What is outer fence in SAP SCM-IBP-DM - Demand?

SAP Term: outer fence

• Component: SCM-IBP-DM

• Component Name: Demand

• Description: A boundary of the tolerance lane calculated during outlier detection. Historical values that are unusally high or low compared to the rest of the data are identified as outliers by the system. To identify such values, the system calculates the upper and lower boundaries of the tolerance lane with the help of a multiplier specified by a data scientist. The most commonly used multipliers are 1.5 and 3. If the multiplier is set to 3, the boundaries are called outer fences. The values outside the outer fences are identified as strong outliers. This means that the data scientist can be sure that they are actual outliers and not false positive results.

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• Key Concepts: 
  Outer fence is a feature of SAP's Demand Management component of the Supply Chain Management-Integrated Business Planning (SCM-IBP) suite. It is used to set a limit on the amount of demand that can be planned for a given period. This limit is referred to as the outer fence and is used to ensure that demand does not exceed the capacity of the supply chain. 
  
  How to use it: 
  The outer fence can be set up in the Demand Management component of SCM-IBP. It is set up by entering a value for the outer fence in the “Outer Fence” field. This value will then be used to limit the amount of demand that can be planned for a given period. 
  
  Tips & Tricks: 
  When setting up an outer fence, it is important to consider the capacity of the supply chain and ensure that the outer fence does not exceed this capacity. This will help to ensure that demand does not exceed supply and cause disruptions in the supply chain. 
  
  Related Information: 
  The outer fence feature is closely related to other features in SCM-IBP such as safety stock, inventory optimization, and demand forecasting. These features can be used in conjunction with the outer fence to ensure that demand does not exceed supply and cause disruptions in the supply chain.