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Identify Problems Before They Derail Your Supply Chain: mySAP Supply Chain Management Technologies

by Bernd Lauterbach | SAPinsider

July 1, 2001

by Bernd Lauterbach, SAP AG, and Oswald Wieser, SAP AG SAPinsider - 2001 (Volume 2), July (Issue 3)

Supply chain event management is an up-and-coming business trend - and for good reason. Managing supply chain activities that revolve around warehouses, production centers, shipment legs, and other critical supply chain activities requires prompt identification and notification of problems in the existing supply chain plan.

      At the same time, you also need the ability to initiate corrective actions, when and where they become necessary. And since supply chains don't start and stop within the boundaries of your company - they extend across multiple vendors and enterprises - you need notifications and corrections up and down the entire length of your supply chain, from the supplier's supplier all the way down to the customer's customer, and anywhere in between.

     Supply chain event management, in this way, becomes the critical intermediary between planning and execution. Toward this end, mySAP SCM Supply Chain Event Management (SCEM) delivers functionality designed to increase the speed of reaction to variances and enable better evaluation of supply chain performance, including: 1

Monitoring: Provides continuous information about supply chain objects and events, including the detailed current status of orders, supply, production, shipments, inventories, and assets.

Notification: Supports alerts and exception handling in real time, including exception messages, sent to the appropriate parties, to preventively indicate the decisions that need to be made.

Simulation: Supports decision-making by evaluating the conse-quences of proposed actions, or by recommending actions based on optimization methods.

Control: Allows a decision-maker to correct a previous decision (e.g., diversion of shipment.

Measurement: Provides evaluations, often Key Performance Indicators (KPIs) and metrics, so that the responsible decision-maker can estimate the past or current performance of the supply chain.

     Two essential elements of SCEM are supply chain objects (SCOs) and events. Within the context of event management, there is obviously a huge number of objects to be considered from the distribution, procurement, production, and asset perspectives.

     But no matter what the tracking object - whether it is a batch, truckload shipment, production order, inventory, or purchase order - the monitoring and follow-up of the SCO must support the primary goals of event management. Supply chain event management functions need to span a wide range - from tracking a single item to correcting supply chain-wide problems - and include:

  • Early recognition of malfunctions in the supply chain
  • Compliance with legal requirements for documentation of material flows
  • Determination of the current status and location of a container

SCEM Engine: Enhanced Support for Event Management

     The release of SAP's SCEM Engine in the second quarter of 2001 creates a new link between solutions for the monitoring and notification needed for supply chain event management, by evaluating the supply chain and providing comprehensive event alerts.

     The SCEM Engine was developed within the framework of a strategic customer project that uses mySAP Supply Chain Management (mySAP SCM) for transportation planning and tendering, SAP R/3 Enterprise2 for organizing the transport execution, and mySAP Business Intelligence (mySAP BI) for analyzing key performance indicators. It was first implemented and tested in early 2001.

The SCEM Engine has three core components:

  • The Engine Kernel performs the actual event management process. For each process or inventory to be managed, it provides a supply chain object that guarantees that incoming events are processed.
  • The Interface for Applications is a generic add-on for SAP systems. It allows business processes implemented in SAP systems to manage supply chain objects (i.e., create, change, and delete). For non-SAP applications, information on supply chain objects and events can be transferred with XML using Business Connectors.
  • The KPI Component contains several mySAP BI InfoCubes that allow evaluations of logistical execution, along with quality, on-time delivery performance, and confirmation reliability, to be created for mySAP SCM's transportation planning functions.

     Although the future functions of the SCEM Engine will likely be even broader (see "Potential of SCEM and the SCEM Engine"), it currently performs three main tasks in the context of supply chain event management. The SCEM Engine:

1. Monitors shipment tendering to the carrier.

2. Checks logistics execution by the carrier.

3. Evaluates the quality of the carrier.

Figure 1 provides an example of the paths a planned shipment could take with the SCEM Engine.

     Once a sales order is received, deliveries and planned shipments are created in mySAP SCM. Then the planned shipments are transferred to the SCEM Engine, which monitors the tendering process.

     In the scenario in Figure 1, the carrier either accepts or declines the tendered shipments, and confirms the delivery date with the customer. If the carrier does not respond, the SCEM Engine issues an alert in the SAP Advanced Planner and Optimizer (SAP APO) alert monitor. If the shipment is fully planned and confirmed by the carrier, it is transferred to the SAP R/3 Enterprise system for execution.

Figure 1 Example of an Event Management Process Using the SCEM Engine

     From that point on, the SCEM Engine controls the execution of the individual steps of the shipment, such as arrival and departure at distribution centers and customer locations. The carrier can then report on these events via EDI or a web connection (see Figure 2).

Figure 2 Events Reporting

     The SCEM Engine updates the reported dates with the events in the LE shipment document, which allows employees to easily access the current status of the shipment at any time, as in Figure 3, for example. Via this screen, employees can view information on the pickup arrival and departure for LTL Shipment 1960.

Figure 3 Status Report on Shipment with the Supply Chain Event Management Solution

     When the shipment process is complete, the event data is processed in the SCEM Engine and also transferred to mySAP BI for further evaluation. With these two steps, the system evaluates both the actual execution of scheduled steps and the quality and accuracy of the confirmations (events) based on previously negotiated standards for report quality. This facilitates prompt and accurate execution of the shipment and complete event reporting, and ensures that all reporting is in the right order and within acceptable time periods. When delivery to the customer is complete, invoicing then takes place.

Potential of SCEM and the SCEM Engine

     This event management scenario hints at the enormous possibilities of the mySAP SCM solution and the SCEM Engine. In the future, the logistics-relevant objects found in different SAP systems could also be displayed in the SCEM Engine, forming the backbone of an open solution - an alternative to using separate systems to provide information on supply chain objects and events or to create alerts. This technology could also allow you to trace a supply chain object's maintenance history in public and private supply chain exchanges. What's more, this server has great potential for a variety of clients - including auto PCs or mobile devices with GPS - to keep up with ever-changing client technology.

     With the addition of the SCEM Engine to SAP's business process experience, combined with its Internet-based solutions, SAP now provides a complete set of event management tools to monitor and evaluate the success of your supply chain.

Dr. Bernd Lauterbach is Project Manager for the mySAP SCM Supply Chain Event Management solution. He joined the SAP Logistic Execution development team in 1995. Prior to joining SAP, he worked as Project Manager and Developer for GIS products focused on transportation. During his university career (1987-1993), his research focus was on automatic data extraction from scanned maps using image processing techniques to provide vector and symbolic data for GIS databases.

After graduating in sociology and ethnology at the Universities of Heidelbeg and Freiburg, Oswald Wieser went on to study information Technology at the Institute for Information Technology, Business Management and Electronics in Karlsbad, Germany. In 1980, he joined Nixdorf Computers AG, and from 1987 was head of the Competence Center for Chemical Manufacturing Team at Hewlett-Packard GmbH. He joined SAP AG in 1991, and is now Product Manager for mySAP Supply Chain Management.

1 The supply chain event management functions listed here are based on information from AMR Research, Inc.

2 SAP R/3 Enterprise is the successor to the R/3 ERP solution.

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