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An Insider's Guide to mySAP SCM

by Katrin Stroebel | SAPinsider

October 1, 2002

by Katrin Stroebel, SAP AG SAPinsider - 2002 (Volume 3), October (Issue 4)
 

As competition has continued to heat up - and companies have become increasingly interconnected - the ability to manage the supply chain has become critical. Indeed, it is a key to everything from increased market share to reduced costs - and many experts say that it is now the supply chain, rather than the individual company, that is the real competitive unit in business. Companies that can enhance their supply chain's performance will have a powerful advantage over those that can't.

To support companies in their efforts to use their supply chains to the fullest, SAP offers mySAP Supply Chain Management (mySAP SCM),* a complete, integrated end-to-end solution for managing supply chain network operations. This solution facilitates planning, execution, collaboration and networking across your enterprise, as well as with suppliers and customers on three levels: strategic, tactical, and operational. Your supply chain partners can be involved with everything from taking orders to tracking inventory and shipping products, all the while monitoring and measuring supply network performance, so you can assess what's working well and what needs improvement.

*mySAP Supply Chain Management and mySAP SCM are trademarks of SAP.

mySAP SCM is an integrated suite of solutions that provide companies with end-to-end solutions for supply chain planning, execution, networking, and coordination. Figure 1 provides an overview of the mySAP SCM solution.

Within each area, we see companies expressing the need to make better use of the information and networks already at work in their own supply chains, articulating objectives such as:

  • "Reduce our inventory with better forecasting and planning."

  • "Avoid cost overruns by reacting more quickly to shipping delays."

  • "Make sure our shop floor managers have the information they need immediately, so they can address problems faster."

This article provides a quick tour of the four mySAP SCM functional areas and, within these areas, some of the goals that companies are voicing as they look to better manage their supply chain networks - and how mySAP SCM is designed to help achieve those goals.

Supply Chain Planning

The planning capabilities of mySAP SCM support you with state-of-the-art planning methods and graphical displays to let you synchronize supply chain activities such as demand planning, supply planning, and sales and operations planning; respond quickly to changes such as increased demand or external influences (like an unexpectedly hot summer); and optimize forecasts, plans, and operational schedules. They are designed to help you optimize planning activities and meet goals such as these:

Figure 1 Four Supply Chain Areas Covered by mySAP SCM

"Gain a big-picture look at the supply chain, to start evaluating each connection point in the network."

Supply Chain Design provides supply chain planners with a centralized overview of the entire supply chain. Using the Supply Chain Cockpit (see Figure 2), planners have a complete graphical instrument panel for monitoring, navigating, and controlling all the links in your supply chain. It also shows you key performance indicators, which help you identify weak links and potential improvements.

Figure 2 Supply Chain Cockpit, Part of mySAP SCM Supply Chain Design

 

"Create a plan to better synchronize supply and demand, and cut costs by creating more accurate forecasts of supply and demand."

Dynamic exchange of information is the basis for successful supply chain management. The Collaborative Demand Planning and Supply Planning capabilities of mySAP SCM lay the foundation for this information exchange and help you tightly couple supply to demand. SAP's demand planning tools, such as Statistical Forecasting, Causal Forecasting, and Promotion Planning, among others, let you take into account historical demand data, causal factors (like seasonal fluctuations in demand), marketing events, market intelligence, and sales objectives.1

Supply planning tools, which include Safety Stock Planning, Capacity Leveling, and Demand & Supply Matching, allow you to create an overall supply plan that takes into account materials management, production, distribution, and transportation requirements and constraints. Plans can then be shared with all members of the supply chain network, allowing them to work from a single, accurate forecast.

Overall, these demand and supply planning capabilities help you reduce the amount of material in the supply chain while maintaining high levels of customer service.2

For example, a large consumer products company using mySAP SCM's collaborative demand planning functions was able to reduce forecast errors significantly (from 62% to 22%), which contributed to improvements in cycle times and customer service.

Supply Chain Execution

Once the supply chain planning phase has produced optimized plans for production, it's time to put them into action. This is what mySAP SCM Supply Chain Execution delivers - key processes in the area of supply chain execution that enable you to manage the entire range of materials management, manufacturing, and order fulfillment activities across the extended supply chain, to fulfill objectives including:

"Improve tracking of materials, to ensure that they reach our sites on schedule."

With Materials Management, you can share accurate inventory and procurement order information to ensure that the materials required for manufacturing are available at the right place at the right time. Plan-driven procurement, inventory management, and invoicing is done easily. mySAP SCM lets you create a complete feedback loop between demand and supply to increase responsiveness across all areas of supply chain planning.

Overall, the solution's Materials Management tools help you reduce raw material spending, procurement costs, safety stocks, and raw material and finished goods inventory.

Companies that have used mySAP SCM for Materials Management have seen noteworthy decreases in inventory and stock outs.

"Improve scheduling with supply chain partners during production."

Collaborative Manufacturing enables companies to share information with partners to coordinate production, and help to increase responsiveness and efficiency. mySAP SCM supports production processes, both in discrete as well as in process manufacturing industries: configure-to-order, make-to-order, and make-to-stock. A continuous information flow across planning and execution is created.

Production schedules across the supply chain are optimized, taking into account material and capacity constraints, as well as information from other planning areas like demand and supply planning. Processes that are supported in the discrete industries include Model Mix Planning and Characteristics Based Forecasting. Block planning and campaign planning are among the processes supported within process industries.

"Find ways to get products delivered more quickly, and on time."

To close the supply chain execution loop, mySAP SCM also supports Collaborative Fulfillment, which means that you and your partners can intelligently commit to delivery dates in real-time and fulfill orders from all channels on time.

For example, a global available-to-promise (ATP) feature lets you locate finished products, components, and machine capacities in a matter of seconds. You can also manage the flow of products through your sales channels and match supply to market demand, reassign supply and demand to meet shifts in customer demand, and manage transportation and warehousing to provide on-time, low-cost delivery.

Supply Chain Coordination

Your supply chain consists of many parties, both within your company and beyond its boundaries. To coordinate the plans and activities of these different parties, you can use mySAP SCM and conduct detailed analysis of how your supply chain is performing. This ensures that changes in the supply chain do not adversely affect delivery or service to the customer.

mySAP SCM's Supply Chain Coordination capabilities allow you to work closely with partners to coordinate, manage, and evaluate activities and processes across the extended value network; identify exceptions; and collaborate to respond with speed and accuracy, in order to:

"Know and act earlier when our transportation and delivery plans are at risk, or are going wrong."

SAP Event Manager enables you to model relevant milestones of a process, such as the preparation of a pallet of goods or the departure of a truck. It then monitors those events and raises alerts for delays, the wrong sequence of events, or no events at all. The system can alert you to such things as an overdue delivery, or a vendor that has not started production in time to meet planned delivery dates.

In many cases, the solution can assess the impact of a delay automatically, through its tight relationship to other planning and execution software systems. When problems do require attention, the event management capability enables supply chain partners to work collaboratively to respond.

"Check the supply chain plans for our key concerns - like overspending - to make corrections as early and quickly as possible."

mySAP SCM's Event Management capabilities together with its Performance Management capabilities provide you with the visibility3 you need to work successfully within your supply chain and with all partners which are a part of it. mySAP SCM gives companies the ability to define, select, and monitor key performance indicators (KPIs) - such as costs and assets - and use them to gain an integrated, comprehensive view of performance across the supply chain.

SAP offers more than 300 preconfigured KPIs, such as Delivery Performance and Capacity Utilization, to help you in your daily work. Many of these KPIs are based on the Supply Chain Operations Reference (SCOR)4 model. On a day-to-day level, mySAP SCM provides constant surveillance of these key performance measurements and automatically generates an alert if there is a deviation from the plan.

When there is a problem, mySAP SCM works with mySAP Business Intelligence, SAP's data warehousing and data analysis solution, so you can evaluate a range of possible actions rapidly and accurately. On a strategic level, mySAP SCM gives you the feedback needed for true closed-loop supply chain management and continuous improvement.

Enhanced visibility into all parts of the extended supply chain network results in reduced inventory levels and increased market share, revenues, and profits. Furthermore, shorter lead times and increased customer loyalty are achieved. Resources can be employed more effectively, resulting in reduced costs. All in all, you can enhance your operating efficiency and increase your company's responsiveness.

Supply Chain Networking

No matter how complex your network of employees, partners, customers and suppliers might be, for successful supply chain management, you need a seamless flow of information. mySAP SCM offers various Supply Chain Networking capabilities to help you Internet-enable your supply chain, giving employees, customers, suppliers, and partners a view into the entire supply chain and the ability to act as a single, seamless network to meet objectives such as:

"Provide our established customers, partners, and suppliers with a marketplace for ordering and tracking goods and services."

Using a Private Exchange, you can create and operate an online marketplace to bring your suppliers, partners, and customers together online in a secure environment where confidentiality is protected. Here you can manage relationships with participants and give them 24x7 flexibility to track order status, view pricing scenarios, check inventory levels, track shipping status, inquire into the status of product returns, and review their order histories. Collaboration on demand and supply management, procurement, fulfillment, event management, and product design are also important elements of mySAP SCM's private exchange capabilities.

"Allow a variety of partners and employees to access just the supply chain processes they need - no matter what software or platform they're working from."

The Enterprise Portal gives you the freedom of using web-based tools to integrate third-party systems into your supply chain network and let employees collaborate with coworkers, business partners, and customers (see Figure 3). With the portal, you can provide information access regardless of participants' IT infrastructure, company size, or location.

Figure 3 Enterprise Portals for Personalized Access to Information and Third-Party Integration into Your Supply Chain Network

The portal gives users personalized access to the wide range of supply chain information, applications, and services they need to do their jobs. It uses role-based technology to deliver information to users based on their individual responsibilities within the supply chain network. Roles included in mySAP SCM are, for example, the Supply Chain Manager, the Demand Planner, and the Transportation Manager.

"Give employees, whether they're on the shop floor or on the road, the ability to enter and access supply and production data."

mySAP SCM offers Mobile Supply Chain Management capabilities so that data and information can be processed and shared at almost any time.

Users throughout the supply chain network can plan, execute, and monitor activity using mobile and remote devices. They can perform mobile data entry and automate many data-capture activities in plants and warehouses to reduce errors and increase efficiency. Barcode scanning in Warehouse Management and Production is available. Decision-makers can gather information and act, whether they are on the road, working in a remote facility, or virtually anywhere else.

A Solution for the Future: Creating Advantages Through Adaptive Supply Chain Networks

With increasingly sophisticated tools and technologies, supply chain networks will soon be responsive enough to enable partners not only to adjust production and logistics, but to actually modify the entire business model on a continuous basis. They will be able to keep redefining markets and pricing, serving ever-smaller customer niches, and providing increasingly customized products. And the supply chain network will be able to operate as a single, coherent entity, with all participants focused on the customer and, ultimately, the creation of value for the network as a whole.

When using mySAP SCM, customers are already on their way to transforming their supply chains into adaptive supply chain networks - supply chains that are similar to complex organisms in which a stimulus creates an immediate response, allowing the supply chain network to continuously adapt and thrive. To this end, SAP is pioneering the development of adaptive "agents," which will greatly enhance both responsiveness and control over the supply network. These agents are small pieces of software that continuously monitor supply chain operations, and automatically react when certain conditions are detected. Web services technology, to standardize and reduce the data flow within the supply chain, complements SAP's offering for adaptive supply chain networks.

Therefore, as you continually look for ways to better manage your own supply chain, the goals of adaptive planning, networking, event-driven coordination with continuous performance management, and seamless, collaborative execution are within your reach. Deploying mySAP SCM, every company can become part of an adaptive supply chain network.


1 For further information on supply chain planning, please see "Supply Chain Planning with mySAP SCM" by Dr. Stefan Theis in this issue of SAP Insider

2 For more on the ties between customer relationship management and SCM, see "Leveraging the Real Value of Data and Process Workflow Integration with a True CRM/SCM Solution" by Claus Grünewald in this issue of SAP Insider

3 Please refer to Oswald Wieser's article "Supply Chain Visibility: You Can't Steer When You Can't See!" in this issue of SAP Insider for further information.

4For more information, see www.supply-chain.org.


Katrin Ströbel works as a Marketing Manager for mySAP SCM at SAP AG in Walldorf, Germany. She is responsible for driving outbound marketing processes, including launch management, and partner marketing and communication. Before joining global marketing, Katrin was product manager for Network Design and later part of the GBU SCM's program management team, where she was primarily responsible for the supply chain planning and performance management focus areas.

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