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The insideEdge (SAPinsider Vol. 3, Iss. 4)

by Albrecht Diener | SAPinsider

October 1, 2002

by Albrecht Diener, Senior Vice President, GBU SCM, SAP AG SAPinsider - 2002 (Volume 3), October (Issue 4)

Under pressure to manufacture a critical customer order and alarmed to find some essential parts are not on hand, what would your organization do? I've seen lots of inventive fixes, even the shuttling of parts from remote facilities via private helicopters. Whatever fix you might apply, you incur expenses or inefficiencies.

On the flip side of this all-too-common manufacturing scenario would be precise predictors of customer demand and complete visibility across the full expanse of your supply chain, right down to the replenishment process. Or imagine customers removing packages from "smart shelves" that relay stock quantities to SAP software. Having a real-time understanding of consumer behavior helps companies, especially in the consumer products and retail industries, optimize all logistics processes, including the "last hundred meters" of the supply chain race from the retailer's backroom to display cases and shelves.

When inventory dips below a certain threshold, for example, the pertinent supply chain partners are notified automatically, and replenishment runs are triggered. Now imagine that the replenishment quantities being ordered account for the seasonable variations in customer demand, regional sales promotions, and an upcoming national ad campaign. Or picture a retail order precipitating automatic inventory checks and then optimally apportioning work orders to all relevant suppliers, distributors, and logistics service providers, and having that retailer then be able to track the status of things.

The ability to detect and then quickly respond to unplanned supply chain events or to account for the risks, opportunities, and variable business conditions that lay ahead are not untenable, futuristic scenarios. What I'm describing are attributes of "adaptive supply chain networks." We're seeing a strong, steady movement among SAP customers and their supply chain partners to transform their traditional supply chains into intelligent, adaptive networks that enable them to collaboratively address supply, manufacturing, distribution, and fulfillment activities with both reactive and proactive measures.

Pressing issues we now see as catalysts for this transformation include the quest for Available-to-Promise (ATP) capabilities, lowering of inventory levels, and streamlining of mass customization and build-to-order efforts. Integration of participating systems and visibility of orders, plans, supplies, inventory, and shipments are obviously key prerequisites for supply chain functions like these. So are collaborative planning capabilities, along with the ability to monitor and assess the performance of these activities.

SAP offers much of this functionality today. We offer the underlying integration technology, the industry's strongest suite of collaborative SCM applications, the event management technology that makes it possible to detect and manage variability in your supply network, and the analytic functions to predict and account for future conditions. Moreover, all mySAP SCM technology is open. mySAP SCM can be integrated with SAP and non-SAP systems alike.

These offerings have received resounding endorsements from customers and analysts. I take that to be a testament to the quality of the technology and to their timing, because it appears that transforming traditional supply chain processes into more collaborative, intelligent, and adaptive ones is imperative. Market forces leave you little choice, and frankly, the cost savings are just too significant to ignore.

Albrecht Diener
Senior Vice President,

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