Q. Forrester Research claims that “accelerated business
forces are changing the principle foundations of supply chains.”
Do you agree? And if that’s the case, does that render your customers’
current installations obsolete?
Frankly, you’d be hard pressed to find a supply chain executive
who does not agree with this assessment. The velocity and volatility
of business forces means all of us are experiencing global competition,
outsourcing challenges, mass customization, and mounting pressure to attract
and retain more customers by producing better-quality and more innovative
deliverables. Moreover, those deliverables have to be produced in a faster
and more profitable fashion. There is no question that the current business
climate is reshaping supply chains. They now need to operate as loosely
coupled networks, rather than in the traditional linear fashion. And they
also have to be adaptive, so that they are prepared to share knowledge
and intelligently adjust to constant, dynamic change and all the challenges
that go along with that. This is why you see the industry embracing the
term adaptive supply chain network, and more importantly, the
principles this term embodies.
As to the matter of obsolescence, ask
yourself whether your supply chain network can readily adapt to these
pressures. Does it offer you end-to-end visibility across extended supply
networks? Does it include analytic functions for historical, real-time,
and predictive views? What about planning processes that can account for
business variability? Can it sense and respond to supply chain events
so that you can react more effectively to fast-moving market conditions?
Does it offer collaborative processes that foster and enforce increased
supplier reliability? And do you have end-to-end controls for
executing manufacturing, transportation, and warehouse management processes?
These are the principles upon which adaptive
supply chain networks are being built. If your answer to these sorts of
questions is “No,” there are certainly elements of your supply
chain in need of updating.
Q. How does one move entrenched supply chain processes in this
Incrementally! Supply chain networks offer ample opportunity
for optimization: demand management, production management, inventory
management, order management, and service management.
Start with the area
or areas that make the most sense for you.
Goodyear, for instance, focused efforts on inventory.
Those efforts lowered their inventory by 30%. Colgate-Palmolive
focused on forecasting to achieve a 98% accuracy
rating. The SAP SCM 4.0 application suite — which is comprised of SAP Advanced Planning
& Optimization, SAP Inventory Collaboration Hub, and SAP Event Management
— supports all these critical supply chain management areas in the
- SAP Advanced Planning & Optimization (SAP APO 4.0)
provides sales and operations planning, trade promotion management,
and Collaborative Planning, Forecasting, and Replenishment (CPFR).
- SAP Inventory Collaboration Hub (SAP ICH 4.0) enables
you to collaborate with suppliers on inventory planning to meet production
schedules. Suppliers actually gain visibility into your inventory.
- SAP Event Management (SAP EM 4.0) delivers supply
chain performance management and extended inventory visibility. Its
capabilities include monitoring, alerts, and the ability to quickly
resolve process exceptions.
These three applications are not new
to mySAP SCM. They were previously available. But this is the first time
that the three come in one, comprehensive offering, and can be installed
and maintained as a single system, instead of three different ones.
Now, all this functionality is at your disposal.
There is ample flexibility for you to address
your unique optimization concerns. And there
is ample new and enhanced functionality to
make current APO, ICH and EM customers take
notice. (See the checklists of new and enhanced
Q. You’re suggesting a significant increase in functionality,
yet supply chain executives are under inordinate pressure to curb the
total cost of ownership. How do you reconcile the two?
You reconcile the two with the right technology. We are well aware of
the mandates for supply chain profitability, and that a non-trivial component
of that profitability equation is bound up in total cost of ownership.
Keeping TCO in check requires:
- A persistent data model across all supply chain management applications
- Combined planning, collaboration, coordination, and execution
- Improved IT operational costs through ease of administration, and
few SCM interfaces
- Faster process changes with the same application knowledge base
- Fully supported, open integration with SAP and non-SAP systems alike
- Uncompromising levels of stability and performance
SAP SCM 4.0, because it is built on the
SAP NetWeaver technology stack, delivers on all counts.
Lastly, it should be noted that placing
APO, ICH, and EM on one consolidated platform makes SAP SCM 4.0 easier
and less costly to install1 and maintain.
Q. What advice can you offer customers who are evaluating adaptive
supply chain management solutions?
Aside from the obvious pointers — proper functionally, TCO, and
ease of use — look for a comprehensive end-to-end supply chain management
offering. You need support for integrated end-to-end business scenarios.
Look to a solution that will enable you to move beyond local process improvements
to holistic process enablement and control of the extended supply
chain. You need visibility and control across the full expanse of your
supply chain network in order to harness all available resources, especially
in the wake of changing conditions.
Make sure that the solution accounts
for industry-specific scenarios. For example, special provisions are needed
for planning functions in the aerospace and defense industry; the high-tech
industry needs flexible order transactions. Functionality that is designed
specifically for your industry is key to your ROI. We’ve gone to
great lengths to do this, and like all things that constitute a high ROI
for customers, it wasn’t easy.
SAP SCM 4.0 Technology
SAP SCM 4.0 runs on the SAP NetWeaver platform, which means:
- The entire SCM application suite can be run in the SAP Enterprise
Portal, if you elect.
- Integration with SAP Business Intelligence (BI) is built into
SAP SCM 4.0. A complete set of KPIs, for example, is available
in SAP BI. So is an advanced set of analytics, which enable the
collection and computation of analytics of performance numbers
across your extended supply chain.
- Interfaces are based on XML and on SAP Exchange Infrastructure
(XI) to streamline document exchange.
- The foundation of the SAP NetWeaver technology stack is the
robust and scalable SAP Web Application Server.
Lastly, remember that at the end of the
day, supply chain management practices are about maximizing your return
on relationships with your suppliers! Collaboration is key, and technology
can play a pivotal role in enabling this collaboration. Shared insights
and visibility can help you link to customers and partners to more accurately
plan, more quickly replenish, and further accelerate suppliers’
Vendors who fail to optimize their relationships
with suppliers stand to lose out. If it takes too long for your suppliers
to react, you can’t have the right components on hand to manufacture
goods. Customers are too well informed these days to settle for late shipments.
They’ll simply choose a different vendor.
Are You Ready
to Ramp Up?
Many customers elect to be part of SAP's "ramp-up" programs.
Enrollment is now open for the SAP SCM 4.0 Ramp-Up program.
For details about SAP Ramp-Up, visit
SCM Key Information
1 Two installation options are available
for SAP SCM 4.0.
The first is the Full Version, which includes
all application components of SAP SCM 4.0 and the full benefits of the
The second is the Lean Version, for customers
- Need to get up and running quickly, without the need for advanced
planning and optimization
- Need to support collaboration, coordination, or extended visibility
across a heterogeneous applications environment
- Desire a 3-tier, easy to implement set of applications which
can be shared across business partners via use of a browser
This version includes SAP ICH 4.0 and SAP EM 4.0.
Senior Vice President,
SCM Product Management, SAP