With IT budgets shrinking, solutions that can quickly demonstrate concrete,
measurable value with short implementation cycles and quick ROI are more
in demand than ever. Even so, companies still must keep an eye on their
long-term strategies for the future of their supply chains. But what if
implementing a focused project with immediate impact could also support
your long-range vision? How can you sustain and enhance all that you gain
with these quick implementations?
Consider inventory management, for instance.
Reliable, accurate inventory handling systems are vital to every aspect
of manufacturing, distribution, and marketing. Now, though, many companies
are shifting the emphasis from production (push) to demand (pull), enterprises
face shorter product life cycles, and, in this networked economy, demand
can shift overnight. Manufacturers, distributors, retailers, and, especially,
consumers increasingly expect products and delivery processes to be tailored
to their specific needs. Stakeholders continue to see efficient inventory
management as an indicator of an enterprise’s well being.
Under increasing pressure to not only
anticipate but also proactively respond to customer demand, companies
need to quickly ramp up their demand planning and replenishment efforts.
As a result, they find themselves with immediate requirements for accurate
demand information and forecasting, as well as for consistent information
shared across internal and external organizational boundaries.
To help customers meet these challenges
in both the short- and long-term, SAP has selected specific, tightly focused
components from the mySAP Supply Chain Management (mySAP SCM) solution
and made them available as standalone offerings. The first two are now
available: SAP Collaborative Replenishment Planning (SAP CRP), designed
specifically for the consumer products industry, and SAP Demand Planning
(SAP DP), to support the demand planning needs of a broad range of enterprises.
With attractive pricing and implementation options for SAP DP and SAP
CRP, most companies can expect to see a fast ROI for these solutions.
But these applications provide more than
just a short-term fix for specific business pain points. SAP will continue
to provide them as part of the extensive mySAP SCM solution, so these
applications are ready to deliver competitive advantage by enabling a
long-range, strategic vision for your supply chain.
No Need to Choose Between Short-Term Returns and Long-Term Investments
In SAP Demand Planning and SAP Collaborative Replenishment Planning,
SAP offers two powerful, easy-to-implement applications from mySAP SCM
to meet business demands today and tomorrow. By creating a baseline for
building out more complex business scenarios and offering a seamless upgrade
path, these two applications help customers take the next steps forward
on a strategic roadmap for their supply chain.
SAP Demand Planning, as part of the SAP Advanced Planning and Optimization
(SAP APO) component within mySAP SCM, provides companies with all of the
tools required to implement and manage a robust process for forecasting
and managing overall customer demand.
As a standalone offering, SAP Demand Planning
includes SAP APO and sophisticated statistical forecasting techniques
coupled with data representation and demand management features that support
processes related to planning for customer demand. For instance, the planner
can highlight a specific item under “APO Product” in the SAP
Demand Planning example in Figure 1, and SAP DP lists
past production data, calculates forecasted demand, and presents the data
in table and graphic form.
|Demand Planning Screen in SAP DP
SAP DP embodies all the features of a
best-of-breed demand planning solution (see Figure 2)
and supports the drive toward collaborative, consensus-driven demand planning
processes, including delivery of content over the Internet.
Forecasting and planning are supported at any level and any dimension.
Gives customers flexibility to easily view large volumes of data,
both in tables and graphics.
SAP DP comes with a complete toolset of practical and proven tools
that include univariate forecasting, causal analysis, and composite
Trade promotion planning
Includes the ability to track and factor the effect of any product
trade promotion on any level, including integration with the mySAP
Customer Relationship Management (mySAP CRM) solution.
Collaborative demand-planning processes
Planners can enable collaborative planning by sharing demand plans
with different process participants to collect, forecast, or plan
demand from multiple input sources. Offers the ability to leverage
the Internet for sharing content with partners (for example, via
|SAP DP Features At a Glance
SAP DP is ideal for getting forecasting
up and running in as little as six months, depending on the complexity
of customer requirements. But it can also be leveraged in a future, broader
implementation of supply network planning (another of mySAP SCM’s
capabilities), or in key customer planning and replenishment programs,
such as Vendor Managed Inventory (VMI), or to meet the demand-planning
criteria of a Collaborative Planning Forecasting and Replenishment (CPFR)
program (discussed later in this article). With SAP DP, you also gain
an entry point for future deployment of other supply chain planning applications
in SAP APO.
All in all, SAP DP provides key operational
- Lowered costs by exchanging crucial information to help reduce inventory
build-up, streamline overall cycle times, and make more efficient use
- Improved customer service through more accurate and timely order fulfillment,
increasing order fill-rate and on-time performance.
- Increased responsiveness due to broader visibility into demand and
supply information, with the ability to manage unanticipated changes
in demand or supply.
- Enhanced productivity among planners, as well as operational and other
functional personnel throughout the supply chain, due to a more timely
planning process and real-time availability of key information.
CPFR (Collaborative Planning, Forecasting, and Replenishment)
is a collection of business practices designed to provide visibility
into end-customer demand.1 CPFR processes are designed
to support shared, consistent forecasts of sales and orders between
individual manufacturers and distributors. They are particularly
helpful for avoiding unexpected special promotions and ensuring
that other factors — seasonal sales, etc. — are accounted
for by both the retailer and the manufacturer. The process model
involves the manufacturer and distributor creating a joint business
plan, including exception criteria. Sales and forecasts are created
together, and resolving exceptions is done collaboratively as well.
CPFR development began in 1995 and is currently promulgated by
the Voluntary Interindustry Commerce Standards (VICS) committee,
which includes more than 100 leading U.S. retailers and trade associations.
1 For details
and case studies on CPFR guidelines, including a sample process
model, see www.cpfr.org.
For more information on VICS, see www.vics.org.
SAP Collaborative Replenishment Planning
In their relationships with retailers and distributors, manufacturers
are increasingly required to take greater responsibility for sharing inventory
planning and replenishment information by implementing a CPFR program.
CPFR is a set of collaborative business practices supporting shared, transparent
inventory forecasting and replenishment (see “What’s CPFR?”).
With US-based retailers like Wal-Mart and Target requesting or even requiring
that top suppliers implement CPFR — sometimes in a matter of months
— this is a looming issue for the consumer products (CP) industry.
These two retailers alone can represent up to 50% of a CP manufacturer’s
revenue, and other retailers are reportedly planning to follow suit.
Despite this pressure from retailers and
the valuable returns CPFR has shown, many CP manufacturers have been slow
to respond for many reasons: CPFR can be very labor intensive, and most
CPFR solutions are not sufficiently automated for the exception-handling
steps (e.g., managing discrepancies or conflicts in a forecast) required
in the CPFR model — leading to follow-up emails and phone calls
for resolution. What’s more, most CPFR-compliant solutions currently
on the market are point solutions that are expensive to integrate with
backend planning and transaction systems.
To make CPFR implementation more attractive
and manageable, SAP created Collaborative Replenishment Planning (SAP
CRP) specifically for the consumer products industry (see Figure
3). SAP CRP implements automated exception-based CPFR processes,
such as order and sales forecasting, which allow you to integrate a retail
partner into your supply chain without overburdening your current staff
(see Figure 4). SAP CRP is a scalable solution that is
VICS-certified and that interoperates with any VICS-certified system,
such as Wal-Mart’s RetaiLink.
Automated forecast reconciliation process that alerts staff to
Automated order reconciliation process.
Web-based, task-oriented GUI that delivers a complete view of all
current exceptions along with the data needed to resolve them.
Tool that allows suppliers to create and manage alerts and alert
thresholds using simple rules.
Web-based GUI for sharing forecasts with partners.
|SAP CRP Features At a Glance
|Planning Book from SAP CRP
Companies using SAP CRP can quickly and
efficiently respond to a distributor’s request to implement CPFR.
SAP CRP is built on the scalable, open SAP NetWeaver technology platform,
and integration with most backend planning and transaction systems is
a snap via SAP-supplied connectors and XML.
Benefits of SAP Collaborative Replenishment
- Increased visibility and velocity — SAP CRP
brings visibility to end-customer data. More information can be handled
- Minimized inefficiency — Time lags in communication
are eliminated, and the exception-based process focuses in on potential
- Improved execution of sales and production plans — Companies
can proactively manage their supply chains. Aligning their goals with
their partners’ results in increased sales and reduced costs.
Given today’s demand for solutions that are quick and connected,
SAP DP and SAP CRP meet customers’ needs for a running start in
special aspects of their supply chain initiatives. Because SAP DP and
SAP CRP are also packaged within the mySAP SCM offering, they offer low-risk,
quick implementation and a tangible ROI that supports broader supply chain
initiatives in the future.
For more information on SAP DP, see www.sap.com/solutions/scm/
For details on SAP CRP and mySAP SCM replenishment
features, see www.sap.com/solutions/scm/
Ferrari is a Director of Product Marketing for mySAP SCM and a member
of SAP Global Marketing, based in Boston, Massachusetts, USA. He is
responsible for driving inbound marketing processes for the planning
capabilities within mySAP SCM and other products. Before joining Global
Marketing, Bob was a Research Director at AMR Research, delivering
client research in the areas of supply chain, procurement, and ERP
Ströbel is 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 supply
chain coordination focus areas.