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The insideEdge (SAPinsider Vol. 5, Iss. 3)

by Stefan Schaffer | SAPinsider

July 1, 2004

by Stefan Schaffer, Vice President, Application Solution Management, Manufacturing, MDM, PLM, SCM, SAP SAPinsider - 2004 (Volume 5), July (Issue 3)

Stefan Schaffer,
Vice President,
Application Solution Management, Manufacturing, MDM, PLM, SCM, SAP

Looking at supply chain activities across industry-leading companies leaves little doubt that the days of planning and managing procurement, manufacturing, and logistics without advanced supply chain management practices are numbered.

The business case is irrefutable. Independent studies show that businesses with advanced practices supported by advanced software solutions are realizing higher cost savings, greater operating efficiencies, and a 75% higher profitability than market average. Those without are falling irrevocably behind.

This is what has driven SAP to be the clear market leader in supply chain management solutions. For the last couple of months, many companies that not too long ago had only eyed SCM from a distance have shown strong interest in our SCM solution. Some come to SAP looking to improve fill rates or increase inventory turns. Others are looking for better demand and supply planning capabilities and tighter integration between the two. Still others are looking to hone manufacturing schedules and resource utilization, share inventory risks with vendors through vendor managed inventory (VMI), streamline mass customization, monitor outsourced activities, ease the difficulties inherent to global trade, and shorten product life cycles. Any one of these priorities renders traditional supply chain management practices obsolete. You simply cannot adequately address these types of endeavors without tightly integrated collaboration and coordination in an adaptive supply chain network.

RFID mandates are yet another rationale for beginning the transformation. For a burgeoning number of companies, support for RFID isn't a luxury, it's a necessity — some of their major customers, like Wal-Mart, Metro, or the DOD, require it. But only becoming compliant runs the risk of adding additional cost to the supply chain, without gaining the full two-way benefits for both companies involved in the business relationship. SAP's RFID solution enables companies to not only comply with their customers' needs, but to also gain significant benefits themselves by enabling a higher degree of warehouse automation and supply chain visibility.

RFID provides the opportunity for bringing the physical and digital worlds much closer together. Imagine, as a manufacturer, being able to know exactly — and in real time — where RFID-tagged inventory is located anywhere in the supply chain, having processes in place that automatically trigger replenishment, and then optimizing production and inventory levels based on this knowledge. This allows supply chains to be far more efficient, adaptive, and, ultimately, safer than they are today.

With traditional approaches, achieving these capabilities is cost prohibitive. With SAP, these capabilities are integral to our platform and form a launching pad from which you can establish business processes with virtually unlimited benefit.

Stefan Schaffer,
Vice President,
Application Solution Management, Manufacturing, MDM, PLM, SCM, SAP

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