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Can you get more supply chain intelligence from your core SAP ERP system?

by Keith Searls

June 16, 2011

Organizations are making huge investments in business analytics as a hopeful solution to gain critical decision support that enables improved performance across the supply chain.

As a  client advisor for Reveal, I often see many organizations  looking for technology solutions as a means to addressing service level challenges or reducing inventory levels (for example), as opposed to taking stock (no pun intended) of the underlying business processes that address critical master data inaccuracies.

This “Silver Bullet Approach” typically does not address the fundamental issues that are related to working in an integrated environment such as SAP. The fact is, no matter what version of SAP a customer is using, or what additional software that companies use, their effectiveness is limited if there is a lack of trust in the information and process inefficiencies. However, here at Reveal, we have seen that by using the information companies already have and learning how to manage their information, there is a common path toward significant, sustainable improvement.

 It starts with a critical self-assessment to help establish your organizational readiness for change. What is the true state of your supply chain data integrity and process alignment? How do you access, and extract the information required to consistently improve supply chain performance in a way that informs across stakeholder responsibilities?

What many customers overlook is that it is possible -- using standard SAP ERP functionality -- to uncover and report on supply chain process performance, and to measure, analyze, and prioritize inventory and service level performance while moving the organization toward an exception-minded business, as a way to set and monitor the critical KPIs that lead to tangible improvements.

Here are just two examples:

Many organizations do not understand how to use the standard Sales and Operation and Demand Planning tools within SAP to create greater visibility in their forecasts and customer demand. These tools, in combination with core ERP analytics that deploy more effective sales data (order, shipments and inventory), can drive substantial improvements in service levels and automation. Many times these functions are done outside SAP, which creates a lack of understanding in the plan -- and loss of trust and efficiencies.

In addition, documents and alerts can show you what can happen to an order during processing, as it moves through the warehouse and along a delivery route. Use your core ERP system’s Supply Chain Exception Monitor to manage events along your supply chain, and enable exception reporting to proactively resolve problems before they create inefficiency and waste. For example, look at your customer service issue alerts. Those red-light alerts can also tell you a lot about supply chain exceptions: Is stock late? Is there too much or too little? Are there new requirements?

These opportunities are not limited to certain industries or just manufacturing. All organizations that buy and sell products can take advantage of these best practices. It is not a matter of the uniqueness of the organization; it comes down to the companies that can manage the variations with their customers and supplies to become exception focused and flexible. These organizations will become the leaders and provide better service, while reducing costs.

Later this month, I’ll be taking questions about how to l everage these tools, and how you can get squeeze the most value from your SAP system to improve your supply chain. Join me on Wednesday, June 29, 11am-noon EDT , and participate in a one-hour SCM Forum. Post your questions about assessing your organization and leveraging these tools to full advantage. Click here for more information:

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