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mySAP Supply Chain Management: Managing the Supply Chain Beyond Corporate Borders

by Katrin Strobel | SAPinsider

July 1, 2001

by Katrin Strobel, SAP AG SAPinsider - 2001 (Volume 2), July (Issue 3)

To be competitive in today’s global economy, your company needs to move beyond the sequential, linear relationship of the traditional supply chain and take advantage of e-business tools to adopt a networked, dynamic approach. Otherwise, you run the risk of being stuck with obsolete inventory and even losing customers to those competitors who can deliver products with greater speed and accuracy. mySAP Supply Chain Management (mySAP SCM) provides best practices, content, and tools to support the needs of the networked supply chain.

What does it mean to be competitive in today's global economy? Companies need to be responsive to market changes, achieve high service levels while remaining profitable, and support an infrastructure that allows you to make timely, accurate decisions - all without carrying a lot of inventory.

To accomplish all this, your company needs to move beyond the sequential, linear relationships of the traditional supply chain and take advantage of e-business tools to adopt a networked, dynamic approach. Otherwise, you run the risk of being stuck with obsolete inventory, and losing customers to competitors who can configure and deliver products with greater speed and accuracy.

mySAP Supply Chain Management (mySAP SCM) provides best practices, content, and tools to support the needs of the networked supply chain, and give you that competitive edge.

mySAP SCM: Understanding the Key Functional Capabilities

mySAP SCM is a comprehensive supply chain planning and execution solution (see Figure 1) designed to promote efficient and smooth collaboration in a networked environment that links your suppliers' suppliers to your customers' customers. The mySAP SCM solution provides:

  • Visibility in supply and demand among all trading partners.
  • Synchronization within the supply chain, which allows all partners to make optimized sourcing, planning, and execution decisions.
  • Improved responsiveness that enables companies to better plan, commit, produce, and fulfill.
Supply Chain Collaboration
  • Share information and integrate processes up and down the supply chain.
  • Internet-enable processes, such as collaborative planning, forecasting, and replenishment (CPFR) and vendor-managed inventory.
Private Exchanges
  • Create an online supply chain community that enables partners to collaborate on design, procurement, demand and supply management, and other supply chain activities.
  • Network your supply chain through private exchanges to link your commerce community.
Supply Chain Performance Management
  • Report key measurements in the supply chain, such as filling rates, order cycle times, and capacity use.
  • Integrate planning and execution functions with information from mySAP Business Intelligence.
Supply Chain Event Management
  • Monitor every stage of the supply chain process, from price quotation to the moment the customers receive the product, and receive alerts when problems arise.
  • Capture data from carriers, vehicle on-board computers, GPS systems, and more.
Supply Chain Design
  • React quickly to changing market conditions, such as product launches and new customer segments.
  • Improve supplier selection, design distribution concepts, and enhance transportation networks.
  • Simulate networks to see what approach will work best.
Collaborative Demand and Supply Planning
  • Develop a one-number forecast of customer demand by sharing demand and supply forecasts instantaneously across multiple tiers. Enable suppliers and vendors to use shared forecasts and real-time demand signals to automatically replenish stock.
  • Precisely forecast demand, and plan accordingly over the supply chain network.
  • Match demand to supply to maximize return on assets.
Collaborative Procurement
  • Manage the complete procurement process, from sourcing to ordering and invoicing.
  • Global visibility into direct material spending.
  • Compare bids and evaluate service levels, such as quality and on-time delivery. Allow partners to leverage buying clout and reduce ad hoc spending.
  • Support a complete manufacturing environment, from planning to execution and analysis in both discrete and process industries.
  • Adopt a flexible approach to engineering changes and customer requirements. Optimize plans and schedules while considering resource, material, and dependency restraints.
Collaborative Fulfillment
  • Fulfill orders from all channels on time with order management, transportation planning and vehicle scheduling, freight cost management, transportation order processing, and carrier collaboration.
  • Support the entire logistics process, including picking, packing, shipping, and international activities. Commit to delivery dates in real time.
  • Check the availability of finished products, components, and resources in seconds via global available-to-promise.

Figure 1

mySAP SCM at a Glance

     The following sections explain each of the key capabilities of mySAP SCM, and the roles they play in planning and execution across the entire supply chain.

Supply Chain Collaboration: Visibility Across the Entire Supply Chain Network

     mySAP SCM's collaborative functions allow companies to share information with all supply chain partners, giving full visibility to:

  • Supplier and customer allocations
  • Inventory levels
  • Orders
  • Forecasts and production plans
  • Key performance indicators (KPIs)

     With supply chain collaboration, you have the key e-business processes needed for supply chain planning and execution beyond the boundaries of a single company or enterprise. The result - open, interactive dialog between supply chain partners via the Internet - is improved service and reduced inventory costs.

Private Exchanges: Leveraging Market Dynamics and Efficiencies

Private exchanges enable companies to integrate customers, suppliers, and partners into supply chain processes. mySAP Supply Chain Management allows your enterprise to operate its own private exchange and bring your suppliers, partners, and customers together into a networked environment. Through the exchange, partners can collaborate, share information, plan, and coordinate - and increase speed and responsiveness across the supply chain.

     Private exchanges within mySAP SCM incorporate these four basic building blocks:

  • SAPMarkets MarketSet infrastructure for portal building, user management, and document exchange is the basis for the private exchange architecture.
  • E-Supply Chain Agents enable synchronized communications between the exchange and other systems or marketplaces - whether inside or outside the enterprise.
  • SAPMarkets E-Core provides generic e-business features such as Content Management and Bulletin Boards.
  • E-Supply Chain Services, such as Supply Chain Collaboration, Order Promising, and Supply Chain Event Management, play a central role in private exchanges.

     mySAP SCM can help your company use online exchanges to collaborate, share information, plan, and coordinate across the supply chain - and allow you to:

  • Increase sales for all partners through reliable customer service, faster time-to-market, and mass customization, so that you produce the right product in the right amount, at the right place at the right time - all the time.
  • Reduce costs through shorter cash- to-cash cycles, improved utilization of assets, strategic sourcing, and decreased logistics expenditures.
  • Achieve faster time-to-market by streamlining design processes, thereby sharpening your competitive edge and improving sales and margins.
  • Increase return on assets through improved visibility of demand, inventory, and capacity information, so you can deploy equipment and inventory more efficiently.

Supply Chain Performance Management: Measuring the Success of Your Supply Chain

Defining overall strategies and goals based on key performance indicators (KPIs) allows you to measure, compare, and set targets for your supply chain activities. mySAP SCM offers real-time supply chain performance measurement and benchmarking, and automatically sends alerts to planners when performance deviates from the plan. In combination with mySAP Business Intelligence (mySAP BI), mySAP SCM also helps identify areas for overall supply chain improvement in line with your current set of metrics. Metrics used are based on the SCOR model.

Supply Chain Design: Allowing You to Respond to Change

Companies need to react to changing market conditions, such as new product launches and new customer segments, and align their supply chain infrastructures accordingly. The Supply Chain Design feature of mySAP SCM helps by providing information on supplier selection, distribution, transportation networks, and production locations.

     Network Design, the main feature of mySAP SCM Supply Chain Design, is key to strategic planning in mySAP SCM. It supports location selection, decisions for coordination of transportation lanes and supply relationships, and analysis of the complex relationships between location and production (see Figure 2). Network Design optimizes geographical distances and costs, taking account of demand structures and resources, and allows you to compare planning results and what-if analyses in a graphical or tabular viewer.

Figure 2

Network Design

     Supply Chain Design also supports regular evaluation and control of existing supply chain networks, and is seamlessly integrated with other elements of, such as mySAP BI.

Collaborative Demand and Supply Planning: Matching Demand to Supply to Maximize Return on Assets

An ever-present challenge to supply chain management is forecasting demand, and optimizing material flow along the supply chain - and with the networked, collaborative supply chain, this challenge is even greater. mySAP SCM Collaborative Demand and Supply Planning enables supply chain partners to analyze demand, taking into account historical buying and selling behavior, market intelligence, and sales objectives (see Figure 3).

Figure 3

mySAP SCM Collaborative Demand and Supply Planning

    In the collaborative model, partners join information to derive the total supply chain requirements. Collaborative Demand and Supply Planning also includes extensive statistical forecasting methods and tools for causal analysis, lifecycle modeling, and promotion planning, along with vendor-managed inventory (VMI) technologies, safety stock planning, and simulation.

Collaborative Procurement: Manage, Enhance, and Automate the Procurement Process

As Internet trading processes make markets more global and transparent, capitalizing on dynamic market opportunities is key. Not only does mySAP SCM Collaborative Procurement monitor external materials needed for production, but it also supports Internet purchasing functions, and includes rule-based procurement processes, automated replenishment, and multiple supplier support.

     When the system schedules externally procured orders, the goods receipt and transportation capacity information is factored in early, so purchase order quantities can be optimized accordingly. As a result, the system can automatically select the optimal source to deliver a sufficient quantity of goods that meet time and other specifications. If the usual supply sources cannot fulfill a peak in demand, the system can start a request on an Internet marketplace.

     Collaborative Procurement functions take these procurement processes to your partners. As you work closely with suppliers to accelerate the flow of information - regarding delivery schedules, for example - you reduce lead time.

Manufacturing: Controlling Production Processes with an Industry-Specific Approach

By integrating manufacturing with other supply chain processes, mySAP SCM Manufacturing ensures a fast and flexible approach to engineering changes and customer requirements. It creates feasible, optimized production schedules, taking into account material and capacity constraints.

     Within its Manufacturing capability, mySAP SCM offers tailored solutions for a diverse set of industries (high- tech, chemical/pharmaceuticals, and consumer goods, to name a few) and production processes (make-to-order, make-to-stock, etc.). With this close integration of commercial and technical applications, information on the progress of production is available immediately to all supply chain processes.

Collaborative Fulfillment: Managing the Order from Start to Finish

mySAP SCM's Collaborative Fulfillment process comes into play when an order is accepted, continues through outbound delivery to customers, and ends with the billing document. In mySAP SCM:

  • Customers can obtain information about the availability of products, and can submit orders by mail, Internet, or phone via a call center.
  • Suppliers, customers, and carriers can use the Internet for tendering, tracking, and proof of delivery.
  • Companies can intelligently commit delivery dates in real time and fulfill orders from all channels on time through optimized manufacturing, ware- housing, and transportation processes.
  • Real-time, global available-to-promise (ATP) checks are included to locate finished products, components, and machine capacities in a matter of seconds.

     mySAP SCM includes order management features for creating quotations and sales orders, along with transportation management features for optimal scheduling and planning of transportation resources. Its transportation management functions also give planners the ability to work with carriers to arrange for shipments that will arrive on time and within budget.1

Supply Chain Event Management: Tracking Goods Across Your Supply Chain

Once paperwork and foreign trade processing are completed, the goods are transported to customers. Then you need to track shipments, checking the shipment's location and whether it is on schedule. After the customer receives the goods, the customer's billing document needs to be created and the carrier will receive a credit note for the services rendered.

     mySAP SCM Supply Chain Event Management (SCEM)2 provides tracking and notification on order status for partners and processes in the supply chain. SCEM monitors all milestones in the supply chain process, from price quotation to procurement to delivery. This provides a completely integrated overview of the processes of different partners (carriers, couriers, parcel services) in the supply chain.

     SCEM's monitoring functions survey process milestones and raise alerts that may result in various kinds of responses - whether they are mail, APO alerts, or automatic process rescheduling. Via the web, partners can access personalized information about the process status, and then, down the road, planners and managers can analyze execution and reporting compliance data to improve processes or evaluate service providers.

     mySAP SCM can be fully integrated with other applications, including mySAP Product Lifecycle Management, mySAP Business Intelligence, mySAP E-Commerce, and mySAP Customer Relationship Management. You can also integrate it with non-SAP systems to capitalize on your ERP investment.

The Effect on Your Bottom Line ... And Your Customers

mySAP Supply Chain Management powers e-business processes across every element of the supply chain by enabling companies, their partners, and their customers to share key information. Increased automation and the rise of e-marketplaces result in a more efficient supply chain process, with reduced order cycle times, speedier conversion of materials into revenue, and decreased inventories. Instead of investing in material, companies can invest in their future, with improved ability to meet unexpected demand.

     Relationships with both partners and customers can improve. With real-time tracking of products worldwide, and more accurate order status information, the possibilities for improved service mean higher customer satisfaction. As you react more quickly to changing customer requirements with mySAP SCM, you move from a supply-centric to a customer-centric demand chain, in which customer demand is what drives production and replenishment.

     It is the power to collaborate with partners and optimize supply planning and execution across enterprise boundaries that enables companies to make full use of the potential that lies within their supply chains.

Katrin Ströbel works in Program Management in the General Business Unit Supply Chain Management (GBU SCM) at SAP AG in Walldorf. Her work includes supporting topics related to mySAP Supply Chain Management planning features. Prior to joining the Program Management group, she was Product Manager for Supply Chain Design.

1 See "mySAP SCM and Transportation Planning and Vehicle Scheduling: Optimize Shipping Resources with SAP's Powerful Transportation Planning Engine" by Bernd Mosbrucker in this issue of SAP Insider.

2 For more on Supply Chain Event Management, see "Identify Problems Before They Derail Your Supply Chain" by Bernd Lauterbach and Oswald Wieser in this issue of SAP Insider.

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