As competition has continued to heat up - and companies have
become increasingly interconnected - the ability to manage the supply
chain has become critical. Indeed, it is a key to everything from
increased market share to reduced costs - and many experts say that
it is now the supply chain, rather than the individual company,
that is the real competitive unit in business. Companies that can
enhance their supply chain's performance will have a powerful advantage
over those that can't.
To support companies in their
efforts to use their supply chains to the fullest, SAP offers mySAP
Supply Chain Management (mySAP SCM),* a complete, integrated end-to-end
solution for managing supply chain network operations. This solution
facilitates planning, execution, collaboration and networking across
your enterprise, as well as with suppliers and customers on three
levels: strategic, tactical, and operational. Your supply chain
partners can be involved with everything from taking orders to tracking
inventory and shipping products, all the while monitoring and measuring
supply network performance, so you can assess what's working well
and what needs improvement.
*mySAP Supply Chain Management and mySAP SCM are trademarks
mySAP SCM is an integrated suite of solutions that provide companies
with end-to-end solutions for supply chain planning, execution, networking,
and coordination. Figure 1 provides an overview of the mySAP SCM
Within each area, we see companies expressing
the need to make better use of the information and networks already at
work in their own supply chains, articulating objectives such as:
- "Reduce our inventory with better forecasting and planning."
- "Avoid cost overruns by reacting more quickly to shipping
- "Make sure our shop floor managers have the information they
need immediately, so they can address problems faster."
This article provides a quick tour of the four mySAP SCM functional areas
and, within these areas, some of the goals that companies are voicing
as they look to better manage their supply chain networks - and how mySAP
SCM is designed to help achieve those goals.
Supply Chain Planning
The planning capabilities of mySAP SCM support you with state-of-the-art
planning methods and graphical displays to let you synchronize supply
chain activities such as demand planning, supply planning, and sales and
operations planning; respond quickly to changes such as increased demand
or external influences (like an unexpectedly hot summer); and optimize
forecasts, plans, and operational schedules. They are designed to help
you optimize planning activities and meet goals such as these:
||Four Supply Chain Areas Covered by mySAP SCM
"Gain a big-picture look at the supply chain, to start evaluating
each connection point in the network."
Supply Chain Design provides supply chain planners with a centralized
overview of the entire supply chain. Using the Supply Chain Cockpit (see
Figure 2), planners have a complete graphical instrument panel
for monitoring, navigating, and controlling all the links in your supply
chain. It also shows you key performance indicators, which help you identify
weak links and potential improvements.
||Supply Chain Cockpit, Part of mySAP SCM Supply Chain Design
"Create a plan to better synchronize supply and demand, and cut
costs by creating more accurate forecasts of supply and demand."
Dynamic exchange of information is the basis for successful supply chain
management. The Collaborative Demand Planning and Supply Planning
capabilities of mySAP SCM lay the foundation for this information
exchange and help you tightly couple supply to demand. SAP's demand planning
tools, such as Statistical Forecasting, Causal Forecasting, and Promotion
Planning, among others, let you take into account historical demand data,
causal factors (like seasonal fluctuations in demand), marketing events,
market intelligence, and sales objectives.1
Supply planning tools, which include Safety
Stock Planning, Capacity Leveling, and Demand & Supply Matching, allow
you to create an overall supply plan that takes into account materials
management, production, distribution, and transportation requirements
and constraints. Plans can then be shared with all members of the supply
chain network, allowing them to work from a single, accurate forecast.
Overall, these demand and supply planning
capabilities help you reduce the amount of material in the supply chain
while maintaining high levels of customer service.2
For example, a large consumer products
company using mySAP SCM's collaborative demand planning functions was
able to reduce forecast errors significantly (from 62% to 22%), which
contributed to improvements in cycle times and customer service.
Supply Chain Execution
Once the supply chain planning phase has produced optimized plans for
production, it's time to put them into action. This is what mySAP SCM
Supply Chain Execution delivers - key processes in the area of supply
chain execution that enable you to manage the entire range of materials
management, manufacturing, and order fulfillment activities across the
extended supply chain, to fulfill objectives including:
"Improve tracking of materials, to ensure that they reach our
sites on schedule."
With Materials Management, you can share accurate inventory and
procurement order information to ensure that the materials required for
manufacturing are available at the right place at the right time. Plan-driven
procurement, inventory management, and invoicing is done easily. mySAP
SCM lets you create a complete feedback loop between demand and supply
to increase responsiveness across all areas of supply chain planning.
Overall, the solution's Materials Management
tools help you reduce raw material spending, procurement costs, safety
stocks, and raw material and finished goods inventory.
Companies that have used mySAP SCM for
Materials Management have seen noteworthy decreases in inventory and stock
"Improve scheduling with supply chain partners during production."
Collaborative Manufacturing enables companies to share information
with partners to coordinate production, and help to increase responsiveness
and efficiency. mySAP SCM supports production processes, both in discrete
as well as in process manufacturing industries: configure-to-order, make-to-order,
and make-to-stock. A continuous information flow across planning and execution
Production schedules across the supply
chain are optimized, taking into account material and capacity constraints,
as well as information from other planning areas like demand and supply
planning. Processes that are supported in the discrete industries include
Model Mix Planning and Characteristics Based Forecasting. Block planning
and campaign planning are among the processes supported within process
"Find ways to get products delivered more quickly, and on time."
To close the supply chain execution loop, mySAP SCM also supports Collaborative
Fulfillment, which means that you and your partners can intelligently
commit to delivery dates in real-time and fulfill orders from all channels
For example, a global available-to-promise
(ATP) feature lets you locate finished products, components, and machine
capacities in a matter of seconds. You can also manage the flow of products
through your sales channels and match supply to market demand, reassign
supply and demand to meet shifts in customer demand, and manage transportation
and warehousing to provide on-time, low-cost delivery.
Supply Chain Coordination
Your supply chain consists of many parties, both within your company
and beyond its boundaries. To coordinate the plans and activities of these
different parties, you can use mySAP SCM and conduct detailed analysis
of how your supply chain is performing. This ensures that changes in the
supply chain do not adversely affect delivery or service to the customer.
mySAP SCM's Supply Chain Coordination capabilities
allow you to work closely with partners to coordinate, manage, and evaluate
activities and processes across the extended value network; identify exceptions;
and collaborate to respond with speed and accuracy, in order to:
"Know and act earlier when our transportation and delivery plans
are at risk, or are going wrong."
SAP Event Manager enables you to model relevant milestones of
a process, such as the preparation of a pallet of goods or the departure
of a truck. It then monitors those events and raises alerts for delays,
the wrong sequence of events, or no events at all. The system can alert
you to such things as an overdue delivery, or a vendor that has not started
production in time to meet planned delivery dates.
In many cases, the solution can assess
the impact of a delay automatically, through its tight relationship to
other planning and execution software systems. When problems do require
attention, the event management capability enables supply chain partners
to work collaboratively to respond.
"Check the supply chain plans for our key concerns - like overspending
- to make corrections as early and quickly as possible."
mySAP SCM's Event Management capabilities together with its Performance
Management capabilities provide you with the visibility3
you need to work successfully within your supply chain and with all partners
which are a part of it. mySAP SCM gives companies the ability to define,
select, and monitor key performance indicators (KPIs) - such as costs
and assets - and use them to gain an integrated, comprehensive view of
performance across the supply chain.
SAP offers more than 300 preconfigured
KPIs, such as Delivery Performance and Capacity Utilization, to help you
in your daily work. Many of these KPIs are based on the Supply Chain Operations
Reference (SCOR)4 model. On a day-to-day level, mySAP SCM provides
constant surveillance of these key performance measurements and automatically
generates an alert if there is a deviation from the plan.
When there is a problem, mySAP SCM works
with mySAP Business Intelligence, SAP's data warehousing and data analysis
solution, so you can evaluate a range of possible actions rapidly and
accurately. On a strategic level, mySAP SCM gives you the feedback needed
for true closed-loop supply chain management and continuous improvement.
Enhanced visibility into all parts of the
extended supply chain network results in reduced inventory levels and
increased market share, revenues, and profits. Furthermore, shorter lead
times and increased customer loyalty are achieved. Resources can be employed
more effectively, resulting in reduced costs. All in all, you can enhance
your operating efficiency and increase your company's responsiveness.
Supply Chain Networking
No matter how complex your network of employees, partners, customers
and suppliers might be, for successful supply chain management, you need
a seamless flow of information. mySAP SCM offers various Supply Chain
Networking capabilities to help you Internet-enable your supply chain,
giving employees, customers, suppliers, and partners a view into the entire
supply chain and the ability to act as a single, seamless network to meet
objectives such as:
"Provide our established customers, partners, and suppliers
with a marketplace for ordering and tracking goods and services."
Using a Private Exchange, you can create and operate an online
marketplace to bring your suppliers, partners, and customers together
online in a secure environment where confidentiality is protected. Here
you can manage relationships with participants and give them 24x7 flexibility
to track order status, view pricing scenarios, check inventory levels,
track shipping status, inquire into the status of product returns, and
review their order histories. Collaboration on demand and supply management,
procurement, fulfillment, event management, and product design are also
important elements of mySAP SCM's private exchange capabilities.
"Allow a variety of partners and employees to access just the
supply chain processes they need - no matter what software or platform
they're working from."
The Enterprise Portal gives you the freedom of using web-based
tools to integrate third-party systems into your supply chain network
and let employees collaborate with coworkers, business partners, and customers
(see Figure 3). With the portal, you can provide information access
regardless of participants' IT infrastructure, company size, or location.
||Enterprise Portals for Personalized Access to Information and Third-Party
Integration into Your Supply Chain Network
The portal gives users personalized access
to the wide range of supply chain information, applications, and services
they need to do their jobs. It uses role-based technology to deliver information
to users based on their individual responsibilities within the supply
chain network. Roles included in mySAP SCM are, for example, the Supply
Chain Manager, the Demand Planner, and the Transportation Manager.
"Give employees, whether they're on the shop floor or on the
road, the ability to enter and access supply and production data."
mySAP SCM offers Mobile Supply Chain Management capabilities
so that data and information can be processed and shared at almost any
Users throughout the supply chain network
can plan, execute, and monitor activity using mobile and remote devices.
They can perform mobile data entry and automate many data-capture activities
in plants and warehouses to reduce errors and increase efficiency. Barcode
scanning in Warehouse Management and Production is available. Decision-makers
can gather information and act, whether they are on the road, working
in a remote facility, or virtually anywhere else.
A Solution for the Future: Creating Advantages Through Adaptive Supply
With increasingly sophisticated tools and technologies, supply chain
networks will soon be responsive enough to enable partners not only to
adjust production and logistics, but to actually modify the entire business
model on a continuous basis. They will be able to keep redefining markets
and pricing, serving ever-smaller customer niches, and providing increasingly
customized products. And the supply chain network will be able to operate
as a single, coherent entity, with all participants focused on the customer
and, ultimately, the creation of value for the network as a whole.
When using mySAP SCM, customers are already
on their way to transforming their supply chains into adaptive
supply chain networks - supply chains that are similar to complex organisms
in which a stimulus creates an immediate response, allowing the supply
chain network to continuously adapt and thrive. To this end, SAP is pioneering
the development of adaptive "agents," which will greatly enhance
both responsiveness and control over the supply network. These agents
are small pieces of software that continuously monitor supply chain operations,
and automatically react when certain conditions are detected. Web services
technology, to standardize and reduce the data flow within the supply
chain, complements SAP's offering for adaptive supply chain networks.
Therefore, as you continually look for
ways to better manage your own supply chain, the goals of adaptive planning,
networking, event-driven coordination with continuous performance management,
and seamless, collaborative execution are within your reach. Deploying
mySAP SCM, every company can become part of an adaptive supply chain network.
further information on supply chain planning,
please see "Supply
Chain Planning with mySAP SCM" by Dr. Stefan
Theis in this issue of SAP Insider
more on the ties between customer relationship
management and SCM, see "Leveraging the Real Value of Data and Process Workflow Integration
with a True CRM/SCM Solution" by Claus Grünewald
in this issue of SAP Insider
refer to Oswald Wieser's article "Supply
Chain Visibility: You Can't Steer When You
Can't See!" in this issue
of SAP Insider for further information.
more information, see www.supply-chain.org.
Ströbel works as 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 performance
management focus areas.