and Partner Group
In these challenging times, there’s no question that SAP customers are looking to get more value out of their existing systems. To remain competitive — even to remain in business — organizations have to make the most of their enterprise information, resources, and assets. But companies cannot stop at simply creating new internal efficiencies. Organizations must also find ways to:
- Optimize profit
- Improve the bottom line
- Engage, retain, and gain customers
- Create efficiencies across the business network
SAP customers already have access to a wealth of information and best-practice business processes that can help them achieve these four goals. In the following pages, we’ll investigate how SAP also works with key software vendors to ensure that customers can tactically extend their current investments to build even more competitive, compelling, and holistic solutions. Whether sold or endorsed by SAP, the select third-party offerings highlighted in this article can quickly extend the value of your investment in SAP and other enterprise systems.
#1: Optimize Profit Through
More-Informed Pricing Decisions
Companies across all industries are feeling intense pressure to cut whatever costs they can and keep a watchful eye on profit margins. Pricing negotiations have therefore become even more important — companies need robust capabilities in price execution, price analytics, price management, price optimization, and price administration to fully understand their break-even and profit points. For example, even a 1% increase in price, when properly executed, can lead to a profit increase of up to 30%.1
But to attain such a profitability boost, companies need a clear understanding of all aspects of their cost and profit plans. Organizations that don’t fully understand how counter-pricing proposals affect profitability, for instance, may lose potentially profitable business — or worse, inadvertently accept unprofitable business. Companies must give their sales force the tools they need to quickly identify profitable opportunities and avoid bad deals.
SAP Price and Margin Management by Vendavo
In global business-to-business (B2B) industries — like wholesale distribution, industrial machinery and components, high tech, and oil and gas — cutting costs and increasing profits are especially critical because B2B pricing is so complex. These companies do business with multiple organizations across different regions, channels, and segments, and they often must coordinate across multiple departments including sales, production, finance, operations, marketing, and executive management.
With tools like SAP Price and Margin Management by
Vendavo, SAP customers in these industries can keep a pulse
on their costs and profits, giving them the visibility they need
to know when — and by how much — to raise prices to maintain or increase profitability. For example, SAP Price and Margin Management allows companies to keep track of changing cost variables, such as product ingredients, transportation, and product support and design. It also allows them to share this information across networks of sales representatives, sales partners, and distributors (see Figure 1),
helping them make more-informed pricing decisions.
With SAP Price and Margin Management by Vendavo, companies gain visibility into many aspects of their pricing and profit margins
And since it is tightly integrated with SAP ERP and SAP
Customer Relationship Management (SAP CRM), this solution’s pricing capabilities leverage up-to-date product and customer-specific information that already resides in your business
systems — ensuring accurate, near real-time analysis, even in a complex B2B environment.
Consider a company with more than 5,000 products and 4,000 customers that’s dealing with a fluctuating cost of
materials. If this company uses only manual profitability calculations, it might end up overlooking important factors — like the costs of freight — that influence its overall profitability. If this company used SAP Price and Margin Management, it would be working within established business rules and processes to help:
- Segment its markets effectively
- Set and optimize prices and terms by customer
- Manage complex price lists, policies, and approval structures
- Negotiate more profitable deals
- Halt “maverick” spending
- Leverage these processes through its existing SAP systems
SAP Price and Margin Management drives informed and consistent pricing decisions that align the entire organization, from planning to execution. This in turn enables companies to achieve higher margins through pricing best practices and a precise pricing science. Please see https://ecohub.sdn.sap.com/irj/ecohub/solutions/priceandmargin for more information.
#2: Improve the Bottom Line Through Better Business Visibility
Organizations must operate more effectively to remain competitive in today’s environment. Business visibility is paramount to ensure an advantage in these turbulent times. Leveraging the business data that resides within your powerful business
systems can enable you to respond better to potential business changes and opportunities. Whether you’re managing a complex, multi-tiered supply chain or channel promotions, you can use the information in your systems to better manage cash-related inefficiencies like inventory carrying costs and days chargebacks outstanding.
Improving Supply Chain Visibility
Manufacturers are under tremendous pressure to meet rising customer expectations for product availability, reduce supply chain costs, outperform competitors, and capture market share. At the same time, globalization is increasing supply chain complexity while fragmented markets and product lines foster higher demand uncertainty.
It doesn’t help that many manufacturers also operate in
disconnected IT environments where functional units tend to make isolated decisions based on inconsistent data. In such environments, forecasts are frequently inaccurate, and responding effectively to demand fluctuations is difficult at best. To compensate, companies carry excess inventory at every stage of the supply chain process as a hedge against supply, production, and demand variability. But this drives up inventory carrying costs, which ties up capital that could be put to far better use.
SmartOps Enterprise Inventory Optimization
Optimizing your inventory requires the continuous management of uncertainties, constraints, and complexities across
your global supply chain. Accordingly, organizations need advanced tools for efficiently optimizing inventory capabilities to accurately sense and respond to supply chain fluctuations while minimizing stock levels to control costs.
The SmartOps Enterprise Inventory Optimization solution, an SAP-endorsed business solution, helps organizations manage their inventory (see Figure 2). Working seamlessly with SAP Business Suite applications, this solution can help manufacturers and distributors dynamically and reliably determine optimal, demand-driven inventory targets for every item at every location throughout the supply chain. You can sense changes more accurately, make decisions faster, and operate with significantly lower working capital and higher customer service levels. SmartOps Enterprise Inventory Optimization delivers a sustainable return on investment by keeping inventory levels from increasing over time while providing near-perfect product availability and consistent on-time deliveries (see sidebar). To learn more about SmartOps Enterprise Inventory Optimization, visit https://ecohub.sdn.sap.com/irj/ecohub/solutions/eio.
The SmartOps Enterprise Inventory Optimization solution’s advanced demand, production, and supply analytics leverage SAP ERP, SAP Supply Chain Management, SAP NetWeaver Business Warehouse, and SAP BusinessObjects reporting and dashboard capabilities
Enabling Better Channel Visibility
As competition for the end customer becomes more difficult, consumer products companies, wholesale manufacturers, and their trading partners are looking to customer promotions and sales channel incentives as a strategic way to maintain and
even gain market share. Additionally, with credit at a premium,
vendor chargeback processes help the forward-thinking CFO in the wholesale distribution industry make strategic investments to improve the vendor cost recovery process, thereby positively impacting cash flow and working capital needs.
Industry trends reveal that manufacturers are increasingly offering special pricing to customers, but that the special
pricing is often lower than what distributors paid for the
product. This is why distributors need to recoup the difference from manufacturers in the form of chargeback claims. An
average company takes 30 days to recoup the money it is due.2 In comparison, the more competitive companies can do so
in three days, dramatically improving their cash position.
It is quite common to see distributors manage chargebacks in spreadsheets or other siloed desktop applications, making it a slow, error-prone, and expensive process. Not only is this a major headache for distributors, it also results in profit leakage. To effectively manage chargebacks and reduce the number of days chargebacks are outstanding, distributors need to track the order-to-cash cycle for each sales order — and all the items within it — to enable more accurate claims and accruals, provide proof-of-sales documentation, and enable an overall smoother claims settlement process (see sidebar). Lacking automated business process capabilities results in lost opportunities, lower profitability, and significant financial underperformance.
SAP Paybacks and Chargebacks by Vistex
With SAP Paybacks and Chargebacks by Vistex, distributors can collect and track all of their chargeback claims (see Figure 3), enabling faster and more accurate claims management while reducing costs. SAP Paybacks and Chargebacks lets you manage the entire chargeback process life cycle — from claim initiation and receipt through adjudication, accrual, settlement, and
post-settlement adjustment. SAP Paybacks and Chargebacks can help you:
- Create a variety of contract agreements with multiple manufacturers and end users
- Process claims through electronic data interchange (EDI), flat files, a Web portal, or manual entry using fast-entry tools
- Validate contract agreements
- Settle payback and chargeback documents based on flexible settlement parameters
- Settle accrued rebate expenses, with automatic reversal
of accruals, to SAP accounts receivable or accounts
- Easily reconcile and resolve disputes
- Use multiple currencies and units of measure
- Report rebate claim and plan/performance tracking to
management through standard reports, a Web portal,
or ad hoc reporting tools
- Establish a full audit trail for the entire chargeback life cycle to support corporate accounting and compliance efforts
- Use analytical and simulation functionality to evaluate and promote desirable programs and model new programs
SAP Paybacks and Chargebacks by Vistex allows users to manage their chargeback claims through one interface
Distributors across all the major sub-verticals of wholesale distribution, such as the healthcare, industrial, and food and beverage industries, are successfully using the SAP Paybacks and Chargebacks application. For more details on using SAP Paybacks and Chargebacks by Vistex, visit https://ecohub.sdn.sap.com/irj/ecohub/solutions/paybacksandchargebacks.
SAP Incentive Administration by Vistex
Since incentive programs go hand in hand with promotions management, distributors using SAP Paybacks and Chargebacks often also leverage SAP Incentive Administration by Vistex to provide the same level of visibility and control to manage their incentive programs. SAP Incentive Administration integrates seamlessly with SAP software to provide robust administration, analysis, and reporting capabilities. This powerful application enables you to efficiently manage commissions and other
incentive programs. You can set targets and quotas — and
monitor actual results against budget.
In the life sciences industry, for example, an integrated
solution is essential to address contract management and downstream contracting processes, such as chargeback claims administration and rebates management. SAP ERP, together with SAP Incentive Administration and SAP Paybacks and Chargebacks, offers the level of end-to-end contract management cycle — including contract negotiation, chargeback
management, rebate calculation, and financial settlement — that highly competitive companies require. Please visit https://ecohub.sdn.sap.com/irj/ecohub/solutions/incentiveadmin for more details on SAP Incentive Administration.
#3: Engage, Retain, and Gain Customers Through Better Customer Engagement
In difficult economic times, it’s critical to attract new customers while also keeping existing, profitable ones on board. But tough times also result in extra strains on the resources available to help meet customer needs.
Companies can better serve prospective and current customers by ensuring that customer-centric information in IT systems is available at the right time, in the right place, in the right
format. With offerings such as SAP Interactive Forms software by Adobe and SAP Document Access by Open Text, you can
maximize your investments and protect your customer base by ensuring that information is at the fingertips of the people who need it precisely when they need it. Services industries that
traditionally rely heavily on paper forms and documents, such as financial services and the public sector, may particularly
benefit from these solutions.
SAP Interactive Forms Software by Adobe
Organizations looking to enable greater business productivity can ensure that all users — including SAP, non-SAP, remote, and online users — have access to the data and applications they need with a solution like SAP Interactive Forms (see Figure 4).3 This software can be used to streamline a forms-based process, such as customer account set-up or maintenance, without requiring an active SAP application login. Because your customers or customer service representatives don’t need to log in to your SAP system, they can easily use the intuitive PDF forms created with this software to include up-to-date information in their reports. This enables your organization to then capture that information within the form in real time and automatically update that data in back-end systems — accelerating new customer onboarding and making account maintenance more efficient through better self-service capabilities.
SAP Interactive Forms software by Adobe offers an intuitive, paper-like format that can be used online and offline
To help automate overall business processes, an interactive form can be prepopulated with data, thereby reducing errors and providing better control over data quality. SAP Interactive Forms also helps companies adhere to compliance mandates by ensuring document validity through digital signatures and
documents-based process transparency. And, since the electronic PDF forms are a cost-effective storage medium, companies can comply with their records retention requirements without breaking the bank.
SAP Document Access by Open Text
Many companies looking to improve customer relations are also taking advantage of the SAP Document Access application by Open Text. This solution gives employees access to all the
relevant enterprise information they need — without leaving the SAP environment (see Figure 5). By using SAP Document Access to capture, manage, and retrieve all customer documents in one location, employees can work from the same data with a complete view of all customer interactions in hierarchal virtual folders. The result? Better, more consistent customer service.
SAP Document Access by Open Text gives users a 360-degree view of customer information without leaving the SAP
environment; here, hierarchal folders provide a self-guided view across all the data and documents pertaining to the customer
And from an IT perspective, companies can use SAP Document Access to optimize system performance by relieving the live system of aged SAP data and storing it in an economical, on-demand storage medium. Additionally, SAP Document Access groups information across a process. So no matter where the process started, the entire customer history is reflected.
Consider a customer claims process for the insurance
industry. Every document or transaction, from the customer’s first filing of loss to the final settlement, can be aggregated in a single folder, regardless of where the information was generated. This also provides transparency across the entire process and supports records retention requirements. Everything a
customer needs to know pertaining to that case is at their
fingertips, or the customer service representative’s fingertips, on demand.
#4: Create Efficiencies Across
the Business Network Through
Efficiency is a key ingredient of a company’s success. Businesses need efficient business processes, an efficient workforce, and an efficient decision-making process to rise above the competition. In this tight economy, however, efficiency has become an even greater differentiator between success and failure. That’s why companies need tools that will enable this efficiency by automating processes, giving decision makers up-to-date and accurate information, and providing management with visibility into what projects the company is working on and exactly who is responsible for what.
SAP Visual Plant Information by NRX
To increase the efficiency of their plants, companies must gain visibility into their plant processes and maintain control of the physical and human assets that keep it running. To overcome these challenges, companies can take advantage of a tool like SAP Visual Plant Information by NRX. This solution is designed to extend the functionality of SAP Service and Asset Management — part of the SAP Supply Chain Management (SAP SCM) solution suite.
SAP Visual Plant Information gives companies visibility into their plant processes — like the status of plant maintenance requests, for example (see Figure 6).
SAP Visual Plant Information by NRX keeps companies
updated on the status of their plant maintenance requests
SAP Visual Plant Information also enables companies to
better manage physical assets throughout the complete asset life cycle. Companies will also be able to manage their plant workforce, tracking the progress of their tasks and allowing managers to find new opportunities to increase their efficiency.
SAP Workforce Scheduling and Optimization
Workforce scheduling isn’t easy. How can you be sure that
the right people — as well as the right parts, equipment, and vehicles — are available for the right job, at the right time, and at the right cost? Efficient field service operation is not only a primary driver of customer satisfaction and loyalty; it can also generate highly attractive profit margins.
The SAP Workforce Scheduling and Optimization application by ClickSoftware can help take the guesswork — and some of the costs — out of field service delivery. SAP Workforce Scheduling and Optimization enables a cohesive set of business activities — such as demand forecasting, workforce shift planning, optimized scheduling, and business analytics — to help service organizations run at optimal efficiency. These functions ensure that the service organization meets its objectives and commitments smoothly and efficiently.
SAP Workforce Scheduling and Optimization addresses the fundamentals of job or task fulfillment — who is doing what, for whom, with what, where, and when (see Figure 7). This application also provides organizations with complete visibility and control over their workforce, enabling companies to:
- Reduce effort and increase efficiency across all levels of analyzing, planning, and scheduling service workforce activities
- Drive tremendous improvements in customer service
- Raise workforce productivity
- Enable flexible, dynamic, and innovative service policies
- Provide and automate real-time proactive and reactive decision-making capabilities
SAP Workforce Scheduling and Optimization by
ClickSoftware delivers exact and immediate availability access
and accounts for all needs, resources, service policies, and
With SAP Workforce Scheduling and Optimization, organizations can also stay in control of their mobile workforce and complete more calls per day. This leads to a more efficient field service operation and more satisfied customers.
SAP Talent Visualization by Nakisa
Facing so much marketplace change, companies may find themselves dealing with executive additions or departures, market fluctuations, or company reorganizations. For both HR professionals and employees, keeping track of these changes can be a daunting task — but maintaining a company’s efficiency in the face of such organizational change is key to maintaining its competitiveness.
With SAP ERP Human Capital Management (SAP ERP HCM), companies gain access to rich and plentiful data that can help them make the most out of their employee resources. And with tools like the SAP Talent Visualization application by Nakisa, users can easily and intuitively view this data and put it to good use.
For example, SAP Talent Visualization uses real-time, in-depth visualization to help HCM professionals create and execute succession plans to effectively align talent goals with business strategy (see Figure 8). In addition, employees can access details on themselves, their team, and the reporting hierarchy through visual organizational charts, enabling them to easily see how their role fits within the
company’s business plans.
SAP Talent Visualization by Nakisa allows employees to transform talent and organizational data into strategic information through an easy-to-use visual interface
The organizational modeling feature allows HR professionals to leverage the data in SAP ERP HCM and plan for the
most efficient and cost-effective organizational structure. By
modeling multiple future restructuring scenarios in support of
what-if analysis, it is easier to understand the ramifications of enterprise-wide changes, such as reorganizations or mergers and acquisitions.
SAP Invoice Management by Open Text
Manual invoice processing is not only a time-consuming
process, it can also pose serious risks for your business (see
Figure 9). Incomplete or inaccurate information belabors
communications and can strain vendor relationships and jeopardize timely payments. And though many companies use decentralized invoice processing, the limits it places on your company’s liability visibility can put your organization at further risk. You can reduce these risks and increase the efficiency of your invoice management processes with the SAP Invoice Management application by Open Text.
With SAP Invoice Management by Open Text, you can monitor the invoice process from start to finish so that nothing falls through the cracks; the solution enables you to monitor bottlenecks, cycle times, first-pass yield, and liability accuracy
SAP Invoice Management is integrated with SAP ERP and
SAP NetWeaver, allowing you to streamline accounts payable operations across and beyond enterprise walls. This application provides companies with a single, company-wide view of their accounts payable process — from purchase through payment. This enables companies to optimize timely operations and improve vendor relations.
With this visibility, companies can increase productivity
without losing control of their financial processes. The accounts payable process will also become more efficient since SAP Invoice Management can:
- Automatically classify, route, and sort invoices; systematically detect invoice exceptions and duplications; and help ensure that the invoice reaches the right person at the right time
- Improve cash management and shorten closing cycles by streamlining the payment process
- Automate internal and external reporting to support corporate financial requirements, trade regulations, and continuous improvement programs
- Ensure compliance by supplying those involved in accounts payable with integrated, consolidated information and enhanced reporting features
SAP customers are always — but especially in challenging
times — looking to get more value out of their existing systems.
I encourage you to learn more about how you can extend your existing IT investments, both in SAP and non-SAP systems, to optimize how you run your business. You’ll find a wealth of information about the solutions highlighted in this article
at www.sap.com/solutions/solutionextensions and http://ecohub.sap.com.
Understand how SAP works with key software vendors to ensure that customers can tactically extend their current investments and build even more competitive, compelling, and holistic solutions.
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