Building a Digital Supply Chain Strategy for SAP S/4HANA

Published: 01/August/2018

Reading time: 19 mins

Panelists: Martin Rowan and David Carroll from Reveal
Date: Wednesday, August 22
Sponsor: SCM 2018

The Fourth Industrial Revolution has arrived, and the BIG question is… Is your business ready? SAP S/4HANA is here to stay and other technologies that facilitate concepts like Machine Learning, AI, VR, Demand Sensing, etc., are moving fast. Learn what to do when your supply chain’s world is turned upside down, how to maximize the technology investments your company is making, and how to ensure your supply chain is driving value into your organization. Understand where your organization’s maturity is in its ability to adopt the new technology, and more importantly, leverage it.

Read this live Q&A transcript to get answers to your questions on what will change in the digital supply chain in SAP S/4HANA. Martin and David shared tips and best practices for what you can do NOW to prepare your supply chain.

Matthew Shea: Hello and welcome to today’s SAPinsider live Q&A!

I am excited to be joined by Martin Rowan and David Carroll from Reveal, who will share tips and best practices on what will change in the digital supply chain in SAP S/4HANA.

Martin Rowan is a Senior Partner in Reveal and his primary focus is to facilitate solutions that help companies optimize their integrated supply chains to achieve a level of ERP Maturity and increase profitability.

David Carroll is a Thought Leader with Reveal and an accomplished SAP professional with significant experience in SAP Discrete, Repetitive and Process Manufacturing and SAP Supply Chain experience gained throughout several complete project lifecycles.

Comment From Margarita: I want to undrestand the real solutions SAP is delivering for the supply chain, because all the latest SAP related solutions are poor itself and are poorly integrated to the ERP. Ariba is an example of that.

Martin Rowan: Margarita, that is such a relevant question. Even in the ECC days integration was the biggest challenges companies faced. Moving to S/4 SAP is trying to minimize “interfaces” by brining in PP/DS and eWM in the core and in doing so improve integration of processes. However, it is a clear strategy to keep some solutions such as Ariba (a cloud solution) separate – at least for now. So the improvements in core S/4 are MRP live, eWM, PP/DS etc etc – I would say evolutions not new solutions.

Comment From Aravind: Are there any case studies or verticals of Life Sciences or Pharma examples in the Digital Supply Chain? How is SAP S/4 HANA helping them which was not available earlier? Adopting new technology will always results in huge change management in the organizations.

David Carroll: Hi Aravind. I haven’t seen any case studies on how S/4 is improving things in the areas you have mentioned. You are correct though in the fact that change management plays a huge part . A bigger part than people are anticipating. This will be key to the success of S/4 The change management will not be addressed by the technology.

Martin Rowan: In addition to what David said, we are seeing Pharma companies discuss a future with S/4 but all are realizing that the technology is only one aspect of the digital future. Process and People make up more than 2/3 of the challenge.

Comment From Srinivas: What is role of Transport Management in the Digital Supply Chain Strategy?

Martin Rowan: TM will remain a key solution for SAP (as of now) and with integrated EM (Event Management) the solution will continue to grow. The role of TM as the global market place expands will become more and more important to the digital supply chain, but so will other solutions that SAP is offering. With platforms like Leonardo, the door is opening again for companies “to build their own” digital solutions. EM (as mentioned before) becomes very important to help the business relate to exceptions throughout the digital supply chain as the speed of information increases.

Comment From Mary: What is the 4th industrial revolution?

Martin Rowan: The Fourth Industrial Revolution, is the fourth major industrial era since the initial Industrial Revolution of the 18th century. The Fourth Industrial Revolution can be described as a range of new technologies that are fusing the physical, digital and biological worlds, and impacting all disciplines, economies and industries.

Comment From Kathryn: What will change in the digital supply chain in SAP S/4HANA?

Martin Rowan: A few major things and many minor improvements. Here are a few:

SAP S/4HANA introduces MRP Live; an MRP run optimized for SAP HANA.
MRP Live reads material receipts and requirements, calculates shortages, and creates planned orders and purchase requisitions all in one database procedure.
Advanced Available to Promise (AATP)
Extended Warehouse Management
Production Planning and Detailed Scheduling
Material number length extended to 40
Product version is mandatory
One of the most important changes occurred in Customer and Vendor Masters. Business Partner approach has replaced Customer and Vendor Master.
The functional scope of SAP Supplier Relationship Management (SAP SRM) will gradually be made available within SAP S/4HANA

Comment From Mary: So what does the fourth industrial revolution mean for us?

Martin Rowan: How it differs from previous industrial revolutions is in its Impact…:

Velocity – speed at which things will change
Breadth – how wide the impact will be across the globe
Depth – how deep it will impact our lives and businesses

For example:

By 2020 more people will have mobile phones than will have electricity or running water
Children born in 2018 may never drive a car and might direct robots in everyday tasks

Comment From Shelby: How do I prepare the business for SAP S/4HANA?

David Carroll: Hi Shelby. Great question. There is a multi faceted approach to this. Businesses have to think not just about the technology but their Data and processes at the same time. S/4 HANA is the new tool to run your business but the real question is are you running your business with your current SAP system. If you are not then as a business you need to start thinking about getting that right first. Address any master data issues and have it reflect real life and address any bad processes around rules and behaviors. If you do not start to think this way then you just carry the bad data and bad processes over into S/4.

Comment From Stephen: How will technologies like SAP Integrated Business Planning, SAP Ariba, and SAP Leonardo affect my supply chain?

David Carroll: Stephen these new technologies should not affect your supply chain but enhance your ability to manage it more effectively. Lets take IBP. Integrated business planning is what every good supply chain at a strategic level should be doing. The thing just like the other 2 is that they need to be fully integrated into the whole enterprise solution. They are good but cannot work in isolation from each other. After all Supply chain is integrated.

Comment From Marc: How different is S/4 from ECC – will the same t-codes work?

David Carroll: Marc. Currently there are not significantly large differences but as S/4 grows and with the addition of things like PP/DS and EWM we could start to see a difference.

Comment From dayana: I heard that all functional concept coming under same roof that is S/4 HANA, is it right ? or how this will be divided ? what is the special feature with S/4 HANA?

Martin Rowan: S/4 is replacing ECC and HANA is the column database that supports S/4. From a functional perspective most of what is in ECC will be in S/4 with some other enhancements (or inclusions) – such as the stand alone eWM will be incorporated, the stand alone APO PP/DS (Detailed Scheduling) will be incorporated, SRM is possibly going to be added to the core of S/4 but the biggest change is that MRP will be LIVE and not batch driven. Why this is so important is because it will require significantly mature users to handle replenishment recommendations on the fly. With this automation discipline and user education will be key.

Comment From Oliver: What will the learning curve be for the business to adopt S/4?

David Carroll: Oliver it will be a steep learning curve if business reacts and does not prepare. It will still be a big learning to prepare but getting that right will minimize the risk of Failure.

Comment From Dan: What is the best option? Implement greenfield or convert?

Martin Rowan: Great Question. At first, most organizations were converting and then it seemed like the wave changed over to Greenfield S/4 implementations. Mostly because organization felt that they would be able to “fix” the challenges they had in the past, such as data integrity, lack of user understanding, misaligned processes, lack of master data accuracy, etc. What we are seeing more and more of is that greenfield implementations (in effect “starting over”) seems to be better on the surface but if the items I mentioned above are not effectively addressed then they just appear at a later stage again. We have also seen that greenfield implementations are very expensive since you are basically re-implementing SAP.

With some of our clients, what we are seeing is that with a focused effort to get increased user understanding, aligned best practices and confidence back in the system, generates such a significant amount of business value $$$ that not only allows for an easier conversion, it actually help pay for it.

Comment From Todd: What do we need to know about the new demand-driven material requirements planning SAP Fiori apps in S4?

David Carroll: Todd. DDMRP from what I understand centers around new MRP types that to try to stabilize and protect materials from changes in demand by calculating buffers.

Comment From Jon D Carman: How do we see S4 HANA influencing organisations ability to drive analytics for the digital supply chain?

Martin Rowan: Interesting questions. The primary premise with digital is that analytics becomes so much easier – crunching large amounts of data and taking unstructured data and making sense of it – that is all good. But it is what we do with this information that is more important. Analytics has been around since the 80’s and in SAP (Info Systems, BW, BI etc). Our experience is that most organizations do not know how to improve the business with this analytic info, in a major way. Take an old industry business that has been building equipment for generations, as an example. If they cannot, by merely reviewing basic analytic data such as MRP and Inventory data (existing in ECC already) in combination, to reduce excess inventory and increase service levels and reduce operational costs, then large amounts of data in digital form won’t help, because it is a behavior and cultural challenge. So it starts with helping companies like that become knowledge workers and then let them fly with digital.

Comment From Angel: Is TM replacing LETRA functionality in HANA?

David Carroll: Angel that a good question. I know that TM has more functionality than LE TRA. Logic would say it should be embedded but I have not heard for sure.

Comment From Angel: Is S4HANA enabling companies to migrate from on-premise to cloud looking for lower TCO?

Martin Rowan: TCO is always a great discussion. The total cost of ownership as defined by IT or the Business. If you think of it in IT terms – yes. If you think of it in business terms – maybe. I always suggest companies truly look at both worlds to understand the on-prem vs cloud option. What I do know is as that if you are able to sweat the existing asset (SAP) then you will have a significantly reduced cost going forward whether it is Cloud or on-prem.

6 smart things that we need to do to prepare the BUSINESS for S/4

Stabilize the processes and technology
Regain trust in the system and information it generates
Embrace integration and break down the business siloes
Review and reset the business rules (master data) to reflect reality
Build confidence back into the system ability to balance the end to end demand and supply
Then maximize the current functionality to increase Throughput, Reduce Inventory, Increase Service levels and drive increased Profit…to pay for the digital transformation.

Matthew Shea: Thank you Martin and David for all your insightful answers today!

Martin Rowan: Your welcome Matt – our pleasure!

Matthew Shea: You can connect with David and Martin directly at SCM 2018 in Orlando, November 28-30.

Martin will be delivering two sessions:

Even when it’s not about inventory, it is! How to optimize inventory and customer service levels at the same time
We are heading into the Fourth Industrial Revolution — What can your supply chain do NOW with SAP to prepare for this change

David will also deliver two sessions:

SAP Integrated Business Planning, S&OP, and forecasts! Proven strategies to boost supply chain performance by improving the demand signal by 20%
Solving the disconnect between the shop floor and the supply chain to increase productivity