Optimize Your Supply Chain with SAP Solutions

Panelists: Martin Rowan and David Carroll
Date: Wednesday, October 4

Are you leveraging all the capabilities in your existing SAP systems to optimize your supply chain?  Whether you are trying to minimize inventory levels, improve service performance, reduce stock-outs, or all the above, there is likely functionality you are not using. Plus, you likely need to prepare for an SAP S/4HANA migration.

Read the Q&A transcript with SCM Optimization Bootcamp speakers Martin Rowan and David Carroll to get expert advice on a wide range of supply chain optimization topics for SAP-centric organizations.  Specific questions included:

• How can we integrate siloed supply chain-related activities?
• What are best practices to avoid corrupt materials requirements planning data?
• What are some ways to identify the causes of inventory overages and shortages?
• Where can automation play a role in perfecting the order process?
• What do we need to do to prepare for an SAP S/4HANA migration?

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Martin and David will be speaking at Logistics & SCM, PLM, Manufacturing, Procurement, and IoT 2017 and SCM Optimization Bootcamp.

Matt Shea: Hello, and welcome to today’s supply chain optimization chat. I am excited to be joined by SCM Optimization Bootcamp speakers Martin Rowan and David Carroll of Reveal. They will answer your questions on leveraging SAP solutions and preparing for SAP S/4HANA.

David Carroll is a thought leader at Reveal and an accomplished SAP system professional with significant experience in SAP Discrete, Repetitive, and Process Manufacturing. He has SAP Supply Chain Management experience gained throughout several complete project lifecycles. He has also an extensive supply chain, change management, and production business background gained from running plants in fast-moving consumer goods (FMCG) food, beverages, engineering, toiletries, and chemical environments.

Martin Rowan is a senior partner at 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. He is actively involved with local and international supply chain markets and has been for more than 20 years. His experience covers a wide variety of industries across multiple countries with a specific focus on driving transformational change within the organization and the extended supply chain.

Comment From Kelly: What kind of available-to-promise (ATP) functionality is in SAP S/4HANA?

Martin Rowan (Reveal): The new version of ATP is called aATP and will be embedded in SAP S/4HANA. It is an expanded version of ATP and brings some Global ATP elements from SAP Advanced Planning and Optimization (SAP APO) into the functionality.

Comment From Nick: How can we better identify why our lead time estimates are off? We are running SAP ECC.

Martin Rowan (Reveal): Lead time management is a key component in optimizing a supply chain. The principal rule is that we try to reduce cycle times to increase customer service. To do so we need to ensure three things:

1. We have lead times in the master data
2. We have accurate lead times in the master data
3. Now we can optimize and reduce lead times in the master data

When it comes to lead times, we have to manage them across the end-to-end supply chain — customer, sales, production, purchasing, and supplier. To see how well your suppliers are doing, check transaction code MC$K.

Comment From Sam: What do we need to do to prepare for an SAP S/4HANA migration?

Martin Rowan (Reveal): To prepare for SAP S/4HANA you need to decide which path to follow. Only two exist:

1. Choose a new implementation
2. Migrate. On the migration side there are two options as well:  From premise to cloud or premise to premise.

The biggest challenge with the migration option is to ensure that your data integrity is in place and that your custom code is minimized (eliminated). That requires a big effort to sort out before you embark on a migration or new implementation.

Comment From Pete: What are some ways to identify the causes of inventory overages and shortages?

David Carroll (Reveal): You can identify these causes by using the inventory analytics that are available and also by using exception monitoring. For instance, a message of 15 is the result of possibly overordering against demand. Material requirements planning (MRP) message 15 means push back the supply element because you don’t need it just yet; message 10 means pull it in, thereby avoiding the shortage.

Comment From Jason: How can we integrate siloed supply chain-related activities?

David Carroll (Reveal): This integration is always very hard to do, but the best way to accomplish it is to remove personal information systems and start using one system of record. This step forces the integration and alignment across the silos.

Comment From Rodrigo: Where can automation play a role in perfecting the order process?

Martin Rowan (Reveal): The perfect order is a great concept, but we really need to understand what that means. In addition, a perfect order is not exclusively limited to the customer order. There are perfect production orders, perfect purchase orders, etc. The premise is that we have all the right master data elements and order data captured to ensure minimal to zero manual intervention to manage. When the required order dates, promised dates, and scheduled dates are accurately captured, along with ATP and MRP master data, etc., only then is true automation available.

Comment From Chris: What are best practices to avoid corrupt MRP data?

David Carroll (Reveal): Exception monitoring points you in the direction of corrupt data. It can also manifest itself in things such as high inventory or a constant stock-out situation.

Comment From vellanki venkata s: We have been live for a year with our Extended Warehouse Management (EWM) implementation. We are facing issues with layout-oriented storage control (LOSC) search strategies for put-away using handling units (HUs).  What are your suggestions on this topic?

Martin Rowan (Reveal): Process-oriented storage control (POSC) and LOSC can provide a company with more visibility to the flow of goods in the warehouse, and HUs can be challenging when not understood or well thought out. I believe this may be a technicality you are challenged with.

Comment From Warren: I’ve read that simple logistics in SAP S/4HANA has the functionality to optimize production planning. What are the main differences between SAP S/4HANA and the SAP APO Production Planning and Detailed Scheduling (PP/DS) optimizer?

David Carroll (Reveal): They are not actually two different things. They are adding PP/DS back into SAP S4/HANA. This will become the core.

Comment From Guest: To your point about preparing for SAP S/4HANA migration, what are some best practices for preparing our master data? Is there anything in particular to watch out for?

David Carroll (Reveal): You don’t want to be migrating bad data, so what you should be looking to do is to start using exception management. This is the best practice because it highlights the quality of your data within your current system. It shows all elements that need cleaning up and points you in the direction of what needs fixing.

Comment From Hrvoje Oreški: What are the current best practices for public procurement (i.e., governments’ and state-owned enterprises’ purchase of goods) in an SAP system, especially in SAP S/4HANA? Is SAP Ariba currently the best way?

Martin Rowan (Reveal): We are working with the US Navy (public procurement), and even though it uses Service Parts Planning (SPP) to help plan and drive demand, the procurement is still managed in SAP ERP Central Component (ECC). Therefore, when the Navy goes to SAP S/4HANA, it will most likely remain in SAP S/4HANA. What we have seen in other organizations is that they often distinguish between indirect procurement items and direct procurement. Some will adopt Ariba for indirect procurement items, since the catalog functionality exists and helps with pricing options. But when it relates to direct procurement with MRP or Supply Network Planning (SNP) generating demand, then the best practice is still using outline agreements, quota arrangements, source of supply, purchase requisitions, purchase orders , vendor evaluation, etc., in core ECC or SAP S/4HANA.

Comment From Josh: Are you seeing customers moving more to on-premise or to the cloud?

Martin Rowan (Reveal): In short, I’d say on-premise. Companies are still struggling with the idea that the data leaves their four walls. Even though most cloud solutions offer far better protection and encryption tools and techniques than an organization has internally, the hesitation still exists. We have seen people bring up a cloud option of SAP S/4HANA to begin preparing and having people “play” to get a sense of what functionality is becoming available. The bottom line is that SAP is driving the cloud hard, but companies are struggling to make the leap. It will come, though.

Comment From Alex: What are your best practices for handling and reporting a product recall?

David Carroll (Reveal): First, I assume that you have end-to-end batch traceability. Using the batch cockpit in ECC will help you trace where a faulty batch has been used and where it has gone up to the sales order level. So you can do top-down or bottom-up analysis. There is also something known as global batch traceability (GBT), which enables other objects to be used such as HUs and serial numbers.

Comment From Sapan: What is the solution equivalent of traditional SAP APO-SNP when we look into different solutions provided by SAP Integrated Business Planning?

Martin Rowan (Reveal): SAP’s Integrated Business Planning is basically a replacement of the traditional sales and operations planning (S&OP) built on the new SAP HANA platform. Since it is a tool that consolidates the information to help align business objectives with long-term demand and rough-cut capacity planning, it needs to draw its information from somewhere. Right now the application program interfaces (APIs) pull data from SAP APO and ECC (or any other source for that matter). It is then presented in Excel (actual Excel, not a look-alike) and allows the users to review, change, and update this data as they see fit, thus allowing for a consensus plan to then drop back into ECC (for MRP purposes) or SAP APO (for SNP purposes) to develop a supply plan. So basically SAP Integrated Business Planning does not replace SNP or MRP;  it just provides it with a plan.

Comment From Jay: Do you have any information about SAP Transportation Management content that will be embedded in SAP S/4HANA?

Martin Rowan (Reveal): Not at this time. As of now, the latest news is that it will gradually be introduced into SAP S/4HANA.

Comment From Alex: What do we need to do to implement GBT?

David Carroll (Reveal): GBT is a bolt-on reporting tool with a very powerful graphical interface. It only reports directly from the SAP system against the information that is in there. Here is a link to our webinar:  https://www.revealvalue.com/resource/webinars/. I hope it provides you with all the information that you need.

Comment From Reyes: What are your thoughts on the impact of artificial intelligence (AI) on the supply chain? Robotics automation? Predictive analytics?

David Carroll (Reveal): Going forward, big data-driven analysis such as machine learning is only going to play an increasingly prominent role in supply chain optimization. Today, it is more likely to be the domain of big national and international networks, due to the need for large volumes of up-to-the-minute data and the associated cost and complexity of pulling it all together.

Comment From Sapan: I am still not quite clear on SNP versus SAP Integrated Business Planning. If I have to mold the capabilities of traditional SAP APO-SNP with reference to cross-plant and supply network planning, what solutions should I aim for along with SAP S/4HANA?

Martin Rowan (Reveal): SAP Integrated Business Planning is strategic, and SNP is tactical. SAP Integrated Business Planning builds a consensus plan that business executives decide on with a monthly cadence, and that plan then supplies SNP with a demand for which it now needs to form a supply plan. They are two very different tools and processes, but they work together. From an SAP S/4HANA perspective, MRP Live is taking over, which will incorporate many of the SNP heuristics options.

Comment From Bas: Are there SAP Fiori apps available to help improve overall supply chain transparency?

David Carroll (Reveal): SAP has built some standard ones in the control tower that you can you use. We also have apps there. You will, of course, need to own SAP Fiori to use these apps. The best thing to do is to go to SAP’s website and see what it has there.

Charlotte Christy: David and Martin, you will be speaking at Logistics & SCM, PLM, Manufacturing, Procurement, and IoT 2017 and the SCM Optimization Bootcamp. Can you tell us what users can expect from your sessions?

Martin Rowan (Reveal): The SCM Optimization Bootcamp in Chicago this year (December 4-6) is an exciting opportunity for the audience to prepare their organizations for SAP S/4HANA and optimize the business processes and save some money in the meantime. We have seen companies increase inventory turns as much as 38 percent in six months by applying what they have learned.