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Supply Chain Management (SAP SCM)

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Transforming Supply Chain into a Demand Network



Join us for the much-awaited International SAP Conference on Supply Chain on 1-2 October 2015 in Darmstadt, Germany.

This is a business-focused, customer-centric event where you will learn supply chain best practices on how to drive greater ROI. This year the conference is going to be co-located with two other events: SAP for Manufacturing and SAP for Product Lifecycle Management.

Also being part of our International SAP Conferences on Extended Supply Chain, this event is packed with exciting new customer case studies, latest news, networking opportunities, and workshops.



Gaining greater transparency and control over your complex supply chain through the use of innovative technological solutions and applications – for better decision making and results – is essential to ensure that growth objectives are met.



Take this valuable opportunity and join us to hear from senior executives in leading companies on how they transformed their supply chains to demand networks, and benefited from implementing SAP SCM solutions to improve customer service, facilitate collaboration, and lower costs.


Visit the conference web site: http://goo.gl/JOFK1h

Last week at Sapphire I had the chance to listen to Ron Gilson the CIO and Paul Townsend, a BI Manager at Johnsonville Sausage talk about his company’s deployment of SAP Demand Signal Management.

First Ron gave a brief overview of Johnsonville Sausage who are a family owned company who have been in business since 1945. They consist of about 1,500 members and have six manufacturing facilities in the United Sates, one in Singapore and sales offices in Mexico, Canada, Japan, and China.

A few facts Ron shared highlighted the dominance Johnsonville have in their market:

  • 3 out of 4
  • 1 out of 3 Italian sausages sold in the U.S. are Johnsonville
  • 2 out of 5 fresh breakfast links are Johnsonville
  • Leading brand in U.S. – Bratwurst, smoked-cooked links, fresh breakfast links and patties, Italian sausage


Ron explained the broad SAP application landscape that spans ERP, Sales and Distribution, Planning, VMI, PLM, HR, Plant Maintenance, Production Planning & Detailed Scheduling, Trade Promotions and the topic of this presentation, Demand Signal Management.

Using Point-of-Sale Data for Real-Time Consumer Demand Visibility

Ron explained that “Demand Signal Managements primary roll is the be common data repository for all demand signal data, social, weather, POS , and Neilson syndicated data”. Ron continued. “This is important to Johnsonville as part of a larger trade promotion optimization initiative” to better anticipate consumer demand, improve forecast accuracy, help ensure on-shelf availability, mitigate risk of lost sales, and improve trade promotion.


Business Value Drivers

Ron walked through some of the business drivers of this initiative:

  • Trade Promotions Optimization - Creating 3 years of demand data from POS and Nielson history to create a solid foundation of statistical results.
  • Trade Promotions Execution and post promotion analysis – Moving from being currently based on shipment data to being driven based on POS data.
  • Supply Chain Visibility – Johnsonville were losing visibility to inventory in the supply chain once the product leaves our DC/3PL and were looking to achieve “Plant to Store Supply Chain Visibility” by capturing “retailer data that includes store and retailer DC inventory”.
  • New Product Launch Execution – The current Nielsen Data was “11,12 130 days old” , so capturing POS information means you can see yesterdays (or worst case, last week) actual demand. As Ron highlighted, “We know what scanned at the retailer yesterday AND what current inventory levels are at Store and DC”.
  • Simplified Reporting and Analytics – The goal was to eliminate the current effort required to harmonizing customer POS, Nielsen, shipment and other internal data and to simplify end user experience and increase user adoption by dramatically reducing the number of tools used to report and analyze data.

Paul explained the “current state of the project” where they are currently capturing all internal shipments and finished goods inventory as well as daily POS data from Walmart, SamsClub, FoodLion and Hannafords.

As Paul stated, “the benefit of this master data harmonization is to talk to the Walmart people in Walmart terms, and to talk to internal sales people in their terms. We can also do cross retailer reporting to initiate cost savings”. 

Paul continued, ”some key reporting that we are looking at is ship vs scan as well as the full supply chain visibility to see a full inventory picture and understand what days of supply looks like at a customer’s DC, and giving greater visibility into what we should be forecasting to reduce forecast error, and helping us with new product launches” .

This was a great overview, so thanks to Ron and Paul for sharing the Johnsonville Sausage journey.

To watch the complete presentation click here.

Carl Sandburg's Chicago was


Hog Butcher for the World,

Tool Maker, Stacker of Wheat,

Player with Railroads and the Nation's Freight Handler;

Stormy, husky, brawling,

City of the Big Shoulders:


Chicago may be a slightly different place now, but no one can deny that the manufacturing and maker spirit still runs strong in Chicago. So what better place to hold the SAP Manufacturing Industries Forum than Chicago to kickoff the Summer of 2015 (June 23-25).


SAP Manufacturing Industries Forum is one of the premier events in the country for business and technology leaders and practitioners from manufacturing organizations, including automotive, consumer products, high-tech, medical devices, life sciences, industrial machinery, building materials and chemical companies.


SAP Manufacturing Industry Forum is bringing together thought leaders and practitioners from industry, analyst community and academia to share best practices, analyses and case studies on innovation, supply chain and operational excellence in manufacturing industries. The event includes engaging and educational workshops, keynote sessions and customer case studies related to


  • Innovation and New Product Development in Discrete and Process Industries
  • Connected and Agile Manufacturing
  • Integrated Business Planning for Supply Chain Excellence
  • Logistics Excellence
  • Internet of Things for Connected Assets and Operational Excellence


Don't miss the opportunity to learn, share, network and to take away new insights as well as practical knowledge that you can apply to help your organization grow.


Register now and get invited.

On June 1 - 3 there are 3 events, running in parallel in Prague that all supply chain, manufacturing, R&D and Procurement executives should attend to meet and share experiences with peers and experts.

Logistics & SCM, PLM, Manufacturing, and Procurement 2015



So why should you attend?


  • Keynote and  spotlight sessions from SAP Executives from the respective areas
  • 70+ individual sessions over 3 days from companies such as SAP, Adidas, Bose, Bombardier, Dansk, Goodyear, Intel, Weir Minerals and more.
  • Get clarity on SAP’s solution roadmap and an exclusive look at products and functionality that can drastically improve your day-to-day operations
  • Learn how to optimize the SAP functionality you already own with tips and tricks from seasoned experts
  • Expand your network by engaging with other SAP users in your industry all under the same roof
  • Discover the practical applications of SAP HANA in the SCM solution suite
  • Hear project pitfalls and lessons learned from your peers as you prepare for your next implementation
  • Interact with leading product and service vendors to evaluate third-party solutions and extensions that could help take your SAP solution to the next level


So, will you be in Prague in June? Lots of your piers will be! If so, I will see you there.

If you have not registered yet, it is not too late. Just click on this link to learn more.


Logistics & SCM, PLM, Manufacturing, and Procurement 2015

aaa.JPGToday at SAPPHIRENOW I listened to a great overview of the Transportation Management implementation at United Sugar Corporation by Roger Parala, the Director of Business Systems at United Sugar.

United Sugar is a marketing co-operative owned by sugar producers and have Total annual sales of about $1.5 - $2.0 billion, which represents a Market share of 15% of total consumer sugar and Market share of 30% of total industrial sugar. In total The company manages about USD $300M freight spend and mostly ship via rail and truck with a small amount of multi-modal. 


Rodger explained that United sugar faced a number of challenges that drove the need for a new solution:

  • The system being used had been through a series of ownership changes  (McHugh, Red Prairie, JDA).
  • Rail functionality was no longer supported by the vendor
  • The solution had no proper track and trace functionality or freight payment capabilities, and United Sugar track $75M of in-transit inventory
  • System needed "bolt-on” functionality, thereby increasing the solution landscape
  • Human resource challenges (Lean Organization to support and use the system (manage 4000 rail carts with 3 people)

Evaluation process

Several criteria were identified as part of the evaluation of a next generation solution:

  • Ability to work and integrate well with ERP
  • Flexibility to configure high level of automation to be able to run the business
  • Flexible and automated carrier contract management
  • Integrated Track & Trace environment \Carrier communications via edi
  • Portal functionality for smaller partners

Why SAP Transportation Management on HANA?

Roger explained that SAP was selected for numerous reasons:

  • Very flexible integration with SAP ERP
  • Ability to optimize business processes based on operational data
  • Strategic outlook on solution landscape
  • Ability to gain valuable insights based on variety of data sources to "manage by exception"
  • Data warehousing on "Hana was a perfect solution to have analytics on the operational database".
  • Real time Operational intelligence was available by leveraging event management for real time visibility.
  • Decision support and automation is "better than anything out there on the market"

Lessons Learnt

Roger stressed a few key points:

  • Build SAP TM knowledge upfront
  • Identify the right partner for both Training & Implementation in Westernacher. This was a critical success factor in learning how TM works and how to leverage it best.
  • Understand and adjust the implementation steps as necessary to understand the system and deploy correctly for United Sugar.
  • Build the core team and identify the work stream leaders upfront

As Roger concluded "Sap Transportation Management was the best tool on the market. We have not found anything that we can't do.".

Today at Sapphire, I listened in on a great session from Mark Vollrath, the Worldwide Director for Colgate-Palmolive’s Global Supply Chain,  responsible for strategy and systems.

Mark started by providing a brief history of the company, explaining that Colgate-Palmolive originated in the US in 1806 and are now $17+ Billion in global sales. Colgate employ 35,000+ people worldwide, operations in over 80 countries and sell products across 4 four categories in 223 countries.  Colgate are famous for brands such as Colgate, Palmolive, Sanex, Ajax and Hill’s.

Mark then focused on the companies supply chain and provided some very illuminating facts about the Colgate supply chain over the past 5 years:

  • Provided over $4B in savings
  • ROA consistently far exceeds peer group
  • Strategically consolidated network by 25%
  • Invested in people capabilities and technology
  • Increased Gartner Top 25 ranking year over year


To enable the global supply chain strategy Colgate have collaborated with SAP and are leverage a broad SAP footprint:


Colgate supply chain business needs


Col2.JPGMark explained that when “Colgate think about planning, they see the S&OP process at the center. It is the intersection of Supply, demand and integrated business planning.”


At Colgate, S&OP and Integrated Business Planning help improve planning and operational visibility, reduce information latency and smooth out the “bullwhip effect” of variable demand signals.


Mark described the 6 work streams that are running in parallel for control tower, S&OP, demand sensing, inventory planning and supply planning. He explained that “all of these processes are interdependent, and complement each other”. He also pointed out the importance of integration to APO which also compliments the IBP solutions.

Benefits of Integrated Business Planning

Mark discussed how “deploying Integrated Business Planning processes have driven “near real-time what-if simulation with end-to-end visibility”. This in turn has enabled a more predictable end to end demand signal for responsiveness, resulting in:

  • Increased Service Levels
  • Reduced Inventory
  • Providing Growth Contributions
  • Uncovering New Savings Opportunities


This was a great overview of Colgate’s continued deployment and roll out of SAP’s Integrated Business Planning suite.  Thanks to Mark and the Colgate team for taking part in SAPPHIRENOW.

For over 70 years the fantastic world of Marvel, has created female super-heroes, like the amazing Black Widow in the recent Avengers 2 movie, but these female characters have been few and far between.  Similarly, over the past decades, there has been a dearth of women in supply chain.  But change is happening NOW! 

Women came together today for a breakfast event at Sapphire NOW, to build a force of women in supply chain as they networked, collaborated and celebrated the successes of women, forging ahead to change this traditionally male dominated field. According to a SCM World study, only 5% of top-level supply chain positions at Fortune 500 companies are filled by women.   These few women are the true business super-heroes today as they lead major transformation of their companies with new innovation and strategy.

The Sapphire NOW breakfast was attended by executive women in supply chain representing various industries and Fortune 500 companies.  EY, the event sponsor, has a long and commendable history of commitment to global initiatives, focused on the progression of women into leadership. 


Jamie Larsen, EY Principal, commented “When our economy is facing unparalleled challenges, there is a clear imperative to help women succeed in the economy at all levels, as business owners of multinational organizations, as leaders in business, and at grass roots levels in local communities, and for Ernst & Young, this includes supporting our own women in fulfilling their potential.”


Hala Zeine, Senior Vice President and Head of SAP Portfolio, delivered a very enjoyable and inspiring address, discussing how supply chains are transforming into business networks and how women are uniquely poised to excel in this area.  “Women naturally think in terms of networks, are masters at multi-tasking, are adept at problem-solving in fast-paced environments and are exceptional at collaboration and nurturing relationships.”

It was indeed a wonderful event for Wonder Women who share a common goal - run business better, and make a better world!


In a Panel discussion at SAPPHIRENOW today, Dustin Demmin, the Director of Business Solutions for North American from Nature's Way Brands discussed their journey with integrated business planning processes.


Nature’s Way have been America’s leader in herbal medicine for over 40 years with brands such as Nature’s Way, Enzymatic Therapy and Integrative Therapeutics. As one of the most technologically advanced dietary supplement manufacturers in the U.S., Nature’s Way focuses on product innovation, pushing the boundaries on quality research and testing. As of today, they offer over 500 premium nutritional products, including single herbs and herbal extracts, homeopathic remedies, vitamins, minerals and specialty formulas.


The Nature’s Way Journey

In November of 2013 the company kicked off an S&OP project by



defining the planning cycle and process, the key players and the level of detail they planned to model. This resulted in an initial pilot that focused on the “demand side”, which went live for a subset of products in the consumer business in May of 2014. The pilot was “very successful” and was quickly followed with a roll out to all products and business units in July of 2014.   The next phase was to attack the supply side of the business. This was kicked off in September of 2014 with a focus on defining the supply network and the rules and roll out of the Heuristic model. This phase went live in December, delivering heuristic, unconstrained planning across the supply network.


Dustin discussed some of the highlights of the implementation being:

  • Process Management & Collaboration enabling clear visibility to monthly planning process and collaboration utilizing SAP JAM.
  • Harmonized Data Model for Demand and Supply enabling the company to quickly react to changes in demand while balancing inventory, rough cut capacity, and revenue.
  • Multi-Level Supply Planning for internal and external production and procurement enabling planners to view demand and sourcing changes and their impact on costs, inventory and capacity in real time.
  • Real time updates to plan

Dustin went on to explain some of the benefits that Nature’s Way have achieved due to the implementation:

  • Acceleration of Nature’s Way’s S&OP Process Maturity through defined collaboration and process cadence with measurable tasks.
  • Visibility to Demand & Supply in a single solution incorporating sales, marketing, operations and finance working from a single plan.
  • Real Time Scenarios anywhere in Supply Network through real time what-if scenarios in Supply Planning enabling quick insight to adjustments required to meet demand.
  • Real time analytics support key decisions gives management access to key decision making data with defined & add-hoc analytics and planning views


It was grate to hear about the success of the S&OP roll out at Natures Way and was appreciated by the “standing room only” audience.


Today at SAPPHIRENOW as part of the Demand Network Panel Discussion, Will medtronic.JPGFoster, IT Director in Enterprise Application at Medtronic discussed the benefits of Enterprise Inventory Optimization to his company. Will explained his role as the “global process owner for everything in the PLAN process area, which includes Demand & Supply Planning along with production planning”.   From an applications approach he is responsible for SAP ECC, SAP APO and Enterprise Inventory Optimization (EIO) applications.

Will gave an overview of Medtronic, who are a global healthcare solutions company committed to alleviating pain, restoring health and extending lives of people through medical technologies, services, and solutions. They create meaningful innovations for hospitals, health systems, and health care providers so they can deliver the best care possible to patients and their families around the world.


Implemented SAP Enterprise Inventory Optimization globally across multiple business units

Will discussed the highlights of implementing “multi-echelon inventory planning” across the company and how it:

  • Enables total supply chain view for all items at all stages
  • Considers desired service levels and captures variability within network
  • Synchronizes operations within enterprise systems
  • Provides insight to supply chain performance and process improvements
  • Provides significant safety stock reduction
  • Enables reporting  to assist with Input and Output accuracy


Will also touched upon the business benefit achieved to date:

  • Reduced overall weekly planning cycle duration by >50%
  • Finished Good & Semi-Finished Good safety stock reduction across Supply Chain
  • Service Level Agreement monitoring through weekly optimization monitoring metric
  • Improved forecast accuracy and bias improvements
  • In-depth visibility to entire Supply Chain
  • Improved master data control and accuracy for data input elements
  • Integrated alignment between Demand and Supply
  • Drives process design continuous improvement


This was a great discussion and was well attended by a “standing room only” audience.

My most recent assignment was blueprinting Supply Chain Planning processes for a Scandinavian mineral fertiliser major. It was great learning opportunity working directly with business, learning about the industry, its nuances and peculiarities compared to other clients and industries I had consulted for. Last time I had similar opportunity (working directly with business instead through client IT) was during my very first SAP project assignment back in 2002. I was newbie to SAP world back then and simply focused in building solution to meet business requirements in SAP's Advanced Planning & Optimisation application. But this time it was different, being Planning Track Lead and part SCM Solution Architect overseeing the whole Supply Chain big picture. My focus was to review, validate business requirements and challenge some based on best practices that SAP has built based on. But in the end my responsibility was to craft an end to end IT solution integrating various SAP applications & components in SCM space. Thanks to multiple Supply Chain Planning project experiences in past I am now reasonably experienced with SAP SCM applications, its gray areas and white spaces, integration challenges across legacy, non-SAP applications.


Coming back to the challenge at hand - I knew there is no single application to meet all the client requirements. The challenge was especially around Operations Planning business requirements that are localised, site-specific business processes compared to more global / regional processes in Demand Planning and Replenishment / Network Planning. Even considering the most advanced / process savvy production plant has come up with the requirements, no single SAP SCM applications could meet it all. Of course enhancements can be done but there is associated cost and especially when the client sponsor had dictated 80:20 (maximum 20% custom development) principle.


The first thing I did was review in detail the Operations Planning business requirements, clarify with business SMEs and Power Users to understand exactly how they are operating. Trying to fit that in SAP SCM application's so-called best practices turned out tortuous path difficult to tread. The next logical approach was to group the Operations Planning requirements into logical components like Logistics Planning comprising mainly bulk movement in marine vessels from Production Planning focusing on production order scheduling. This means a mix of SCM APO and ECC PP functionality for Production Planning but for Logistics Planning there were lot of gaps especially around planning for ships and further berth (harbour / quay-side) planning.

Anyway SAP TM was in scope for detailed transport planning, tracking, execution and charge calculation of all modes including maritime vessels like ships. But TM integrates with ECC only through Order or Delivery based Transport Requests. That meant having Stock Transfer Orders created in ECC for bulk products from Production Plant to downstream Terminals in different markets (countries). But from Logistics Planner standpoint they do not want to cut Stock Transfer Order till they know vessel size and availability (in terms of dates) because accordingly they plan for bulk material movement.  

The hunt began looking for suitable SAP applications and came down to a solution used in Oil & Gas Industry (I knew it from a previous project) called TSW (Trader's and Scheduler Workbench). Even though TSW is primarily Oil & Gas industry solution application, SAP had "decoupled" it and made it as an independent (from IS-Oil) Add-On to SAP ERP. TSW uses an object called Nomination that is highly flexible and allows creation of Planned Shipping Requests linking different Purchase Requisitions (not yet converted to Order) having same source and destination locations. The Nomination object can be interfaced (custom) to SAP TM for creating Shipment Booking for Carrier Selection. Once vessel is identified in TM, the capacity and arrival schedule information is interfaced back to TSW Nomination object. The Logistics Planner can then review, update and accept (in exception case reject) the updated nomination. This also triggers consolidation of Purchase Requisitions (may have underwent quantity change to consider filling in vessel capacity) in Nomination Lines into single Stock Transfer Order in ECC MM module. The Stock Transfer Order from ECC automatically gets interfaced to SAP TM using standard Process Integration (PI) as Order based Transfer Request to initiate maritime planning processes in TM.

So this took care of the first problem and then the next major requirement around harbour / quay-side planning was to be tackled. Once marine vessel / ship is booked suitable berthing space is to be made available when it arrives so as not to incur demurrage charges. Unlike other means of transport, planning for Marine Vessels is critical due to the cost and bulk volumes (few thousand tons) involved. For this requirement TSW provided Berth Scheduling functionality that provided graphical overview of harbour to plan for vessels arriving, laying on for discharging / loading material and finally departing. Each individual lines in the Nomination object allows assignment of berth with from and to date/time allowing detailed level planning. Of course any changes of vessel arrival (also known as ETA Estimated Time of Arrival) has to be interfaced from SAP TM (where Transport Monitoring & Tracking is done) to TSW as events. This events information can be used by Logistics Planner to reschedule vessel assignment to berths reducing chance of demurrage charges and potential "traffic jams" just off the harbour for docking.

Thus overall an integrated Logistics Planning solution was conceived as part of Blueprint - starting with SAP APO for Purchase Requisition creation based on Demand at Terminals, Production Order creation & scheduling at Plant to meet these requirements, plan for shipments based on Stock and Transport Vessel availability meeting requirement dates (3 way pegging) in SAP TSW, conversion of Purchase Requisitions to Purchase Order (proposed small custom development in ECC MM for automated conversion based on Nomination line entries), Berth Planning and Scheduling in SAP TSW and subsequent execution of Transport Order in SAP TM and ECC MM / IM (Goods Receipt and Issue against Delivery). No doubt complex with integrating three different SAP applications (APO, ECC and TM) with add-ons (TSW) and multiple modules (APO PPDS, ECC MM, IM, LE) coupled with few enhancements but overall an integrated solution meeting business needs.

Time will tell how the conceptualised solution works out practically during Integration Testing after the developments and configurations are setup along with suitable master data. But keeping in mind the big picture, exploring to identify potential SAP applications (some less known) to architect an integrated solution indeed was an achievement and tremendous learning experience. It not only gave the chance to explore different SAP applications but also to understand and decouple complex yet much needed business requirements in order to architect SAP based solution as much standard as possible with minimal enhancements to bridge solution gaps.

You may like to read my earlier blog Evolution of SAP SCM Applicationshttp://scn.sap.com/community/scm/blog/2015/04/28/evolution-of-sap-scm-applications.

In my professional life as SAP Consultant I have explored and worked extensively with SAP's Advanced Planning and Optimisation or APO (rechristened as SAP SCM with APO being main application component) modules and related SAP ERP modules apart from few other applications in supply chain space. This blog is to pen down my thoughts on how SAP SCM applications have evolved over time and is cross-posted in LinkedIn. In early 2000 life as a functional supply chain consultant was simple, you had SAP R/3 as main ERP application providing supply chain execution with some planning capabilities and newly introduced SAP APO focused on supply chain planning.

Since then SAP invested, developed and came out with multiple supply chain applications like Supply Network Collaboration (SNC), Transport Management (TM), Extended Warehouse Management (EWM) to name a few. Most of these started out as extensions / improvement of core SAP ERP or even APO application but became full-fledged stand-alone applications. One interesting aspect when APO was rebranded as SAP SCM (version 4.0) two other application components were added Inventory Collaboration Hub (pre-cursor of SNC) and Event Management (EM). In fact as SAP Product Management commented here on consolidated platform for easier installation and maintenance. In the next version two more application components were introduced - Forecast & Replenishment (mainly to target Retail clients) and Extended Warehouse Management. Note basic Transport Management functionality was already present in SAP APO as Transport Planning Vehicle Scheduling module. Then in SCM 2007 (also known as 5.1 or is it other way round) Service Parts Planning was introduced and Inventory Collaboration Hub (ICH) got rechristened as Supply Network Collaboration owing to added functionality. Thus SAP SCM application version 5.1 in 2007 kind of consolidated Supply Chain Management application components APO, SNC, SPP, EWM, TM, EM other than what SAP ECC had to offer.

Then came the era of Service Oriented Architecture and SAP joined the bus touting ESA - Enterprise Service Architecture in mid 2007 enabled by SAP Netweaver platform. Around 2005-2006 time frame SAP introduced Business Process Platform concept as unified Netweaver based platform having components of SCM, ERP, CRM, SRM etc. that customers can pick and choose to meet their business process requirements. Even a new IT role was created - Business Process Expert (BPX) with a flair or functional, business process knowledge coupled with technical experience to compose a solution by mashing up from large number of enterprise services. If you are interested then look at this and this in SAP Community Network Wiki. In hindsight this grand vision of BPP turned out to be futuristic and really did not see light of day.

Coming back to the main topic after consolidation in SAP SCM 2007 things started changing quite a bit. First of all there was no formal SAP SCM 6 version but went directly to SAP SCM 7. This is the time when decoupling also started with Transportation Management moving out of SAP SCM. Although EWM was an application component SAP suggested it to be deployed in separate SCM box. Essentially SAP SCM 7 would be APO and SNC application components with SPP brought inside of APO. The trend continued with TM and EWM coming out with subsequent versions 8.0, 9.0, 9.1 and 9.2 (latest). Version 9.1 unified into Supply Chain Execution (SCE) application TM and EWM as application components and some transaction level integration without the need for transaction routing via SAP ERP system. Another application EM though part of SAP SCM becomes stand-alone component that can be deployed and used independent or with SAP SCM, SCE or even ECC applications.

On the other hand some edge applications were getting developed like Sales & Operations Planning (S&OP), Demand Signal Management (DSiM), Supply Chain Performance Management (SCPM) and more technology enabler like Auto ID Infrastructure (AII) and Object Event Repository (OER) to support RFID revolution & EPCGlobal. Safety Stock Planning was one major area where SAP did not invest but had SmartOps as their preferred partner who eventually got bought out by SAP in February 2013. So now erstwhile SmartOps applications like Enterprise Inventory & Service Level Optimisation (EIS) and Enterprise Demand Sensing (EDS) join SAP SCM application list. To see the long list check out SAP Solution Explorer Line of Business Supply Chain.

Now with the advent Suite 4 HANA (S4/HANA) things are becoming interesting, starting with core ERP application where Simple Logistics will be introduced before this year ends. On the other hand SAP is pushing ahead with Integrated Business Platform for Supply Chain Planning processes mostly based on Sales & Operations Planning on HANA and adding EIS capabilities as IBP S&OP, Demand , Supply, Inventory modules. But there is a fundamental difference between IBP applications vis-a-vis SCM, EWM, TM applications. IBP are Cloud-first applications developed as native HANA applications i.e. with no ABAP layer. The code line is mostly SQL Script with some level of customisation possible through proprietary (?) L-script and using SAP UI5 for web browser based user interface. While SCM, EWM, TM are on premise applications running on ABAP AS that can have HANA as DB and can be deployed on SAP Cloud too. The user interface is still SAP GUI or Netweaver Business Client based though some Fiori apps are possible when backend HANA DB is used.

However in the midst of all core Supply Chain Planning & Execution application components like APO, SNC, TM and EWM coupled with SAP ECC Logistics (SD, MM, IM, PP) still rules and will remain as foundation for enterprises going into 2020s. Hopefully by then SAP can materialse the original grand vision of Business Process Platform this time powered by HANA Cloud. Remember SAP has extended support for Business Suite applications till 2025 giving it more time and breathing space to fully develop and get customers adopt to next generation cloud-based business process platform.

PS: You may like to review this presentation I did during Networking Session at TechEd Bangalore 2013.

"Lies, damned lies, and statistics" is a phrase describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments. The term was popularized in the United States by Mark Twain, who attributed it to the 19th-century British Prime Minister Benjamin Disraeli .   For all the surveys and statistics available via the internet, the best proof points come from actual practitioners and users  of systems. Over the past few years SAP has invested considerable time in interviewing our customers through the SAP Benchmarking services.


Both at recent and future events, SAP Customers continue to present their success stories to showcase their companies and the benefits they have achieved through SAP solutions:


  • HP spoke at last year’s SAPPHIRE NOW about the benefits of “Planning and Execution With SAP SCM GATP at HP”
  • Bose recently presented at the SAP Insider event (March 31st) on “Next-generation planning at Bose: An inside look at the company’s deployment of SAP Sales and Operations Planning, powered by SAP HANA”. If you missed it, there will be an encore performance in Prague on June 1st.
  • Hallmark presented at the SAP Insider event on March 31st about “ How Hallmark Cards improved production planning and partner engagement for its specialty products”
  • Laprino Foods presented at SAP Insider on March 31st about ”How Leprino Foods reduced overhead costs and streamlined the planning process”
  • Colgate will be presenting at SAPPHIRE NOW on May 5th on “How to Improve Collaboration through Integrated Business Planning”.
  • Medtronic and Naturesway will present at SAPPHIRE NOW on May 5th about how to “Transform Your Supply Chain into a Customer-Centric Demand Network”
  • Weir Minerals will present at the SAP Insider event in Prague on June 1st on how “Weir Minerals expands its global S&OP initiative using SAP Integrated Business Planning
  • Adidas will present at the SAP Insider event in Prague on June 1st on “How Adidas is driving business transformation with its SAP SCM on SAP HANA migration”
  • Joy Global recently recorded a video explaining how through “improved forecasting and optimizing service levels” they met 95% customer service level targets for higher volume stock keeping units and achieved 40% inventory savings with 38,000 parts and locations modelled.


So there are lies, damn lies, statistics, and actual users talking about their experiences. Who do you believe?


And if you would like to hear some factual results from the 100’s of benchmarking service studies we have conducted, here is a snapshot:


  • “Companies that have S&OP enabling tools link company's business strategy with tactical and operational deployment of plans across all internal functional areas as well as external supply chain have on average 57% lower Inventory Obsolescence Cost”.
  • “Companies with what-if modeling capability and ability to evaluate multiple scenarios based on multiple changing parameters have on avg. 42% lower Expedited Transportation Spend
  • “Companies with  exception reporting and analytic framework in place and shared/ used across multiple disciplines within the enterprise, and sharing performance data with key suppliers on a frequent basis have 62% lower Warehouse Management Costs
  • “Companies that extensively use what-if scenarios to evaluate different problem resolution approaches have on avg. 4.6% higher on time delivery performance
  • “Companies where distribution planning is triggered by approval of demand plan have on avg. 33% lower Inventory Carrying Cost
  • “Companies with order promising enabled by dynamic sourcing  and integration with key trading partners to confirm availability, pricing, and delivery commitment have on avg. 61.4% lower revenue loss due to stock – outs
  • “Companies with high Forecast Accuracy have on avg. 59.8% lower Inventory Carrying Cost
  • “Companies where forecasting is performed for different combinations of SKUs and inventory locations have on avg. 47% lower Overall Supply Chain Planning Cost
  • “Companies with formal, globally applicable constraint based supply planning process performed at a regular intervals  have, on average, 28.4% lower transportation spend”
  • “Companies where supplier managed inventory is managed via automated signals, have on avg. 41.3% lower days in inventory

Last week Wellesley Information Systems  (wispubs.com) ran their annual Logistics & Supply Chain, Manufacturing and PLM events which were absolutely buzzing with over 1,400 attendees, 70+ presentations, 30+ exhibitors and 7 tracks of content over a 3 day period.


The event was kicked off with a keynote from Hans Thalbauer, General Manager Extended Supply Chain, SAP.  Hans talked about the emergence of product and demand networks, and how companies can and are connecting their corporate strategies to their customer and product strategies. Hans focused on 3 main business drivers in today’s environment:

  • Customer Centricity – driven by todays omni-channel environment servicing informed customers
  • Personalized Solutions – Which is driving the design and manufacturing process towards a “Lot size of one”
  • Improving People’s Lives – as companies adopt mission statements focused around simplification, social responsibility and compliance


Hans went on to discuss and explain how we need to translate these business realities into Business Strategies:

  • Transform supply chain and logistics disciplines into Demand Networks
  • Connect products, assets and machines to Product Networks
  • Gain real-time insights and take action with the Internet of Things During the remainder of the session,


Hans discussed the SAP strategy for Extended Supply Chain and showed some great demonstrations and customer examples of this strategy in action from:

  • Gebr. Heinemann who are optimizing there planning and logistics processes in an omni-channel world
  • Tate & Lyle who are managing and adjusting recipes to support global tastes from the labs, through manufacturing and to the customer
  • Hamburg Port Authority who are leveraging real time data and signals to run the connected port of the future


One of the highlights of the keynote was a presentation by executives from Bose who described how, after an initial 6 week proof of concept project, they implemented Sales & Operations Planning in January 2014 in their Home Entertainment, Noise Reduction and Professional Divisions in the Americas after a 6 month project.  The next phase was a roll out of S&OP to the Asia Pacific Region in Q4 of 2015, which was followed by an upgrade of the Integrated Business Planning platform in Q1 of 2015. Bose have seen benefits through “improved efficiency of the sales planning process through global standards. They now have the flexibility to analyze revenue and margin scenarios, and have the capability to do rapid what-if scenarios and comparisons. As was stated, “Integrated Business Planning has helped turn our challenges into opportunities”.


The audience was also treated to a detailed demonstration of the Integrated Business Planning solution that numerous customers are now leveraging across the globe. It spanned the areas of Demand, Inventory, Supply and Sales & Operations Planning.


You can see the video at the following link




The Keynote was followed by a series of “Solution Spotlights” in the area of:

  • Supply Chain Management– I had the pleasure of hosting a panel discussion with Martin Barkman, Patrick Crampton-Thomas and Markus Rosemann where we discussed the top questions customers are asking us today 
  • PLM and Manufacturing – Where Thomas Ohnemus, Garrett Miller and Mike Lackey discussed how companies need to adapting to change in the 4th industrial revolution


Future blogs will cover these Spotlights and other sessions from the event.


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Managing forecast consumption settings can be a tricky, error-prone activity. We asked SCM 2015 speaker Sean Mawhorter of SCM Connections to host an online Q&A to address users' questions and provide tips to optimize forecasts for more accurate demand and supply planning results. Check out an excerpt from this Q&A session and see whether your questions were answered.


Sean will be one of the featured speakers at SAPinsider’s SAP SCM 2015 conference in Las Vegas, March 30 – April 1. For more info on the event visit our website at Logistics & SCM, PLM, Manufacturing, and Procurement 2015 and follow us on Twitter @InsiderSCM

Comment from Rohit

We changed the packaging specifications for a couple of SKUs and gave them a new material number. How do we forecast for these new materials using the forecast of the old ones? We have tried life cycle planning, but the demand planners think it is too tedious to maintain all the entires. Is there any other option other than life cycle planning and realignment/copy?


Sean Mawhorter: Unfortunately, there are not too many more options to address these requirements (although they are fairly common). One option is to copy the sales history from the old item to the new item, but that can throw off your aggregate sales history. Plus, it’s a manual process.


Comment From Pavani

Can we assign a custom category to TLB order STO in APO system, so that we can influence consumption of forecast by this custom category?

Sean Mawhorter: It is possible to set this up in the consumption configuration. It is a combination of the requirements planning strategy and ATP categories and assignments.

Comment From Anna

Do you have any recommendations on when to use backward vs forward consumption methods and the time frame for the orders to be considered?


Sean Mawhorter: This is a great question, but would require a long answer. Short answer is that a combination of the sales order volume/quantities, order drift, and forecast bias should lead to segregation of your materials and/or material-location combinations and backward/forward settings should be established and managed using these groups.


Comment From Rangarajan

Can you explain order drift?


Sean Mawhorter: Order drift is the propensity for an order to be in a different bucket that its intended forecast. An indicator of this can be where the forecast accuracy for a single bucket (month) is usually much lower than the forecast accuracy of a multi-bucket window (e.g., 3 months). So timing is more the issue than the quantity itself.


Comment From Rangarajan

Can we maintain forecast consumption settings in SNP different for each material?

Sean Mawhorter: This is standard functionality. The consumption parameters are set in the product master at the product-location level.


Comment From Suat

Consumption of different forecasts: If we have more than one forecast line (50 pcs and 100 pcs for example) in SNP relevant for consumption by a sales order of 120 pcs, how we can find a way to consume fully the first one and partly the second one? The reason why we have more than one forecast figure is because we want to add specific characteristics to represent priorities, for example.


Sean Mawhorter: Have you investigated the use of extra forecast characteristics for this one (i.e. adding priority as an additional characteristic to the customer to be used in the consumption)?


Comment From André

How can we use forecast and safety stocks together to increase the SNP plan quality?


Sean Mawhorter: This is an area where many are confused as to what dial to turn when...
Safety stock is really the dial to turn to adjust inaccuracies in the forecast quantity itself, versus consumption settings, which are used to address inaccuracies in the timing of that forecast.
There are many variables that can affect these; the key is knowing which dial to turn when. ;-)


Comment From Rangarajan

Can forecast consumption work other than the Active 000 Planning version?


Sean Mawhorter: It can, but you need to use the save_multi bapi to create the sales orders in the other version. Sales orders are normally sourced from ECC and only populate version 000 by default.


To view the rest of the transcript, click here.

SAP Advanced Planning and Optimization (APO) is the planning component of mySAP SCM, the supply chain management solution provided by SAP.

SAP APO is used to make strategic, tactical and operational decisions and supports you in performing the following planning activities:

  • Demand Planning (DP)
  • Supply Network Planning (SNP)
  • Production Planning (PP)
  • Detailed Scheduling (DS)
  • Deployment
  • Transport Load Builder (TLB)
  • Transport Planning and Vehicle Scheduling (TP/VS)
  • Global Available-to-Promise (G-ATP)

SAP's endeavor into the advanced planning solution market was with the name SAP APO. There are other APS solutions in the market from Oracle, Manugistics, i2 and a whole host of other companies providing specialized planning solutions

Over the years SAP has brought the SAP APO solution under a wider umbrella called SAP SCM. Since version 4.0 of APO it has been called SAP SCM. So in the release strategy of SAP you will find SAP APO 3.1 followed by SAP SCM 7.0

SAP SCM is a more complete solution that covers planning, networking, coordinating and execution. In addition to SAP APO, which is still the core of SAP SCM, there are other applications such as SNC (Supplier Network Collaboration - erstwhile ICH), SCEM (Event Management), EWM (Extended Warehouse Management) and SPP (Service Parts Planning).

Thank you, LV


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