Transcript Title

The Risks and Reward of an
Adaptive Supply Chain- Directions
for SAP
Cyd Riede, SCM Solution Principal
Bob Ferrari, Director, mySAP SCM Business
Development
October 21, 2004
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
Change Is Constant
“In the real world, you have to be ready
for the unexpected”
Stock market reactions on days when
supply chain glitches are reported:

Delays in product development:
by -10%

Ramp-up/rollout problems:
by -11%

Production problems:
by -10%

Quality problems:
by -9%

Parts shortage in manufacturing:
by -7,5%
Source: Prof. Vinod Singhal, DuPree College of Management, Georgia Institute of Technology
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Major Forces Are Driving Adaptability
Adaptability is the key to succeed
in today’s business environment
COMPETITION
MARKET
 Product innovation
 Process innovation
 Services innovation
 Increased quality requirements
 Increased product configurations
 Service wrapped into products
ECONOMY
TECHNOLOGY
 System and data consolidation
 Mobile computing, RFID
 Continuous asset and process
innovation
 Decreased IT budgets
 Shareholder expectations
 Shrinking margins
GOVERNMENT REGULATIONS
 Environmental
 Legal compliance
 Industry standards
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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The Adaptive Enterprise
Adaptive Enterprise – “Ability to react on
realtime changes “
Create insights based on detailed and timely
information throughout the value chain.
Sense
Product
Leadership
Extended
Enterprise
Customer
Intimacy
Respond
Fast and flexible react to changing market,
business and operational conditions.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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SAP View of Adaptive Processes
Create insights based on detailed and timely
information throughout the value chain
Plan & Execute


Integrated processes
across planning &
execution
Single planning &
execution data model
Sense
Product
Leadership
Extended
Enterprise
Customer
Intimacy
Respond
Fast and flexible to react to changing market, as
well as business and operational conditions
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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SAP View of Adaptive Processes
Sense & Respond



Deep connections
to customers
and partners
360-degree view
inside and outside
the enterprise
Distributed control
and exception
management
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Create insights based on detailed and timely
information throughout the value chain
Sense
Product
Leadership
Extended
Enterprise
Customer
Intimacy
Respond
Fast and flexible to react to changing market, as
well as business and operational conditions
SAP View of Adaptive Processes
Learn and Adapt

Comprehensive
analytical capability

Rapidly change/adapt
existing processes

Introduce new
processes, or change
existing processes
Create insights based on detailed and timely
information throughout the value chain
Sense
Product
Leadership
Extended
Enterprise
Customer
Intimacy
Respond
Fast and flexible to react to changing market, as
well as business and operational conditions
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 9
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
Inventory Levels
Reduce inventory levels...
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Stock-Outs
Fewer Stock-Outs
Reduced Inventory Levels
Managing the Supply Chain - Conflicting Goals
Inventory Levels
Stock-Outs
Reduce inventory levels... or reduce stock-outs.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Fewer Stock-Outs
Reduced Inventory Levels
Managing the Supply Chain is about Conflicting Goals
...and It is More than Just Two Opposing Goals
Order Leadtimes
Production Efficiency
Stock-Outs
Inventory Levels
Number of Products
Logistics Costs
Reduce order leadtimes... or reduce logistics costs.
Increase the number of products... or increase production efficiency.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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How Do You Get Off the See-Saw
Order Leadtimes
Production Efficiency
Stock-Outs
Inventory Levels
Number of Products
Logistics Costs
Moving toward any goal... moves you away from every other.
How do you move balance all of your goals at the same time?
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Move from Being Reactive to Being Adaptive
Order Leadtimes
Production Efficiency
Inventory Levels
Reactive
Adaptive
Number of Products
Logistics Costs
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Stock-Outs
The Goal- An Adaptive Supply Network
A business process framework:

… that incorporates adaptive business practices
and enabling technology

… is driven by real-time demand information

… that manages a responsive supply network of
customers, suppliers, and other partners
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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SAP’s Adaptive Supply Chain Network Framework
VISIBILITY
Plan and re-plan
resource needs
based on business
objectives
Collaborate and
Respond to internal
and external
deviations across
the extended
network
Sense and alert in
real time the
deviations caused
by internal and
external events
Execute plan based
on available supply
chain network
resource capability
Continually learn
from exceptions and incorporate
knowledge into business processes
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
Demand Driven Networks – What Are They ?
Ability to respond more quickly
to changes in demand
Meeting consumer or customer
needs in a much more
responsive and timely manner
Focus on the key “moments of truth”
On-shelf availability or when customer
desires product
Supplier
Manufacturer
Distributor
Retailer
Consumer
•An interlocking of operations and business process capabilities
•Ecosystems of supply networks, extending across suppliers, producers, and
distribution partners
Moving toward a “single integrated process” of demand driven
supply chain process capabilities
 SAP AG 2004, SAP SCM 4.1-
Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 19
Demand Driven Networks
Demand Driven Network

A environment where every participant can exchange information, goods,
and services with every other. The ultimate source of demand (the
consumer or customer) is the channel master.

The ability to synchronize on the ultimate demand signal by sensing and
responding to demand with changes to products/ promotions/ production/
distribution.
Information Flow
Physical Goods Flow
Supplier
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Manufacturer
Distributor
Retailer
Consumer
Transformation Implications
Information Flow
Physical Goods Flow
Supplier
Manufacturer
Distributor
Retailer
Consumer
 A fundamental
rethinking of the inter-relationships between forecasting,
planning, and network execution

Reducing overall production setup and network execution cycle times
Combination
of continuous demand-pull, and some forms of supply push for
long lead time materials

Leveraging lean production, flexible fulfillment, and more adaptive process
support capabilities
Bidirectional
sharing of information quickly within organizations and across
supply networks

Real-time monitoring and interpretation of exceptions- adjustment to existing
plans in response to exceptions

More than a supply chain initiative
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Current Situation for Many Companies
Most companies today plan and execute operations in different processes
Annual
Monthly /
Quarterly
Weekly/Daily
VMI
Brand
Planning
Product
Planning
Marketing &
Sales Planning
Operations
Planning
Supply
Network Financial
Planning Planning
S&OP
Process
“The moment of truth”
Execution,
Replenishment
Product Delivery
C
u
s
t
o
m
e
r
Point of
Sale
Web
Orders
Channel
Orders
Shipment to
DC’s
Trade
Promotions
EDI
Event
Demand Generation
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Demand Driven Processes
• Divide planning and execution into three interrelated time horizons
• Continuous demand (pull), with some push
• Comprehensive supply network planning to integrate all time-horizons
Long-Term
Annual
Mid-Term
Month/ Quarter
Short-Term
“The moment of truth”
VMI
Brand
Planning
Marketing &
Sales Planning
Operations
Planning
S&OP
Planning
Weekly/Daily/Sub-Daily
Financial
Planning
C
u
s
t
o
m
e
r
Point of
Sale
Web
Orders
Channel
Orders
Shipment to
DC’s
TPM
Continuous Demand
What-Ifs, Scenarios, Network
Capacity
 SAP AG 2004, SAP SCM 4.1-
Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 23
Exception and
Plan-based
Promotional Demand
Channel Demand
RFID
Events
An SAP View- Demand Driven Networks
Supplier
Manufacturer
Distributor
Retailer
Consumers
DEMAND DRIVEN SUPPLY NETWORK
Sense – Respond - Execute
Adaptive Logistics
SRM
Supply
Demand
CRM
PLM
New Product Development & Introduction
SAP NetWeaver
People – Information – Process – Platform Integration
Interlocking the Required Process Capabilities
 SAP AG 2004, SAP SCM 4.1-
Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 24
Key Enabling Process
Increase rate &
volume of new
product
introductions
Customers
Suppliers
Establish/maintain global data
synchronization, network
visibility and analytics
Sense, Respond & Adapt to demand
and supply network needs
Supplier
Manufacturer
Distributor
Retailer
Plan for and Execute “turn” business
focused on costs & efficiency
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Consumers
Integrated sales
and marketing
campaigns driven
by demand
SAP Initiatives

Began our development activities two years ago

Launched first enabling SCM process at ASUG / Sapphire 2004 :
● Responsive Replenishment powered by SAP ICH- gateway between POS
driven demand and daily replenishment planning

Multiple SAP additional internal product initiatives underway:
● Demand Driven Planning
● Adaptive Manufacturing
● Demand Driven Supply Chain (DDSN)
● New Product Development and Introduction (NPDI)
● Trade Promotion Planning and Brand Equity (CRM)
● Master Data Management and Data Synchronization (SAP NetWeaver)
● Supplier Collaboration
Launching new ASUG Influence Council for further direct
customer influence

 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Business processes supporting DDSN
EXECUTE
PLAN
SENSE
RESPOND
RFID Infrastructure • Case Level Order Tracking
• Electronic Pedigree
Event Management
Sense & Respond
Master Data Mgmt.
Advanced Planning
Analytics
Portal
Middleware
ERP
•
•
•
•
•
•
•
•
•
•
Attainment to Plan
Asset Utilization
Sales Clerk Role
Procurement Role
Receive Orders
Transmit ASN’s
SAP ERP
Procure
to Pay
Order to Cash
Pick/Pack/Ship
Load Tendering
• Consensus Fcstg
• Sales & Ops Plng
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Product ID
Location ID
Consensus Fcstg
Sales & Ops Plng
SAP to Promise
Capable
• Order Track & Trace
• Alert Management
• Collaborative Plng
• Vendor Managed Inv.
• Supplier Managed Inv.
SAP Event
• Management
Product ID
• Location ID
• Collaborative Plng
• Vendor Managed Inv.
• Supplier Managed Inv.
• Co-Mfg Scheduling
Advanced
Forecast
Accuracy
• Cust. Out-of-Stocks
Planning
&
Inventory Position
• Supplier Score Card
Optimization
Demand Planner Role • Customer Svc Role
Supply Planner Role
• VMI Planner Role
Retrieve Sales History • Inventory Movement
Snapshot of Inventory • Order Status
Forecast Sales
SAP Netweaver
• Vendor Managed Inv.
Estimate Capacity
Plan Production
Distribute Inventory
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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SAP Inventory
Collaboration
Hub
• Responsive
Replenishment
• Product ID
• Location ID
• POS Data Mgmt.
• Replenishment Role
• Plant Mgr. Role
• Capture POS Data
• Lean / JIT
Consumer
Driven
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
Continual Evolution to Meet Customer Requirements
Enterprise Services
Architecture
SAP NetWeaver
mySAP Business Suite
SAP xApps
Web services
3-tier client/server
SAP R/3 Basis
SAP R/3
Mainframe
architecture
SAP
R/2
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Example – The Current Integration Dilemma
Supply Chain Processes Across Platform Components
and Applications



New trading partner
or new process =
new integration project
High number of
integration points limits
visibility and the ability
to change
Platform
Portal
Business
Intelligence
Very complex to add
new technologies such
as RFID

Multiple vendors and
technologies

High TCO
C-Room
Bus. Process
Mgmt
APS
Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 30
EAI
Partners
SAP
R/3
CRM
Components
 SAP AG 2004, SAP SCM 4.1-
…
Legacy
Example – The Current Integration Dilemma
SAP SCM: Leveraging SAP NetWeaver Components
Reduction in cost
through integration

Enable new supply
chain strategies
through flexibility

Add new capabilities
and composites based
on business needs

Leverage new
innovations, such
as mobile

Extensibility via Java
developments
SAP SCM
SAP NetWeaver
Enterprise Portal,
Business Intelligence,
Master Data Management, …
APO
EM
ICH
SAP
R/3
Partners
CRM
Components
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Other

Platform
Legacy
Foundation of the Adaptive Enterprise
SAP NetWeaver – The Open Integration and Application
Platform Powers the Adaptive Enterprise
Enterprise Portal
for customer and supplier access
Multi
Multichannel
channel access
access
Portal
Collaboration
INFORMATION INTEGRATION
Bus.
Bus.Intelligence
Intelligence Knowledge
Knowl. Mgmt
Mgmt
Master Data Management
PROCESS INTEGRATION
Integration
Bus. Process
Broker
Mgmt
Business Analytics
with predefined content
LIFE -CYCLE
CYCLE MANAGEMENT
LIFE
MANAGEMENT
COMPOSITE APPLICATION FRAMEWORK
PEOPLE INTEGRATION
Master Data Management
for harmonized product/customer data
Exchange Infrastructure
for hub-and-spoke integration
Business Process Management
to drive cross-enterprise processes
APPLICATION PLATFORM
J2EE
ABAP
DB and OS Abstraction
...
Lowest TCO and maximum flexibility
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Web Application Server for
extensibility with Java applications
Improving Collaboration Through Leveraged Utilization of SAP
NetWeaver
FROM
TO
Point-to-Point Integration
BP 1
Centralized Integration
BP 1
XI
SCM
BP 2
ICH
BP 2
BP 3
BP 3
BP=Business Partner

Collaborative Businesses processes need to be integrated both inside (EAI) and
outside (B2B).

With SAP NetWeaver Exchange Technology (SAP XI), SAP ensures that
applications, systems, processes, and people are exchanging data effectively.

SAP XI is the application integration technology for SAP ICH which allows a
centralized integration of processes, application and data.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Extended SCM Processes, Applications, Enabling Technology
SAP NetWeaver
ERP
People Integration
mySAP
SCM
CRM
Order
Mgt
Multi-Channel Access
Portal
Collaboration
Information Integration
Knowledge Mgmt
Business Intelligence
Master Data Mgmt
Process Integration
Integration Broker,
Business Process Mgmt
Application Platform
J2EE
ABAP,
DB and OS Abstraction
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Order
Capture
Inventory
Availability
ERP
Backbone
SCM
Backbone
CRM
Backbone
3rd party
Solution
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
SAP SCM Vision
OUR VISION
Adaptive Supply Chain Networks are
communities of companies who:

Thrive by sharing knowledge

Are fast and adaptive to changing market conditions

Can proactively respond to shorter, less predictable
product lifecycles

Intelligently adjust to changing market conditions
OUR MISSION
To help customers become more flexible
and adaptive by providing:

Best-in-class mySAP SCM Business Suite applications
and infrastructure

A complete ERP solution that incorporates
comprehensive SCM

Innovative technologies, partners and
implementation services
To manage manufacturing, logistics, and supply
network capabilities as an integrated part of one
or many supply chain networks
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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mySAP SCM
Responding to Customer Business Needs for:

Supporting the transformation to demand-driven, more adaptive supply
networks

Helping to fuse the physical and digital aspects of supply chain processes
through leveraged use of sense and respond technologies (Auto ID and
Mobile Technologies)

Enabling more efficient, less resource intensive supply chain operating
costs

Managing more adaptive, network-wide logistics

Lowering overall total cost of ownership for SCM applications

Integrating SAP and non-SAP systems across the extended supply chain
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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mySAP SCM – Key Competitive Differentiators
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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
A holistic and complete SCM
solution leveraging SAP
NetWeaver capabilities

Integration by design coupling
mySAP ERP and mySAP Business
Suite applications to support crossfunctional SCM business process
with the lowest overall Total Cost of
Ownership (TCO)

Deep, industry-focused
functionality leveraging 30 years of
business process experience

RFID-enabled supply chain
execution process support

The market leading SCM Solution
(AMR Research, ARC Advisory
Group, Gartner)
mySAP SCM – Increased Recognition
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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
Wall Street Journal Europe Annual
European Innovation Award
(integration of RFID through SAP
Auto ID Infrastructure)

Frost & Sullivan Global Customer
Leadership Award (dominant SCM
vendor to Global Pharmaceutical
Industry)

2003 IDC ranking of worldwide SCM
services providers positions SAP
in the top 10

SAP SCM 4.1 has been certified in
supporting the VICS (Voluntary
Inter-industry Commerce Standards)
Association CPFR interoperability
mySAP SCM Providing Value for All Sizes of Companies

Providing value to all sizes of companies

The ability to easily add key customers or suppliers to your extended
supply chain process needs

Supporting collaboration in key areas such as demand-chain,
inventory, and responsive replenishment processes

Providing the most adaptive and scalable planning and transactional
capabilities for logistics, warehousing, distribution and transportation
needs

Providing more flexible choices and best practices in accommodating
SCM deployment and implementation services needs
Nearly 60% of all SAP Installations are in companies or divisions
with annual revenues of less than $500M USD
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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SAP SCM 4.1 – A Suite of Applications
SAP Advanced Planning
& Optimization
(SAP APO 4.1)
SAP Inventory
Collaboration Hub
(SAP ICH 4.1)
SAP Event Management
(SAP EM 4.1)
Integrated by design with SAP
Supply Chain and Manufacturing
Execution Applications within
mySAP ERP
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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mySAP SCM- Incorporating Adaptive Framework Capabilities
Enterprise Portal
Demand Planning
Supply Planning
Distribution
Planning
Global Available to
Promise
Collaborative Processes (VMI, CPFR,
Responsive Replenishment)
Production
Planning
Transportation
Planning
Supply Chain Process Integration
Leveraging SAP NetWeaver
Supply Chain Planning
Supply Chain Visibility
Supply Chain
Collaboration
Supply Chain Execution
Supply Chain Event Management
Materials
Management
Manufacturing
Business Analytics and BW
Order Promising &
Delivery
Warehouse
Management
Transportation
Execution
Foreign Trade/Legal
Services
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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mySAP SCM 2004 - 2005 Headlines
Enhanced Scenarios:

DDSN (Demand Driven Supply
Network)
● Responsive Replenishment
● Supplier / Customer Collaboration
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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
Project Manufacturing

RFID-enabled Logistics

Forecasting and Replenishment

Adaptive Manufacturing

Data Synchronization (MDM)

Service Management
Collaborative Supply Chain Processes
Responsive
Replenishment
Supplier
Managed Inventory
My Company
Supplier
Supply Plans
SAP Inventory
Collaboration Hub
(SAP ICH 4.1)
Customer
Sales Data
Releases
Forecasts
Inventory Data
Inventory Data
Alerts
PO‘s
ASNs
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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Introducing Responsive Replenishment
Customer
Process Support Goals and Benefits:
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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
Rather than traditional reorder-point driven VMI,
support a process driven by actual demand,
including promotional demand

Provide capabilities of receiving POS information
from store-level demand vs. DC level

Support a collaborative, joint planning and
execution process to manage promotional
demand and include last-minute changes

Support a planning process that can be executed
in sub-daily buckets

Provide a built-in, automatic statistical demand
forecasting engine

Support more intelligent and efficient use of
transportation through an amplified intelligent
replenishment and load-building process
Responsive Replenishment: Shrinking Time & Moving
Closer to the Customer
on shelf
availability
Replenishment
of shelf
Goods issue GI + 1 day
manufacturer
Uncertaintyhorizon
Objective (1): Moving towards a
‚responsive‘ replenishment cycle:
10 days down to 1 day‘
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
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GI + 7 days
VMIhorizon
time horizon
Demand Planning/
CPFR horizon
Objective (2): Plan on real
Customer Demands to enhance
forecast accuracy
Supplier Collaboration Direction
One consolidated view on design objects, bids & contracts,
forecasts, inventory, procurement documents and shipments
Order
collaboration
Design
objects
RFx, auctions &
contracts
Collaborative
replenshment
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 47
Supplier Collaboration – SAP Direction
Leverage the SAP NetWeaver platform

Unified access to collaborative applications and information

Gateway providing suppliers with a single point of access

Requires nothing more than a Web browser on supplier
side
One-supplier collaboration solution

Empowers your entire supply base to share relevant
information

Enables collaborative processes along the entire
supplier relationship life cycle

Provides alerts for implementing exception-based
processes
Powered by the buying organization

Completely Web-based hosted solution

Easy, flexible, and fast to implement

Highest security standards
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 48
Introducing Adaptive Manufacturing
Adaptive manufacturing is the ability of a
factory to profitably replenish the supply chain
while dynamically responding to unpredictable
change
Adaptive Manufacturing enables companies
and their production personnel to “run
Manufacturing at the Speed of their Business”
and deliver Superior Performance thru
Visibility and Responsiveness.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 49
More Adaptive Manufacturing
Forecast Driven
(Make to Stock)
Demand Driven
(Make to Order)
Push
Pull
Manufacturing
Flexibility
Inventory
Flexibility
2000+
Push
Pull
Inventory
Flexibility
1990’s
Manufacturing
Flexibility
“The Order is fast becoming
Pull
the Forecast“
Push
Inventory
Flexibility
1980’s
Manufacturing
Flexibility
Push
1970’s
Pull
Inventory
Flexibility
= Manufacturing
Decoupling
Point
Shift
from “Forecast-driven”
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 50
Manufacturing
Flexibility
to “Demand-driven” Manufacturing
Production as the De-Facto Supply Network Buffer
Multi-Channel
Demand Network
Distributed
Fulfillment Network
Supplier
Aggregate supply
chain and manufacturing
plans integrated with
multiple MES Systems
ATP giving way to CTP
Visibility into changing
demand patterns
Mobil
Customer
Logistics
Service Provider
Merge Center
Near-time to real-time
visibility and
collaboration with
other supply chain
partners
Distribution
Center
MANUFACTURING
Factory Planning
integrated with Execution
drives “Sense and
Respond”
Telephone
Customer
Monitor, analyze and learn
for continuous
improvement
Internet
Customer
Companies today have the opportunity to become adaptive by connecting
their Manufacturing to the Enterprise and their Supply Chain Partners.
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 51
Industry Challenges – Becoming More
Adaptive
Implications to the Supply Chain
Demand Driven Networks
The Critical Importance of Integration
mySAP SCM Directions 2004-2005
Rewards and Summary
P&G: Consumer-Driven Supply Network - CDSN
Key issue
Key Business Process Changes
P&G believes there are two “moments of truth”:
winning at the shelf with the shopper, and winning
with the consumer when they use a product
Demand planning: Shifted entire global operations to
a 24x7 model to receive data from retailers at all
times; put in place parallel systems to
accommodate POS-driven demand planning and
traditional shipment / warehouse withdrawal
forecasting and replenishment depending on retailer
capabilities
P&G’s response
P&G has been actively working on implementing a
Consumer-Driven Supply Chain Network for the
past year to win at these two moments of truth
Collaboration on events: Accepts hourly information
updates from retailers to receive the best quality
information to assist with retailer event planning
CDSN has three major thrusts: transform business
processes, change systems and focus the
organization using consumer demand signals
Manufacturing response: Introduced highly
responsive production and shipping capabilities to
respond to shortage demand signals, regardless of
day or sku
Key benefits
Revenues increased 12-15%
Out-of-stocks declined up to 25%
On-shelf inventory improved by 20%
Replenishment cycles cut down from 15 to 6 days
Much faster reaction to market changes
Improved supply response planning
Supplier integration: Introduced “P&G Portal”,
currently used by 60% of suppliers, enabling them
to access aggregate demand signals from retailers
representing 65% of P&G’s total revenues
System reliability and reporting: Put in place
business process monitoring with exception based
alerts on all supporting systems, including
performance metrics reporting and track and trace,
to align to the needs of the consumer-driven supply
chain
Source: Jack Barr, P&G Associate Director of Supply Chain Network Innovation, IRI Reinventing CPG Summit Meeting, 23 February 2004.
 SAP AG 2004, SAP SCM 4.1-
Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 53
Benefits for All Groups
CEO / CFO

Create more business value by responding faster and more efficiently to customer needs

Adapt to rapidly changing markets and competitive pressures

Differentiate products and supporting supply chain process capabilities from those of industry
competitors

Increase ROA, improve inventory management, shorten overall cycle times
CIO and IT Director

Improve IT operational costs through ease of administration and fewer SCM interfaces

Broaden data integration utilizing a persistent data model across all mySAP SCM

Support for faster process changes with the a common SAP application knowledge base

Fully supported open integration with non-SAP systems, leveraging SAP NetWeaver technology
COO / VP / Director

Reduced costs, improved customer service, enhanced productivity across the supply chain

Extend visibility and process capabilities to key suppliers / customers / partners

Enable more responsive and adaptive supply chain capability

Broadest industry specific SCM functionality
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 54
SCM: Innovation Drives Business Value
VOLVO CONSTRUCTION EQUIP.
 Reduced shipping lead times by 43%
 Reduced inventory levels by 53%
 Increased sales by 89%
 Enhanced per capita rev: $85,000 to $340,000
PALM
 Lowered channel inventory by 32%
 Lowered cash-to-cash cycle time: 23 to 14 days
 Reduced planning cycle times by 50%
COLGATE-PALMOLIVE
 Increased cash flow 13% through improved planning & cycle times
 Achieved 98% forecast accuracy
 Reduced inventory 13% in 12 months
DOW CORNING
 Improved forecast accuracy by up to 25%
 Reduced inventory by nearly 20%
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 55
MySAP SCM- Trusted by Customers
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 56
Summary

Change is constant in today’s industry environments

Being adaptive in business implies supply chain process
capabilities that can sense and respond to changing market
needs

Comprehensive, flexible, cost-effective integration tools and
technologies are the ‘secret sauce” for supporting adaptive
processes

SAP is leading the way in supporting customer needs to
deploy more adaptive business networks
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 57
Continued Commitment to Customer Success

Expanded choices and broader capabilities

Lowered overall total cost of ownership through pre-integration
of SCM and Manufacturing applications

A pragmatic technology approach ensuring reliable and
scalable solutions

A commitment and passion for customer success in business
and process goal fulfillment

Long-term market presence combining:
●
●
Global support and partner resources
Process and industry-oriented SCM expertise
●
Market leadership in SCM
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 58
my SAP SCM
The power to ADAPT.
Thank You
Questions?
Bob Ferrari , SAP SCM Business Development
robert.ferrari @sap.com
 SAP AG 2004, SAP SCM 4.1Continuing the Journey for Enabling More Adaptive Supply Chains
Robert Ferrari, Hans Thalbauer / 59