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"SAP Supply Chain Management (SAP SCM) enables collaboration, planning, execution, and coordination of the entire supply network, empowering you to adapt your supply chain processes to an ever-changing competitive environment. "
Source : SAP
Supply Chain Supply Network Visibility and Analytics
Supply Chain is also known as :
Supply Chain Modeling,
Supply Chain Management,
Supply Network,
Supply Chain Network,
Supply Chain Optimization,
Demand Chain,
Demand Chain Management,
Demand Optimization,
Value Chain,
Value Network,
Supply Chain Logistics,
Distribution,
Logistics,
Supply Chain Module,
Value Chain Management,
CONTENTS
Executive Summary
The Need for Network-Wide Supply Chain Visibility
Decision Making and Event Handling
Visibility Leads to Better Coordination
Process Visibility
Supply Chain Event Management
Centralized Control, Role-Based Access
The Pitfalls of Poor Supply Chain Visibility
Collaboration and Coordination
Alerting and Event Resolution
Product Visibility: Items, Assets, and Inventory
Tracking and Tracing
Visibility Beyond Exceptional Events
Inventory Visibility
Performance Visibility
Close the Planning-Execution Loop
Metrics Key to Analysis
The Challenge of Visibility
Event Capture Through RFID
Supply Networks Cross Traditional Boundaries
Access Crucial to Supply Chain Analytics
User-Friendly Analytics
Connect Transactions and Analysis
Analytical Applications to Sense, Respond, and Learn
The Benefits of Analytics
Looking Forward
SAP Solutions for Supply Chain Network Visibility and Analytics
mySAP SCM: Rising to the Challenge of Adaptive Supply Chain Networks
SAP Event Management: Managing Events Across the Supply Chain
SAP Solutions for RFID: Helping Manage Critical Data
SAP xApp Analytics: Closing the Loop in Supply Chain Management
mySAP SCM: Providing Crucial Visibility and Analytics Support
EXECUTIVE SUMMARY
Complexity and the speed of change in the global economy are
powerful motivations for companies to look for new ways to increase
efficiency and productivity. In order to succeed in today´s
ultracompetitive, interconnected business climate, traditional
modes of thinking must be reassessed in light of new and emerging
technologies. Instead of looking at their supply chain issues
as problems to be solved, more companies are turning to their
supply chain to facilitate innovation and growth - moving
beyond supply-driven efficiency to a demand-driven
environment.
Successful forward-looking companies are focusing on the ability
to anticipate customer demands and expectations and
respond with adaptability, efficiency, and accuracy by providing
the highest quality, value-added services and products. The
entire extended supply chain must operate at the accelerating
speed of business to match the pace of demand and give companies
the ability to quickly sense and respond to changes in the
marketplace. Companies in all industries see improving supply
chain visibility and analytical capabilities through the implementation
of an enterprise-wide, integrated, adaptive solution
as an important factor for growth and success. And new technologies
such as radio frequency identification (RFID) are an
important aspect of such a solution, giving companies real-time
information and connectivity with sensor networks for realworld
awareness, insights, and visibility.
Analytics close the loop between planning and execution by
providing in-depth process awareness. Companies need to transform
their good information into meaningful, timely, and accurate
business insights. And these insights must be systematically
interconnected to align business strategy with tactics through a
seamless integration of analytical, transactional, and collaborative
processes.
To achieve success today and tomorrow, companies need the
ability to perform supply chain management - to monitor their
processes and inventories and all the so-called "events" that take
place across their extended supply chains. They must manage
information in heterogeneous systems and disparate silos separated
by departmental, geographic, and even organizational
boundaries. And they must be able to detect, evaluate, and solve
problems in real time and grow a community of collaborative,
cooperative business partners.
THE NEED FOR NETWORK-WIDE SUPPLY CHAIN VISIBILITY
For companies to be successful in the modern, networked,
global business environment, they need to be faster, more agile,
and more productive than ever before. In order to respond to
constant changes, the demands of increasingly savvy customers,
and fiduciary responsibilities to shareholders, many companies
are focusing on core competencies and partnering to achieve
success. Partnerships and business communities are formed to
create win-win situations in which collaboration, outsourcing,
and information sharing are critical success factors.
The pressure to reduce costs remains unrelenting, but cost
reduction is not enough. Innovation and growth are the watchwords
of today´s economy - and of the economy of tomorrow,
as well. The velocity of change in customer needs and trends
makes innovation a key competitive differentiator for achieving
profitable growth. The best-performing companies integrate
innovation into their core business processes and focus on time
to volume and time to market.
These factors result in a pressing need to reach beyond supplydriven
efficiency. The preferred business model is fast becoming
a pull- or demand-driven environment, and the ultimate
source of demand is the customer. Companies must now move
to balance their supply chains based on these new push and
pull dynamics. In order to anticipate customer requirements
and better respond to their demands, companies must bring
high-quality, value-added products to market faster than the
competition.
This demand-driven business model requires companies to
proactively anticipate customer expectations and respond
rapidly with high-quality, value-added products and services.
To meet customer expectations in the most timely, efficient,
and profitable manner, the entire extended supply chain must
match the pace of actual demand and maintain the ability to
respond to sudden changes. All processes, from production
and logistics to transportation and fulfillment, must be interconnected and synchronized. And aggregated business intelligence
must be brought to bear within and between processes to
bring greater visibility throughout the extended supply chain.
A lack of network-wide visibility across the supply chain seriously
hinders companies ability to act efficiently and effectively. Without
clear visibility, companies lack the ability to respond to unexpected
and sudden events and are kept in the dark about the
status of complex processes with long cycle times. Business decisions
are made then in a vacuum without an intact feedback loop
connecting responsible parties with the results of their actions.
As a result, the potential to learn from mistakes and improve business
practices is reduced. Without sophisticated visibility capabilities,
companies cannot track inventory in transit and in multiple
internal and external warehouse locations. And companies cannot
forge business communities that lead to greater collaboration
and more profitable operations without the ability for multiple
partners to work simultaneously and in synchronization on the
same business processes.
Decision Making and Event Handling
The need for improved visibility across the extended supply
chain cannot be understated. Visibility is crucial to enabling and
supporting decision making. Decision makers must have accurate
and timely information on hand to make the right
decisions and follow through with the correct actions in
support of their decisions. Visibility plays a key role in the ability
to sense, respond, and learn across the supply chain. It enables
companies to sense the occurrence of an event, recognize the
importance and potential impact of the event, propose action to
be taken, and state the probable ramifications of the different
actions that could be taken.
An exceptional event, or exception, is any instance in a supply
chain process that occurs outside of specified parameters. Such
an event might be a late shipment from a supplier, a batch of
products delivered to the wrong distribution center, a temperature-
sensitive storage area becoming too hot or too cold, or customer
satisfaction percentages falling below an acceptable level.
Event handling and monitoring are simply not possible without
correct, real-time visibility into the supply chain. When an exceptional
event occurs, visibility into processes and objects such
as products, orders, and inventory allows the proper actions to be
taken. This increases a company´s agility and provides the ability
to make faster and better informed decisions and changes. For
example, during the 2005 hurricane season in the United States,
keen supply chain visibility provided information about orders
and shipments affected by the storms, so that shipments could be
rerouted through unaffected ports. And the scope of supply chain
visibility goes beyond the handling of exceptional events.
Greater visibility is also extremely important as more and more
companies outsource key supply chain functions and work closely
with business partners inside and outside the company walls.
When distributed locations and (or) systems are part of customerfacing
processes, accurate visibility is required to monitor service
levels and ensure that they are within acceptable parameters.
Such visibility is valuable to postal industries, for example, to
facilitate their ability to work with other (sometimes competing)
delivery companies to enable delivery to the "last mile."
Visibility Leads to Better Coordination
Real-time, accurate supply chain visibility greatly facilitates
collaboration and coordination between business partners,
especially in complex service management processes such as
a telecommunications equipment malfunction or the procurement
of medical devices. With the right visibility capabilities,
partners across the supply chain can query a milestone schedule and plan accordingly and realistically, with a dynamic schedule
that is continuously updated with real-time status information.
This transforms a schedule from a static, dated estimate into an
accurate, adaptive, dynamic representation of the extended
process.
Many companies are challenged by a gap between their plans
and estimates and the actual execution of their processes. In
order to shrink this gap, they look to their supply chains to
become more responsive and adaptive. The optimal execution
of a business plan is of course ideal, but reality intrudes in the
form of transportation difficulties, rush or cancelled orders,
and other unexpected but nonetheless inevitable events. In
addition to being able to sense and respond to unexpected
events and deviations, the adaptive supply chain must also be
able to "learn," in order to continuously improve overall
performance. Three fundamental aspects of visibility provide a
full perspective on the supply chain:
- Process visibility
- Product visibility
- Performance visibility
PROCESS VISIBILITY
Innovative companies seek greater visibility into supply chain
processes for a number of reasons: to allow them to manage
information over heterogeneous systems and multiple tiers at
every stage of the extended supply chain; to detect, evaluate,
and solve problems in real time; and to create a community
of business partners that can reach out across geographic and
organizational divides to collaborate in a responsive and adaptive
supply chain. In short, innovative companies see optimizing
the supply chain network through greater visibility as the key to
increasing customer satisfaction, reducing costs, and collaborating
with business partners more effectively.
Supply Chain Event Management
Given the speed of business today, companies must be adept at
preparing for the unpredictable. In the modern, highly
networked economy, disruptive events caused by natural crises
can have a widespread effect on capabilities across the extended
supply chain. For example, during Hurricane Katrina in 2005, a
globally operating chemical manufacturer required real-time
information regarding goods and materials on ships scheduled
to use ports on the Gulf of Mexico. A primary concern was the
need to assess the potential risk to the environment should
shipments in the area become lost at sea. It was also important
for the company to address the needs of customers by providing
alternate shipments through unaffected ports. This illustrates
the paramount importance of process visibility - in particular,
visibility into order status and disposition.
Quite simply, companies need fast, accurate information and
specific details about affected orders. They need visibility to plan
their resource needs and revise plans based on business
objectives. And they must reduce their time to action in the
case of an unplanned event by having in place visibility as close
to real time as possible across the supply chain network.
In some cases, this means that the focus and thought process of
management must evolve from the tendency to manage the
expected outcomes of business processes to managing by exception. This paradigm shift allows resources to be focused
on the areas most in need of attention, instead of on the overmanagement
of processes that are basically humming along
just as desired. In taking an overview of increased visibility with
supply chain event management, these components are key:
- Monitor supply chain processes at the activity level and
compare actual results with plans and forecasts.
- Notify the proper person(s) of any deviations proactively and
in real time.
- Simulate the consequences of reactions to the event, provide
decision-making guidance, and anticipate further
ramifications.
- Control the process throughout the adjustment of
various parameters such as process time, mode of transport,
and so on.
- Measure performance based on user-specific performance
criteria.
Centralized Control, Role-Based Access
For efficient and effective management, it is critically important
that there be a single avenue of visibility within the supply
chain. In other words, there must be a centrally controlled and
authorized version of the facts. Everyone - from executives and
managers to IT workers and employees on the warehouse floor
- must use the same underlying data and processes - the
agreed-on version of the truth.
The right information on processes must be made available to
the right people at the right time, not only to those with different
roles within the company, but also across company boundaries
to include all business partners and facilitate effective collaboration.
Up and down the extended supply chain, better
visibility is needed to manage events within and between companies.
Increased visibility allows managers to deal with supply
chain disruptions proactively and more effectively, reducing the
impact on the company.
The Pitfalls of Poor Supply Chain Visibility
No company escapes the need for better visibility across the
supply chain, although different companies and industries
focus on different processes within the extended supply chain.
An international retail or high-tech company with far-flung
suppliers, for example, may focus on purchase order and shipment
visibility, while a consumer-product-goods company may
pay more attention to its domestic network and the control of
finished-goods networks. All companies, at any rate, need better
visibility into supply chain processes and must enable their
employees to make better decisions by providing them with
better, more accurate, and up-to-date information.
Uncertainty and lack of timely information and visibility into
the supply chain can impact operations across many business
processes. In the realm of asset utilization, for example, late
notification of unplanned events can drive reactionary management
moves and lead to direct expenses, such as high costs for
rush transportation, and indirect costs, including management
time and effort. In terms of lost sales, greater visibility can prevent
the loss of customers who turn to competitors because the
product they want is out of stock. In a case like this, customer
satisfaction can also be affected, with customers not necessarily
leaving for the competition, but settling instead for a substitute
choice that doesn´t fully address their needs.
Greater visibility into manual processes is also needed to
prevent mistakes in the decision process caused by human
errors and inconsistent application of decision criteria. Productivity
can also be improved in this area by reducing the amount
of time spent collecting and manipulating low-value data.
Collaboration and Coordination
Visibility is essential to effective collaboration and coordination
across the supply chain. All business partners must have access
to the same information about distribution, manufacturing,
and procurement processes, as well as orders, containers,
and shipping units. When an exceptional event occurs, it is necessary to have the capabilities in place to notify business
partners - both inside and outside the company. Manual and
automatic exception resolution needs to be supported, with the
ability to adjust enabled by automatic workflow generation and
actions that can take place in the system or in related systems.
Collaboration is even more important when a company
decides to outsource portions of its supply chain. For example,
by giving third parties the responsibility to run its distribution
centers, a company needs extended supply chain visibility in
order to maintain control of operations and ensure customer
satisfaction.
In another example, a manufacturer of medical devices once
managed its global supply chain with a tool accessible through
the company intranet, but found that its growing process
management demands could no longer be met with this homegrown
solution. The manufacturer was able to achieve realtime,
integrated supply chain management by implementing
the SAP Event Management application, which is part of the
mySAP Supply Chain Management (mySAP SCM) application.
The company realized many benefits from this implementation,
including these: availability of real-time information from incoming
order through payment receipt; complete transparency
of supply chain processes; reduced transaction times and costs;
optimized workflow; and integrated document and information
flow for sales orders, purchase orders, and deliveries.
Today it is essential to synchronize the supply chain network,
and to do this, companies must have the ability to extend
response processes to key customers and key suppliers. This
requires a common information framework that enables
increased visibility across the entire supply network.
Alerting and Event Resolution
Companies need to continue moving toward real-time event
alerting and away from stodgy manual methods. Gone are
the days when companies could rely on processes in which managers read through piles of disparate, disconnected, incompatible
reports looking for red flags - numbers blatantly out of
whack. It is important to consider both event notification and
event resolution in this context. The two processes are, of
course, closely interrelated, but have different focuses. The
importance of aggregating data to facilitate business intelligence
is well established. But the ability to drill down to the granular
level is also critical to having an event management system with
access to detailed data about individual events.
A fact-based understanding of the business process landscape is
essential to a company´s success and prosperity. Supply chain
event management focuses on providing process visibility based
on a milestone model, whereas event resolution focuses on
handling exceptional events across the extended supply chain
with the help of decision and event resolution support. In other
words, event management is about the warning, and event
resolution monitoring is about the decision support needed to
resolve an exceptional event. Both are essential and they are
obviously interconnected. Business processes across the extended
supply chain are monitored at significant, defined milestones
and measured against key performance indicators (KPIs).
Support for both event resolution and event management leads
to a powerful solution, enabling sophisticated analytics and
business rules systems that are able to interpret process events
within a larger context. This more complete context includes
other concurrent events, as well as historical events and projections,
all of which can have a crucial impact upon the situation
at hand.
PRODUCT VISIBILITY: ITEMS, ASSETS, AND INVENTORY
In addition to the importance of visibility into the processes of
the supply chain, visibility into the outcomes of the processes -
for example, into stock items, physical assets, and inventory -
is also crucial. Visibility must be achieved not only at the aggregate
level, with data such as cross-warehouse inventory and
global demand information, but also at the granular level, for
example, at an individual stock-item level.
Tracking and Tracing
With improved visibility through tracking and tracing of items,
companies can become aware of exceptional events in the desired
or expected process in time to deal with supply chain events efficiently
and effectively. The impact of greater visibility through
tracking and tracing supply chain processes can be significant.
The failure to see exceptional events soon enough can lead to
problems in order fulfillment, resulting in higher costs for
expedited freight and personnel and asset utilization - and
ultimately to decreased customer satisfaction and lost sales.
For example, imagine that a certain production batch of pharmaceutical
products was discovered to be tainted, and that this discovery
was made some time after the shipments had left the distribution
center. Timely tracking and tracing would allow carriers
and retailers to be contacted in time to return the product in
question before a public recall became necessary. This would not
only save time and money, but also the company´s reputation and
customer confidence - as well as essential invaluable brand equity.
Visibility Beyond Exceptional Events
The need for visibility goes beyond exceptional event handling.
In the manufacture and distribution of pharmaceutical products,
for example, visibility is required to establish a trusted chain of custody
from point of manufacture to point of dispensing. This goes
beyond the imperatives of cost reduction and efficiency to the
public safety and compliance issues covered by pedigree laws
enacted to assure a safe and secure drug supply. Here, in particular,
we can clearly see the great importance and far-ranging influence of supply chain visibility. Indeed, compliance is no small issue,
with government regulations such as Sarbanes-Oxley, the Waste
from Electrical and Electronic Equipment (WEEE) directive, and
U.S. FDA requirements imposing important accountability and
visibility mandates.
Depicting the flow of documents through supply chain processes
is not enough to provide the visibility that companies really
need. To properly close the loop, document flow must be combined
with quality indicators, such as timely execution and confirmation
data, and expected versus actual values of such variables
as product quantity. Data on process duration and the
personnel involved should also be incorporated to provide a
consistent and granular view into the supply chain and enable
companies to maintain and measure service levels.
Inventory Visibility
Inventory visibility is always an important issue, but in an
extended order management (EOM) environment visibility is
crucial to having correct, up-to-date inventory availability
information. Managing orders from multiple channels and
coordinating fulfillment across multiple inventory locations,
partners, and business units is simply not possible without
timely and accurate visibility into inventory levels. Information
on inventory availability must be an aggregate of data regarding
events, individual inventory items, and overall stock levels.
Such visibility is also key to showing a single, unified face to
customers across multiple channels and points of contact.
Simply put, a manager needs visibility into the supply chain to
be able to answer the most basic inventory questions: where is
my inventory, and how do I plan to use it?
Without accurate knowledge of inventory levels, the ability to
respond to customer requirements is reduced. Complex global
supply chains increase the uncertainty of supply and demand
information, leading to inventory buffers to accommodate the
management of complex sourcing. Insufficient visibility into inventory levels can lead to problems that reverberate up and
down the supply chain. A lack of hard, real-time demand information
can cause excessive inventory levels and costs, and uncertainty
regarding supply can lead to speculative ordering.
Inventory deployment also requires greater visibility: companies
must determine where and what quantity of inventory to deploy
across the network, taking into account geographic, demographic,
and time constraints and concerns. Visibility is crucial
to maintaining proper inventory levels and deploying inventory
effectively.
PERFORMANCE VISIBILITY
The major visibility challenge faced today is not the availability of
data. Indeed, most companies have huge amounts of data to
plumb, and their systems and capabilities can be overwhelmed by
an excess of information. There are also many sources of important
data. For example, online transaction processing (OLTP)
databases provide a wealth of information that is required to be
able to properly perform comprehensive, in-depth analytics
processes. This information includes stock situations at different
locations, movement across locations, cycle time across locations,
as well as a variety of quality reports.
What is essential, then, is the ability to provide relevant data
access to different parties across the extended supply chain in a
secure, role-based format. Companies also need to ensure that
data can be easily understood and, most important, efficiently
used by a wide range of participants in supply chain processes. In
order to achieve this, it is essential to have standard procedures
and processes that are agreed upon, accompanied by standardized
metrics, so that a common playing field and set of rules can be
established. Only then can the available data be made useful in a
coordinated and cooperative context, enabling users to make
better, more well-informed decisions.
A significant hurdle to improving visibility into the supply chain
is the tendency of organizational change through mergers and
acquisitions. This tendency can create a more heterogeneous,
unconnected network situation that increases the demand on
information flow and IT capabilities. Further complicating
matters is the increasing use of multitier sourcing, as existing
vendor-customer relationships and business rules have changed
radically. These factors illustrate the importance of the ability to
exchange information across system, cultural, geographical, and
language barriers.
Close the Planning-Execution Loop
To achieve better visibility up and down the supply chain and
use it productively, companies must close the loop between
planning, execution, and evaluation. They must integrate the ability to adjust plans on the fly based on feedback and information
received in real time. To accomplish this, companies need
to implement integrated software that supports major business
processes such as monitoring supply chain events, notifying
the right person in case of a delay or critical event, simulating
activities, controlling processes, and measuring supply chain
activities to adapt business operations and make them more
effective and efficient.
Companies need the ability to optimize overall business processes
on a strategic and operational level. They can accomplish
this with an integrated suite of applications that transform
supply chain data into strategic information to measure and
optimize business processes across geographic and organizational
boundaries.
However, companies face significant challenges in reaching this
goal, including access to relevant and accurate real-time data,
a lack of consistent metrics across the business, the need for
benchmark metrics, and the ability to manage daily deviations
from targeted values.
Metrics Key to Analysis
In order to accurately measure supply chain performance
across the extended supply chain and bridge boundaries
between companies, it is necessary to use standardized metrics
covering processes including planning, procurement, manufacturing,
order fulfillment, inventory management, and
visibility. Such metrics can cover a wide range of factors and
parameters, from late shipment percentages to supply
shortages to acceptable temperature ranges.
The ability to track and trace business objects and processes
through the supply chain must be complemented by the ability
for all relevant parties in the extended supply chain to act upon
information learned from the occurrence of an exceptional event. The use of metrics such as KPIs is essential to ensure that
processes up and down the supply chain are running according
to expectations and within established parameters.
Standardized metrics are essential to collaboration across the
extended supply chain. With these standards, business partners
can be assured they are speaking a common language when it
comes to performance metrics. Without the ability to share the
relevant tracking and tracing information with the people who
need it, when they need it, the value of the information is
greatly diminished.
The use and implementation of metrics also adds another layer
of analytical possibilities and challenges to the mix. Hundreds
of predefined metrics are available in analyzing supply chain
performance management, leading to bottlenecks caused
by an overabundance of metrics. The selection and definition
of KPIs is therefore, in essence, a form of strategic analysis itself;
deciding what milestones and parameters to use will dictate the
direction and potential results of the analysis. In light of this,
it is advantageous for an integrated system to provide feedback
and guidance to the user in selecting which metrics and KPIs
to use, ensuring that the process itself is analytical - scientific,
repeatable, and reliable.
THE CHALLENGE OF VISIBILITY
The key challenges of supply chain visibility are threefold: capturing
data, providing the right people with access to the right
data at the right time, and enabling and assisting those people
to take action. Capturing specific events that take place during
supply chain processes is essential to efficient and practical
visibility.
With RFID technology, companies can facilitate data capture
through automation and item level identification using standardized
processes to attain enhanced visibility. The ultimate
goal is to close the loop between action and automated information.
This means making access easy and providing prompts
and guidance to help the user take appropriate action while the
system provides feedback and forecasts along the way.
Event Capture Through RFID
By enabling the identification of single items in the network,
RFID is helping companies improve visibility into their inventory
data and increase accuracy up and down the extended
supply chain network. Companies can use RFID to make inventory
data more transparent and accurate, allowing them to
speed up the delivery process, respond more quickly to customer
demand, and reduce overall costs. The technology can be
used to track individual items or pallets throughout the supply
chain: across the factory floor, from loading dock to stack in the
warehouse, and onto retailers´ shelves. But RFID is not a silver
bullet, as there are significant challenges to integrating the
technology into existing systems.
RFID is seen as an enhancement to identification technologies,
and it allows much more visibility into inventory status and
event management than other methods, with great potential
to truly automate data collection. Bar code technology, for
example, requires repeated manual reading to track inventory,
while RFID allows for passive data tracking at any point. And
RFID identification tags offer the potential to carry additional code, allowing for much more information gathering. This adds
to the challenge, as use of RFID technology generates huge
amounts of data to handle.
Given the amount of data that RFID can generate, it is important
for companies to be able to fully incorporate RFID into their
supply chain networks. Complete process support is needed to
capture and handle RFID data, streamline and automate supply
chain processes with RFID, and integrate RFID information into
enterprise systems.
RFID also moves companies closer to truly real-time information,
improving on the capabilities of bar code technology with
automated identification. While supply chains are now much
more adaptive through new event management solutions, as
data still comes from electronic data interchange (EDI) feeds or
from business partners´ systems, these solutions fall short of the
potential of RFID and would more accurately be described as
almost real time.
When RFID tags are attached to products, boxes, and pallets,
the items can be followed automatically as they move, providing
an up-to-date and accurate view of inventory - and greatly
enhancing the ability to track and trace goods along the supply
chain. The end result is reduced costs, faster response to changing
customer demand, and an improved ability to have the right
product in the right place at the right time. If RFID technology
is more fully and comprehensively integrated in a company´s
enterprise system, then true real-time information and greatly
improved visibility into the supply chain is possible.
Supply Networks Cross Traditional Boundaries
To enable greater visibility across the extended supply chain, including
with business partners, companies need RFID event management
capabilities that enable them to track and trace electronic product codes (EPCs) across the supply network, receive
alerts when there are problems, and share EPC-related data with
business partners via EPC information services (EPCIS).
Given the huge amounts involved, capturing data is a tremendous
effort that requires an enterprise repository of processes and
products and can only be achieved within the owned network or
under pressure from regulatory and compliance issues.
Reporting mechanisms and KPIs are needed in order to compare
the performance of business partners´ supply chains. Event management
capabilities are necessary to support sensors for new tags
and the global trade identification numbers that are registered in
a central object naming service. Finally, the viewing, managing,
and sharing of RFID and event management information - both
internally and with business partners - should be facilitated
through a browser-based portal or dashboard.
Companies can implement RFID technology to control and improve
inventory management across the supply chain network
and work with partners to continue improving processes. They
can track and analyze the flow of goods from the customer´s
distribution center all the way to the retailer´s store and can enhance
visibility across the supply network. Integrated, comprehensive
RFID technology can help companies do the following:
- Understand actual inventory status, fulfillment, and
replenishment accuracy as well as customer demand.
- Manage exceptional events (such as inaccurate or late
shipments) on the basis of RFID events and automatically
trigger appropriate responses.
- Facilitate the accurate tracking, tracing, active replenishment,
and distribution of assets with associated RFID data.
- Speed up connection and integration with private or public
EPCIS.
Essential to process transparency is the ability to maintain and discern
the hierarchy and relationships of documents and objects in
the process flow at all times. Managers must be able to trace and
link documents and the related processes throughout the extended
supply chain, with the capability to connect, for example,
a purchase order, sales order, invoice, and receipt acknowledgement.
This document visualization is crucial not only to event
management, but also to analytical processes.
Access Crucial to Supply Chain Analytics
In order to make the right decisions in a timely fashion, based
upon a complete and accurate view of their business, we have
seen that companies need to align execution with business
strategy through credible and accurate insights into business
processes. People throughout a company need the ability to act
based upon timely and relevant information that is placed in
the context of the business situation they are facing. They need
the ability to find the root of the problem quickly when KPIs fall
outside acceptable ranges or objectives are not met. Managers
must have the tools to track business activities and make sure they
fall in line with overall business strategies, and clear metrics are
needed to achieve this aim.
Easy access to information is crucial to these goals. In a constantly
changing environment, that means the right information
must always be available so decision makers can take
action based upon accurate, timely, contextualized data. And
in the face of increasing regulatory and compliance pressures,
companies must have a comprehensive view of their business
information and operations.
User-Friendly Analytics
Having centralized control and easy, role-based access to essential
data is critically important in supply chain management. Predefined
analytical applications, delivered through a user-friendly
Web interface, can provide any level of user with secure, filtered access to key information regarding supply chain activities and
processes - the single version of the truth. And composite
analytical applications can guide the analytical process, providing
feedback for suggested action, projections, and predictions based
on the action to be taken. In this way, business intelligence is combined
with operational data in the context of the business process,
resulting in a "one-stop shopping" synergy of analysis and action
based on that analysis, closing the loop effectively and efficiently.
Connect Transactions and Analysis
Companies seeking more insight into their supply chain operations
have long been hamstrung by the separation of transactional
and analytical processes, caused by the fact that the two
kinds of processes have historically been supported by different
software solutions and technology. For example, an enterprise
resource planning solution might house a database of transaction
information, while analytical processes are carried out in
different departments, all running a variety of unconnected
spreadsheet applications on personal computers.
Integration is often insufficient even within the analytical
side of things, with separate departments running their own
analyses and no way to synchronize efforts systemically. Manual
attempts at synchronization are rife with errors, labor-intensive
and time-consuming, and difficult if not impossible to replicate
- not a very promising approach. Simple methods that are
mostly manual work well but offer limited results, while complex
methods that are mostly manual get bogged down by
errors and a lack of efficiency that result from manual
implementation.
What is needed is a way to connect the separate silos of transactional
and analytical processes, so that more complex analysis
can be performed in a way that is efficient and accurate as well
as repeatable and measurable. Businesses need to move from
analytical processes that are mostly hit-or-miss propositions -with managers buried under avalanches of incompatible spreadsheets
and error-ridden reports, hoping that revelations will still
somehow leap off the page - toward truly integrated decisionmaking
processes that are rigorous, dynamic, transparent, and
repeatable.
Fully integrated analytics are necessary to allow businesses to
take the best action with timely, relevant, and complete insights
into their organizational processes across the extended supply
chain, and spanning multiple functions, departments, and even
external organizations.
ANALYTICAL APPLICATIONS TO SENSE, RESPOND, AND LEARN
Fully realized supply chain analytics and visibility capabilities cannot
be add-on features. They must be integrated, built-in enterprise
functions that interconnect with planning, execution, and
collaboration tools and processes. Only in this way can these capabilities
fully coordinate and streamline supply chain processes.
Going forward, analytical capabilities must be fully synchronized
with actions, providing constant real-time information, guidance,
and feedback on decision-making processes.
The Benefits of Analytics
Integrated business analytics can provide credible information
that is timely, comprehensive, and actionable to provide better
business insight. Analytics help companies identify issues and
opportunities and provide a supportive collaborative environment
to facilitate the connection of strategy and action, thus
forging a timely connection between action and insight. This
can lead to an increased pace of innovation as better informed
companies can act with agility, taking action more quickly and
successfully. Companies can respond more quickly to everchanging
business conditions and thrive in today´s fast-paced
climate. Well-implemented analytics help companies understand
their business through relevant, contextualized information
and insights delivered in the context of their business
processes, giving them a competitive advantage in deploying
new processes and building new relationships.
Such enhanced visibility, along with a system that can integrate
insights and action, enables companies to align strategies with
execution and empowers managers to continuously plan and
monitor strategic, operational, and tactical goals. Integrated
analytics provide valuable insight across the value chain, covering
a wide range of end-to-end processes.
Managers can get overviews into current business order situations
through order analytical applications, which can provide
detailed information on invoice quantities, sales targets, and
existing orders. Complementing this capability, supply and
demand match analytics can provide users with an immediate overview of the demand situation, fulfillment options, sales
quantities, the ability to match demand with inventory, and
analysis of production lead times and inventory levels.
Analytics can also help companies get the most from their
suppliers with powerful tools that can rate the performance of
top suppliers, rate products, and analyze event alerts. This can
help mangers sort out which suppliers consistently outperform
others and which suppliers are problematic. And analytics provide
visibility into the performance of forwarding and delivery
agents, giving managers valuable overviews of efficiency, costs,
and various process metrics.
On a global level, analytics can give companies insight into
current capacity utilization status, as well as inventory within
the supply chain, helping provide a company-wide view into
inventory. With real-time visibility into goods movements
within a warehouse, analytics can help companies track which
products or parts are slow or fast moving and provide insights
into warehouse workloads and inefficiencies.
In addition to their inherent and sometimes indirect benefits,
analytics can generate bottom-line value through automated
processes. For example, actual carrier business share can be
automatically compared to contracted values, with a mismatch
in the numbers raising an alert to call for renegotiation of the
contract terms. In this way, analytics automatically note a
changed situation and trigger a change in the business, creating
value, reducing carrier costs, and increasing efficiency.
Looking Forward
The trend in network visibility and analytics is toward embedded
analytics in composite applications. Composite applications are
applications that gather different services from existing applications
and bundle them to new and flexible applications.
Examples are distributed order management, product tracking
and tracing, and sales and operations planning. On the horizon
are real-time analytics that are based upon real-world events,and integrated systems that connect transactional and analytical
processes, facilitating a company´s ability to learn about and
anticipate changes, closing the loop between event management
and analytics.
Extended order management will continue to transform historically
inward-facing processes, managing ever more complex and
dynamic order fulfillment up and down the supply chain. Internal
and external processes will be synchronized and tied to order
fulfillment. Orders can be managed from multiple channels and
fulfillment coordinated across different locations, as well as with
suppliers and business partners both inside and outside company
boundaries. With global information repositories extending across
multiple channels, EOM can be used to present a unified front, a
single identity to customers as more and more noncore supply
chain processes are outsourced.
In part due to pressure from large companies as well as government
and regulatory agencies that will increase the use of RFID,
bar code technology, together with global satellite systems, and
cellular technology will be used more and more to leverage
event data, moving extended supply chain visibility closer and
closer to actual real time. And beyond tracking, RFID technology
tags can store vast amounts of data about a particular item
and even be used for security and climate control purposes.
SAP SOLUTIONS FOR SUPPLY CHAIN NETWORK VISIBILITY AND ANALYTICS
To meet the challenges of rapidly changing market dynamics,
traditional linear supply chains and their sequential processes
must be transformed into virtual communities or networks.
These networks allow all participants - such as customers,
suppliers, logistics providers, and so on - to sense changes in
demand and supply conditions as they occur and to share the
critical knowledge needed to respond intelligently. The result
is an adaptive supply chain network that is not only demand
driven, but can also leverage its assets to influence demand
where appropriate. This requires a dynamic synchronization
of demand-driven planning, logistics, and network execution
based on real-time information that enables you to do the
following:
- Synchronize supply with demand by balancing push and pull
network planning processes to replenish and produce based
on actual demand.
- Sense and respond with an adaptive supply chain network in
which distribution, transportation, and logistics are driven
and integrated into real-time planning processes.
- Enable network-wide visibility, collaboration, and analytics
across the extended supply chain.
mySAP SCM: Rising to the Challenge of Adaptive
Supply Chain Networks
Adaptive supply chain networks are communities of customercentric
companies that thrive by sharing knowledge, quickly seizing
new market opportunities, and proactively responding to
shorter and less predictable product life cycles while intelligently
adjusting to changing market conditions. But most of today´s
best-practice supply chain processes do not provide the necessary
flexibility as they are based on a rigid paradigm of planning and
execution, which has inherent limitations. Unfortunately, we plan
in a perfect world and execute in the real world - and in the real
world things do not always go according to plan. When things
change in the real world, SAP software delivers the ability to sense
these changes and respond with timely and intelligent actions.
SAP software helps companies face the challenges of moving
toward a demand-driven business model to anticipate customer
desires and expectations, enabling companies to create more
adaptive supply chain networks. This allows them to act proactively
as well as responsively and create more collaborative,
cooperative, and transparent relationships with business
partners across the extended supply chain.
mySAP SCM enables companies to transform traditional supply
chains from linear, sequential steps into an adaptive supply chain
network. In such a network, communities of customer-centric,
demand-driven companies can share knowledge to intelligently
adapt to changing market conditions and proactively respond to
shorter, less-predictable life cycles.
mySAP SCM helps companies manage the complex and multifaceted
modern supply chain by aligning and synchronizing
operations with suppliers, partners, and customers; managing
supply chain events; and monitoring and evaluating performance.
The solution supports four main supply chain event management
processes: creating and evaluating supply chain event data; reporting
events and triggering subsequent activities; querying the
status of business processes; and conducting analysis in the data
warehouse.
SAP Event Management: Managing Events Across the Supply Chain
Companies can use mySAP SCM to perform event management
and gain visibility into processes, inventories, and events that
take place across the supply chain. Its notification, simulation,
and adaptive-collaboration functions help companies manage
information in heterogeneous systems and multiple levels and
facilitate the ability to detect problems, evaluate them, and solve
them - in real time. Companies can gain a comprehensive view
into the extended supply chain network, with planning execution,
collaboration, and coordination all integrated by design.
And the ability to sense and respond, integrated with analytic
functionalities, enables companies to adapt to business and marketplace
changes with efficiency and flexibility. The end result is
increased customer satisfaction, reduced costs, more effective
collaboration, stronger customer and partner relationships,
and communities that can work together in an adaptive and
responsive supply chain.
Part of mySAP SCM, SAP Event Management supports control
processes for managing events that occur across the extended
supply chain, both with and between companies. The application
helps companies understand, adapt, and respond to supply chain
events and supports tracking, monitoring, proactive alerting, and
the analysis of business processes.
SAP Event Management has a Web interface that provides for
usability across a wide range of users, with administrator settings
for the interface layout, branding, and company logo. It
allows for a great degree of customization and personalization
through user settings and favorites, as well as ease of use with
status icons providing a quick overview of a process. The Web
interface lets companies implement a role-based approach to
event management, enabling authorization and filtering and
making it possible for different people to view the same business
process from different perspectives.
SAP Solutions for RFID: Helping Manage Critical Data
Together with SAP Event Management, SAP solutions for RFID
- which include the SAP NetWeaver platform and its SAP
Auto-ID Infrastructure component - allow companies to connect
information and data related to transactions and business
rules and processes with the physical world of inventory, products,
and people. Using SAP solutions, companies can seamlessly
integrate RFID data into business applications with an
approach that goes beyond the demands of customer compliance.
Companies can use RFID to automate processes and
transactions across the supply chain to achieve better inventory visibility, perform exception-based reporting and event management,
and become more responsive to customer demands and
adaptive to changes in the marketplace.
The solutions are designed to handle the large amounts of data
generated by the use of RFID technology, minimizing data
replication and enabling businesses to integrate all automated
communication and sensing devices, including bar code devices,
Bluetooth devices, and RFID readers and printers. Event management
software tracks and exchanges data through the
various infrastructures across the supply chain, provides visibility
across different companies and warehouses, and enables
automatic notification of events.
Companies that implement this technology will benefit from
increased operational flexibility and efficiency and enjoy sharper
insights and increased visibility into their business processes.
Real-time stock and inventory data will allow businesses to run
more efficient warehouses, catching errors earlier by verifying
expected reads against actual reads, keeping managers in the
loop on exactly what is happening, while it is happening.
With the solutions companies can control and improve inventory
management across the supply chain network - and work
with partners to continue improving processes. Companies get
more visible and accurate inventory information, allowing
them to respond more quickly to customer demands, speed
delivery, and reduce costs.
In the future, SAP solutions will provide event management
functionalities that will allow companies to track and trace
EPCs across the supply network, receive alerts when there are
problems, and share EPC-related data with business partners via
EPC information services. The solutions will include reporting
mechanisms and KPIs needed to compare the supply chains of
various business partners, along with event management functions
needed to support sensors for new tags and the global trade identification numbers registered in a central object naming
service. And the solutions will include a powerful, browserbased
portal that makes it easy to view, manage, and share RFID
and event management information - both internally and with
business partners.
Companies that implement the solutions can reap great benefits,
including opportunities to enhance collaborative planning,
forecasting, and replenishment; improve the exchange and
monitoring of in-store and out-of-stock situations; increase
visibility into inventory levels and customer demand; and
improve vigilance against theft and counterfeiting problems.
SAP xApp Analytics: Closing the Loop in Supply
Chain Management
The SAP xApp Analytics composite application provides
companies with comprehensive supply chain management
functionalities, delivering actionable, contextualized information
and enabling the integration of transactional, collaborative,
and analytical processes. SAP xApp Analytics integrates seamlessly
into existing business processes and across functional and
even organizational divides. Guesswork and multiple versions
of the truth are eliminated, allowing businesses to close the
loop between operations and performance management, providing
guidance, and enabling the successful execution of the
company´s goals.
SAP xApp Analytics empowers people throughout the company.
Executives can monitor performance and bring execution
in line with corporate strategy. Business people and knowledge
workers can access and analyze the information they need to
perform to their maximum potential. IT workers can create
value by providing the entire company with more powerful,
integrated tools. And partners and suppliers can get access to
the data they need to help form a more cooperative collaborative
business community.
mySAP SCM: Providing Crucial Visibility and Analytics Support
mySAP SCM gives companies crucial support in evaluating
process performance so that they can make improvements to
better adapt to customer demand on a real-time and ongoing
basis. Using mySAP SCM, companies can face internal processes
outward and collaborate seamlessly based on a clear understanding
of the constraints and opportunities of their partners,
facilitating visibility and understanding of the supply chain and
improving customer service levels.
The analytics functions of mySAP SCM enable network-wide
visibility and collaboration, facilitating a common information
framework across an extended supply network. Companies
can extend their network response processes to key customers
and suppliers, use built-in business intelligence to adapt more
quickly and with better accuracy to customer demand, and
gain better visibility into supply chain event management.
With the comprehensive analytic portfolio of mySAP SCM,
companies can take the best action armed with timely relevant,
complete insights into their business processes across the extended
supply chain, crossing departmental and even organizational
boundaries.
Empowered by increased visibility, companies can align business
strategies with execution, so managers can continuously plan
and monitor strategic, operational, and tactical goals. Companies
can create insights across all functions including those
in planning, procurement, manufacturing, order fulfillment,
and inventory management, with the help of more than 1,000
predefined KPIs, many of which are based on the supply chain
operations reference (SCOR) model. And with function- and
industry-specific analytic applications, companies can take
advantage of actionable business insights in the context of the
business process in question across the complete value chain,
delivering value for users throughout the corporate hierarchy.
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