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Evolving Your Inventory Planning and Management Through Advanced Analytics

by Kumar Singh, Research Director, Automation & Analytics, SAPinsider

Inventory planning- The constant balancing act

Inventory planning is one of the most critical and most challenging aspects in supply chain planning. This means that implementing an effective inventory planning and management strategy is crucial for an organization to stay competitive in today’s dynamic global supply chain landscape. There is always room to bring more science into the planning process for this critical balancing act between service levels and the cost of inventory. With advances in data science and the proliferation of advanced planning algorithms in the world of business, there may be an opportunity to leverage a more holistic inventory planning process, one that leverages multiple advanced analytics approaches in tandem.

Advanced analytics has the capability to re-invent inventory planning and management

In my opinion, a key strategy to successfully exploiting your investment in digitalizing your business processes, is to leverage the data that is generated to gain insights and build analytics capabilities. That is the true competitive differentiator obtained from investing in digital technologies. Data is the new oil but just like oil, it needs to be transformed into a state that enhances its value. And that state is building Business Intelligence (BI) and advanced analytics capabilities from your data.

The exponential progress in data science and computing has finally started making inroads in the supply chain world. While conventional operations research has been used in supply chain and manufacturing for decades, advanced analytics methodologies are also seeing an uptick in their adoption in the supply chain world. With Industry 4.0 capabilities on their mind, companies are making a push to build advanced capabilities within their supply chain as a foundation and advanced analytics is one of those capabilities.

The need to evolve beyond vanilla inventory optimization

Adoption of advanced analytics methodologies in supply chains has definitely  increased recently but many areas within supply chains are still using approaches that may not be optimal in this era. We have seen the havoc wrecked on supply chains across the globe during the pandemic because of the just in time approach. Another approach that leads to struggle for many companies is the rigid safety stock calculation approach that is at the core of traditional inventory optimization tools and methodologies.

Though safety stock does provide a decent grasp of how much invetory you need to hold across your supply chain, it may not be sufficient by itself, in my opinion, as far as today’s dynamic business ecosystem goes. As supply chains have evolved and become much more complex in last couple of decades, it may be the right time to use other analytics levers in tandem with traditional inventory optimization approaches to build more realistic inventory management and planning processes.

 

Analytics levers for inventory management and planning

While inventory optimization certainly remains one of the key levers to use for inventory management and planning, below are some additional approaches that can help you ensure that you have optimal inventory levels in your network. Please note that these approaches need to align with each other in order to implement a truly optimized inventory planning process.

Demand forecasting : While it is a no brainer that accurate demand forecasts play a significant role in helping reduce on hand inventory, traditional time series methods have started to struggle as the complexity and noise in demand data has increased exponentially. Machine Learning (ML) based advanced analytics algorithms can tackle many challenges that traditional time series forecasting algorithms are running into these days.

For a detailed overview on using Machine Learning algorithms for demand forecasting, please refer to this article:

https://www.sapinsideronline.com/articles/leveraging-machine-learning-for-demand-forecasting/

Supply chain segmentation : Many organizations have traditionally leveraged a “one size fits all” for inventory planning, where traditional inventory optimization methodology was force fit on local or regional supply chain demand data. But the reality today is that there are many supply chains operating within a single supply chain, even in the same geography. Optimal data driven supply chain segmentation is a must, prior to embarking on inventory optimization journey. Advanced analytics algorithms, like k-means clustering can help you automate your supply chain segmentation exercise, thereby reducing your planning cycle time for inventory planning.

Strategic inventory classification : Organizations traditionally have leveraged ABC classification for inventory categorization for decades now. While it is still a better approach than any other tribal approach, the realities of product portfolio and demand dynamics are much more complex in today’s supply chains vs what they were when ABC analysis first came into existence. Advanced analytics can help here as well. Clustering algorithms can help create more strategically aligned clusters (categories) vs the classic ABC approach. While this may increase the number of inventory groups, the potential to reduce inventory cost is significant.

Optimal network design: It should not be news for any supply chain practitioner that the network footprint of your supply chain impacts the amount of inventory you hold in your network. Organizations have been leveraging supply chain network modeling to design optimal supply chains for decades but not all such exercises incorporate inventory cost impact in an optimal way. The fact is that if you do not incorporate inventory cost aspects in your network design, you are essentially “locking” avoidable inventory costs every time you redesign your footprint.

Manufacturing optimization : Leveraging even vanilla simulation tools can help you minimize the inventory in your manufacturing process as well as raw material inventory. If your supply chain systems are optimally integrated, you can incorporate dynamic data points like inbound raw materials and semi-finished goods data as well as demand pulls into your manufacturing planning to optimize your manufacturing planning even further. And this impacts the total inventory you hold in your network.

Warehouse optimization: Since warehouses perform the ugly task of holding the inventory, they are always the focus of inventory optimization initiatives. But the focus most of the time is on finding the optimal level of inventory to hold at each warehousing location based on the demand that the particular warehouse fulfills. However, there are inventory reduction opportunities hidden in warehouse layout and flow design. Advanced analytics can help design optimal warehouse layouts and leveraging analyticalapproaches on data captured by WMS systems can help you run a leaner warehouse.

Transportation optimization : Ever since manufacturing footprint of companies started getting globalized, transportation has played a key role in contributing to the amount of inventory that is held in the network. Leveraging advanced optimization algorithms and heuristics, you can design transportation networks and routes that are “inventory friendly” which means they try to minimize the impact of transportation on the network inventory.

What does this mean for SAPinsiders ?

Establishing a holistic inventory planning process is a challenging task and advanced analytics can certainly provide significant advantages. Here are few aspects that SAPinsiders should be cognizant about:

  • SAP has a robust Inventory optimization and planning capability in IBP tool. Being a SAP product, it integrates seamlessly with your SAP ecosystem.
  • Unknown to many, SAP provides consulting services as well, to help those running on SAP develop best in class inventory planning and management capabilities.
  • If you are looking at third party tools, the good news is that there are many options available in the market. Many of these tools are cutting edge however which one is a good fit depends on your unique business requirements.
  • There is also an option to develop an inventory planning platform from scratch, that taps into your SAP and other systems, using open source programs. The critical aspect of building this platform is to ensure that you build a robust data hub or data lake. SAP data hub is also an option you can explore.

 

Kumar Singh, Research Director, Automation & Analytics, SAPinsider, can be reached at kumar.singh@wispubs.com

 

 

 



Best Practices for SAP High Availability in AWS

By Brett Barwick, Senior Software Engineer, SIOS Technology

Any organization relying on an SAP ERP solution has, implicitly, an interest in control. That’s not a bad thing: you rely on SAP because the world in which you operate is complex. Your reputation and your own expectations demand that you deliver your products and engage with your customers in a predictable manner. But control also extends to the data center in which your SAP landscape has been running. Your IT organization may be comfortable ensuring the availability of that landscape when it is on-premises, in a data center it controls. At the same time, it may see very good reasons for that landscape to run in the AWS cloud.

The question is, how can an SAP landscape be configured in the AWS cloud to ensure the high availability (HA) you expect? While on-premises, IT knows what to do. But in the AWS cloud?

That’s a question we can address today.

Ensuring HA for SAP in AWS

The key components of an SAP ERP system that one would deploy on-premises — at the presentation, application, and database layers — are also deployed in the AWS cloud. What differs from an HA perspective is how they are deployed. There are single points of failure that threaten the high availability of the solution. In the presentation layer, the SAP Apache content management system is one; in the application layer, the file system manager is another, as are certain core SAP services, such as the message server and the enqueue server. Should any of these services fail — regardless of whether that is due to human error or a hardware failure in an AWS Availability Zone (AZ) — the availability of your entire landscape is threatened.

Best practices exist to ensure operational continuity of your SAP landscape in AWS. To begin with, you should build out your HA SAP landscape across multiple AWS AZs. This ensures that if the virtual machines (VMs) or the underlying servers in one AZ go dark, the infrastructure in another AZ can be called into service immediately. For full disaster recovery you should consider creating a shadow landscape in a geographically distinct AWS region. This provides a hedge against a catastrophic failure that could take down multiple AZs in a single region.

You’ll treat the network resources connecting the components of your landscape differently as well. Within and among AZs in an AWS region there is ample bandwidth to move information among the nodes of your SAP landscape without delay. However, the environment is likely more complex than any your IT team will manage on-premises — but a certain amount of abstraction is advantageous. Best practices involve the use of floating IP addresses and cloud quorum/witness features so that underlying resources can be swapped in and out transparently as availability demands dictate.

Finally, the manner in which data is stored in AWS must be considered and proactively addressed. You can’t use shared storage resources in the cloud in the same way you can on-premises, meaning you’ll need to anticipate how and where your data will be stored. Again, distributing storage across multiple AZs helps ensure HA, but you’ll also have to consider how that data is properly replicated among distributed storage. You’ll also have to consider how you’ll track, manage, and protect important mount points for partitions, logical volumes, and NFS exports.

Intelligent Management of Cloud Components

While distributing the components of your SAP landscape among different AWS AZs is critical for HA, so too is the deployment of a landscape monitoring and management solution. You need a solution that can monitor the health of each of these components, immediately identifying any component that is not performing properly and orchestrate the process of repairing the problem as quickly as possible.

The intelligence of such a solution is key, because different issues affect different components of an SAP landscape in different ways and no single remedy is universal. Some availability problems may be solved almost instantaneously by restarting a process on a specific VM; others may require a VM in another AZ to go online, and that may require the reassignment of IP addresses and the restarting of several SAP services in a specific sequence. Monitoring and management tools that are SAP-aware are key to an appropriate, orderly, and expeditious response.

In particular, you’ll want to look for monitoring and HA management tools that look at an SAP landscape across multiple dimensions. Tools that simply listen for a heartbeat from the SAP primary application server (PAS), for example, and then initiate a failover to a secondary server in the absence of a detected heartbeat are too heavy-handed. A suite of SAP-aware tools that can monitor the performance of critical processes on individual landscape components can provide a broader range of appropriate actions. With that kind of intelligence, lower-level issues that might eventually compromise a component in the cloud can be detected and automatically addressed before they cause serious problems.

At the same time, this suite of tools must also be AWS-aware. They must be able to translate the appropriate responses to issues detected within components of the landscape to actions appropriate to AWS. If the appropriate response is to restart a particular component within the SAP landscape on a new VM, the tools must be able to orchestrate that restart in the appropriate AZ, make the relevant IP address changes, and so on. If an error causes a database in one AZ to go offline, an intelligent monitoring and management solution orchestrates the replication of data to secondary instances of that database and manages all aspects of bringing that secondary database online seamlessly to ensure ongoing availability of the SAP landscape.

For IT departments accustomed to ensuring the availability of an on-premises SAP landscape, the cloud offers many advantages and raises many questions. But these questions have answers. It is possible to run your SAP landscape in the cloud and achieve the level of HA that you’ve been accustomed to in your on-premises deployment. It requires planning, and it takes an appreciation of the core technical differences between an on-premises environment and a cloud environment like AWS. Add to that a suite of intelligent, SAP- and AWS-aware monitoring and management tools, and your enterprise will be in good hands going forward.

 

MEET THE EXPERTS

Brett Barwick SIOS
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Brett Barwick, Senior Software Engineer, provides the SIOS engineering team with in-depth expertise in SAP. He is also an AWS Certified Solutions Architect - Associate, well versed and knowledgeable in the cloud. Before joining SIOS, Brett was an Assistant Professor of Mathematics at the University of South Carolina-Upstate. He holds a Ph.D. in Mathematics from the University of South Carolina-Columbia.



Securing the SAP Landscape Against Cyber Threats Benchmark Report

Over the past several years SAP systems have increasingly been targeted for cybersecurity attacks as they contain some of the most critical data within the organization. Part of the reason for this is the fact that those SAP systems are increasingly becoming more connected with each other, with applications like SAP SuccessFactors and SAP Ariba now connected with other financial and ERP systems. But another factor is that there is more information on potential exploits and security flaws being found and shared. Combined with a now largely remote workforce where user roles and access may have broadened to facilitate teams that are no longer under the same roof, systems are now at risk more than ever.

Read the report to:

  • Discover what drives security for the SAP landscape.
  • Understand how SAPinsiders approach securing their SAP landscape.
  • Find out which technologies are being used to secure SAP systems.
  • Learn the top requirements for cybersecurity.
  • Gain your steps to success.

Download the report now!


SAP S/4HANA Finance and Central Finance: State of the Market 2021 Benchmark Report

Finance and accounting teams are prioritizing visibility, simplicity, and automation as they solidify their strategies and investments for 2021. While system complexity and data siloes have stifled efficiency and the ability to derive insights for many years, business and IT leaders realize that they can no longer operate competitively and efficiently within the status quo.

To understand how SAP customers are adapting their strategies and technology investments to evolve their finance and accounting organization SAPinsider surveyed 168 members of our community in April and May of 2021.

Our research finds that a majority of companies are focused on reducing complexity and cost as a primary driver of their overall finance and accounting strategy. With this reduction, they are hoping to solve their biggest pain point which is a lack of visibility. Over the past three years of our study, reporting has risen from the third largest pain point to number one. (see Figure 1).

Read the report to:

  • Discover what business pressures drive Finance and Central Finance initiatives.
  • Understand how SAPinsiders approach implementing Finance programs.
  • Find out which technologies are being used for Finance and Central Finance.
  • Learn the top requirements for Finance and Central Finance.
  • Gain your steps to success.

 

Download the report now!


Governance Risk and Compliance: State of the Market 2021 Benchmark Report

Governance, risk, and compliance (GRC) systems and professionals are increasingly important as regulations around data become stricter and corporate systems become a more frequent target of cybersecurity attacks. These risks and compliance challenges are compounded by the fact that many SAP organizations are in the process of transitioning to new technology — be it SAP S/4HANA or cloud offerings. The global pandemic and economic turndown of 2020 added more GRC concerns around remote work and budgets.

To understand what SAP customers are doing in the area of GRC, SAPinsider surveyed 167 members of our community in April and May 2021. The goal of the survey was to understand the most important factors driving GRC for SAP customers, and what strategies are being taken to address these factors. The greatest influence for survey respondents (58%) in the area of GRC was new technology migrations (Figure 1).

Read the report to:

  • Discover what business pressures drive GRC initiatives.
  • Understand how SAPinsiders approach implementing GRC programs.
  • Find out which technologies are being used for GRC.
  • Learn the top requirements for GRC.
  • Gain your steps to success.

 

Download the report now!


Simplification and Innovation with SAP on Azure

Roundtable - 17, June 2021 at 14:00 BST

Join us for this complementary roundtable to find out how two of your strategic partners are working together to help you simplify, automate, and innovate! We will be exploring the benefits of running SAP’s business applications on the Microsoft Azure platform and reviewing real-world deployment examples. We will also look at the opportunities for integration, analytics, and innovation extensions using a combination of the SAP Business Technology Platform and Azure products and services.

This content is available to SAPinsider Premium Members.
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MEET THE EXPERTS

Timo Elliott SAP
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Timo Elliott is an innovation evangelist and international conference speaker who has presented to business and IT audiences in over forty countries around the world. A 23-year veteran of SAP BusinessObjects, Elliott works closely with SAP development and innovation centers around the world on new technology directions. His popular Business Analytics blog at timoelliott.com tracks innovation in analytics and social media, including topics such as big data, collaborative decision-making, and social analytics. Prior to Business Objects, Elliott was a computer consultant in Hong Kong and led analytics projects for Shell in New Zealand. He holds a first-class honors degree in Economics with Statistics from Bristol University, England.

Gavin Nichols Microsoft
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Gavin Nichols is a platform innovation specialist who has worked in the industry for over 20 years representing IBM, Oracle, SAP and Microsoft aligning with organisation executives to challenge their outlook and build plans for the future. Has most recently presented at the International SAP Conference for Oil & Gas championing the augmentation of data types to drive better business outcomes. Represents Microsoft as part of the UK Strategic Partnerships Team, disrupting business thinking and approaches for SAP workloads. He holds a BEng Degree in Systems Engineering from the University of Plymouth, England.

A Partner Perspective on RISE with SAP

Webinar - On-Demand

SAP and SAPinsider have answered your questions on RISE with SAP, but what are partners saying about the product? How are they seeing RISE with SAP? And what are they doing to help their customers leverage the solution? In this webinar, Robert Holland from SAPinsider will discuss RISE with a panel of partners who have significant experience in the cloud deployment and transformation space, to get their insight on the solution.

Attend this webinar to:

  • Lean about the partner perspective on RISE with SAP
  • Hear how partners are working with RISE
  • Explore options for leveraging the solution
  • Leverage the opportunity to have your questions answered

MEET THE EXPERTS

Mark Shields PwC
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Mark is an SAP S/4HANA and digital transformation leader with over 24 years of SAP experience.  He specializes in architecture and infrastructure and has deep technology skills focused on Cloud, hosting, integration, and the intersection of SAP S/4HANA on Cloud. Mark has participated in roles ranging from subject matter advisor to program lead on more than 30 complex technology initiatives for Fortune 500 clients, including direct experience with SAP S/4HANA transformations, conversions, and replatforming on Cloud. Mark’s main role with his clients includes:

  • SAP S/4HANA Roadmap and Transformation
  • Modernizing and re-platforming SAP S/4HANA on Cloud
  • Leveraging SAP S/4HANA and Cloud to accelerate digital transformation

Joao Couto Microsoft
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With more than 25 years of professional experience, Joao Couto is the Vice President for the SAP Business Unit at Microsoft. Prior to this, Joao held leadership roles in Microsoft subsidiaries in Germany and Portugal. Before joining Microsoft, Joao was the CFO at Vodafone Group Commercial in UK and Portugal and VP and Partner at ATKearney Management Consulting. Joao is a transformational leader who is passionate about combining both strategy and execution to deliver rapid business growth in challenging environments through highly motivated and energized teams.

Adil Zafar IBM
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Adil is an Associate Partner at IBM with over 21 years’ experience in winning and delivering SAP consulting services. Currently he is the Global Leader for RISE with SAP at IBM helping clients on the journey to S/4HANA and beyond. He has delivered numerous SAP S/4HANA Programs as a Technical Design Authority and continues to provide Thought Leadership on SAP S/4HANA on Hybrid Cloud.

Increasing Threats Highlight the Need for Robust Enterprise Risk Management

by Fred Donovan, Senior Editor, SAPinsider

In the face of challenging micro and macro events companies need to be able to anticipate and better manage the impacts on their core business objectives. Additionally, legacy business models and IT landscapes don’t contain all of the capabilities necessary to manage risk across the entire enterprise. For example, intelligent technologies like robotic process automation are not available in older ERP systems. As a result, there is an urgent need for a new approach to risk and compliance by incorporating governance, risk, and compliance (GRC) and security in digital transformation initiatives.

This innovative approach requires an integrated enterprise risk management (ERM) program. “Integrated enterprise risk management should not be considered an issue for only IT or auditors to address,” Michael Heckner, Senior Director of GRC Solution Marketing at SAP says.

“Having transparency into all the business risks that stand in the way of achieving strategy and business objectives is key to accomplish risk-adjusted management and to help carry on performance and keep processes running in any environment,” he adds.

Integrated ERM Trends

The integrated ERM trend is accelerating, with 98% of organizations saying they have a full or partially integrated ERM program, an increase of 26% from 2017, according to a recent survey by the Risk Management Society (RIMS).

Three-quarters of senior leadership teams and boards are applying ERM insights for business decisions, and close to half of respondents said that “meeting strategic and operational objectives” is ERM’s greatest value to the organization.

More than half of ERM programs have shifted their focus to health and safety and business continuity as a result of the COVID-19 pandemic, and 22% of respondents said there has been an increase in resources allocated to ERM in response to COVID-19.

“Enterprise risk management is now an accepted mainstream business discipline. That said, work still needs to be done to make ERM fully integrated, agile, and proactive,” according to RIMS.

SAP Solutions and the Three Lines Model

SAP bases its GRC solutions on the Three Lines Model (Figure 1), which provides a framework for managing GRC:

  • Operational management: identify, assess, document, and respond to risks in business operators; comply with laws, regulations, and internal policies; monitor risk, responses, and compliance status; raise, report, and respond to incidents and breach events; accept advice from the internal audit team.
  • Corporate risk and compliance: set the context and provide frameworks for GRC; oversee risk and compliance management methods; monitor risk and compliance outcomes; aggregate and report GRC insights and conclusions; accept advice from the internal audit team.
  • Internal auditors: manage audit activities for the first and second lines; plan and perform audits to support assurance requirements; communicate the results of engagements; and report on the reliability of work performed in the first and second lines.

Source: SAP

The model provides a self-correcting framework in which each line collaborates with the others to provide integrated and reliable information and response. SAP supports the framework with its SAP Digital Boardroom built on SAP Analytics Cloud.

To secure its systems, SAP offers a GRC solutions suite that includes SAP Risk Management, SAP Process Control, SAP Access Control, SAP Business Integrity Screening, SAP Audit Management, and SAP Tax Compliance.

SAP’s GRC solutions help enterprises simplify their GRC processes, gain insights from detailed reports, and enable continuous monitoring of risk and controls.

To learn more about managing enterprise risk and SAP’s GRC solutions, read SAPinsider’s recent article “How to Manage Enterprise Risk in Remote and Digital Environments.”



Shift to Remote Work Underscores Need for a Robust Identity and Access Management Program

by Fred Donovan, Senior Editor, SAPinsider

As a result of the COVID-19 pandemic, remote workforce models are likely here to stay. This shift magnifies the importance of organizations guaranteeing that only authorized individuals can access their network and data. The best way to avoid unauthorized users from entering SAP systems is through a robust and automated identity and access management (IAM) program.

According to a survey of IT decision-makers by LastPass, 98% of respondents said they depend on IAM platforms to secure their business in the current work-from-anywhere environment, and 96% said that remote work had impacted their IAM strategy.

More than half of respondents strongly agree that increasing security for their remote workforce using IAM is critical.

Respondents recommended IAM solutions such as single sign-on, multifactor authentication, and password management to secure remote workers while IT retains visibility and control over logins.

Sarma Adithe, SAP’s Chief Product Manager for Access Governance, advises organizations to adopt cloud-based user authentication and provisioning to ensure a unified approach for IAM and support the identity lifecycle of employees.

Figure 1 — The identity lifecycle of employees

Managing the identity lifecycle of employees (Figure 1) is vital for production and compliance. Productivity is impacted when an employee cannot access required resources to accomplish a task. Regulatory compliance issues can arise when an employee keeps access rights to resources no longer needed or authorized.

Automating IAM in a Complex Enterprise Environment

Automating IAM helps the IT team secure a remote workforce in a complex enterprise environment, James Roeske, CEO of the Customer Advisory Group says. “Getting people the right access in an automated, safe, and Segregation of Duty (SoD)-free way helps everyone.”

An automated IAM system that defines and grants access triggered by HR events will enable a new employee to be productive on day 1. An automated IAM platform will continue to boost productivity because it adjusts the employee’s access as roles and responsibilities change. And once the employee leaves the organization, all access must be canceled to ensure that person no longer has access to corporate resources.

In addition, IAM controls should align to corporate governance objectives and polices. “The cycle should be able to identify risk, associate mitigation control, and apply Continuous Control Monitoring (CCM) to help ensure mitigation controls are still effective,” Adithe observes.

Automated IAM needs to be supported by human-instituted policies and controls to protect organizations, comply with regulations, and enable maintenance and cleanup of access.

“Assigning access that honors all the required policies and regulations from a compliance standpoint should be an inherent process,” Adithe says. He also recommends harmonizing access and defining employee responsibilities and roles in a standardized way.

Automated IAM, along with good access hygiene, effective role design, and human decision-making, will help keep organizations secure in a remote and constantly evolving work environment.

To learn more about automated IAM in the enterprise, read SAPinsider’s recent article “How Identity and Access Management Technology Is Supporting People Power.”