by Kumar Singh, Research Director, SAPinsider
As supply chains become more global, complex, and interconnected, they become increasingly difficult to manage and plan. Fortunately, technology now provides us solutions that can help us tame many of these complexities. A key category of imperative supply chain solutions is end-to-end-supply chain planning solutions. These solutions plan and optimize for the entire supply chain, thereby not only providing end-to-end visibility but generate end-to-end optimization opportunities as well.
Taming supply chain complexity through end-to-end planning
While ERP systems like SAP bundle top level business processes to present an end-to-end view of supply chain operations, the next stage is to leverage that visibility and data to synchronize your supply chain operations. It is precisely for this reason that an end-to-end supply chain planning and optimization solution is the need of the hour. A best-in-class, end-to-end planning solution will integrate key planning aspects across the supply chain. The solution would integrate planning aspects starting with procurement, all the way to customer delivery. And this is where the true power of supply chain planning comes into picture. Having an end-to-end solution helps you attain true supply chain synchronization capabilities, which is now imperative to build in complex supply chains today. SAPinsider recently had the opportunity to speak with solution experts from GIB, a leading provider of end-to-end supply chain optimization solution for SAP ecosystem, to get their perspectives on why end-to-end supply chain planning tools are an imperative in today’s highly interconnected and complex supply chains. You can watch the full video of the discussion here:
Limitations of conventional planning solutions and approaches
In conventional supply chain planning, each sub-function within a supply chain plans and optimizes for their objectives. While this may lead to local optima (i.e. efficiencies and optimal operations within one sub-function), it may end up creating a global suboptimal within the supply chain (where a planning approach to optimize one department may create inefficiencies in another department). According to Eric Jones, Director of solutions at GIB, “Adding to the inherent complexity of supply chains is the further bifurcation of data and processes across the supply chain sub-teams. The most common disruption of supply chain connectivity are the spreadsheet data silos that each subgroup creates for their personalized views, analysis and decision making. These spreadsheet data silos are created in response to the rigid, single transaction orientation of SAP. When the information flow is disrupted by offline data pools; delays, errors, and costs are added to supply chain operations.”
A synchronized planning solution takes the end-to-end visibility aspect one step further into the planning domain. An end-to-end planning capability helps place the highly interconnected nature of supply chains into perspective. This is critical in the context of operating ecosystems that are increasingly becoming uncertain and where a minor planning hiccup in one area may end up cascading into a major disruption in another area. Alex Kasher, Senior solutions advisor at GIB points out: “In an SAP context, supply chain visibility is a challenge. Too often, improvements and innovations to supply chain technology exist outside of the System of Execution (SOE), which for SAP customers is ECC or S/4 HANA. Once you create a separate System of Planning (SOP, or S&OP) from the SOE, you create a break in the end-to-end flow of supply chain information. Most SAP customers chose SAP for the integration. Introducing an external SOP creates a counterintuitive disruption between planning and execution.”
When an end-to-end solution plans for a sub-area within the supply chain, it would consider the potential impact in the other area. Similarly, the solution, through the near real time visibility data, can flag the implications of issues in one area on other areas within your end-to-end supply chain. End-to-end supply chain planning and optimization An end-to-end planning solution has many associated features that makes it optimal for leveraging it in planning end-to-end supply chain operations. However, the following three features are critical and should be inherent in every end-to-end planning solution:
Optimization – End-to-end optimization capability should be inherent to the solution. This capability is not as straightforward as it seems. Supply chain optimization is challenged by volume, complexity, variability. Businesses need systems and algorithms to process the mass of data to find patterns, outliers, exceptions, and probable outcomes. A good end to end planning solution should provide this capability to them.
Convergence – Planning is a productive capability to have only when it translates into effective execution. The more disconnected systems of planning are from systems of execution, the less likely those plans will be realized. This calls for planning and optimization systems that either have integrated execution aspects or can seamlessly connect with execution systems. This integration also introduces ease of use for the end user, another key requirement for a best of breed solution.
Adoption – Introducing new processes and optimization tools are a challenging endeavor for any organization. That challenge is compounded when those tools are delivered through a different user interface and software navigation. Successful user adoption is at its highest probability when the new processes and tools are delivered within a familiar user interface.
What does this mean for SAPinsiders?
- End-to-end supply chain solutions are no longer nice to have but a must have today. The need is exacerbated not only due to the complexity of supply chains but also due to the complexity of inherent modules within SAP systems that cater to supply chain. Some key aspects that SAPinsiders need to be cognizant about when evaluating implementing end-to-end solution capabilities are:
- Map your supply chain processes. A crucial first step is to understand your end-to-end supply chain. Make sure you have a current repository of data around your existing supply chain that will contain documents like process maps, standard operating procedures, system schemas, standard configurations for planning systems etc.
- Re-engineer business processes when required. A key foundation to successful implementation of any solution is to ensure that your business processes are aligned to the evolving realities. Force fitting solutions on archaic processes will not yield the transformational results you desire.
- Develop talent to support best in class planning. One of the three key ingredients (people, processes & technology) of successful transformations is your talent. You must ensure that those who are working on implementing solutions as well as those who will interface with these solutions in the future, understand the technology well.
- Develop a deep understanding of what type of solution you need. There are many best-of-breed solutions in the market, and you need to carefully evaluate which of those align with your unique business requirements. You may not always need all the bells and whistles that some of the solutions may provide. An optimal selection will provide you the capabilities you need while minimizing the cost of ownership.
Kumar Singh, Research Director, Data & Analytics, SAPinsider, can be reached at firstname.lastname@example.org
GIB, an SAP silver partner, is a global supply chain solutions company that provides solutions to improve supply chain processes and planning. GIB’s solutions are focused on SAP ecosystem and are currently leveraged by 800+ customers in 20 countries. GIB has been helping its customer achieve end-to-end supply chain efficiencies for more than three decades now. www.gib.world