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SAP SCM is an umbrella term for a set of applications that provide advanced planning capabilities. This set of applications is fed by standard SAP integration technologies, which include the Core Interface (CIF) and BAdIs, among others, that connect the system to SAP ERP. SAP SCM is used to improve and optimize the supply chain by enabling automated decision making, providing improved analytical tools to users, and sharing information with internal system customers and external business partners. SAP SCM was introduced as SAP Advanced Planning & Optimization (SAP APO) in 1998. It contained the following basic components: Demand Planning Supply Network Planning Production Planning and Detail Scheduling Global Available to Promise It was used to carry out planning and optimizing functions as regards to supply chain area. Over the years, SAP has been adding functionalities to its APO component and now the APO component come under the umbrella of SAP-SCM with addition of functionalities like Supply Network Collaboration ( also known as Inventory Collaboration Hub) Extended Warehouse Management Service Parts Planning

SAP has a relatively, standard solution architecture for supply chain management that has grown through time to reflect the trends of advanced planning. While SAP SCM began its life as SAP APO and was originally intended to perform advanced planning only, it has since evolved to essentially be a repository for all advanced supply chain functionality not covered in SAP ERP. As an example, while the SAP warehouse management functionality in SAP ERP has essentially been stabilized, the more advanced functionality has and will continue to migrate to the SAP SCM application known as SAP Extended Warehouse Management (SAP EWM). Both applications cover warehousing, but their capabilities are different. SAP SCM is based upon a supply chain network, which is a combination of locations, products, and transportation lanes.

SAP SCM, as with the plant and material master in SAP ERP, stores a large amount of configuration information in the product master, location master, and the product location master. SAP SCM is most beneficial to companies that are dedicated to improving their planning processes and that already have good planning processes to begin with. While were not able to find specific research to back this up, our anecdotal evidence from our experience on projects indicates that the better the company is at planning before it implements an advanced planning system, the more the company gets from the implementation. Being effective at planning helps the company know how to design the system and also allows the company to better leverage what it ends up implementing. Some companies are better suited to undertaking an SAP SCM implementation than others. Most important factor which results successful SAP SCM implementation are: Current SAP ERP users Already have effective planning processes Make planning a priority Focused on improvement