Fill In the Missing Links

in Your SAP Supply Chain

SAP users sometimes focus on certain features in a tool and neglect the rest. But customers
would be well served if they brush off the rust and put everything theyve invested in to use.

Editors note

SAP Addresses Top

Trends in Supply
Chain Technology

Ten Tips to Unlock

SAP Potential

Sales and Operations

Gets a Boost

editors
note

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

Efficient Supply Chain Starts With Taking Stock

Increased computing power and big

data analytics can be used to solve complex
supply chain management problems, but these
new abilities come at a cost and must be clearly
understood for their potential to be reached.
SAP has long been at the forefront of supply chain management (SCM) technologies. It
has extended its core ERP offerings with a slew
of modules for both the execution and planning sides of the supply chain, from supplier
relationship management to demand sensing
and logistics. This handbook will help readers understand key trends in SAP tools and
choose the best SCM products for their SAP
environments.
First, Jawad Akhtar examines trends in SAP
supply chain technology, including the SAP
Business Network, the Internet of Things and
mobility. Companies must learn to exploit
these technologies for leaner and more efficient
SCMor face competitors who do it first.

Fill In the Missing Links in Your SAP Supply Chain

Next, Akhtar details how companies can

take advantage of SAP ERPs hidden features
to improve their supply chains. He argues that
those who complain about the cost of implementing advanced SAP tools should first see
if their existing SAP system is achieving sufficient ROI. He then presents 10 SAP ERP features that can be used more effectively for SCM.
Finally, for a real-life example of SCM
improvement, David Essex profiles how Radisys Corp. used E2opens hosted E2 Planning
and Response software to extend its SAP ERP
system. Doing so helped the company solve
problems that arose when it outsourced manufacturing to China. The result was quicker
order response and inventory savings of more
than $10 millionan ROI any SAP user can
appreciate. n
Jim ODonnell
News Editor, SearchSAP

getting
started

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

SAP Addresses Top Trends

in Supply Chain Technology
In todays intertwined economies, companies must find ways to improve their supply
chain management and logistics processes or
face nimbler, more determined challengers.
Optimizing supply chain management (SCM)
is a two-pronged effort. Companies must have
supply chain planning capabilities that allow
them to quickly and comprehensively sense
and respond to changes in demand.
Every industry has its own supply chain
dynamics and associated challenges, but the
fast-moving consumer goods (FMCG) and consumer packaged goods (CPG) industries are
great examples of the demand-driven supply
chain. To locate the leading edge of supply
chain technology, follow the software that SAP
makes for the FMCG and CPG industries.
Serving consumers in the hyper-connected
world of the mobile Internet brings never-ending challenges. Feedbackpositive or negative
that goes viral on social media can make or

Fill In the Missing Links in Your SAP Supply Chain

break a brand. Take the June 2015 food-safety

scare in India involving Nestles Maggi noodles.
Nestle had to withdraw the product immediately from shelves and faced massive supply
chain disruptions that caused millions of dollars in lost sales and tarnished the companys
image. If this can happen to the worlds biggest food company, with its otherwise enviable
record in food safety, how might others handle
similar shocks to their supply chains?
Staying on top of the biggest trends in supply chain technology becomes even more
important.

Everything Connected

To address supply chain concerns, SAP purchased Ariba, Concur Technologies and Fieldglass and integrated them with its ERP offering.
Ariba provides a cloud-based procurement
network and applications, Fieldglass handles

getting
started

contract and temporary workforces and Concur addresses travel and expense management.
Together, the three companies make up the
SAP Business Network, which integrates the

Home
Editors Note
SAP Addresses
Top Trends in Supply

SAP Ariba, part of the SAP

Business Network, connects
global suppliers with buyers,
helping improve procurement.

Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

various functions involved in completing

important tasks. Its intended to engender
business transactions with minimal involvement of people.
SAP Ariba deserves to be singled out though.
Its huge online commerce and procurement
network connects global suppliers with buyers,
which can lead to more efficient procurement.
It continues to gain strong traction, especially
in Europe, where a large installed base of SAP
ERP users is considering moving on-premises
procurement to the cloud.
Meanwhile, the Internet of Things (IoT) is
revolutionizing how companies capture, collate
and comprehend enormous amounts of supply

Fill In the Missing Links in Your SAP Supply Chain

chain data, aided by S/4HANA, SAPs ERP suite

designed to take advantage of the processing
power of the HANA in-memory database. IoT
could offer the insights that will allow companies more flexibility to manufacture only what
customers need. It could also prevent logistical
bottlenecks by sensing traffic jams in the supply chain.
Mobile devices allow business people to
make quicker decisions and take actions that
have a big impact on supply chains. It makes
sense to provide them with mobile platforms
and applications that can make them work
more efficiently. For this, SAPs main tools are
Screen Personas, which allows personalization
of an SAP graphical user interface, and Fiori,
SAP apps with a device-agnostic user interface.

Six Standbys

Beyond responding to the macro trends, SAP

offers six ERP modules that help users stay
current with supply chain technology and master SCM challenges.
n

Demand planning is a subcomponent of

getting
started

Advanced Planning and Optimization, and

it offers granular yet predictable consumer
demand data that aligns well with the supply
side.
Supplier Relationship Management (SRM)
integrates all stakeholders and data involved in
the procurement process, from the person who
placed the purchase requisition to information
on the status of orders. In addition, SRM provides vendors visibility into pending and submitted invoices.

Manufacturing Integration and Intelligence

is a step up from traditional manufacturing
that is disconnected from production on the
shop floor; it provides real-time updates to
ERP.
n

n
Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to

Global Trade Services (GTS) efficiently handle

the complexities involved in managing crossborder and transcontinental logistics and supply chains by providing extensive applications
for customs, legal and regulatory issues, as well
as import and export controls.

Unlock SAP Potential

Sales and Operations
Gets a Boost

Extended Warehouse Management (EWM)

continues to meet the increasing demands of
supply chain practitioners who require function-rich software to cater to diverse logistics
and warehousing needs.

Fill In the Missing Links in Your SAP Supply Chain

Transportation Management (TM) completely integrates with SAP ERP, EWM and GTS to
provide complete control of the complexities
and challenges of logistics, transportation and
the supply chain. Jawad Akhtar

implementation

Ten Tips to Unlock SAP Potential

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

Although implementing SAP is often

considered a one-time effort, continuous
improvements are the secret to unleashing
SAPs full capabilities. But optimizing SAP is
possible only when companies use all of the
tools available in their existing systems. They
also need to upgrade their systems with free
enhancement packages that offer a slew of new
features.
Consider the case of the SAP enterprise
resource planning system, a strong choice
for a business application platform. A conservative estimate reveals that companies dont
effectively use up to 40% of the standard features, functionality and tools that SAP offers.
This leads to a lower return on investment
because companies have already paid for many
of those features.
Lets look at 10 tools and features in an
SAP ERP system that typically arent used
effectively.

Fill In the Missing Links in Your SAP Supply Chain

Sales and operations planning (S&OP). Most

companies go through extensive S&OP. Yet few

companies take advantage of the S&OP tools,
which not only save the time it takes to plan
realistic sales or production figures, but also
provide greater confidence in the entire planning process. A standard offering can help with
complex and flexible planning needs.
Forecasting. Planners

often struggle to create a

sales or production plan that not only reflects
historical consumption of materials but also
offers flexibility to choose a forecasting model
that best fits business needs. Forecasting is a
planning tool that helps predict future sales
or consumption of materials based on historical data. It also helps significantly in preventing
SAP supply chain disruptions.

Material requirements planning (MRP). SAP

supply chain operations are all about maintaining

implementation

Home

a tighter and more efficient link to materials

handlingwhether its raw material procurement, in-house production, outsourcing or dispatching to customers. The fact that relatively
few companies put MRP to work remains one
of the greater disappointments of SAP supply
chain management.

Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

Reports and analyses. SAP

offers thousands of
standard reports that provide real-time information, as well as standard and flexible analyses to help in decision making, but most of
these reports are hardly used. Instead, companies opt for custom-designed reports or jump
to analytics tools and dashboards, such as SAP
business intelligence.

Safety stock planning. Few companies are aware

that SAP suggests safety stock of materials that

can keep planners from facing materials shortages and having to scramble to coordinate with
vendors for rush deliveries.
Automation for efficient replenishment. Com-

panies that still manually enter SAP supply

chain data into the system should transition

Fill In the Missing Links in Your SAP Supply Chain

to barcode and radio frequency identification

technology that promises efficient replenishment and materials handling. SAP offers several interfacing options. Kanban is a viable yet
underused replenishment choice. With the
Kanban dashboard, it is easier and more efficient for a demand source to request materials replenishment from a supply source. Later
on and as a step up, companies can adopt an
Internet of Things (IoT) approach that integrates logistics and SAP supply chain processes
to optimize business processes. IoT connects machines, operations and processes, and
reduces human involvement.
Weaving quality into the SAP supply chain. Qual-

ity isnt a process or a business function. Its

an efficient SAP supply chains lifeline. Integrating quality gates and quality controls into
important logistics and supply chain functions
saves enormous costs. It also provides credibility to companies by ensuring no defective raw
materials are consumed in production or no
defective product leaves the warehouse. Integrating quality features, such as statistical process control, adds enormous value to business

implementation

functions by preventing procurement, production, logistics and supply chain disruptions

through timely alerts of abnormal trends.
Early warning system (EWS). A
Home
Editors Note
SAP Addresses

hidden SAP treasure is EWS, which enables business users to

set up user-defined prompts that signal potential disruptions to logistics and SAP supply
chain operations.

Top Trends in Supply

Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

Classification and document management

system (DMS). This

cross-application component of SAP optimizes logistics and supply

chain processes. Classification provides options to record diverse and user-defined data
that is then available for search and reporting

Fill In the Missing Links in Your SAP Supply Chain

functions. SAP DMS is much more than a document repository. Its integration with the procurement, production and sales functions of
the SAP supply chain provides an option to
record additional information that does not
generally fit in any specific SAP component but
is important for improving business processes.
Engineering change management (ECM). SAP

ECM offers effective controls to master the

data creation process and thus minimize or
eliminate redundant or incorrect master data
entries in the system. Having complete, correct and consolidated master data helps business processes in the SAP supply chain run
smoothly. Jawad Akhtar

management

Sales and Operations Gets a Boost

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

Sales and operations planning is challenging enough without having your operations
on the other side of the Pacific. But thats the
situation Radisys Corp. faced when it started
outsourcing manufacturing to China.
Fortunately, the company has found a silver lining in the cloud. By adopting E2opens
hosted E2 Planning and Response software, the
company linked its on-premises SAP ERP and
Steelwedge cloud sales and operations planning
(S&OP) software to build a global supply chain
planning and execution process. The result
has been a much quicker response to prospective orders and inventory savings of $10 million
plus.
When I first joined Radisys, they had a process, but it was very fragmented, meaning
everyone had their own version of the truth,
said Lisa Aleman, senior director of sales and
operations at the company, which is based in
Hillsboro, Ore. Although there was a number

Fill In the Missing Links in Your SAP Supply Chain

that was put out there, there was never a consensus [on a] supply-demand number and then
[a] revenue picture that would come out of
that. Operations might meet with finance, but
not necessarily with the business unit. And
sales was never really tied into the process at
all.
Radisys hired Aleman expressly to improve
the S&OP process and bring in related technology. She had handled S&OP since the mid1990s for AMI Semiconductor, which was later
bought by ON Semiconductor.
When she arrived in 2010, Radisys, which
makes wireless infrastructure for telecommunications, aerospace and defense, was mostly
using SAP Advanced Planning & Optimization
(APO). Finding SAP APO too slow and inflexible, Aleman and colleagues began in early 2011
to design an implementation of Steelwedge
and supply chain planning and collaboration
software from icon-scm, which SAP resold as

management

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to

an APO add-on. E2open bought icon-scm in

2013 and renamed the product E2 Planning and
Response (E2 PR).
When we were doing the shadow planning
with the [previous] contract manufacturer,
Radisys noticed that their planning was saying that the contract manufacturer can actually produce more than they were saying, said
Steve Lykken, E2opens vice president of customer solutions, who was then with icon-scm.
The contract manufacturer had a different
planning system.

Unlock SAP Potential

Sales and Operations
Gets a Boost

All in This Together

Aleman is a strong believer in shoring up

business processes before automating them.
People have a lot of difficultyif they havent
seen this kind of automationbasically modifying their business processes and adopting the
automation simultaneously, she said. If you
can run that process manually, you can work
the bumps out of it before you [implement] the
automation.
She had experience implementing complex
supply-chain engines from i2 Technologies and

10

Fill In the Missing Links in Your SAP Supply Chain

Oracle and knew that data cleansing could take

longer than expected, so she built an eightweek gap into the project plan. When you put
these solution sets in, youre using data differently, Aleman said. Although its coming from
the system, it creates some problems.
Radisys handled the troubleshooting of
the beta system, aided by what Aleman calls
E2opens robust error checking. As information is sent into the system, it knows when
its throwing errors, so it would be able to help
point us where we [needed] to go look, she
said.
The company went live on Steelwedge first,
then on E2 PR, with each implementation taking six months. The vendors are partners and
worked on the projects jointly, developing blueprints and running workshops.
Aleman knew she would need good integration between SAP APO, E2 PR and Steelwedge
to offer new commitment options for sales
orders, such as capable-to-promise guarantees,
which take production capacity into account
and are more reliable than available-to-promise
formulas, which only consider materials.
I knew that the bidirectional data feeds did

management

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

11

not exist, and I thought I would have to write

them internally, meaning that I could take commitments coming out of the E2open engine and
push them directly to SAP without someone
having to do that manually, Aleman said. But
thanks to a partnership between E2open and
SAP, my guys didnt have to do it, she said.
The integration adapters are essentially bidirectional data feeds between Radisys applications, including the Agile product lifecycle
management system that holds most of the
product information and bills of materials
(BOMs) that can contain up to 2,500 components. Parts masters come from SAP ERP;
BOMs from Agile; and data files from Ennoconn, the division of Foxconn Technology
Group based in Shenzhen, China, that does the
manufacturing. Sales order commitments and
ship dates in E2open PR go back to SAP. They
now write back, directly to the SAP system, the
order delivery dates that we calculated in the
plan, E2opens Lykken said.
The E2open cloud network makes the distance across the worlds largest ocean all but
disappear. I have full visibility into whats
happening there. I know every purchase order

Fill In the Missing Links in Your SAP Supply Chain

theyve placed; I know what inventory they

have on the floor; I know what all their lead
times are for all of their materials, Aleman
said. If I take any orders, I dont have to check
with my contract manufacturer. I already know
the answer, even before they know that that
demand has come in.

I have full visibility into whats

happening [at the manufacturer.]
I know every purchase order
theyve placed.
Lisa Aleman, director of sales
and operations, Radisys

Radisys and Ennoconn employees needed

significant training on the new system. Aleman and a team went to China to give handson demonstrations.
Now more than 20 people use E2 PR, all of
whom report to Aleman, who is responsible
for supply chain planning and execution. That
means she oversees everything from demand
generation to fulfillment and owns execution
on the manufacturing floor. Its a nice pairing

management

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

because if I need stronger demand, I have the

team that basically works that side, she said.
If I want to take a little risk on the supply side,
[I can] also understand what the implications
going to be for the manufacturing floor.
The planning engine in E2 PR lets Radisys
examine a particular demand for a product and
know, for example, if a commitment has already
been made and who the customer is, E2opens
Lykken said.
You can create these priority rules based on
any information in the demand, and use them
to drive the planning. For Radisys, for example, their No. 1 rule is they always keep previous [commitments]. They can commit with the
confidence that the supply is really there.

S&OP Across the Ocean

The E2open software has brought a huge

change to the S&OP process and allowed Radisys to be much more agile in responding to
the fast-moving telecommunications market,
according to Aleman. For example, sometimes
a products designer will float the demand to
manufacturers. If you can respond first, youre

12

Fill In the Missing Links in Your SAP Supply Chain

going to win the business, she said.

The S&OP process used to take at least two
weeks. Now, as soon as the demand hits, I
have a commitment instantly, she said. When
opportunities arise, Aleman can run scenarios
to see if a commitment is feasibleand if not,
how to make it happen.
Forecasting, which used to be a serial process dictated by Radisys monthly S&OP schedule, can now happen anytime. Before, Radisys
S&OP and a customers S&OP and forecasting
cycle could be out of sync as much as two to
three months, Aleman said. Now weve tied
those up tightly.
The better visibility into supply and demand
enabled Radisys to cut $10 million from the
past years inventory by not having to run all
production according to a build-to-forecast
model. We use multiple build models now,
Aleman said.
When a product is waning in its lifecycle
so its very mature and likely to complete its
lifecycleyou dont want to continue to build
to forecast, because you dont know for sure
what the demand is going to be, and it leaves
you with excess and obsolescence on your

management

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential
Sales and Operations
Gets a Boost

13

books, Aleman said. Now she can shift such

products to build-to-order and not make them
or buy materials without an order in hand.
However, the company still uses build to forecast for customers with whom it has vendormanaged inventory partnerships and who are
held liable for the material.
Future plans include a pipeline bridge from
Steelwedge to Salesforce so salespeople can
get a better view of the demand tracked in the
E2open system. It will help to align sales incentives with the new S&OP. In prior years, salespeople were given incentives based on design
wins. Now theyll be rewarded based on revenue from orders that manufacturing fulfills.

Fill In the Missing Links in Your SAP Supply Chain

Aleman would also like to work with E2open

to get more robust inventory reporting and
modeling, and she hopes to use E2opens collaboration features to bring large customers
own forecasts into the Radisys tools.
Radisys is nearing the top level of the fivelevel S&OP maturity model put forth by
research firm Gartner. Were starting to now
work with our customers and having conversations about what we can do collectively
between us, Aleman said, rather than having customers chuck their demand over the
wall and leave Radisys to wrestle with it. Its
becoming much more of a partnership.
David Essex

about
the
authors

JAWAD AKHTAR has written two bestselling books, Pro-

duction Planning and Control with SAP ERP and Quality

Management with SAP. A frequent contributor to Search-

Home
Editors Note
SAP Addresses
Top Trends in Supply
Chain Technology
Ten Tips to
Unlock SAP Potential

SAP, he has 18 years of professional experience, 11 with

SAP systems. Connect with him on LinkedIn, follow him
on Twitter @jawadahl or email him at jawad.akhtar@live
.com.
DAVID ESSEX oversees

editorial strategy and execution

for SearchFinancialApplications, SearchManufacturingERP and SearchSAP. He has covered IT for 29 years
and was previously an editor at now defunct magazines
BYTE, PC Resource and 80 Micro. Write to him at
dessex@techtarget.com.

Sales and Operations

Fill In the Missing Links in Your SAP Supply Chain

is a SearchSAP.com e-publication.
Chris Koch | Editorial Director
Moriah Sargent | Associate Managing Editor
David Essex | Executive Editor
Jim ODonnell | News Editor
Marty Moore | Production Editor
Linda Koury | Director of Online Design
Neva Maniscalco | Graphic Designer
Doug Olender | Publisher
dolender@techtarget.com

Gets a Boost

Annie Matthews | Director of Sales

amatthews@techtarget.com
TechTarget
275 Grove Street, Newton, MA 02466
www.techtarget.com
2015 TechTarget Inc. No part of this publication may be transmitted or reproduced in any form or by any means without written permission from the
publisher. TechTarget reprints are available through The YGS Group.

Stay Connected!
Follow @SAP_TT today.

14

Fill In the Missing Links in Your SAP Supply Chain

About TechTarget: TechTarget publishes media for information technology

professionals. More than 100 focused websites enable quick access to a deep
store of news, advice and analysis about the technologies, products and processes crucial to your job. Our live and virtual events give you direct access to
independent expert commentary and advice. At IT Knowledge Exchange, our
social community, you can get advice and share solutions with peers and experts.
cover art: fotolia