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What are best practices for SAP Supply Chain Management?

Using available planning tools in SAP SCM and taking on a demand-driven mindset will help companies more adequately address modern customers' demands. Here's a look.

Supply chain management has become far more volatile and complex for a number of reasons. These include a shorter...

product lifecycle and globalized supply sources, leading to an enormous bullwhip effect -- slight changes in products' demand have significant and cascading effects on the supply side.

Companies and supply chain planners have their own ways of tackling this modern supply chain variability. Still, if your company uses SAP Supply Chain Management, it's important to consider some best practices that are proven to improve business efficiencies and bring greater ROI. Here are six best practices companies can consider adopting when using SAP Supply Chain Management, a module of SAP ERP Central Component (ECC).

Set up logistics and supply chain alerts

The module that facilitates delay and machine breakdown loss alerts in SAP ECC is known as Early Warning System (EWS). Setting up EWS is easy, fast and user-defined, and alerts can be grouped together to ensure supply chain planners are not overwhelmed by the sheer number of alerts issued by the system as and when deviations occur.

Use standard reports and analyses

SAP ECC offers a plethora of standard, flexible analyses and tools to help supply chain planners bring improvements in the supply chain by providing insightful analytics to help with timely and informed decision-making. In fact, all such logistics and supply chain analyses in SAP ECC are available at one central location for easy reference, including the appropriate inventory key performance indicators that supply chain planners can monitor in SAP Supply Chain Management.

Make the most of planning tools

A large number of materials and capacity planning tools are available in SAP ECC that cater to the strategic, tactical and operational natures of a business. Using some or all of them not only significantly improves the logistics and supply chain planning processes but also takes them a step closer to implementing the SAP Supply Chain Management best practices as a part of an organization's ongoing improvement initiatives.

Some of these planning tools of SAP Supply Chain Management are:

Update master data

Planners need to know planned-versus-actual gaps. To understand this, create the closed-loop business process of planning master data in SAP ECC, followed by using various standard analyses and analytics functions in the Logistics Information System. This will determine the deviation between planning data maintained in ECC versus the actual data available in analytics. In turn, this improves the reliability and confidence in the planning data and eventually uses that in operations and execution.

Integrate quality controls and quality improvements

The logistics and supply chain functions of manufacturing organizations gain a tremendous business advantage when they integrate quality processes, whether in procurement, production, maintenance or sales business processes. This ensures that the relevant quality tools are integral to SAP Supply Chain Management processes, helping to create improvements and reduce inefficiencies. 

Shift from supply-demand to demand-supply planning

Supply chain management is in need of a strategic shift -- from a supply-focused approach to a demand-focused approach where companies are able to quickly fill the customers' demand. Demand-focused supply chain planning requires delinking the entire supply chain and placing stock, capacity and time buffers at strategic points in the entire supply chain. SAP Supply Chain Management now also has a viable demand-focused product in SAP ECC that companies currently using SAP ECC can implement. For example, Demand-Driven Replenishment is available in SAP S/4HANA Cloud, on premises and SAP ECC.

This was last published in December 2017

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