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Animal and livestock food additive maker Novus International is deploying SAP Supply Chain Performance Management (SCPM) because it says dashboards alone have limited potential for increasing supply chain efficiency.
Simply using the same old dashboards isn’t enough, according to Alex Pierroutsakos, the company’s director of enterprise systems and optimization. Organizations seeking to improve supply chain management also need to seek out reporting technologies that incorporate key performance indicators (KPIs) -- something to actually measure their progress against, he explained. “Otherwise, a report is just a report” that fails to provide information that can be acted on, Pierroutsakos said. “There’s no point to it.”
Novus, based in St. Charles, Mo., boasts operations in more than 90 countries, including more than 150 manufacturing and warehouse facilities.
The company is deploying SAP SCPM because the business analytics application allows users to monitor their supply chain strategy using scorecards and dashboards in conjunction with preset KPIs. SAP SCPM uses the data already in the ERP to create the dashboards.
Novus also uses other SAP ERP, Supply Chain Management, BusinessObjects Planning and Consolidation, Product Lifecycle Management, Business Objects 4.0, as well as SAP CRM.
Forecasts to inventory write-offs in SAP SCPM
Once the 18-week deployment is wrapped up in April and employees use the application, Novus is hoping SAP SCPM will allow the company to gain a better understanding of how it’s spending money across its sprawling multinational supply network, according to Pierroutsakos.
“It’s very complex because we’re trying to source, we’re trying to get product out from a few manufacturing locations. A large amount of our costs is in our global supply chain logistics.”
Pierroutsakos said it was important to make sure the KPIs reflected a “balanced measurement mechanism” which attempts to solve multiple business problems as opposed to just focusing on one problem. The company plans to use balanced measurement KPIs to assess the accuracy of its sales forecasts and inventory management processes.
The company is also hoping to gain a better understanding of the cost per kilogram to ship its goods to its nearly 3,000 customers worldwide.
“It’s [looking at] the cost of getting product to a world area, and what the costs are to manage that freight,” Pierroutsakos said, adding that warehousing costs play a large part in determining that benchmark. “A lot of this is [about] having visibility and knowing where we are and where we need to go.”
Understanding KPI figures
Novus is spending a lot of time training business users on how the KPIs are calculated.
“People need to understand [why] the numbers are changing or why something’s getting worse,” Pierroutsakos said.
If it’s just a number that people don’t understand and gets reported up to the business unit’s directors, it defeats the purpose of having the KPIs to begin with, he said.
“If I don’t understand the calculation or what it’s based off of, I can’t unpeel the layers of what’s driving that issue.”