James Thew - Fotolia

How can SAP Event Management improve control of my supply chain?

SAP Event Management can help companies lower costs and boost efficiencies by improving monitoring and controls of critical business processes. Here's a look.

Companies that integrate SAP Event Management into their logistics and supply chain processes reap business benefits...

that come from lower costs in inventory management, manufacturing and transportation. Such savings come from SAP Event Management's role in ensuring effective monitoring and controls of critical business processes.

SAP Event Management (EM) spans ERP and non-ERP systems. It monitors business processes and also notifies, simulates, controls and measures to bring efficiencies.

EM works in a similar way as SAP Early Warning System, a user-defined process monitoring tool that alerts users of any deviation from the standard business process. EM leverages the Netweaver Process Integration tool to bring together data from disparate ERP and non-ERP systems, so the systems are able to exchange data and effectively communicate with each other to maintain a logical chain of events and provide notification in case of any exceptions.

As an example, "company A" was faced with supply chain disruptions on its procurement front due to missing communication links with suppliers. The company decided to implement EM to monitor that a purchase order acknowledgement was received from the supplier within two business days of the PO being sent. The company also wanted to monitor how well the vendor adheres to or deviates from supplying the ordered quantity and delivery dates. Finally, the company also wanted to ensure that the vendor submits the invoice within 10 days of goods delivery. Once these three benchmarks were set -- PO acknowledgement receipt, delivery compliance and timely invoice submission -- the company communicated them to the vendor. Monitoring these processes will enable the company to measure key performance indicators leading to cost reductions and improved customer satisfaction.

These processes were configured in SAP Event Management as events and were monitored for deviations between planned and actual events. When a deviation occurred, for example, the vendor delivered less quantity than was ordered or delivered later than the agreed-upon delivery date, EM issued relevant alerts that prompted company A to quickly react by modifying its production plan, thereby ensuring the least possible disruption to the supply chain.

While one of the main functions of EM is to provide timely alerts, it's important to set them correctly. Supply chain planners can get overwhelmed when the system issues far more alerts than anticipated. Such alerts reflect inefficient processes that need improvement, and planners can use reports, analytics and dashboards to critically evaluate and set performance benchmarks that can then form the basis of setting alerts.  

Next Steps

A look at production planning and control with SAP ERP

How to prevent supply chain disruption

SAP expands supply chain management options

Dig Deeper on SAP SCM