Help prevent supply chain problems with SAP EWS

The often-overlooked SAP Early Warning System module alerts companies before supply chain problems arise, writes SAP expert Jawad Akhtar.

Today's organizations work in more integrated environments, so that people and processes can work better together and bring about increased organizational efficiencies. But that's what often leads to enormous dependencies on others to provide the necessary information when it's needed. SAP Early Warning System (EWS) is the first line of defense against communication lapses and business process snafus.

SAP EWS comes standard with an SAP implementation, but it is one of the lesser known and lesser used functions of SAP. This may be because during SAP implementations, companies and consulting teams are usually so engaged in mapping the existing standard business processes that they overlook many of the business process owner's daily tasks. In fact, procurement or production managers, materials planners and quality supervisors spend significant time attending to daily challenges. Unless a company moves toward business process optimization later on, functionalities like SAP EWS remain highly underused.

Unfortunately, communication and coordination gaps often lead to more issues and surprises, creating supply chain problems. Take a look at the following problematic business processes and faulty communications scenarios that are avoidable with SAP EWS:

  • There has been a negative sales trend for a particular group of products for the last five weeks, but the senior management only becomes aware of it during the quarterly sales meeting's presentation.
  • The scrap quantity of a high-value product generally never exceeds more than 3% of the production quantity. Yet, currently, it is crossing this threshold limit by over 7%. The production manager finds this out long after losses are already incurred.
  • The procurement prices of a few critical raw materials show a decreasing trend, but the procurement planner is unaware of this fact, which could have helped him order larger quantities to take advantage of the falling prices.
  • The maintenance cost of equipment in a work order should never exceed $10,000, and if it does, it is better to scrap it and buy new equipment. With no timely cost alert, it is an unwelcome surprise to find the company ended up spending more than $14,000.
  • Likewise, the quality parameters of an in-house-produced material should not exceed the defined limits. If it does, a prompt alert or other warning enables the production and quality personnel to work together to immediately attend to it. Without a timely alert, much more time and cost is incurred in reworking the defective material.
  • A vendor repeatedly misses the delivery dates of goods, which, in turn, severely impacts the entire supply chain. These delays become evident later on, when the losses to production and sales are incurred and the company rushes to find other sources of the supply, which increases the cost of procurement.

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With these and other challenges faced by business process owners on a daily basis, timely alerts and warnings would enable the people concerned to take immediate corrective actions. SAP EWS attends to these supply chain problems and business processes and is very easy to set up.

EWS is available in all the important SAP logistics and supply chain modules.

  • Logistics Information System
  • Inventory Controlling
  • Purchasing Information System
  • Sales Information System
  • Shop Floor (Production) Information System
  • Shipment Information System
  • Plant Maintenance (PM) Information System
  • Quality Management (QM) Information System

Setting up EWS entails identifying the key figures (sales value, production scrap, delivery date, shipment date, etc.) you'd like to monitor for deviations and exceptions. You can then choose to monitor the selected key figures either by trend (positive and negative) or by threshold values. You can group these exceptions by color-coding them. For example, all sales figures for a range of products with a negative trend can be identified with red, whereas favorable procurement prices of selected materials can be identified with green.

Next, you can set up how often you'd like the SAP system to alert you on any deviations and exceptions. For example, you can be alerted as soon as they occur, or you can choose to have them compiled and consolidated in any given period, such as a day, three days or a week.

All you need is one or two hours of end user training on EWS to be able to manage it on your own. Once trained on how to set up SAP EWS, you can also change or delete the alerts already set up or change the alerts notification frequency to suit your work schedule and priorities. You can also coordinate with other departments and SAP modules to receive alerts to their exceptions, which eventually end up impacting your work and processes.

Jawad Akhtar is an assistant vice president and SAP project manager for AbacusConsulting, where he focuses on SCM issues. AbacusConsulting is based in Pakistan.

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