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From obtaining raw materials to distributing a product to a final customer -- and all the steps in between -- supply chain management is a complex undertaking for today's companies. The aim of supply chain software is to manage those activities. SAP S/4HANA supply chain software, along with additional SAP components that can be integrated with S/4HANA, can address many of the problems that CIOs and supply chain managers face.
A look at SAP S/4HANA supply chain software
SAP S/4HANA is the successor to SAP ERP Central Component (ECC) and is available both on premises and in the cloud. It is the next-generation, HANA-powered ERP application and consists of all of the same components, or modules, as ECC. S/4HANA also brings in several newer components and innovations that ECC does not include or which are available only as stand-alone software and require integration with ECC.
SAP S/4HANA supply chain software components include Materials Management (MM), Production Planning (PP), Sales and Distribution (SD) and Warehouse Management (WM). ECC also includes these components. Newer and embedded supply chain components available in S/4HANA include Production Planning and Detailed Scheduling (PP/DS), Extended Warehouse Management (EWM) and Demand-Driven Replenishment (DDR). In ECC, the first two are stand-alone, and the latter is not available.
S/4HANA's strength is its foundation as the digital core, enabling digital transformation across the business. That digital core provides the ability to process massive amounts of data from a variety of online and offline sources, as well as embedded analytics for better decision-making. S/4HANA provides that for the supply chain, in part by integrating with additional next-generation, cloud-based, HANA-powered supply chain software. The emphasis there is on integration; as is the case with ECC, S/4HANA supply chain software components cover the basics of supply chain management (SCM). In-depth and specialized needs require components such as Ariba and others discussed below. Together with S/4HANA, these supply chain software components are meant to effectively address the complexities that characterize SCM and help bring digital transformation to the supply chain.
CIOs of companies already using SAP S/4HANA, whether on-premises or cloud versions, need to not only individually evaluate the many supply chain software options offered by SAP to see which ones fit the business needs, but also understand how a given supply chain software option integrates with S/4HANA. Here's a look at some of the important integration combinations and why a company might need them.
SAP Ariba and S/4HANA integration: For a connected approach to procurement
SAP Ariba is a HANA-powered, cloud-based procurement network that connects the goods or services suppliers with the buyers. Implementing SAP Ariba complements the MM component of S/4HANA. MM alone isn't able to cater to the depth and breadth of procurement complexities being faced in today's supply chains.
Procurement-related activities, such as supplier selection, purchase order issuance and invoicing, all take place in Ariba. Only the purchase order from Ariba integrates with S/4HANA MM, while the Ariba system automatically creates a corresponding purchase order in S/4HANA MM, since that system will be handling additional supply chain activities.
SAP IBP and S/4HANA integration: For complex production and procurement planning
SAP Integrated Business Planning (IBP) is HANA-powered, cloud-based SCM software that offers in-depth functionality to manage complex procurement and production planning processes to expand control beyond what is available in S/4HANA's PP and MM components.
IBP has five components, each targeted to different aspects of SCM. For example, the IBP Sales and Operations Planning (S&OP) component of SAP IBP offers far more materials and capacity planning and simulations options than does the S/4HANA S&OP subcomponent of PP. With integration between SAP IBP and S/4HANA, the planning results from IBP S&OP are transferred to the PP and MM components of S/4HANA for tactical and operational range -- medium to short time ranges, respectively -- of procurement and production activities.
SAP C/4HANA and S/4HANA integration: For smoother sales and deliveries
SAP Hybris has recently been renamed SAP C/4HANA, which is SAP's HANA-powered, cloud-based end-to-end CRM software. C/4HANA can work with the S/4HANA SD component to optimize sales and customer services processes. For example, the C/4HANA Sales Cloud component can manage complex sales processes and then transfer data to S/4HANA SD for delivery process management. The customer billing can either take place in the Sales Cloud component or in the SD component.
SAP EWM and S/4HANA integration: For managing complex warehousing issues
The SAP EWM component addresses the logistics and supply chain challenges of large and complex warehousing operations. It offers capabilities such as slotting or kitting processes that aren't available in the SAP S/4HANA MM component. As SAP EWM is native to SAP S/4HANA, implementing it will complement the existing warehousing operations, and no separate or additional integration efforts -- as is the case between cloud and on-premises systems -- are required.
SAP TM and S/4HANA integration: For managing complex transportation needs
SAP Transportation Management (TM) is a component of SAP Business Suite and manages end-to-end transportation needs for companies that have complex transportation processes or a vast transport network. TM also manages third-party logistics (3PL), the practice of outsourcing logistics and transportation management, and provides visibility into these operations. The integration between SAP TM and the S/4HANA SD component begins when the goods listed in the SD sales order are ready to be transported to the customer. TM manages activities such as the transport planning and inter- and intraborder crossings. TM also integrates with the S/4HANA MM component, which handles paying the 3PL.
SAP Leonardo and S/4HANA integration: For supporting supply chain digital transformation
SAP Leonardo is the brand-name umbrella of SAP next-generation technologies, such as IoT, machine learning, big data and advanced analytics. It manages the massive and unstructured data streaming in from installed sensors, data collection points and unstructured data from the internet to turn this data into actionable insights.
For example, Leonardo can stream live data from sensors installed at critical equipment and plant machinery maintained in the Plant Maintenance (PM) component of S/4HANA to predict a machine's performance and when the next preventive maintenance is due. This integration between Leonardo and the PM component ensures that the machine runs under optimum conditions. Similarly, sensors installed on trucks can stream live data to predict any destination delays a truck might encounter due to inclement weather or unfavorable road conditions that may disrupt the logistics and supply chain operations.