Fill In the Missing Links

in Your SAP Supply Chain

SAP users sometimes focus on certain features in a tool and neglect the rest. But customers
would be well served if they brush off the rust and put everything they’ve invested in to use.

Editor’s note SAP Addresses Top Ten Tips to Unlock Sales and Operations
Trends in Supply SAP Potential Gets a Boost
Chain Technology
 editor’s
note
Efficient Supply Chain Starts With Taking Stock
Increased computing power and big
Home
data analytics can be used to solve complex
Editor’s Note supply chain management problems, but these
new abilities come at a cost and must be clearly
SAP Addresses
Top Trends in Supply understood for their potential to be reached.
Chain Technology
SAP has long been at the forefront of sup-
Ten Tips to ply chain management (SCM) technologies. It
Unlock SAP Potential
has extended its core ERP offerings with a slew
Sales and Operations of modules for both the execution and plan-
Gets a Boost
ning sides of the supply chain, from supplier
relationship management to demand sensing
and logistics. This handbook will help read-
ers understand key trends in SAP tools and
choose the best SCM products for their SAP
environments.
First, Jawad Akhtar examines trends in SAP
supply chain technology, including the SAP
Business Network, the Internet of Things and
mobility. Companies must learn to exploit
these technologies for leaner and more efficient
SCM—or face competitors who do it first.
2 Fill In the Missing Links in Your SAP Supply Chain
Next, Akhtar details how companies can
take advantage of SAP ERP’s hidden features
to improve their supply chains. He argues that
those who complain about the cost of imple-
menting advanced SAP tools should first see
if their existing SAP system is achieving suf-
ficient ROI. He then presents 10 SAP ERP fea-
tures that can be used more effectively for SCM.
Finally, for a real-life example of SCM
improvement, David Essex profiles how Radi-
sys Corp. used E2open’s hosted E2 Planning
and Response software to extend its SAP ERP
system. Doing so helped the company solve
problems that arose when it outsourced man-
ufacturing to China. The result was quicker
order response and inventory savings of more
than $10 million—an ROI any SAP user can
appreciate. n
Jim O’Donnell
News Editor, SearchSAP
 getting
started
SAP Addresses Top Trends
in Supply Chain Technology
In today’s intertwined economies, com-
Home
panies must find ways to improve their supply
Editor’s Note chain management and logistics processes or
face nimbler, more determined challengers.
SAP Addresses
Top Trends in Supply Optimizing supply chain management (SCM)
Chain Technology
is a two-pronged effort. Companies must have
Ten Tips to supply chain planning capabilities that allow
Unlock SAP Potential
them to quickly and comprehensively sense
Sales and Operations and respond to changes in demand.
Gets a Boost
Every industry has its own supply chain
dynamics and associated challenges, but the
fast-moving consumer goods (FMCG) and con-
sumer packaged goods (CPG) industries are
great examples of the demand-driven supply
chain. To locate the leading edge of supply
chain technology, follow the software that SAP
makes for the FMCG and CPG industries.
Serving consumers in the hyper-connected
world of the mobile Internet brings never-end-
ing challenges. Feedback—positive or negative
—that goes viral on social media can make or
3 Fill In the Missing Links in Your SAP Supply Chain
break a brand. Take the June 2015 food-safety
scare in India involving Nestle’s Maggi noodles.
Nestle had to withdraw the product immedi-
ately from shelves and faced massive supply
chain disruptions that caused millions of dol-
lars in lost sales and tarnished the company’s
image. If this can happen to the world’s big-
gest food company, with its otherwise enviable
record in food safety, how might others handle
similar shocks to their supply chains?
Staying on top of the biggest trends in sup-
ply chain technology becomes even more
important.
Everything Connected
To address supply chain concerns, SAP pur-
chased Ariba, Concur Technologies and Field-
glass and integrated them with its ERP offering.
Ariba provides a cloud-based procurement
network and applications, Fieldglass handles
 getting
started
contract and temporary workforces and Con-
cur addresses travel and expense management.
Together, the three companies make up the
SAP Business Network, which integrates the
Home SAP Ariba, part of the SAP
Editor’s Note
Business Network, connects
global suppliers with buyers,
SAP Addresses
Top Trends in Supply
helping improve procurement.
Chain Technology
Ten Tips to various functions involved in completing
Unlock SAP Potential
important tasks. It’s intended to engender
Sales and Operations business transactions with minimal involve-
Gets a Boost
ment of people.
SAP Ariba deserves to be singled out though.
Its huge online commerce and procurement
network connects global suppliers with buyers,
which can lead to more efficient procurement.
It continues to gain strong traction, especially
in Europe, where a large installed base of SAP
ERP users is considering moving on-premises
procurement to the cloud.
Meanwhile, the Internet of Things (IoT) is
revolutionizing how companies capture, collate
and comprehend enormous amounts of supply
4 Fill In the Missing Links in Your SAP Supply Chain
chain data, aided by S/4HANA, SAP’s ERP suite
designed to take advantage of the processing
power of the HANA in-memory database. IoT
could offer the insights that will allow compa-
nies more flexibility to manufacture only what
customers need. It could also prevent logistical
bottlenecks by sensing traffic jams in the sup-
ply chain.
Mobile devices allow business people to
make quicker decisions and take actions that
have a big impact on supply chains. It makes
sense to provide them with mobile platforms
and applications that can make them work
more efficiently. For this, SAP’s main tools are
Screen Personas, which allows personalization
of an SAP graphical user interface, and Fiori,
SAP apps with a device-agnostic user interface.
Six Standbys
Beyond responding to the macro trends, SAP
offers six ERP modules that help users stay
current with supply chain technology and mas-
ter SCM challenges.
n Demand planning is a subcomponent of
 getting
started
Advanced Planning and Optimization, and
it offers granular yet predictable consumer
demand data that aligns well with the supply
side.
n Supplier Relationship Management (SRM)
Home
integrates all stakeholders and data involved in
Editor’s Note the procurement process, from the person who
placed the purchase requisition to information
SAP Addresses
Top Trends in Supply on the status of orders. In addition, SRM pro-
Chain Technology
vides vendors visibility into pending and sub-
Ten Tips to mitted invoices.
Unlock SAP Potential
Sales and Operations n Extended Warehouse Management (EWM)
Gets a Boost
continues to meet the increasing demands of
supply chain practitioners who require func-
tion-rich software to cater to diverse logistics
and warehousing needs.
5 Fill In the Missing Links in Your SAP Supply Chain
n Manufacturing Integration and Intelligence
is a step up from traditional manufacturing
that is disconnected from production on the
shop floor; it provides real-time updates to
ERP.
n Global Trade Services (GTS) efficiently handle
the complexities involved in managing cross-
border and transcontinental logistics and sup-
ply chains by providing extensive applications
for customs, legal and regulatory issues, as well
as import and export controls.
n Transportation Management (TM) complete-
ly integrates with SAP ERP, EWM and GTS to
provide complete control of the complexities
and challenges of logistics, transportation and
the supply chain. —Jawad Akhtar
 implementation
Ten Tips to Unlock SAP Potential
Although implementing SAP is often
Home
considered a one-time effort, continuous
Editor’s Note improvements are the secret to unleashing
SAP’s full capabilities. But optimizing SAP is
SAP Addresses
Top Trends in Supply possible only when companies use all of the
Chain Technology
tools available in their existing systems. They
Ten Tips to also need to upgrade their systems with free
Unlock SAP Potential
enhancement packages that offer a slew of new
Sales and Operations features. 
Gets a Boost
Consider the case of the SAP enterprise
resource planning system, a strong choice
for a business application platform. A conser-
vative estimate reveals that companies don’t
effectively use up to 40% of the standard fea-
tures, functionality and tools that SAP offers.
This leads to a lower return on investment
because companies have already paid for many
of those features.
Let’s look at 10 tools and features in an
SAP ERP system that typically aren’t used
effectively.
6 Fill In the Missing Links in Your SAP Supply Chain
Sales and operations planning (S&OP). Most
companies go through extensive S&OP. Yet few
companies take advantage of the S&OP tools,
which not only save the time it takes to plan
realistic sales or production figures, but also
provide greater confidence in the entire plan-
ning process. A standard offering can help with
complex and flexible planning needs.
Forecasting. Planners often struggle to create a
sales or production plan that not only reflects
historical consumption of materials but also
offers flexibility to choose a forecasting model
that best fits business needs. Forecasting is a
planning tool that helps predict future sales
or consumption of materials based on histori-
cal data. It also helps significantly in preventing
SAP supply chain disruptions.
Material requirements planning (MRP). SAP sup-
ply chain operations are all about maintaining
 implementation
a tighter and more efficient link to materials
handling—whether it’s raw material procure-
ment, in-house production, outsourcing or dis-
patching to customers. The fact that relatively
few companies put MRP to work remains one
of the greater disappointments of SAP supply
Home
chain management.
Editor’s Note
Reports and analyses. SAP offers thousands of
SAP Addresses
Top Trends in Supply standard reports that provide real-time infor-
Chain Technology
mation, as well as standard and flexible anal-
Ten Tips to yses to help in decision making, but most of
Unlock SAP Potential
these reports are hardly used. Instead, compa-
Sales and Operations nies opt for custom-designed reports or jump
Gets a Boost
to analytics tools and dashboards, such as SAP
business intelligence.
Safety stock planning. Few companies are aware
that SAP suggests safety stock of materials that
can keep planners from facing materials short-
ages and having to scramble to coordinate with
vendors for rush deliveries.
Automation for efficient replenishment. Com-
panies that still manually enter SAP supply
chain data into the system should transition
7 Fill In the Missing Links in Your SAP Supply Chain
to barcode and radio frequency identification
technology that promises efficient replenish-
ment and materials handling. SAP offers sev-
eral interfacing options. Kanban is a viable yet
underused replenishment choice. With the
Kanban dashboard, it is easier and more effi-
cient for a demand source to request materi-
als replenishment from a supply source. Later
on and as a step up, companies can adopt an
Internet of Things (IoT) approach that inte-
grates logistics and SAP supply chain processes
to optimize business processes. IoT con-
nects machines, operations and processes, and
reduces human involvement.
Weaving quality into the SAP supply chain. Qual-
ity isn’t a process or a business function. It’s
an efficient SAP supply chain’s lifeline. Inte-
grating quality gates and quality controls into
important logistics and supply chain functions
saves enormous costs. It also provides credibil-
ity to companies by ensuring no defective raw
materials are consumed in production or no
defective product leaves the warehouse. Inte-
grating quality features, such as statistical pro-
cess control, adds enormous value to business
 implementation

functions by preventing procurement, produc- functions. SAP DMS is much more than a doc-
tion, logistics and supply chain disruptions ument repository. Its integration with the pro-
through timely alerts of abnormal trends. curement, production and sales functions of
the SAP supply chain provides an option to
Early warning system (EWS). A hidden SAP trea- record additional information that does not
sure is EWS, which enables business users to generally fit in any specific SAP component but
Home
set up user-defined prompts that signal poten- is important for improving business processes.
Editor’s Note tial disruptions to logistics and SAP supply
chain operations. Engineering change management (ECM). SAP
SAP Addresses
Top Trends in Supply ECM offers effective controls to master the
Chain Technology
Classification and document management data creation process and thus minimize or
Ten Tips to system (DMS). This cross-application compo- eliminate redundant or incorrect master data
Unlock SAP Potential
nent of SAP optimizes logistics and supply entries in the system. Having complete, cor-
Sales and Operations chain processes. Classification provides op- rect and consolidated master data helps busi-
Gets a Boost
tions to record diverse and user-defined data ness processes in the SAP supply chain run
that is then available for search and reporting smoothly. —Jawad Akhtar

8 Fill In the Missing Links in Your SAP Supply Chain

 management
Sales and Operations Gets a Boost
Sales and operations planning is chal-
Home
lenging enough without having your operations
Editor’s Note on the other side of the Pacific. But that’s the
situation Radisys Corp. faced when it started
SAP Addresses
Top Trends in Supply outsourcing manufacturing to China.
Chain Technology
Fortunately, the company has found a sil-
Ten Tips to ver lining in the cloud. By adopting E2open’s
Unlock SAP Potential
hosted E2 Planning and Response software, the
Sales and Operations company linked its on-premises SAP ERP and
Gets a Boost
Steelwedge cloud sales and operations planning
(S&OP) software to build a global supply chain
planning and execution process. The result
has been a much quicker response to prospec-
tive orders and inventory savings of $10 million
plus.
“When I first joined Radisys, they had a pro-
cess, but it was very fragmented, meaning
everyone had their own version of the truth,”
said Lisa Aleman, senior director of sales and
operations at the company, which is based in
Hillsboro, Ore. “Although there was a number
9 Fill In the Missing Links in Your SAP Supply Chain
that was put out there, there was never a con-
sensus [on a] supply-demand number and then
[a] revenue picture that would come out of
that. Operations might meet with finance, but
not necessarily with the business unit. And
sales was never really tied into the process at
all.”
Radisys hired Aleman expressly to improve
the S&OP process and bring in related tech-
nology. She had handled S&OP since the mid-
1990s for AMI Semiconductor, which was later
bought by ON Semiconductor.
When she arrived in 2010, Radisys, which
makes wireless infrastructure for telecommu-
nications, aerospace and defense, was mostly
using SAP Advanced Planning & Optimization
(APO). Finding SAP APO too slow and inflex-
ible, Aleman and colleagues began in early 2011
to design an implementation of Steelwedge
and supply chain planning and collaboration
software from icon-scm, which SAP resold as
 management
an APO add-on. E2open bought icon-scm in
2013 and renamed the product E2 Planning and
Response (E2 PR).
“When we were doing the shadow planning
with the [previous] contract manufacturer,
Radisys noticed that their planning was say-
Home
ing that the contract manufacturer can actu-
Editor’s Note ally produce more than they were saying,” said
Steve Lykken, E2open’s vice president of cus-
SAP Addresses
Top Trends in Supply tomer solutions, who was then with icon-scm.
Chain Technology
“The contract manufacturer had a different
Ten Tips to planning system.”
Unlock SAP Potential
Sales and Operations
Gets a Boost
All in This Together
Aleman is a strong believer in shoring up
business processes before automating them.
“People have a lot of difficulty—if they haven’t
seen this kind of automation—basically modi-
fying their business processes and adopting the
automation simultaneously,” she said. “If you
can run that process manually, you can work
the bumps out of it before you [implement] the
automation.”
She had experience implementing complex
supply-chain engines from i2 Technologies and
10 Fill In the Missing Links in Your SAP Supply Chain
Oracle and knew that data cleansing could take
longer than expected, so she built an eight-
week gap into the project plan. “When you put
these solution sets in, you’re using data differ-
ently,” Aleman said. “Although it’s coming from
the system, it creates some problems.”
Radisys handled the troubleshooting of
the beta system, aided by what Aleman calls
E2open’s “robust” error checking. “As infor-
mation is sent into the system, it knows when
it’s throwing errors, so it would be able to help
point us where we [needed] to go look,” she
said.
The company went live on Steelwedge first,
then on E2 PR, with each implementation tak-
ing six months. The vendors are partners and
worked on the projects jointly, developing blue-
prints and running workshops.
Aleman knew she would need good integra-
tion between SAP APO, E2 PR and Steelwedge
to offer new commitment options for sales
orders, such as capable-to-promise guarantees,
which take production capacity into account
and are more reliable than available-to-promise
formulas, which only consider materials.
“I knew that the bidirectional data feeds did
 management
not exist, and I thought I would have to write
them internally, meaning that I could take com-
mitments coming out of the E2open engine and
push them directly to SAP without someone
having to do that manually,” Aleman said. But
thanks to a partnership between E2open and
Home
SAP, “my guys didn’t have to do it,” she said.
Editor’s Note The integration adapters are essentially bidi-
rectional data feeds between Radisys’ appli-
SAP Addresses
Top Trends in Supply cations, including the Agile product lifecycle
Chain Technology
management system that holds most of the
product information and bills of materials
Ten Tips to
Unlock SAP Potential
(BOMs) that can contain up to 2,500 com-
Sales and Operations ponents. Parts masters come from SAP ERP;
Gets a Boost
BOMs from Agile; and data files from Enno-
conn, the division of Foxconn Technology
Group based in Shenzhen, China, that does the
manufacturing. Sales order commitments and
ship dates in E2open PR go back to SAP. “They
now write back, directly to the SAP system, the
order delivery dates that we calculated in the
plan,” E2open’s Lykken said.
The E2open cloud network makes the dis-
tance across the world’s largest ocean all but
disappear. “I have full visibility into what’s
happening there. I know every purchase order
11 Fill In the Missing Links in Your SAP Supply Chain
they’ve placed; I know what inventory they
have on the floor; I know what all their lead
times are for all of their materials,” Aleman
said. “If I take any orders, I don’t have to check
with my contract manufacturer. I already know
the answer, even before they know that that
demand has come in.”
“I have full visibility into what’s
happening [at the manufacturer.]
I know every purchase order
they’ve placed.”
—Lisa Aleman, director of sales
and operations, Radisys
Radisys and Ennoconn employees needed
significant training on the new system. Ale-
man and a team went to China to give hands-
on demonstrations.
Now more than 20 people use E2 PR, all of
whom report to Aleman, who is responsible
for supply chain planning and execution. That
means she oversees everything from demand
generation to fulfillment and “owns” execution
on the manufacturing floor. “It’s a nice pairing
 management
because if I need stronger demand, I have the
team that basically works that side,” she said.
“If I want to take a little risk on the supply side,
[I can] also understand what the implication’s
going to be for the manufacturing floor.”
The planning engine in E2 PR lets Radisys
Home
examine a particular demand for a product and
Editor’s Note know, for example, if a commitment has already
been made and who the customer is, E2open’s
SAP Addresses
Top Trends in Supply Lykken said.
Chain Technology
“You can create these priority rules based on
Ten Tips to any information in the demand, and use them
Unlock SAP Potential
to drive the planning. For Radisys, for exam-
Sales and Operations ple, their No. 1 rule is they always keep previ-
Gets a Boost
ous [commitments]. They can commit with the
confidence that the supply is really there.”
S&OP Across the Ocean
The E2open software has brought a huge
change to the S&OP process and allowed Radi-
sys to be much more agile in responding to
the fast-moving telecommunications market,
according to Aleman. For example, sometimes
a product’s designer will “float” the demand to
manufacturers. “If you can respond first, you’re
12 Fill In the Missing Links in Your SAP Supply Chain
going to win the business,” she said.
The S&OP process used to take at least two
weeks. “Now, as soon as the demand hits, I
have a commitment instantly,” she said. When
opportunities arise, Aleman can run scenarios
to see if a commitment is feasible—and if not,
how to make it happen.
Forecasting, which used to be a serial pro-
cess dictated by Radisys’ monthly S&OP sched-
ule, can now happen anytime. Before, Radisys’
S&OP and a customer’s S&OP and forecasting
cycle “could be out of sync as much as two to
three months,” Aleman said. “Now we’ve tied
those up tightly.”
The better visibility into supply and demand
enabled Radisys to cut $10 million from the
past year’s inventory by not having to run all
production according to a build-to-forecast
model. “We use multiple build models now,”
Aleman said.
“When a product is waning in its lifecycle—
so it’s very mature and likely to complete its
lifecycle—you don’t want to continue to build
to forecast, because you don’t know for sure
what the demand is going to be, and it leaves
you with excess and obsolescence on your
 management
books,” Aleman said. Now she can shift such
products to build-to-order and not make them
or buy materials without an order in hand.
However, the company still uses build to fore-
cast for customers with whom it has vendor-
managed inventory partnerships and who are
Home
held liable for the material.
Editor’s Note Future plans include a pipeline bridge from
Steelwedge to Salesforce so salespeople can
SAP Addresses
Top Trends in Supply get a better view of the demand tracked in the
Chain Technology
E2open system. It will help to align sales incen-
Ten Tips to tives with the new S&OP. In prior years, sales-
Unlock SAP Potential
people were given incentives based on design
Sales and Operations wins. Now they’ll be rewarded based on reve-
Gets a Boost
nue from orders that manufacturing fulfills.
13 Fill In the Missing Links in Your SAP Supply Chain
Aleman would also like to work with E2open
to get more robust inventory reporting and
modeling, and she hopes to use E2open’s col-
laboration features to bring large customers’
own forecasts into the Radisys tools.
Radisys is nearing the top level of the five-
level S&OP maturity model put forth by
research firm Gartner. “We’re starting to now
work with our customers and having con-
versations about what we can do collectively
between us,” Aleman said, rather than hav-
ing customers “chuck” their demand over the
wall and leave Radisys to wrestle with it. “It’s
becoming much more of a partnership.”
—David Essex
 about
the
authors

JAWAD AKHTAR has written two bestselling books, Pro-

duction Planning and Control with SAP ERP and Quality
Management with SAP. A frequent contributor to Search-
SAP, he has 18 years of professional experience, 11 with
SAP systems. Connect with him on LinkedIn, follow him
Fill In the Missing Links in Your SAP Supply Chain
on Twitter @jawadahl or email him at jawad.akhtar@live
is a SearchSAP.com e-publication.
Home .com.
Chris Koch | Editorial Director
Editor’s Note
Moriah Sargent | Associate Managing Editor
DAVID ESSEX oversees editorial strategy and execution
David Essex | Executive Editor
SAP Addresses for SearchFinancialApplications, SearchManufacturing-
Top Trends in Supply
ERP and SearchSAP. He has covered IT for 29 years Jim O’Donnell | News Editor
Chain Technology
and was previously an editor at now defunct magazines Marty Moore | Production Editor
Ten Tips to
BYTE, PC Resource and 80 Micro. Write to him at Linda Koury | Director of Online Design
Unlock SAP Potential
dessex@techtarget.com. Neva Maniscalco | Graphic Designer
Sales and Operations
Doug Olender | Publisher
Gets a Boost
dolender@techtarget.com

Annie Matthews | Director of Sales

amatthews@techtarget.com

TechTarget
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14 Fill In the Missing Links in Your SAP Supply Chain