Supply chain and procurement teams are critical contributors to meeting customer demand, efficiently and effectively, while optimizing the company’s materials and production management. According to ASUG research, the single biggest goal of supply chain and procurement professionals in 2019 is to make process improvements. But where can they start and what options are available?
ASUG News asked the authors of “Logistics with SAP S/4HANA: An Introduction” from SAP Press to understand what enhancements SAP S/4HANA brings to the supply chain. Vadhi Narasimhamurti, principal in Deloitte’s SAP consulting practice and Chaitanaya Desai, senior technology leader on the forefront of developing supply chain solutions on SAP S/4HANA, talked to us about what SAP S/4HANA offers manufacturing, warehousing, and procurement. They also discussed how SAP Fiori applications and emerging technologies that enhance the user experience fit within the supply chain.
Sharon: What unique benefits does SAP S/4HANA bring to the supply chain?
Vadhi: SAP S/4HANA offers an integrated and enhanced end-to-end view. In comparison with SAP ECC, which requires stand-alone applications, SAP S/4HANA is integrated with applications for the warehouse environment, production planning and detailed scheduling, inventory management, quality management, MRP Live, and much more.
Additionally, because SAP S/4HANA is an in-memory computing solution, the speed at which these transactions can be processed is fundamentally faster, allowing customers to make real-time decisions much more quickly.
SAP S/4HANA’s strong digital core also allows customers to integrate all the new technologies such as the Internet of Things (IoT), machine learning, or artificial intelligence.
Sharon: What are the four logistical value maps within SAP S/4HANA and how are they different from the traditional ERP modules?
Vadhi: One of the changes in SAP S/4HANA is the addition of value maps. Instead of using modules such as the traditional SAP Business Suite, available functionalities are now grouped into value maps. Traditional ERP modules were very focused and vertical. The value maps—Streamlined Procure-to-Pay, Accelerated Plan-to-Product, Optimized Order-to-Cash, and Enhanced Request-to-Service—offer a horizontal view and are more end-to-end harmonized maps.
Sharon: How does SAP S/4HANA allow a business to scale transformations across the entire enterprise?
Vadhi: The digital core within SAP S/4HANA ties together end-to-end business operations in a seamless manner, which is critical to drive business transformations across an enterprise. Equally worth highlighting is the fact that the SAP Fiori applications available with SAP S/4HANA help drive adoption across the enterprise. SAP Fiori apps help demystify complex SAP screens and deliver information that’s easy for the business end user to understand.
Sharon: What are the benefits that come with the planning and scheduling functionality in SAP S/4HANA?
Vadhi: There are two big advancements to highlight: The first is with material requirements planning (MRP) and the other is with production scheduling.
Within SAP ECC, MRP was a batch job that would run for multiple hours, usually overnight, before the planner could see results. If there was an error with the data, then the planner would need to input updated data and start the process from step one again, usually resulting in a 24-hour or longer runtime.
Now with SAP S/4HANA, the planner has access to real-time information because of the in-memory computing that SAP HANA provides. You can run MRP Live on the screen or in the background and see results immediately. In addition to real-time information, the planner has visualization with SAP Fiori apps, which provide a holistic view to address material shortages across the supply chain. It allows the planner to do “what-if” analyses, which are a critical part of their job.
SAP Fiori apps also allow the planner to have a holistic view into the production schedule. This is all integrated within SAP S/4HANA with specialized and detailed scheduling functionality. Users can reduce production lead time, increase on-time delivery performance, increase the production throughout, and reduce stocking costs.
Sharon: How does SAP S/4HANA enhance the sourcing and procurement processes?
Vadhi: The first thing to note is that SAP S/4HANA offers a simplified user interface and master data organization with SAP Fiori apps. Beyond that, in its latest release, SAP S/4HANA introduced a central procurement hub, which allows buyers to manage procurement for multiple business units.
SAP S/4HANA provides APIs to pull all process requisition data from various subsystems into a centralized hub, seamlessly supporting any kind of shared service procurement functions. The central procurement hub helps standardize business processes and achieve a clearer enterprise architecture.
Sharon: How does SAP S/4HANA help manufacturers stay competitive? What other manufacturing applications does it integrate with?
Chaitanaya: SAP S/4HANA offers ease-of-use from a production execution perspective. All the other functionalities we’ve discussed so far lead to the ability to manufacture a product without setbacks. Being able to plan in real time with materials, sourcing, and procurement means inventory is always available at the right time, at the right place. Manufacturers also have access to real-time analytics that are embedded within the SAP Fiori apps.
There are two layers of key manufacturing applications that integrate with SAP S/4HANA. The first is MII (Manufacturing Integration and Intelligence), which allows a user to connect directly with the shop floor systems. The other is SAP ME (Manufacturing Execution), which allows the user real-time availability to data so that they can make decisions right then.
Sharon: How does SAP S/4HANA support quality management processes? What should customers know about how this functionality cuts across multiple processes?
Chaitanaya: The role of quality management needs to integrate across several functions including materials management, manufacturing, and delivery. SAP Fiori apps offer ease-of-use across every single touch point. The user experience is a lot better at the end of the day because users can record, track, and work on key business data proactively.
Another big change here is that SAP S/4HANA shifts the focus from being a transaction-led process to one of user-based personas. Rather than focusing on tasks for a particular job title, it becomes about job functions, which ultimately simplifies the process.
Sharon: What key features and benefits does SAP S/4HANA offer for plant maintenance and asset management? How can it help customers move to predictive maintenance?
Vadhi: The big news with plant maintenance is the evolution from corrective maintenance—something broke down, I need to fix it—to preventative maintenance—I’m going to fix it because it’s eventually going to break down—to predictive maintenance—I can predict when something is going to fail and fix it before it does.
With this model, you can reduce the amount of preventative maintenance you have because you’re using predictive maintenance based on machine data. Combining that with an improved user experience makes the job of the maintenance planner a lot easier.
Sharon: What functionality does SAP S/4HANA offer for transportation management, and how can it help you develop better relationships with your carriers?
Vadhi: There are significant changes within transportation management from SAP ECC to SAP S/4HANA. SAP had a stand-alone transportation management tool that it’s been developing for several years. All the capabilities that were built in that stand-alone tool have now been integrated with SAP S/4HANA using embedded Transportation Management.
Everything from the master data for the transportation network including lanes, carriers, and locations to actual transportation and freight planning, tendering, carrier selection, and execution and tracking of freight in real time has been integrated within SAP S/4HANA.
There is a transportation cockpit within SAP S/4HANA that provides the transportation planner visibility into what trucks are coming in at what time, help schedule appointments for those trucks, and tender any requirements for carriers automatically and seamlessly. All of that is done with SAP Fiori apps.
The integrated capabilities, the seamless flow of real-time data to the carriers, and integration with emerging technologies such as SAP Leonardo all lead to a better working relationship.
Sharon: What processes are possible with embedded Extended Warehouse Management (EWM) in SAP S/4HANA?
Vadhi: Extended Warehouse Management is like transportation management in that there are significant enhancements to warehousing capabilities with SAP S/4HANA. SAP ECC offered standard warehousing capabilities including inbound operations, internal warehouse movements, and outbound movement.
But warehousing operations have become much more complex and require advanced capabilities. The EWM that is embedded within SAP S/4HANA provides users an end-to-end integrated view of warehousing. It includes capabilities such as managing stock types, control of unit handling administration, multistep receiving and dispatching, kitting, radio frequency transactions, material flow control, yard and labor management, and much more.
Sharon: What type of logistics reporting and analytics is available with SAP S/4HANA? What are the business intelligence (BI) maturity levels and how can they help you prepare for an SAP S/4HANA implementation?
Vadhi: In the past you would have to take the data from an SAP ECC system, send it to BI—which is a separate system—overnight using batch jobs and wait to receive the report on the following day. With SAP S/4HANA, you can get all of that in real time.
When you think about BI in the past, the reporting was always descriptive and backward looking. Now, with BI maturity, we look at how do you use the data that you currently have to drive the predictive analytics? How do we predict when things are going to happen?
That level of maturity is where organizations are moving toward from a reporting standpoint and logistics perspective. SAP S/4HANA supports organizations getting there.
Sharon: How can a supply chain evolve into a digital supply network?
Vadhi: Supply chains are already evolving into this concept of a supply network, as driven by the digital revolution. Let’s use 3D printing as an example. If you think about supply chains, they’ve traditionally been linear—you had product development, planning, procurement, manufacturing, distribution, and then perhaps customer service operations. All of these would be linear functions that would be vertically focused.
Now, when thinking about product development in the world of 3D printing, a supply chain must consider the impact of printing something in real time versus producing it ahead of time. It needs to think about how product development can be reconfigured to create printable items as close to real time, which means that product development has to understand when and how these items are going to be used and where are they going to be used.
Secondly, manufacturing now must focus on how to produce or print in a decentralized fashion, closer to where the product’s being consumed, rather than producing it in a central plant. Every function needs to think about the previous or the next. The product development, the manufacturing team, and the distribution team need to talk to each other to drive what their product design needs to be.
The notion of siloed functions is disappearing. It’s creating this concept of integrated supply network driven by the level of digitization that’s going to be happening. Organizations don’t have a choice but to evolve from a supply chain to a supply network.
Sharon: Can you summarize the book in a few sentences?
Vadhi: This book is like a 15-course tasting menu of functions within the supply network using SAP S/4HANA. You get a very high-level perspective of all of the various aspects of the supply network, and it also provides some key industry perspectives in any innovation driven by SAP S/4HANA.
More importantly, this book is about the why and what of SAP S/4HANA, not the how. If you understand the why and the what, then it becomes easier to understand the how.
ASUG Members can log into their accounts to get their discount on the “Logistics with SAP S/4HANA: An Introduction” book from SAP Press. If you’re planning to attend SAPPHIRE NOW and ASUG Annual Conference, don’t miss the day of learning about Moving to SAP S/4HANA, A Practical Discussion, an ASUG Pre-Conference Seminar. Register today and save your spot.