ASUG recently interviewed SAP leaders for year-in-review highlights and commentaries on what’s next in key technology areas, solution portfolios, and industries. Here we explore 2022 progress and the 2023 outlook for SAP Supply Chain with Darcy MacClaren, Senior Vice President, Digital Supply Chain, SAP North America.

Question: It has been a big year for supply chain. We would like you to recall what you believe were the 2022 highlights.

Answer: It has been quite a year. There is a lot of disruption going around, and everybody is talking about a resilient, agile, and sustainable supply chain. But the fact of the matter is, it's not easy to reverse 20 years of globalization in 20 months. Typically, supply chains were cost centers focused on maximizing profits. That’s why we had a lot of low-cost suppliers or manufacturers. They optimized to reduce working capital and shipping cost. Then, everything changed.

Now that we're really in the midst of it, we realize—with lockdowns, port closures, canal blockages, supply shortages, and more—that supply chain management is all about alleviating risk. That’s what’s different. Everybody is rethinking how to design their supply chain to eliminate risk. You can't say you're agile or resilient if you haven't incorporated that component of managing risk, and you can't do that by addressing a small part of your business.

That’s where we see significant changes. It's about connecting the entire process of your business. We see a shift from after-the-event reaction to real-time prediction, from just automation to business-changing transformation, and from agility, resiliency, and sustainability to operational realities. That’s what we're seeing.

Q: How would you assess increased awareness of supply chain this past year?

A: The longer you’ve had a relationship with SAP, the more you think you know us, but we have gone through such a transformation ourselves, particularly in the supply chain area. And supply chain is considered a part of the S/4 development area because there’s such tight integration with S/4. Anything to do with inventory and execution is not integrated with S/4—it's part of S/4. That gives us a huge advantage.

We have had so much innovation in SAP in supply chain. It's top of mind across the highest levels of leadership at SAP and business leaders worldwide. In conversations with our customers, we are hearing we must really look at what we're doing with this whole risk-resilient supply chain and what we call Design to Operate in connecting everything. That’s the beauty of SAP: the interoperability of how you design your product, move it through manufacturing (which is all about Industry 4.0), continue that through logistics (which is automating your logistics with a best-in-class approach), and then take that back with Operate, to give you that full digital thread. Then, it’s about how you combine that with all our intelligent technologies in a sustainable environment. That’s the vision of what you can accomplish with SAP.

The question is, where do you start to transform? Everybody needs that end-to-end view, where you get to transformation in business models. What varies is where you are as an organization and where we need to start. I want to stress that it’s important to look at this holistically. How can you use the supply chain, the SAP Logistics Business Network, or SAP Integrated Business Planning to move quicker, better, and faster? How can these offerings help move you from ECC to S/4 and justify that transformation?

That’s another thing we were asking this year: Where do people start? Some said, “My order-to-cash and procure-to-pay are working fine, but I have a real area [to address] in logistics and transportation.” We would start the S/4 journey by pulling apart SAP Extended Warehouse Management and SAP Transportation Management, in some cases with product lifecycle management. And that would be their first foray into S/4. And ultimately, you start bringing in the rest of the environment at the right time. The bigger the organization, the more planning you need to do to go from where you are to where you need to be.

Q: What are you most proud of regarding supply chain this year?

A: Much of this technology has been around for a while. 2022 was the year of the adoption of Industry 4.0. We have new and emerging high-growth organizations, such as Zero Motorcycles and Rivian. You can almost look at them as greenfield. Zero Motorcycles was able to take our concepts of S/4 and Design to Operate and say, “I’m going to do product lifecycle management into manufacturing, with S/4, with integrated business planning.” They put that all in and get the true value of Design to Operate because they're starting with nothing amid building a new company. I’m excited to see our products being used to the fullest.

The automation in Industry 4.0 and connecting that digital thread excite me, in conjunction with what we’re doing with our networks. SAP developed SAP Ariba, the largest network in the world, with suppliers and contract manufacturers. A few years ago, we created the Logistics Business Network (LBN), the Intelligent Asset Network (IAN), and the concept of Network of Networks, a common user interface to make it easier to get connected in this digital world. With these newer networks, what’s new is getting the flywheel going. We made headway on LBN. Very soon, once we have all the big carriers on, the question to customers will become, “Why aren’t you on the network?” I’m proud of what SAP did in this network area because that is so key to the supply chain and getting information for our customers.

Q: What would you list as unfinished business with supply chain for this year?

A: What you’ll see us working on for next year is anything that has to do with a risk-resilient and sustainable supply chain. That’s our framework, in addition to making service a vital part of your business.

We’re focused on the design: of products we resell and product development for engineering and visibility. In field service, we’re reinventing service models, delivering service provision, and revolutionizing equipment. We want to make sure sustainability is core across SAP. We’ll continue to enhance Industry 4.0, but we’re making sure we’re rolling out all the AI, mobility, machine learning, and IoT at scale. That will be a key component across not only the supply chain products but also across SAP. As we work toward being the largest artificial intelligence company in the world, we roll these applications out at scale, as opposed to operating in pockets and projects here and there.

Within those areas, there are specific plans for each of our five pillars—Design, Plan, Manufacture, Deliver, and Operate. Integrated business planning is core: the control tower and the intelligence of our supply chain. It will become the planners’ workbench, where you'll bring in all your outside content, your Google information, your demand sentiment…information to make sure you're designing the right products. We’ll have network connections, and then you’ll have intelligence, machine learning, and other advanced technology capabilities so that you have a really proactive cockpit from which to run your business. That is integrated business planning. We'll continue to enhance that with the concept of synchronized planning.

Q: You’re known for your advocacy around women in supply chain. What have you been working on this year?

A: Supply chain is such a growing field that everyone needs to track the best and brightest. None of us have enough people. We grew our supply chain business by 86% last year. In 2023, we’re expecting that to grow another 46%, so we need more people. There is a real diversity issue in supply chain. It’s very male-dominated.

In 2020, I formed with some others at SAP the Women in Supply Chain Network. It’s all about how we can improve the diversity of women in supply chain. How do we get them into this exciting field, and then how do we coach, mentor, and sponsor them? It’s more than SAP; it also includes SAP customers and partners. Now, the network is about 800-strong. We meet face-to-face at Sapphire and at our customer-success-field kick-off meeting. The rest of the year, we meet virtually every quarter.

It has been life-changing for many of the women I've met and for me. As any woman in supply chain (and too many other industries) knows, they will go to a meeting and be the only woman there. This is one way we can help increase diversity in the field. And now’s a great time. Before COVID, nobody knew what supply chain was. Now, all of a sudden, this is considered a cool job.

Q: You’re referring to before the pandemic. Can you speak further about the importance of increasing visibility to establishing resilient global supply chains?

A: It all starts with visibility. If you don’t have visibility, then you can’t provide decision-makers with the needed information. And if you don't have that, you can't make the best decision for your customer, your company, and the global environment. It’s all about getting connected. And we want to be connected via networks, not point-to-point; that’s too expensive. There are too many people in the ecosystem; you need to connect it to networks. The people that are connected stand the best chance.

Once you're connected, you can start implementing intelligent solutions to automate that because we're collecting a lot of data. You only need to know, “Do I have an issue? Is it late? And if it is, can I figure out what to do, who to notify, and what else to do?” That's when you get a self-healing supply chain. “I noticed the ship is two weeks late. Who’s affected? What do we need to do when it lands? Do we need to have a different type of mode of transport to get it to the end, or do we need to notify the ultimate customer it will be late? Can we send something else?” Those are the questions you can only answer if you're connected. Whether it’s your trucks driving around on the roads or your equipment in a plant, your equipment needs to be connected so you know what's going on. Once you’re connected, we use tools to help automate and a control tower to manage that.

Q: Let’s look ahead to 2023. What are the imperatives for those companies committed to transforming supply chains? What should they be focused on?

A: To transform, companies need to look across the entire supply chain. We need to stop the pilots, the POCs, and the science projects. We need to look across our organization, and we need to be connected. The term “best of breed” is a problem because the reality of being resilient, agile, and risk-free requires you to be connected and work with the other parts of the system in mind.

If every leader goes out and tries to solve a single, low-hanging-fruit issue in supply chain, that may temporarily work, but you won’t get the transformation you ultimately need. Supply chain people think that’s an IT issue, but it’s not; it’s a supply chain issue. You can connect everything to everything, but the data latency and disparate data all over, causing problems in this fast-moving agile world, are why you need to look more holistically.

People are now getting that, which is game-changing. We’re trying to ensure that not only IT and digital transformation people understand that but also that supply chain practitioners understand it’s not about them. The pandemic taught us that it’s not about you, your department, or your silo—it’s all connected. It’s bigger than us. It’s our ecosystem. We want to help people understand that and then put in place what their transformation should be; everybody needs to transform, but they need to start in the important places now.

Q: Do you have any parting words for the ASUG community?

A: What I would ask of the ASUG community is to involve their supply chain practitioners in the process and to have them understand the SAP point of view across Industry 4.0, intelligent technologies, and supply chain. Bring them in. These decisions are made within the business and cannot be kept just within IT. IT cannot force planning, transportation, or research and development to use solutions. Open the door. Don’t protect businesspeople; get them involved.

Also, work with SAP to start the transformation. The bigger the organization, the more complex you are. We can help you figure out where to start to deliver quick wins to the business while you undertake a broader SAP transformation. 2023 will be a huge year because everyone is starting this work. Bring SAP in, have us work with your business folks, and we’ll be great partners.

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