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.