SAP Supply Chain Management Software Review

SAP AG was founded in 1972 by five ex-IBM employees. Their initial product offering was Manufacturing Resource Planning (MRP) software. In the early 1990s, SAP developed a fully integrated client/server Enterprise Resource Planning (ERP) system and in the mid to late 1990s, SAP expanded their solutions to include Supply Chain Management software. SAP is the world’s largest business software company. Gartner recognizes SAP as the world leader in SCM market share with about 19% share of the market.

Vertical Markets

SAP customers are midsize to large enterprise retailers, distributors, wholesalers, and manufacturers. Manufacturing segments include aerospace & defense, automotive, chemicals, consumer goods, industrial equipment and life science.

Supply Chain Software Products

SAP’s Business Suite of solutions for larger companies includes:

Customer Relationship Management (CRM)
Enterprise Relationship Management (ERP)
Product Life Cycle Management (PLM)
Supply Chain Management (SCM)
Supplier Relationship Management (SRM)
Merchandising, Store Systems and SCM

SCM Features

Software Architecture and Cross Application Solutions – NetWeaver is a big part of SAP’s SOA software architecture and offers an open architecture for extensibility and integration to third party software vendors and applications. Samples of some of the features are:

Application Server for Business Applications and Web Services
Business Information Warehouse Integration
Business Process Manager
Business Rules Manager
Information Lifecycle Manager

SAP has collaborated with Microsoft to develop a strong interface between Microsoft’s Office Suite and SAP’s processes and data. Users can access, synchronize and organize data in the SAP database with MS Outlook and SAP analytical data using Excel and other Office products.

Supply Chain Event Management (SCEM) provides a framework to monitor and notify appropriate parties for configured events and milestones.

Sales and Operation Planning – SAP does not have a full featured S&OP product. Their prescription for S&OP is to cobble together a system using the following SAP solutions:

Demand Planning
Supply Network Planning
ERP for financial data
Business Intelligences
Duet

For large enterprise clients with in house expertise, SAP provides the flexibility to customize its business software solutions to the client’s unique needs and requirements.

Demand Management – SAP provides multiple forecast modeling techniques and auto-picks the best fit model for each item. Forecasting accepts multiple sources of inputs, in addition to demand history, including: causal forecasting, bill of materials, product lifecycle trends and promotional plans. Both internal stakeholders and external trading partners can collaborate in the planning.

Full feature demand shaping and product lifecycle management requires SAP’s CRM and PLM products.

Order fulfillment is addressed with Sales Order Processing.

With SAP’s Demand Planning, ERP, CRM, PLM, BI, NetWeaver and Duet, customers have the flexibility to configure and structure demand management to their unique needs and requirements.

Supply Management – SAP’s Supply Network Collaboration (SNC) can be implemented as a customer, supplier and contract manufacturer’s solution for collaborative inventory management.

Supply Network Planning – SNP integrates purchasing, production, distribution, and transportation for analyzing and planning of mid-term and long term sourcing decisions. Planning tools include capacity leveling, cost optimization and demand matching.

Distribution Planning – Planning evaluates which demands can be fulfilled and deploys transfers to replenish inventory and fulfill customer orders.

Replenishment – Includes the ability to auto generate POs and delivery schedules from demand, sales orders, and sourcing agreements.

Vendor Managed Inventory – VMI replenishes customer inventories based on stock and sales data sent to the vendor. SAP SNC auto generates a PO from the vendor’s ASN.

Procurement Management – Strategic sourcing functionality includes: long term planning and Bid, Contract, and Catalog Management. Purchase Order (PO) processing converts demand into POs, monitors PO activities, and settles invoices against receipts.

Warehouse Management:

Yard Management – Users have visibility to inventories located in trailers. Inbound trailers can be sent directly to a door or a parking space in the yard.

Inbound Processing – Users plan and schedule inbound shipments. Pallet and carton auto-identifications are matched to the supplier’s ASN and a receipt is auto generated. Inventory is directed to bin locations based on multiple put-a-way strategies.

Outbound Processing – Sales orders and inventory transfers are filled from a Warehouse Order, which uses rules and algorithms to generate picks. Pick methods include: LIFO and FIFO; Shelf Life Expiration; and Partial Quantities.

Proof-of-Delivers (POD) are recorded to confirm the receipt of shipments at the destination locations.

Cross Docking – Inbound goods can be directed to the outbound process. Unplanned opportunity cross docks can be evaluated and detected during the inbound process.

Value Added Services – Value added services can be scheduled as part of the inbound or outbound processes.

Storage – SAP provides special handling requirements for tracking serial numbers and hazardous materials. Slotting optimizes the storage of goods based on cube, weight or future demand.

Transportation Management:

Planning – Features includes capturing requests, dynamic routing, credit checks and sending confirmations.

Dispatch – Based on load, pickups, modes of transportation, and route optimization, the dispatcher performs the following:

Assigns carriers to routes
Produces Shipment Documents
Generates EDI transactions

Freight Charges and Settlements – Charges are calculated and settlements made with invoice audits or automated self-billing.

Fleet Management – Driver and asset management is available for customers who manage their own fleet.

Supplier Relation Management:

SAP uses their NetWeaver platform to integrate SRM with their SCM, ERP and PLM solutions. The integration enhances the overall features and functionality of the SCM planning and execution solutions.

Catalog Management – SRM includes a centralized master database of spend and supplier data. Product searches are supported from other SAP solutions. SRM includes web and print publishing.

Sourcing – SRM manages and automates the supplier evaluation, negotiation and bid processes.

Contract Management – SRM provides the tools to assess and create a contract from the bidding process. The contracts interface with SCM execution to fulfill demand requirements. Contract monitoring tracks trading partner performance and compliance.

Supplier Compliance – SRM tracks and reports on qualitative and quantitative data against compliance agreements.

Customer Relationship Management – As with other SAP Business Suite solutions, CRM is integrated with their SCM and ERP products using SAP’s NetWeaver. Through the integration with SCM, CRM provides additional data to demand planning and order fulfillment.

SAP Supply Chain Software Strengths and Weaknesses

SAP’s strength is their lineup of SCM features, robust functionality and broad business software suite. SAP and Oracle are the only enterprise software vendors to have products for each area addressed in this evaluation. They also provide the tools to meet or exceed the integration, customization and management reporting needs and requirements for the largest organizations.

The NetWeaver software architecture is at the top of the list in functionality, features and tools. Software developers are not always needed or their efforts are minimized with NetWeaver’s support for standard common IT functions such as defining process flows, business rules and information sharing.

SAP’s forecasting uses best fit forecast models. The selection of a forecast model is based on an item’s history at the time the model is selected. At a later date, changes in an item’s demand behavior may result in using the wrong forecast model.

Planning done through the Duet product will have a latency that comes with transferring spreadsheet data, as opposed to a connected browser or windows application working on live data.

For customers using SAP’s ERP solution, the SCM solution is a strong candidate for most SCM requirements. Without the ERP solution, SAP SCM becomes a less likely candidate. Some of the other Supply Chain Management software vendors have certified some of their products to be compliant with SAP’s ERP software and NetWeaver.

SAP’s suite of integrated CRM, ERP, PLM, SCM and SRM for all customers and industries means that each customer has a much larger and complex IT footprint than a suite of products tailored to a specific industry. Smaller and midsized companies will likely not have the economies of scale and the systems expertise to support broad SAP solutions. Without any custom programming, a typical implementation requires SAP certified consultants and often takes several months to implement a single module.

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