Supply Chain Management

Supply Chain Planning and Collaboration
SAP SCM includes features and functions to support collaborative supply chain planning processes, including strategic, tactical, and operational planning as well as service parts planning.
Strategic, Tactical, and Operational Planning
With SAP SCM, you can optimize a full range of planning activities, including:

• Demand planning and forecasting – Forecast and plan anticipated demand for products or product characteristics. Use state-of-the-art forecasting algorithms for product life-cycle planning and trade promotion planning.
• Safety stock planning – Assign optimal safety stock and target stock levels in all inventories in the supply network. Meet your desired customer service levels while maintaining a minimum amount of safety stock.
• Supply network planning – Integrate purchasing, manufacturing, distribution, and transportation plans into an overall supply picture – so you can simulate and implement comprehensive tactical planning and sourcing decisions based on a single, globally consistent model. This can involve heuristics and capacity planning, optimization, and multilevel supply and demand matching.
• Distribution planning – Determine the best short-term strategy to allocate available supply to meet demand and to replenish stocking locations. To achieve this, planners can determine which demands can be fulfilled by existing supply elements.
• Supply network collaboration – Work with partners across your supply network. Using collaboration features that improve visibility into supply and demand, you and your partners can reduce inventory buffers, increase the velocity of raw materials and finished goods through the pipeline, improve customer service, and increase revenues.

Service Parts Planning

With SAP SCM, you can also handle service parts planning activities, including:

• Parts demand planning – Improve the accuracy of forecasts through better modeling of demand quantities, events, and their respective deviations. You can select sophisticated forecast models and optimize model parameters to improve forecasting for slow-moving parts or for parts with irregular demand patterns. Through aggregated forecast-parameter profile maintenance, you can make data maintenance more efficient.
• Parts inventory planning – Reduce inventory levels and achieve retail service levels by providing more precise demand modeling. You can distribute inventory optimally within the multi-echelon supply chain to ensure high service levels while keeping inventory levels at a minimum.
  Parts supply planning – Reduce inventory in the supply chain by improving supplier alignment, increasing automation, and developing accurate supply plans. You can also reduce operational cost through efficient purchasing practices.
• Parts distribution planning – Set up stock transfers for parts within a service parts network to reduce stock-out situations and operational costs.
• Parts monitoring – Work with suppliers and customers to exchange information and handle alerts collaboratively.
  Supply Chain Execution
  SAP SCM provides features and functions that enable supply chain execution processes, including order fulfillment, procurement, transportation, warehousing, and manufacturing.
  Order Fulfillment
• With SAP SCM, you can manage order fulfillment activities, including:
• Sales order processing – Fulfill a contract or purchase order with a specific product configuration and quantity – or a given service at a specific time.
• Billing – Handle the entire billing process, from the creation and cancellation of invoices through the transfer of billing information to the accounting department.
  Procurement
  SAP SCM supports end-to-end procurement, including processes for:

• Strategic sourcing – Identify and evaluate vendors based on historical performance and other data. Create long-term sourcing plans that align with financial and marketing strategies.
• Purchase order processing – Convert demand, such as purchase requisitions and e-shopping carts, into purchase orders or delivery schedules for a scheduling agreement.
• Invoicing – Receive, enter, and check vendor invoices for correctness in terms of content, price, and computation.
  Transportation
• With SAP SCM, you can manage key transportation processes, including:
• Transportation planning – Optimize shipments, assign carriers to shipments, and tender shipments to assigned carriers.
• Transportation execution – Select carriers, calculate freight costs, settle shipment costs, and print documents. Use denied-party and embargo lists when shipping internationally.
• Freight costing – Calculate and settle freight costs based on actual shipments and current rates, and use this information to verify invoices.
  Warehousing
• With SAP SCM, you can manage warehouse activities, including:
• Inbound processing and receipt confirmation – Receive and process externally procured goods into your warehouse with a single radio-frequency scan.
• Outbound processing – Use RFID technology to manage all the steps of the goods issue, including distribution and proof-of-delivery activities.
• Cross docking – Direct inbound goods from receipt to issue without interim storage. Minimize duplicate goods movements, optimize the flow of goods, and shorten routes within the warehouse.
• Warehousing and storage management – Optimize internal movements and storage of goods within a warehouse.
• Physical inventory – Plan and execute physical inventory or cycle counts.
  Manufacturing
  SAP SCM supports all production processes, including engineer-to-order, configure-to-order, make-to-order, and make-to-stock manufacturing. The solution enables both:
• Production planning and detailed scheduling – Optimize schedules for machine, labor, and overall capacity utilization, factoring in customer delivery dates, material availability, and real-time manufacturing conditions.
• Manufacturing operations – Capture production information from the shop floor to support production control and costing processes.
  Supply Chain Visibility Design and Analytics
  SAP SCM supports supply chain visibility design and analytics with features and functions that enable supply chain design and analytics processes, including:
• Strategic supply chain design – With visibility across the entire supply chain network, planners and key decision makers can perform strategic and tactical business planning. They can test scenarios to determine how the supply chain network can address changes in the market, the business, or customer demand.
• Supply chain analytics – SAP SCM enables you to define, select, and monitor KPIs to get an integrated, comprehensive view of performance across the supply chain. You can also use predefined KPIs based on the supply chain operations reference (SCOR) model to monitor sourcing, planning, production, distribution, and returns processes.

Business Benefits

SAP SCM can help you transform a traditional linear supply chain into an adaptive network with the following benefits:

• Faster response to changes in supply and demand – With increased visibility into the supply chain and adaptive supply chain networks, you can be more responsive. You can sense and respond quickly to changes and quickly capitalize on new opportunities.
• Increased customer satisfaction – By offering a common information framework that supports communication and collaboration, SAP SCM enables you to better adapt to and meet customer demands.
• Compliance with regulatory requirements – You can track and monitor compliance in areas such as environment, health, and safety.
• Improved cash flow – Information transparency and real-time business intelligence can lead to shorter cash-to-cash cycle times. Reduced inventory levels and increased inventory turns across the network can lower overall costs.
• Higher margins – With SAP SCM, you can lower operational expenses with more timely planning for procurement, manufacturing, and transportation. Better order, product, and execution tracking can lead to improvements in performance and quality – and lower costs. You can also improve margins through better coordination with business partners.
• Greater synchronization with business priorities – Tight connections with trading partners keep your supply chain aligned with current business strategies and priorities, improving your organization's overall performance and achievement of goals.