In the current global market, expectations are continually increasing towards Supply Chain functions, bringing new demands for flexibility, more layers of interaction, and requiring deeper real-time insights. Many companies’ core supply chain operations processes are still too fragmented, too inflexible, too vulnerable, or too difficult to control while their front-ends towards customers are becoming more global and seamless.
This is where SAP S/4HANA® can come into the picture. Companies transitioning to SAP S/4HANA® typically have major elements of their supply chain SAP solution which work well but key elements that should be completely redesigned and made much more flexible. A brownfield approach may not be flexible enough to support this change and a greenfield approach may be too costly for many companies. With a Selective Transformation approach, companies can maintain a robust backbone, protect their legacy investment for their business operations while having the possibility to develop new solutions to respond to changes in market conditions or to adopt intelligent cloud-based supply chain niche solutions.
Huge focus on the supply chain
All supply chain leaders experience every day how the supply chain itself is the subject of endless scrutiny from the business at large. When times are tough, it’s a natural target for cost-cutting and optimisation and, in times of growth, supply chain planning can play a big role in addressing increased demand. As a result, many view the supply chain as a constant work in progress.
In fact, that’s exactly how we see it in Deloitte, too. Having worked many years with companies helping them align their supply chain to changing business conditions, we have experience how many improvement have been made in efficiency, productivity, and compliance. It has been a huge task with great complexity and many companies have come a long way in trying to move past the inflexible processes of the past.
However, on the back of the global turmoil during the last few years, it’s time to realise that there is still work to be done to streamline processes, unlock essential insights, and improve decision-making across the entire value chain end-to-end.
For many companies, core supply chain operations processes are still far too fragmented, too vulnerable, and too difficult to control while their front-ends towards customers are becoming more global and seamless. Many leaders are largely left in the dark when it comes to effectively preparing for and responding to sudden disruptions. There has to be a better way forward. For companies running SAP, this is where SAP S/4HANA® comes into the picture – the number one digital core ERP and business transformation platform in the world for optimising end-to-end supply chain.
At Deloitte we observe, at present, that our clients choose to adapt to SAP S/4HANA® in diverse ways, based on different criteria. Some choose the cost focused approach, by doing a technical lift and shift, and some choose a more value based transformational approach, by fully or partially re-implementing business processes into S/4HANA.
A partial re-implementation is what is called a Selective Transformation and gives the ability to re-design processes and areas that do not fully support the future digital strategy and at the same time allows for companies to protect their legacy investment through re-use of robust functionality and opening up for harvesting S/5HANA quick wins.
Here are just three out of many ways in which SAP S/4HANA® can pave the way for a revolutionary supply chain transformation:
1. A huge leap in visibility and control
The rapidly-evolving digital global economy means manufacturing and distribution activities are becoming more consolidated and more complex, which in turn drives the need for efficient planning, execution and management. Deployed effectively, SAP S/4HANA® can help organisations develop the competitive edge they desperately need, supporting their ability to make decisions rapidly and accurately across the entire spectrum of their operations. The solution’s strength lies at the intersection of analytics and functionality as well as its in-memory processing capabilities for handling massive amounts of data.
Manufacturers, for example, might face complex questions about sourcing related costs in rapidly moving markets. For example, they may need instant information on incidental expenses for expediting freight – or one-time supplier charges for special orders.
Need to make ad hoc changes for massive orders? SAP S/4HANA® can help ensure that production and distribution can keep flowing. And it can do a lot more. Ultimately, it can help you transform decision-making and take customer service to the next level.
The analytics capabilities of SAP S/4HANA® provide real-time functionality that enables end-users to create and personalise reports, KPIs, or any other analytical artifacts as needed to monitor and improve operational performance. All is enabled by the simplified SAP data model, which supports operational, financial and predictive data analysis at the most granular levels. Across the supply chain processes, you can enable reliable, real-time decision-making by leveraging data across the entire digital enterprise. For the first time, you will get instant answers on costs, spending and resources, simulate alternative scenarios, and make proactive decisions with a bird’s eye view as important events unfold.
2. Integrated, robust but flexible processes
Whether we are looking at purchasing, production, warehouse operation and transportation, asset management, aftersales or overall planning, what is evident is that rising expectations across the supply chain bring new demands, more layers of interaction, and more data for the enterprise to process. As challenges grow exponentially, organisations seek solutions that allow them to respond rapidly to evolving challenges.
SAP S/4HANA® is not just a game-changing digital core but integrates natively with the full spectrum of SAP supply chain application components, including SAP Ariba, SAP IBP (Integrated Business Planning), SAP EWM (Extended Warehouse Management), and SAP TM (Transportation Management). It is worth remarking that what many customers refer to as the SAP monolith, the core of SAP has shrunk since the rearchitecting of SAP S/4HANA®. SAP has massively rationalised its table structure and module relationship, optimising data access in real-time and increasing flexibility.
Its core application is much smaller than before while industry-specific and functional area solutions are now typically launched as cloud-native- satellites around the core, connecting via open APIs Therefore, it’s also a solution that is greater than the sum of its parts, in that the integration of its components allows companies to achieve new levels of cohesion and collaboration across the organisation and with customers and suppliers.
When transforming to SAP S/4HANA® with a Selective Transformation approach, companies can maintain a robust backbone, protect their legacy investment for their business operations while having the flexibility to develop new solutions to respond to changes in market conditions or to adopt intelligent cloud-based solutions.
3. Reconfiguring the business for the future
Needless to say, a supply chain transformation driven by SAP S/4HANA® is only one element of the vast efforts through which companies are right now trying to navigate in a difficult environment, ultimately reconfiguring, reorganising, and reinventing their business for the future. SAP S/4HANA® is not only a state-of the- art technology, but also a method for constantly aligning technology with your business needs and with your vision for the future in order to stay ahead of expectation and evolving market forces.
What SAP S/4HANA® offers organisations is a digital core that can deliver on these strategic priorities, realise even more value throughout the supply chain, engage customers more meaningfully, empower the workforce in new ways, and leverage analytics to get new insights for decision making across the enterprise.
The result is a supply chain, which is more agile, more efficient and much easier to control, ultimately delivering the Horsepower and steam that companies need right now to move within, through and beyond the crisis.
Forfatter spotlight
David Colgan
Ask me about: SAP, S/4 HANA, Digital transformation, IT strategy, Program management, Digital Finance function, Cloud David is a partner in Deloitte and the Nordic Lead of our SAP Practice. David has a background as a Chartered Accountant but has more than 25 years of experience with SAP transformation programs, where the underlying theme is SAP and financial & digital optimization. David works with Danish as well as Nordic companies advising on SAP-enabled digital transformations and delivering SAP S/4HANA.