SAP S/4HANA: Taking stock of supply chain visibility, intelligence and control
The COVID-19 pandemic has exposed the vulnerability of supply chains globally. The need for visibility across the entire ecosystem, and the ability to react to changing demand quickly and more acutely is more important than ever. Crucial considerations at a time when the world’s economy could be significantly impacted include creating appropriate controls, business standards, launching new business models and opening up to new markets. Underpinning this is the need to create a digital supply network, which will allow a company’s systems to communicate with their business partners’ systems to ensure a smooth, rapid flow of data and information. A new ERP implementation is an opportunity to create the adequate environment for digital supply networks to become reality, whilst also enabling a company to rethink their processes to allow for quick decision making using the enhanced data flow.
The need to optimise supply chains globally
Currently, the supply chain landscape is complicated, potentially inaccurate, and has numerous pain points. Supply chain professionals struggle to obtain full visibility due to the complex and unrelated network of partners that perform a variety of activities on their behalf. They may need to use several thousand different applications to run the supply chain that do not “talk” to each other. Furthermore, the current modus operandi is a reactive approach to managing risk. This leaves businesses vulnerable to regulatory non-compliance, operational disruption and reputational damage.
The current state of play also limits supply chain directors’ ability to set up appropriate controls and governance: they simply do not have access to the modern and fully integrated technology platforms that would help them monitor their internal supply chains, as well as the supply chains of their partners.
Such platforms would help turn traditional, linear supply chains into dynamic, IoT-enabled digital supply networks (DSNs) allowing for real-time tracking of deliveries around the world, strategic sourcing of supplies, and early notification and resolution of any problems with assets throughout the supply chain. As systems would be fully integrated, manual input of data would be limited, with less errors as a result. Supply chain directors would gain real-time product intelligence, control tower-enabled visibility, strategic sourcing and optimisation. This would obviously help reduce and control costs, enhance visibility and compliance but also considerably boost innovation, and co-innovation with partners.
Transform the business model to offer new types of products and services
This is crucial as the Fourth Industrial Revolution puts the supply chain of all companies under great pressure to transform and adopt new business models, and new products or services quickly. In our 2019 Supply Chain Digital and Analytics survey, 76% of respondents said developing digital and analytics capabilities was most important or very important to delivering the overall supply chain strategy. New technology platforms are seen by many businesses as a means to completely change what they do and offer end-to-end services, from factory to delivery to customers on other side of the world. Transforming processes is seen as an urgent need: organisations worry their business will suffer if they do not innovate quickly enough to offer new types of products and services in an increasingly competitive landscape. They want to boost productivity, move faster, in a more agile and transparent way. The new insights gathered by IoT and analytics would also allow businesses to respond to changes from their customers and markets faster.
Practical steps to digitalise your supply chain
In this context, S/4HANA implementation presents businesses with the opportunity to re-examine current business processes and confirm they are still fit for purpose. It allows companies to break out of the “that’s the way it’s always been done” mentality and clean up any customisations and rationalise legacy systems that are in use. Doing so will enable a cleaner IT landscape and smoother processes which will be able to use innovation to turn the whole supply chain into a connected “always on” resource for informed decision making. Insights gathered by distributed data and the sensors of IoT combined with the use of advanced analytics have the potential to transform supply chains into connected, intelligent, scalable, customisable, and agile digital supply networks. Businesses hope they can dramatically reduce the thousands of applications used in their supply chain by simplifying and automating processes.
Using a single platform for warehouse or transport management, allowing real-time inventory, more frequent material requirements planning (MRP) or advanced available-to-promise (ATP) check for releasing large production orders would allow that. It would also help supply chain businesses enhance collaboration with logistics partners to improve throughput, reduce wait times, and become more efficient. The digitalised supply chain would finally become a dynamic and responsive network of partners, able to even sense demand change and even make predictions, participating to overall business strategy. There has never been a more urgent time to do it.