Three Key Innovations of the Digital Supply Chain

Blog Posts | August 8, 2017

Where is the real ROI in S/4HANA?  I’m betting you didn’t guess the Digital Supply Chain, but it’s true.  Most of us have heard a lot about S/4HANA (Simple) Finance and how it can enable the digital enterprise, provide instant insight that drives better decision making and a redefined user experience. SAP has also delivered numerous “simplifications” and business process improvements in Finance along with the reduction of the Total Cost of Ownership by simplifying its architecture and lowering overall IT complexity.

Now, these are all true and are of tremendous value for a company looking to thrive in the digital economy.  However, what is perplexing is that we have heard very little about the nature of Logistics and the Supply Chain benefits in S/4HANA. To help rectify this, below I have focused on the three areas which I believe deliver the most significant business benefits.

Digital Supply Chain

  1. Production Planning (PP) – for those who are familiar with SAP’s Advance Planning and Optimization’s (APO) Production Planning Detailed Scheduling (PPDS) solution, many of its capabilities are now core to S/4HANA.

Benefits: True constraint-based planning can be done directly in S/4HANA without the need for a bolt-on Advanced Planning solution like APO.  You can now optimize and plan resource schedules and order dates by taking the resource and component availability into account.  Further, you can plan critical products with long replenishment lead times, or those that are produced on bottleneck resources, directly in the core. This also means real time information and no integration or need for the Core Interface (CIF).

  1. Available to Promise (ATP) called Advanced Available to Promise (AATP).Available to promise

Benefits: with AATP you can now perform true Backorder Processing (BOP) and production allocations which were never easily accomplished within ECC.  BOP now allows order confirmation based on the business impact, volume and/or priority of the order.  Also, Product Allocation has a completely new design and is now based on business rules and priorities that are based on the attributes of the underlying sales order.

  1. Integrated Extended Warehouse Management – SAP has now “embedded” Extended Warehouse Management directly in S/4HANA.

Warehouse ManagementBenefits: S/4HANA provides state of the art Warehouse Management capabilities directly in the core thus reducing complexity. This will allow more flexible deployment options and precludes replication of complex material, order and batch information.  It also brings additional transportation management functionality that is intrinsic to EWM.

These examples of business process improvements in the SAP Digital Supply Chain can add tremendous value.  Quantifying the benefits of these Logistics and Supply Chain innovations inherent in S/4HANA Enterprise Management is a great foundation to justify the move to S/4HANA with significant ROI.

Jeff Clark is Vice President of Solutions at GROM.  Jeff has over 18 years of SAP Supply Chain experience and was one of the first SAP APO consultants focusing on S&OP.