From Supply Chains to Demand Networks SAP s Supply Chain Strategy and Roadmap
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1 From Supply Chains to Demand Networks SAP s Supply Chain Strategy and Roadmap Patrick Crampton-Thomas VP SAP Supply Chain Solution Management October, 2014 This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement
2 Legal disclaimer The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP s willful misconduct or gross negligence. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions SAP SE or an SAP affiliate company. All rights reserved. 2
3 Supply Chain Needs to Adopt to New Business Realities New methods are required to respond as global supply chains are transforming into demand networks Volatile Markets The customer has more knowledge about products and services than ever before (e.g. Social Networks) SPEED Innovative Manufacturing Technologies The customer is demanding individualized products (e.g. print your food with 3D Printers) Growing Logistics Complexity The customer expects flexible and speedy delivery of ordered products (e.g. delivery within the next hour) SPEED 2014 SAP SE or an SAP affiliate company. All rights reserved. 3
4 Are Supply Chain Organizations Prepared for Demand Networks? Major Challenges for Supply Chain Professionals Manage the Supply Chain in Real Time Only 20% of Supply Chain Professionals have information available within a day Improve Short-Term Planning Results Forecast accuracy for the first week is in average lower than 70% Orchestrate the Global Network of Partners Less than ~10% of suppliers are directly connected to their customer s supply chain Execute the Supply Chain efficiently About 10% of world-wide GDP is related to logistics spending 2014 SAP AG. All rights reserved. Internal 4
5 Supply chains are evolving into product and demand networks that drive six core processes across the enterprise Respond Plan Product & Demand Networks Design Operate Produce Deliver 2014 SAP SE or an SAP affiliate company. All rights reserved. 5
6 SAP Supply Chain Solution Strategy Enable Businesses to Transform their Supply Chains to Demand Networks Supply Chain Monitoring Ensure integrity and predict issues of the DEMAND NETWORK [THE DEMAND NETWORK] Demand Driven Business planning Sense & shape DEMAND. Balance DEMAND plans with NETWORK constraints for profitability Response and Supply Orchestration Manage Customer response and orchestrate the supply NETWORK Logistics & Order Fulfillment The DEMAND NETWORK requires speed & efficiency in Logistics Powered by SAP HANA 2014 SAP AG. All rights reserved. Internal 6
7 managed cloud SAP Supply Chain Architecture Sketch Simplified and Harmonized Solution Architecture for Demand Networks public cloud Mobile First Experience monitoring planning network logistics SAP Business Suite on-premise SAP HANA Platform 2014 SAP SE or an SAP affiliate company. All rights reserved. 7
8 SAP Integrated Business Planning Speeding up the Supply Chain requires a new Supply Chain Planning approach Mobile First Experience Introduce state-of-the art user experience with communication capabilities (SAP JAM) and MS Excel Spreadsheets Built on SAP HANA Demand Networks require real-time monitoring and a focus on short-term planning One Harmonized Data Model Avoid any latency due to integration efforts and leverage the SAP ERP data model New Planning Algorithm Leverage predictive analytics (e.g. demand sensing) algorithm in combination with optimization Cloud First Approach The solutions will be provided in the SAP Cloud but also be made available on-premise Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 8
9 Example innovations and roadmap Im Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network Market and Consumer Insight with Demand Signal Management. Collaborative Demand Planning for both simple and advanced use cases Demand Sensing based on inventory, POS, order feeds for short term and daily forecasting and exception management 2014 SAP SE or an SAP affiliate company. All rights reserved. 9
10 SAP Integrated Business Planning for sales and operations Deliver a cross departmental sales and operations plan balancing the impact on inventory, service levels and profitability Create the optimal business plan to drive revenue growth and increase market share Effectively balance demand and supply and attain financial targets Increase speed and agility of planning and drive most profitable responses Improve forecast accuracy and on-time delivery through aligned and integrated Business Planning across short, mid and long term Supply Chain Control Tower Sales and Operations Demand Inventory Supply Response This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 10
11 Where does SAP Integrated Business Planning for sales and operations fit across enterprise planning? Strategic Planning Financial Planning Strategic Plans Scenario Plans Constrained Revenue Margin Projections Strategic Tactical/Execution Opportunities, Promotions SAP Sales and Operations Planning on HANA AOP, Finance Plan Sales and Marketing Sales Forecast Short Term Plans Constrained Qty Plan Scenario Plans Constrained Revenue and Margin Projections R&D Operational Planning This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 11
12 SAP Integrated Business Planning for sales and operations sample use cases S&OP process management Simulation Collaboration Dashboard analytics This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 12
13 2014 SAP SE or an SAP affiliate company. All rights reserved. 13
14 2014 SAP SE or an SAP affiliate company. All rights reserved. 14
15 2014 SAP SE or an SAP affiliate company. All rights reserved. 15
16 2014 SAP SE or an SAP affiliate company. All rights reserved. 16
17 2014 SAP SE or an SAP affiliate company. All rights reserved. 17
18 Key features of SAP Integrated Business Planning for sales and operations Complete scalable model Real-time what-if scenario planning Social collaboration Supply Demand Finance Demand, supply chain, and financial model at aggregate and detailed levels Real-time scenarios and simulation on entire model Transparent communication, record decisions This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 18
19 Example innovations and roadmap Im Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network 2014 SAP SE or an SAP affiliate company. All rights reserved. 19
20 Managing complex Inventory decisions How much inventory here? Here? How about here? Why are we holding Inventory? This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 20
21 Inventory ($) Decrease Increase Integrated Business Planning for inventory benefits Achieving the right balance between inventory and service levels Fix the mix of inventory for each item at each location 60% 40% 20% 0% -20% -40% -60% 90% 92% 94% 96% 98% 100% Customer Service Level (%) Optimal inventory Company current performance This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 21
22 IBP Solutions integrated with S&OP Released July 2014 Im Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network End to End Visibility across the supply chain for Performance Management, Operational Reporting and Simulation SCM Event Management, Serialisation of products and full Batch Management and Traceability 2014 SAP SE or an SAP affiliate company. All rights reserved. 22
23 SAP Supply Chain Control Tower Mobile First Experience monitoring planning network logistics SAP Business Suite SAP HANA Platform Enable supply chain professionals to navigate, analyze and profitably manage the end-to-end supply chain in real-time Increase end-to-end visibility Increase on-time delivery performance to customer Decrease overall inventory levels while reducing risk Increase supply chain agility and reduce supply chain cost This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 23
24 SAP Supply Chain Control Tower sample use cases KPI Library & Dashboards Global visibility & Analytics Alerting to Action Collaboration with Task & Case management Demo link This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 24
25 Key enablers of SAP Supply Chain Control Tower End-to-end monitoring Alerts Collaboration Comprehensive view of supply chain current and historical supply chain performance Quickly identify current and future potential supply chain problems Communicate and resolve issues across functions This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 28
26 Example innovations and roadmap Im Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network Market and Consumer Insight with Demand Signal Management. Collaborative Demand Planning for both simple and advanced use cases Demand Sensing based on inventory, POS, order feeds for short term and daily forecasting and exception management 2014 SAP SE or an SAP affiliate company. All rights reserved. 29
27 SAP Integrated Business Planning for demand PLANNED Gain full demand transparency for short-, midand long-term forecasting by leveraging demand sensing and statistical forecasting methods Develop more accurate mid-term statistical forecasts React faster to short term demand changes with pattern recognition based algorithms to Better integrate short term demand planning and execution Respond to demand changes Drive more accurate deployment of product Collaborate to ensure the most accurate forecast and manage exceptions This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 30
28 2014 SAP SE or an SAP affiliate company. All rights reserved. 31
29 IBP-Demand including SAP Enterprise Demand Sensing Sense Short-Term Demand Patterns AVAILABLE (IBP Release 2014) Short-term Forecast Issues Increase Inventory and Reduce Service Metrics Enterprise Demand Sensing Increase short term accuracy including daily patterns Open order correction Predicted future bias correction Predict daily demand requirements Forecast patterns Shipment patterns Apply pattern-based forecasting logic for shipment and fulfillment Open order patterns Sense downstream demand using external data patterns (Planned Innovation) 2014 SAP SE or an SAP affiliate company. All rights reserved. 32
30 Example innovations and roadmap Im Existing mature and sophisticated supply planning capabilities within SAP APO Improved Usability Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network Order based network planning and production planning Available for HEC deployment or On Premise New Supply planning Capabilities developed as native HANA applications Available: IBP-Supply Rough Cut supply planning (working in conjunction with IBP- S&OP time series framework) Planned: New IBP Response and IBP Supply solutions for advanced order based supply planning across networks 2014 SAP SE or an SAP affiliate company. All rights reserved. 33
31 SAP Integrated Business Planning for Response & Supply: Order Based Operational Planning Fast, rules-based, demand priority driven supply planning, allocations planning, and order rescheduling Planning & what-if simulation of forecast and order demand Order / demand-based prioritisation rules Infinite or Finite (priority rules-driven) planning across supply / manufacturing network for all materials and resources PLANNED Full pegging and gating-factor analysis Generate and provide allocations to ATP for online confirmations of sales orders Capableto-Match Backorder Processing This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 36
32 Example innovations and roadmap Mobile First Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network Combine the best of SAP s existing Supply Network Collaboration Solution with the network capabilities of ARIBA s Business Network Enable collaborative supply chain process with both customers and suppliers Options for On Premise and Cloud deployments 2014 SAP SE or an SAP affiliate company. All rights reserved. 37
33 SAP Announces availability of Supply Chain Orchestration Combine the best of SAP s existing Supply Network Collaboration Solution with the network capabilities of ARIBA s Business Network Enable collaborative supply chain process with both customers and suppliers Support for all collaboration partners from simple order collaboration to advanced supply chain scenarios with strategic partners 2014 SAP SE or an SAP affiliate company. All rights reserved. 38
34 Enabling the Best Business Network SNC Integrated collaboration with advanced and broad Supply Chain Business processes Supply Chain Orchestration (SCO) Communication & Collaboration Ease of deployment, connectivity and on- boarding Content Engine Item Party Locatio Busines s Partner Profiles SAP n Information Interchange SAP B2B Supply Chain Connectivity (ex- Crossgate Solutions) 2014 SAP SE or an SAP affiliate company. All rights reserved. 39
35 Accelerated Supplier Onboarding with Ariba Network: On- Boarding Services, Self-Registration & Unified Supplier Portal Supplier Self Registration Logon to Supplier Portal Ariba Network ~1 million trading partners across all industries 40+ million Purchase Orders 60+ million Invoices ~$400 billion in spend 142 countries 72 currencies 40 Invoice compliant countries 2014 SAP SE or an SAP affiliate company. All rights reserved. 41
36 Managed cloud (HEC) Integrated Business Planning, Monitoring & Network Available and Planned Products Integrated Business Planning (IBP) Mobile-Enabled User Experience Public cloud Supply Chain Control Tower IBP for sales and operations AVAILABLE AVAILABLE IBP for demand PLANNED IBP for inventory AVAILABLE IBP for supply AVAILABLE AVAILABLE On-premise (future) IBP for response SAP HANA Platform PLANNED SAP Business Network This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without 2014 a SAP warranty SE or of an any SAP kind, affiliate either company. express or All implied, rights reserved. including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 42
37 gatp SAP APO Has Been Significantly Enhanced Recently SAP Supply Chain Info Center SAP Enterprise Inventory and Service Level Optimization SAP Supply Network Collaboration SAP APO Demand Planning Supply Network Planning PP/DS HANA any Database Performance Analytics Usability SAP APO available on SAP HANA and HANA Enterprise Cloud (HEC) LiveCache is part of SAP HANA Performance improvements for many transactions and planning runs SAP Supply Chain InfoCenter enables real-time analytics of APO data Direct access of LiveCache data with easy navigation between SAP APO and SAP SCIC Renovation of Product View, ebopi, and Planner s Home Page Introduction of Fiori Applications for GATP Analytics MS Excel Add-In for APO Demand Planning This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a 2014 warranty SAP of SE any or kind, an SAP either affiliate express company. or implied, All rights including reserved. but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 43
38 Manufacturing Planning & Scheduling SAP APO PPDS AVAILABLE (HANA Simplification planned 2015) Generate a short- to midterm supply plan / machine schedule based on orders, WIP, detailed Material flow definitions Support for finite backward- and forward-scheduling models with constraint-modeling capabilities Creates a production schedule considering all capacity constraints (at multiple levels) and materials availability Optimization based on actual constraints to ensure reliable delivery-due-date promises and to maximize capacity utilization Highly specific sequencing capability (for example, tank mixing and scheduling, model mix planning & sequencing) Seamlessly integrates with ATP for CTP scenarios Resource 2 A-20 B-20 C-20 D-20 This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2014 SAP SE or an SAP affiliate company. All rights reserved. 44 (Finite) Resource 1 (Infinite) A-10 B-10 C -10 D-10
39 gatp Incorporate SAP Integrated Business Planning in phases by adding incremental value to existing planning solutions IBP for demand SAP Supply Chain Info Center Supply Chain Monitoring Supply Chain Control Tower Integrated Business Planning (IBP) User Experience IBP for sales and operations IBP for inventory IBP for response SAP HANA Platform + SAP Enterprise Inventory and Service Level Optimization SAP APO Demand Planning Supply Network Planning PP/DS HANA any Database IBP for supply SAP Supply Network Collaboration Flexible roadmap for short, mid and long term value delivery: 1) Continue APO Roadmap in line with business needs and value delivery, fully supported by SAP through ) Extend existing SCM footprint with value-add elements of IBP and lay the foundation for next generation real time supply chain. For example SAP Integrated Business Planning (IBP) for sales and operations, IBPinventory and supply chain control tower can be used with SAP APO, SNC or EIS 3) Further adopt SAP Integrated Business Planning elements such as IBP for demand and IBP for response when available This presentation and SAP s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a 2014 warranty SAP of SE any or kind, an SAP either affiliate express company. or implied, All rights including reserved. but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 45
40 managed cloud SAP Supply Chain Platform for Demand Networks World class solution for supply chain monitoring, sales and operations planning, demand management, inventory planning, supply planning, and response management public cloud Mobile First Experience monitoring planning network logistics SAP Business Suite on-premise SAP HANA Platform 2014 SAP SE or an SAP affiliate company. All rights reserved. 46
41 Contact information: Patrick Crampton-Thomas Vice President, Supply Chain Solution Management
42 2014 SAP SE or an SAP affiliate company. All rights reserved. No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affiliate company. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. Please see for additional trademark information and notices. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP SE or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP SE or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE s or its affiliated companies strategy and possible future developments, products, and/or platform directions and functionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forwardlooking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions SAP SE or an SAP affiliate company. All rights reserved. 48
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