Accelerating Your SAP Supply Chain Management ROI Improving Supply Chain Data and Business Process Management Summary Integrating Microsoft Excel and Access applications with SAP Supply Chain Management allows IT to delegate supply chain management solution development to supply chain stakeholders. This will ensure that companies and their supply chains can be more flexible and competitive in today s global economy. This white paper will explore SCM use cases illustrating best practices, overcoming usability challenges, and alternatives to common SCM integration issues. Finally, critical SCM processes such as Sales Operations and Planning, and Supply Chain data quality management are highlighted as key functions for SCM business process improvement. A white paper by: Winshuttle, Inc. Bothell, WA 98012, USA +1 (800) 711-9798 www.winshuttle.com 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com
Introduction Supply chain management involves all of the business processes and coordination necessary to get a product or service from a supplier to a customer. The SCM function touches a myriad of departments, including: purchasing, inventory management, manufacturing and distribution. Beyond affecting several departments, SCM also involves the planning process, forecasting functions and resource identification. The supply chain management landscape continues to shift as companies continually outsource their production overseas while simultaneously cutting back in-house IT resources. The combination of expanding global markets, a rapidly changing economy and rising business operation costs means that now, more than ever, each function in the supply chain has to run as efficiently as possible. SAP SCM is a world leader in enterprise class supply chain management solutions and is deployed widely at tens of thousands of global enterprises. Additionally, an ecosystem of services, tools and solutions designed to enhance the SAP SCM experience continue to evolve. This progression of SAP SCM has in part helped to drive productivity gains and increase cost savings for SCM users worldwide. These flexible, easy to use, secure tools allow end users to drive supply chain business process improvements. As a result, supply chain managers are able to streamline daily processes and move goods and services worldwide with greater accuracy. Primarily, the SAP SCM tools empower business users to create and execute business process improvements. Coincidently, the costs of enterprise operations as well as the demand on IT resources are also reduced. The state of SCM today Presently, business logistics costs extend beyond 9.3 percent of US GDP (2009 U.S. GDP $14.2T or $1.3T USD for business logistics annual costs), according to the 19th Annual State of Logistics (ASL) Report. The logistics, transport and supply chain costs represent an area ripe for business process improvement. Reducing direct costs is the top priority of 64% of CFOs interviewed in a survey of more than 500 CFOs conducted by Basware in cooperation with Indiana University s Kelley School of Business and the University of Navarra s IESE Business School in Spain. The physical production of products overseas continues to rise, and companies need a way to communicate quickly with international vendors who may not be able to access their suppliers SAP SCM systems. As a result, business users turn toward their IT departments, placing more demands for SAP SCM system enhancements in order to develop solutions to enhance the supply chain. However, many companies have cut back on IT resource, which in turn has forced end users to produce their own reports within the supply chain. In some cases, this burden requires skills beyond the supply chain manager s function. SCM users are challenged with entering data into a computer entry screen (for example, vendor maintenance, or materials maintenance updates) because this is generally cumbersome, complex and slow. The lack of an intuitive interface results in errors, due to the volume of steps and screens. Coupled with rising operational costs, supply chain business owners are also faced with inefficient business processes, such as delays in order to cash cycles. In the past, business users requested customized reports from IT. Now business users seeking to manage logistics, inventory and costs must find alternative ways to create these critical reports. Solutions exist within the marketplace to address this cycle of need and demand. These solutions offer business users the power to address SCM business process improvement with software tools and applications that are designed to address their supply chain business requirements. The focus of this paper is on these SCM business process solutions. 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com 2
Cost optimization, demand management and supply management are three key areas in supply chain management that require ongoing improvement. Cost optimization pinpoints the balance between satisfying the desires of a customer while expending the least amount of capital and resources. Costs include purchasing materials such as the initial cost of buying inventory, constructing buildings, purchasing a machine, running a machine or storing finished goods inventories. These are examples of capital or resource expenditures; inventory management, on the other hand, relates to the process of controlling stock or goods. One example of inventory management is the cost of holding materials and the related processes of creating and maintaining materials master data. Demand management relates to accurate prediction of forecasting demand. Typically, businesses create forecasts for the week, month, year or decade. At times, however, businesses will have demands predicated on actual orders from customers. Capturing demand as accurately as possible is vital for efficient supply chain management. Supply management addresses the management of monitoring production inventory and resources. Purchasing is a source of supply, whether that includes stock in a warehouse or purchasing products on demand. Supply management, therefore, involves acquiring what is needed to meet demand. Business users must manage products promised to customers. Additionally, another source of supply management may relate to excess capacity at the business plant. This excess capacity may come in the form of product, people, machines or raw material stored in stock. BusinessValue Model Aggregate Measures Demand Management Market Responsiveness Sales Effectiveness Product Development Effectiveness Supply Management Customer Responsiveness Supplier Effectiveness Operational Effectiveness Support Services HR Responsiveness IT Responsiveness Finance and Regulatory Responsiveness Source: Gartner (April 2009) Monitoring these three specific areas, cost optimization, demand management and supply management, requires managing the daily business processes that support ongoing supply chain management progress. With the shift to global supply networks, numerous corporations are rethinking their processes. As previously illustrated, 64% of CFOs of the top 500 CFOs worldwide were surveyed and indicated that reducing direct costs was a top priority. Therefore, ideas related to planning, logistics and fulfillment are evolving in order to accelerate SAP supply chain return on investment (ROI) and overall margin contribution. Corporations are narrowing their focus of key SAP SCM business processes on three-way invoice matching and streamlining supplier invoicing. Yet, the growing burden on dwindling IT resources has created a need for more automated data entry. It is now critical for supply chain executives and managers to find alternative methods to optimize supply chain processes. One approach to this dilemma is to combine the flexibility and ease of use found in working with Microsoft Office applications while adhering to strict SAP security and corporate governance guidelines via third-party applications such as Winshuttle s software tools. 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com 3
SCM Business Process Improvement: Challenges & Resolutions Global enterprises face mounting challenges to improve profit and shareholder return. As a result, business users are driven to first identify inefficiencies in the organization and then simplify and standardize business processes by implementing easy-to-use tools. The increase in efficiency empowers knowledge workers and results in a number of cost benefit drivers including transaction productivity gains, training and help desk savings. The following areas illustrate typical SCM challenges facing many businesses and how they were able to solve these challenges. Enhancing supply chain systems requires expensive customizations: With IT resources dwindling, there are fewer resources to spend on programming. There is often a long wait for system enhancements such as automating the creation of, or maintenance of, vendor information. Soon after a corporate apparel supplier, Cutter & Buck, implemented SAP SCM, it realized a need to find a solution that would decrease the amount of time it required to enter data into its supply chain management system. At the same time, Cutter & Buck understood it could not tie up valuable and costly IT resources. End-user data entry was time consuming, but developing custom solutions via internal programming was not a feasible option given the cost and heavy reliance on IT resources. Beyond the time and cost of custom solutions, the scripting tools, LSMW and CATT, were too technical for everyday users. The company needed a third-party solution that could meet all of its requirements. Cutter & Buck uses Winshuttle s software products to tackle complex data quality management issues. The data management application lets users load supply chain data into SAP without requiring any programming skills or involving IT resources. As a result, supply chain data entry is neither an IT headache nor an inhibiting process for data entry users. Users are embracing the SAP SCM system because the Winshuttle application sits outside of SAP, residing on the user s PC. However, the application strictly adheres to SAP user authentication, an important aspect for governance, risk and compliance (GRC). Due to the adoption of Winshuttle products, the company reduced data entry time by 98 percent. In addition, users have improved their productivity since they now have time to pay attention to other aspects of their jobs instead of entering data into SAP. Extracting data from EDI is time consuming and prone to error: Electronic Data Interchange (EDI) continues to grow as an alternative to manual entry of supply chain data (however, estimates today indicate that still at least 40% of SCM transactions are still executed as a manual process). Electronic data interchange (EDI)That said, EDI transactions can occur between two businesses thousands of times a day. In a retail environment, for example, many products have an SKU number, a cost and a location. All of this data is stored in the retailer s system. On a daily basis, updated inventory information stating the number of products that were sold that day is produced from the retailer s system. This is the inventory that needs to be replenished. EDI is used to specify the date and location where the replenishment orders should be sent. Developing and implementing an EDI connection with each and every supplier is challenging, and of course, when changes occur, requires more IT intervention to update and maintain. Then, integrating this vital information in both the retailer and the supplier s SCM system needs to be managed in both places. Using Winshuttle s business-user enabled solutions, a large North American retailer was able to implement over 2,000 daily EDI interchanges with its suppliers in a very short timeframe (days as opposed to years). By using Winshuttle as a solution for supplier invoice automation, the EDI flat file is now easily converted into a standard format sent to all suppliers. Winshuttle acts as the flat file transmitter without IT programming and without error-prone human intervention. This has resulted in huge time savings over doing direct EDI integration into SAP. Another example of the flexibility of the Winshuttle solutions at this well-known retailer relates to management of burst-out purchase orders. A burst-out purchase order is a purchase order that is used to acquire inventory, which, in turn, is sent out to a large number of retail outlets. Historically, burst-out purchase orders required a separate purchase order to be issued for each retail outlet. Now, the company is able to manage the purchase of inventory by distributing that order to over 1,000 retail outlets using one purchase order instead of 1,000 purchase orders. A significant amount of SAP key entry time savings was realized using Winshuttle, resulting in significant data entry time savings and accelerated period closure timeframes. 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com 4
Finding alternatives to supply chain data quality maintenance: Supply Chain Master Data management is the cornerstone of supply chain management. Master data is a set of data that defines all of the characteristics of a product. Product information changes frequently within companies, and often, as result of these changes, mistakes may occur. Part of this failing is due to the reality that data workers update the changes manually. It is critical, therefore, to ensure that the master data always remains correct. An example of this critical need to ensure data is entered correctly can be seen through Hubbell Wiring Systems (HWS). When HWS, a manufacturer of electronic products, went live with SAP it faced several master data challenges. The company relied on a data migration and management group that helped with the day-to-day migration of data from various systems going into SAP. Temporary employees were hired to manually key in and correct master data. The result was poor quality data that impacted customers. HWS deployed Winshuttle to help overcome master data management challenges such as customer information updates related to sales order information and demand forecasting. Next, HWS expanded its use of these solutions to include purchase order creation and maintenance, transactional data for inventory, receivables, and production orders and quote updates. Now, business users can quickly, efficiently and automatically upload new master data information as well as easily manipulate data already in SAP. In addition, HWS has significantly reduced its manual data entry costs, its overall headcount and minimized the burden on IT resources. Advantages of empowering SCM business users to improve SAP SCM processes The logistics and fulfillment environment is more complex than ever with transportation carriers, ports of call and warehouses both owned and contracted spanning the globe. By streamlining daily tasks for more innovative business processes, businesses can realize improved logistics and fulfillment data quality, thus reducing costs and complexity associated with supply chain partners. Sales Operations & Planning: Sales and operations planning is a critical function of a highly efficient and responsive supply chain management system. Gathering and presenting supply and demand data in an easily understandable format for executives can be time consuming. Transcription errors can lead to poor decisions and a lack of credibility. Gathering data quickly and correctly is essential for a robust sales and operations planning process in a dynamic supply chain environment. Management Function Entry Maintenance Integration MIgration Description Winshuttle s support for a broad range of supply chain data entry transactions include streamlined purchase order, vendor, storage location and bill of material creation. Winshuttle provides strict compliance to corporate security and governance rules while easing the maintenance of critical supply chain data assuring high-quality logistics and fulfillment information. Customers use Winshuttle s enterprise solutions to manage receipt of goods by cleansing EDI data and auditing three-way 3rd party invoice, receipt and purchase-order matching processes. Supply chain system migrations resulting from corporate merger & acquisition activities are expedited leveraging Winshuttle s Enterprise Suite Winshuttle TRANSACTION, QUERY and CENTRAL. Example SAP SCM Transaction Codes ME21N Create Purchase Order XK01 Create Vendor (centrally) EC14 Storage Location CS01 Create Material BOM MM01 Create Material MM41 Create Material ME22N Change Purchase Order XK02 Change Vendor (centrally) CS02 Change Material BOM MM02 Change Material MM42 Change Material MIGO Goods Movement MB01 Post Goods Receipt for PO MB02 Change Material Request Legacy MRP, purchase order management, vendor management 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com 5
Supply Chain Data Entry: Entering either master or transactional data in a timely manner is required by all departments in a business. This is critical to keep operations running smoothly. Also, broad support for a wide range of supply chain data entry transactions including streamlining purchase order, vendor, storage location and bill of material creation is also necessary. Supply Chain Data Maintenance: Simplifying mass changes to master or transactional data in SAP SCM is a time-consuming routine business process that is usually the responsibility of the business process owner, the data owner or data steward. Giving existing owners the power to govern this process will accelerate time to completion. Providing strict compliance to corporate security and governance rules while easing the maintenance of critical supply chain data will assure high-quality logistics and fulfillment information. Supply Chain Data Integration: Business process improvement solutions can streamline receipt of goods by improving EDI data integration and auditing third-party invoice, receipt and purchase-order matching processes. These key supply chain processes are essential for accelerating the return on your SAP SCM investment. Synchronizing data between SAP SCM and a variety of disparate production and data warehousing systems in a timely and inexpensive manner brings enormous cost advantages along with enterprise agility. Supply Chain Data Migration: This core activity takes place during new SAP SCM implementations, upgrades, or mergers and acquisition driven consolidations. The accurate and mass import of large volumes of supply chain data into SAP has tremendous value during these projects and can accelerate the ROI for SAP SCM projects by reducing development, training and implementation costs. Conclusion Enabling business users to work with SAP SCM directly from Excel, without programming is critical to an agile and flexible supply chain ecosystem. Leveraging the world s most common and useful applications interface the spreadsheet improves SAP SCM productivity and can help you save time and money. Integrating Microsoft Excel and Access applications with SAP SCM allows IT to delegate supply chain management solution development to supply chain stakeholders. This will ensure that companies and their supply chains can be more flexible and competitive in today s global economy. Winshuttle, Inc. provides software products that enable business users to work with SAP directly from Excel, Web forms and other interfaces without any programming. SAP users often struggle to effectively run the complex business processes supported by SAP. Winshuttle solves this problem by offering a familiar spreadsheet interface to SAP, which improves productivity and saves customers significant time and money. Winshuttle s suite of solutions work with all SAP modules, enabling both business and IT users to solve any SAP data or business process challenge by securely expanding SAP interactions to both employees and partners. Hundreds of global customers use Winshuttle to make their SAP lives easier. Headquartered in Bothell, Washington, Winshuttle has offices in the United Kingdom, France, Germany, and India. For more information, visit www.winshuttle.com. Corporate Headquarters 18323 Bothell Everett Hwy Suite 110, Bothell, WA 98012 Tel + 1 (800) 711-9798 Fax +1 (425) 527-6666 www.winshuttle.com United Kingdom 64 Kimber Road, Southfields, London, SW18 4PP, U.K. Tel +44 (0) 208 704 4170 Fax +44 (0) 208 711 2665 www.winshuttle.co.uk France 58, rue Delalain 94700 Maisons-Alfort Tel +33 (0) 148 937 171 Fax +33 (0) 143 68 37 68 www.winshuttle.fr Germany Stresemannstr. 46 27570 Bremerhaven Tel +49 (0) 471 1701900 Fax +49 (0) 471 1701902 www.winshuttle-software.de India Third Floor, Tower D DLF Building, Technology Park Chandigarh 160101, India www.winshuttle.in 2010 Winshuttle, Inc. All rights reserved. 4/10 www.winshuttle.com 6