SAP Supply Chain Response Management by icon-scm

SAP Supply Chain Response Management by icon-scm Michael Lipton SAP Supply Chain Planning Solution Management Jan Aggerbeck CEO, icon-scm

Agenda The demand/supply alignment challenge What makes committing with confidence tougher today? What is supply chain response management? SAP Supply Chain Response Management by icon-scm Demo How SAP SCRM fits into SAP Supply Chain Management Proven customer value 2012 SAP AG. All rights reserved. 2

The demand/supply alignment challenge Volatile demand Key customer order exceeds forecast Customer wants to pull-in forecast Inflexible supply with visibility challenges Excess supply Late deliveries Corporate strategies and priorities How to prioritize How to protect existing commits for key customers 2012 SAP AG. All rights reserved. 3

Rapid response is crucial, but few have attained it Agility Factor Required to Make Decisions Availability of Information within a day 12% 10% 36% Within the hour and below Within the day 10% 14% 20% More than 80% of the time 61-80% of the time Within the week 41-60% of the time 42% Within the month 26% 30% 21-40% of the time Less than 20% of the time 78% of survey participants indicate that in order to make timely decisions, they need operational information available within 1 day or faster 20% admitted to having it available within the day Aberdeen Group, January 2011 2012 SAP AG. All rights reserved. 4

How are most demand/supply challenges handled today? Challenges Fear of de-committing important orders Avoiding holding stock and/or capacity Poor supply/demand visibility Expediting decisions Balancing corporate policies and goals Classic Workarounds Blocking sales orders, allocation spreadsheets Virtual stock locations, customerspecific stock, multiple part numbers Phone calls, lost time, SWAGs, lost opportunities Block orders, phone calls, spreadsheets Blocking sales orders, allocation spreadsheets, cherry picking orders 2012 SAP AG. All rights reserved. 5

What is supply chain response management? Synchronizes demand commitment and supply planning in one solution Across the extended supply network According to business rules and priorities Respecting supply chain constraints Enables more rapid response to changes or opportunities Understand the business impact Compare scenarios Execute the best plan back into ERP 2012 SAP AG. All rights reserved. 6

The response management planning cycle Request Customer demand Wants more, want less Wants the same Wants it sooner Supply Chain Response Management Can I meet the demand? What is on-time vs. late? Where am I short materials? Where am I short capacity? Do I have excess? Review Respond Which plan do I commit to? Do I now have enough supply? If not, what are the priorities? How can I best use available materials and capacities? Resolve Can I resolve the problems? Can I get more materials? Can I get more capacity? Can I eliminate excess? 2012 SAP AG. All rights reserved. 7

SAP Supply Chain Response Management by icon-scm Quickly re-aligns supply and demand across the network Supplier Manufacturer Assembly Distribution Customer Supply Planning Production Planning Order Promising SCRM Customer Driven Financially Beneficial Operationally Aligned Decision Support Upload Execute ERP APO SNC 2012 SAP AG. All rights reserved. 8

SAP Supply Chain Response Management Bi-directional integration SAP SCRM APO ERP SNC ERP APO SNC ERP integration Full or delta APO integration for demand plans SNC integration for collaboration Can be scheduled or triggered manually Used for initial or ad-hoc system synch Event driven based on change pointers (configured in ECC) Based on IDOCs and JCO 2012 SAP AG. All rights reserved. 9

Coming in 11.1. Full HANA Support One of 1 st SCM applications supporting SCRM Planning supports HANA as persistance layer (DB) SCRM DataHub supports HANA as persistance layer (DB) 2011 SAP AG. All rights reserved. 10

SAP Supply Chain Response Management rapid-deployment solution Offered by SAP and Certified Partners Go live in as little as 14 weeks What s included Service scope Installation of SAP Supply Chain Response Management: Short-term planning: Visibility and what-if analysis Reporting Master data Transaction data Users A special step-by-step guide describes each activity during the deployment 2011 SAP AG. All rights reserved. 11

Demonstration 2011 SAP AG. All rights reserved. / Ganesh Wadawadigi / Internal Use Only 12

SAP Supply Chain Management Solutions 2012 SAP AG. All rights reserved. 13

Traditional planning process Recommended for CPG / process industries Demand Planning Create Demand Plan Supply Network Planning Create Supply Plan APO Order Promising (gatp) Commit Orders Against Fixed Supply gatp Backorder Processing Adjust Order Commitments Production Planning / Scheduling Plant Schedule Supply Network Collaboration ERP Order Management, Fulfillment, Production, Finance 2012 SAP AG. All rights reserved. 14

Responsive planning scenario Recommended for certain discrete industries Demand Planning Create Demand Plan Supply Network Planning Supply Chain Create Response Supply Management Plan APO Create Supply Plan, Set/ Adjust Order Commitments Production Planning / Scheduling Plant Schedule Supply Network Collaboration ERP Order Management, Fulfillment, Production, Finance 2012 SAP AG. All rights reserved. 15

Responsive planning scenario - Option 2 Recommended for certain discrete industries Demand Planning Create Demand Plan Supply Supply Chain Network Response Planning Management Create Supply Plan Create Supply Plan, Set/ Adjust Order Commitments APO Order Promising (gatp) Commit Orders Against Fixed Supply gatp BOP Adjust Order Commitments Production Planning / Scheduling Plant Schedule Supply Network Collaboration ERP Order Management, Fulfillment, Production, Finance 2012 SAP AG. All rights reserved. 16

With SAP Supply Chain Response Management Radisys decreases forecast cycle time by 50% SAP SCRM is enabling Radisys to reduce customer response times and capture more demand Business Challenges Radisys lacked visibility to outsourcer supply details Outsourcer lacked visibility to Radisys demand details Long planning cycles Objectives Automate supply chain planning Accelerate accurate commitments Improve overall inventory position Improve collaboration with supply network partners Why SAP SCRM? Customer: Radisys Corporation Headquarters: Hillsboro, Oregon Industry: Electronics Products/Services: Embedded wireless infrastructure solutions Revenue: $300 million (2011) Solutions: SAP SCRM Aligned with corporate strategy Business rules govern supply allocations Full integration with SAP ERP and SCM systems Easy to use prioritization and modeling tools Benefits High visibility and collaboration between headquarters and regions Increased flexibility and responsiveness Reduced costs of excess materials 50% reduction in forecast cycle times 2012 SAP AG. All rights reserved. 17

With SAP Supply Chain Response Management Foxconn improves capacity utilization by 15% SAP SCRM is Enabling Foxconn to release more orders to production Business Challenges Underutilization of manufacturing facilities Extended planning cycles for supply/demand change management High carrying costs of WIP inventory Objectives Transition from Load and Chase to Feasible Production model Accept and build more lower priority orders without jeopardizing higher priority orders Improve capacity utilization and decrease idle time Why SAP SCRM? Customer: Foxconn Technology Group Headquarters: Taipai, Taiwan Industry: Electronics Products/Services: Contract Manufacturing Services Revenue: $6.4 billion (2011) Solutions: SAP SCRM Aligned with corporate strategy Business rules govern supply allocations Full integration with SAP ERP and SCM systems Easy to use prioritization and modeling tools Benefits Capacity utilization improved by 15% Accelerated customer response rate by 9X Reduced WIP inventory by 40-50% Can release 15% more orders to production 2012 SAP AG. All rights reserved. 18

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SAP Supply Chain Response Management Order promising APO ERP SNC Drag n Drop User friendly specification of corporate rules and policies for demand fulfillment Use a broad set of characteristics to define a demand category Previous commit, upside, pull-in Product characteristic Customer characteristic Demand characteristic Rules maintained by business users, no programming required Corporate fulfillment policies explicit, executed uniformly Setting previous commit as highest priority Provides plan stability and high delivery performance 2012 SAP AG. All rights reserved. 21

SAP Supply Chain Response Management Production planning APO ERP SNC Finite capacity/finite materials Toggle capacities between constraint or unconstrained Simulate additional/reduced capacity Align materials plan to available capacity 2012 SAP AG. All rights reserved. 22

SAP Supply Chain Response Management Supply planning ERP APO SNC Customer Order #1 Priority 1 Customer Order #2 Priority 2 Distribution Packing Inv Camera Body Assy Accessories Inv Assy Capacity Factory 1 SMT Capacity SMT Assembly Factory 2 Optical Capacity Optical Assembly 100% Substitutes 0% Part 1 Part 2a Part 2b Inv Inv Inv Part 3 Part 4 Inv Inv PO #123 PO #456 PO PROP @LT PO PROP @LT End-to-end, multistage demand-supply matching All demands, all supplies Forecasts and sales orders Inventories Open orders/in-transits Capacities Intelligent consideration of substitutes/alternates Non-blocking allocation meets priorities but does not reserve supply unnecessarily Results in 10-30% improvement in inventory turns Full transparent pegging of each customer demand to component supply Flexible priorities and fulfillment rules 2012 SAP AG. All rights reserved. 23

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