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Future-Proof Your Business: Supply Chain Optimization Tips for the Modern Era

Optimizing supply chain management (SCM)

Cloud ERP and RISE with SAP, SAP S/4HANA and SAP S/4HANA Cloud, and enterprise management

Ananth info solutions Optimizing supply chain management (SCM) with SAP SCM can significantly enhance efficiency, visibility, and responsiveness across the supply chain. SAP SCM, or Supply Chain Management, is a software suite provided by SAP specifically designed to manage supply chain operations.

By leveraging SAP SCM, companies can streamline supply chain processes, reduce costs, improve customer satisfaction, and gain a competitive advantage in today’s dynamic business environment.

  1. End-to-End Visibility: SAP SCM provides real-time visibility into supply chain processes, from procurement to production to distribution. This visibility enables better decision-making by allowing stakeholders to track inventory levels, monitor supplier performance, and identify potential bottlenecks.
  2. Demand Planning: By leveraging historical data, market trends, and demand forecasts, SAP SCM helps companies accurately predict customer demand. This allows businesses to optimize inventory levels, reduce stockouts, and minimize excess inventory costs.
  3. Inventory Optimization: SAP SCM includes advanced inventory management capabilities to optimize inventory levels across the supply chain. By implementing techniques such as ABC analysis, safety stock optimization, and reorder point planning, businesses can ensure the right level of inventory is available at the right time while minimizing carrying costs.
  4. Supplier Collaboration: SAP SCM facilitates collaboration with suppliers through features such as supplier portals, electronic data interchange (EDI), and vendor-managed inventory (VMI). By streamlining communication and sharing real-time data with suppliers, companies can improve supplier relationships, reduce lead times, and enhance overall supply chain efficiency.
  5. Production Planning and Scheduling: SAP SCM enables companies to optimize production planning and scheduling processes. By considering factors such as machine capacity, labor availability, and material availability, businesses can create more accurate production plans, minimize production downtime, and improve resource utilization.
  6. Transportation Management: SAP SCM includes transportation management functionalities to optimize freight planning, routing, and execution. By consolidating shipments, optimizing routes, and leveraging carrier networks, companies can reduce transportation costs, improve delivery reliability, and enhance customer satisfaction.
  7. Analytics and Reporting: SAP SCM provides powerful analytics and reporting tools that enable companies to gain insights into supply chain performance. By analyzing key performance indicators (KPIs) such as on-time delivery, inventory turnover, and order fulfillment rates, businesses can identify areas for improvement and make data-driven decisions to optimize the supply chain.
  8. Integration with ERP: SAP SCM seamlessly integrates with SAP’s enterprise resource planning (ERP) systems, allowing for end-to-end visibility and control over business processes. Integration with other SAP modules such as SAP S/4HANA enables companies to streamline operations, eliminate data silos, and improve overall business efficiency.

Features and capabilities of S/4 HANA Supply Chain Management

SAP S/4HANA Supply Chain Management (SCM) offers a range of features and capabilities aimed at optimizing supply chain operations and enhancing business performance. Overall, SAP S/4HANA SCM provides comprehensive functionalities to optimize supply chain operations, improve efficiency, and drive business value across the entire supply chain.

  1. Advanced Planning: S/4HANA SCM includes advanced planning capabilities to optimize demand planning, supply planning, and production planning processes. It leverages real-time data and advanced algorithms to generate accurate forecasts, optimize inventory levels, and create efficient production schedules.
  1. Integrated Business Planning (IBP): S/4HANA SCM provides integrated business planning functionalities that allow companies to align their strategic, tactical, and operational plans across the entire supply chain. It enables collaborative planning, scenario modeling, and what-if analysis to improve decision-making and responsiveness.
  1. Material Requirements Planning (MRP): S/4HANA SCM includes MRP functionalities to calculate material requirements based on demand forecasts, production schedules, and inventory levels. It helps optimize procurement, production, and inventory management processes to ensure the availability of materials at the right time and place.
  1. Supply Chain Execution: S/4HANA SCM facilitates supply chain execution processes such as order fulfillment, warehousing, and transportation management. It streamlines order processing, optimizes warehouse operations, and improves transportation planning and execution to enhance customer service levels and reduce costs.
  1. Inventory Management: S/4HANA SCM offers advanced inventory management capabilities to optimize inventory levels, reduce carrying costs, and improve inventory turnover rates. It provides features such as real-time inventory visibility, multi-level inventory optimization, and advanced inventory analytics to optimize inventory across the supply chain.
  1. Supplier Collaboration: S/4HANA SCM enables seamless collaboration with suppliers through features such as supplier portals, electronic data interchange (EDI), and vendor-managed inventory (VMI). It facilitates communication, information sharing, and collaboration with suppliers to improve supplier relationships and supply chain performance.
  1. Demand-Driven Replenishment: S/4HANA SCM supports demand-driven replenishment strategies such as Just-in-Time (JIT) and Kanban. It enables companies to synchronize supply with demand in real-time, reduce excess inventory, and improve responsiveness to changing customer requirements.
  1. Extended Warehouse Management (EWM):
    1. Slotting and Rearrangement: Optimizes storage location assignment and layout, based on product characteristics and handling requirements.
    2. Labor Management: Plans and monitors labor resources, ensuring efficient utilization and performance tracking.
    3. Yard Management: Manages the flow of vehicles and shipments within the warehouse yard, optimizing dock assignments and minimizing congestion.
    4. Cross-Docking: Coordinates inbound and outbound shipments to minimize storage time and handling efforts.
  1. Transportation Management (TM):
    1. Order Consolidation: Combines multiple shipments to optimize load capacity and reduce transportation costs.
    2. Carrier Selection: Evaluates and selects the best carriers based on factors like cost, transit time, and service quality.
    3. Route Optimization: Determines the most efficient transportation routes, taking into account factors like distance, time, and cost.
    4. Freight Settlement: Automates the calculation and settlement of freight charges, ensuring accurate and timely payments.
  1. Global Trade Services (GTS):
    1. Customs Management: Streamlines customs declaration processes, ensuring accurate and timely submissions.
    2. Embargo Screening: Identifies and prevents transactions with restricted parties or countries, reducing the risk of non-compliance.
    3. Export Control Classification: Assigns correct export control classification numbers to products, ensuring compliance with trade regulations.
    4. Preference Processing: Identifies and manages preferential trade agreements, reducing duties and tariffs on eligible transactions.
  1. Procurement and Sourcing:
    1. Supplier Relationship Management: Streamlines supplier onboarding, evaluation, and development to foster long-term, strategic partnerships.
    2. Contract Management: Manages the entire contract lifecycle, from negotiation to renewal, ensuring compliance and performance monitoring.
    3. Spend Analysis: Provides visibility into procurement spend, identifying opportunities for cost reduction and process improvement.
    4. Purchasing: Automates the procurement process, including purchase requisition creation, approval, and order placement.
  1. Analytics and Reporting: S/4HANA SCM provides powerful analytics and reporting capabilities that enable companies to gain insights into supply chain performance. It offers real-time dashboards, KPI monitoring, and advanced analytics tools to track key metrics, identify trends, and make data-driven decisions to optimize the supply chain.
  1. Integration with SAP Digital Supply Chain Solutions: S/4HANA SCM seamlessly integrates with other SAP digital supply chain solutions such as SAP Integrated Business Planning (IBP), SAP Extended Warehouse Management (EWM), and SAP Transportation Management (TM). This integration enables end-to-end visibility and control over supply chain processes, ensuring smooth operations and efficient decision-making.

Advanced Intercompany Processes

SAP launched the Advanced Intercompany Processes in SAP S/4HANA Cloud, public edition with the 2208.3 release.

Short overview of the Advanced Intercompany Processes:

Advanced Intercompany Sales

The figure below shows the process flow for Advanced Intercompany Sales – Single Level / Single System

Figure 1: Advanced Intercompany Sales – Single Level / Single System

Advanced Intercompany Stock Transfer – Single Level / Single System


The next figure shows the process flow for Advanced Intercompany Stock Transfer – Single Level / Single System

Figure 2: Advanced Intercompany Stock Transfer Process – Single Level / Single System

Advanced Available-to-Promise (aATP)

Internal sales representatives, order fulfillment managers and order fulfillment specialists require mechanisms to configure, execute and monitor availability checks and optimize the distribution of supply. This is particularly important when the availability of materials needed to confirm requirements is limited.
You can use the advanced Available-to-Promise (aATP) capabilities to confirm on which date and in which quantity a requirement can be fulfilled.

Review Availability Check Result

First, let me highlight the new explanation screen for availability check results in SAP S/4HANA. Now, the Review Availability Check Result has improved when it comes to Intermediate Results display. The pop over provides an overview for basic method and offers navigation to a comprehensive explanation for product allocation and supply protection.

Description: A screenshot of a computer

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Fig.2: Review Availability Check Result’ screen – Comprehensive explanation for product allocation.

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