Investing In Enterprise Technology for S&OP Process


The world has changed. Very soon, the days when managing enterprise applications was considered cumbersome would become a thing of the past. Big Data, Cloud, Social Analytics etc. have changed the paradigm in which enterprise applications work. Today CIOs and IT managers are using mobile apps to increase organizational and business process efficiency. SAP, one of the biggest players in the world of enterprise applications have taken a positive step in this regard by incorporating faster technology designed for user-centric applications, rather than traditional applications which require years of experience to master. With onset of its solutions for sales and Operations planning process for global supply chains, SAP is ready to change the world of enterprise applications.

What happens to the installed base of current SAP customers, particularly those using its existing supply chain solutions?

SAP has solutions in all areas of business you can think of – Demand Management, Supply Planning, Inventory & Service Level Optimization, Collaborative Response Management, Manufacturing, Transportation Management, Warehouse Management, and Service Parts Management as well as Supply Chain Monitoring processes. Should customers of these products think of shelving their IT investments so far (which may range anywhere in millions of dollars, depending on the size of the company) and spend more on the new solutions (which again will range in millions of dollars, depending on the size of the company)

Investing in enterprise applications is very much like investing in stock market – One needs to undertake comprehensive analysis before making a buy decision and once a buy decision is made, one wants as much returns as possible. However it is much more difficult to take a sell decision – (No longer use an enterprise technology) – for the simple reason that the amount of efforts invested in technology implementations are humongous and more so in getting that technology up and running for day to day business. On an average it takes around 3-4 years for any technology implementation to stabilize and provide substantial returns. Once the technology is stabilized, it is very difficult to change it as it calls for changing the way people do their daily jobs. In fact investing in new enterprise technology is not an easy riddle to solve

[blockquote style=”1″] So then, what should one do? I may not be able to advise you on that, but what I can tell you is what you should have been doing: Maximizing returns from existing supply chain investments, while you craft a transition roadmap for the future technologies[/blockquote]

Taking a particular case of SAP SCM application (SAP APO) as example – It is one of the most powerful supply chain planning engines available in the market but still I have seen customers not being able to make the full use of its capabilities. In most cases, it’s a poor system design leading to sub-optimal use of product capabilities and lower than expected returns/results. I have seen from my experience, how a good system design implementation can lead to drive up revenues, streamline processes and also drive up morale of the users.

Developing design for enabling S&OP process using SAP APO

With respect to sales and operations planning process, my focus was on following major areas:

  • Increase in user adoption with easy to use interfaces
  • Better consolidation of planning results, KPI tracking and process adherence
  • More planning simulations with automated alerts
  • Email notifications and Sharing comments/qualitative information to keep all the users informed.

For existing SAP APO customer, if the value of the products can be fully realized, it will lead to a more granular and comprehensive integrated capability that converges planning and execution.

The top 3 Value Add Provided by APO for Enabling S&OP process are:

  1. Very Robust Integration with SAP Execution system and BI systems
  2. Capability to Drive Execution
  3. Powerful Demand and Supply Planning Algorithms and Support for a variety of business situations

Other aspects of a good S&OP process e.g. – Simulations, scenario comparison, analytics etc. can be covered by a good system design and using less costly APO Add-on solutions. However if nature of businesses is such that it need faster platforms with the latest state of the art planning algorithms, Then it will be better to look out into the market on what suits best. Thus I feel it is extremely important for businesses today to assess the current design’s ability to meet the changing business requirements and then take well informed decision. They may be able to get small incremental returns from existing investments with less risk or can have breakthrough returns for the dynamic business with some challenges. Take your pick!

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Vijay is a supply Chain Professional with 5 years of experience across industries - FMCG, Automotive, Semiconductors. He has expertise in End to End Supply Chain Planning, Demand Planning, Supply Planning, Inventory Management and in depth understanding of Sales and Operations Planning. Post graduate in Management from Tier-1 B-school in India, Vijay has assisted various organizations in the selection, implementation, and support for various process improvements and supply chain projects. With his in-depth consulting skills, business knowledge, and supply chain planning expertise he has handled diverse supply chain challenges & business problems. At Bristlecone, He performs the role of a Senior Supply Chain Consultant and is also solution owner for Bristlecone IP - DemandPlanning NOWTM