Understanding Supply Chain Management with SAP Business Suite

SAP Business Suite is a bundle of applications designed to help integrate processes across all sections of a company, offering modules for finance, spend management, human capital management, customer experience (CX), customer relationship management (CRM), sustainability, and even supply chain management (SCM).  

While all of these aspects are extremely important, an efficient supply chain is vital for businesses to ensure that they can meet inventory needs and deliver their products on time, and SAP Supply Chain Management (SCM) can help with just that. SAP SCM empowers users to optimize their supply chain by providing tools that can track inventory and help with demand planning and forecasting.  

Below, we dive into supply chain management with SAP Business Suite. 

WHAT IS SAP SCM? 

SAP SCM is a software module within SAP Business Suite that helps businesses manage the flow of goods from beginning to end, starting with the production of raw materials and all the way until the final product is in the customer’s hands. SAP SCM is designed to help businesses seamlessly connect every step of a product’s lifecycle, making the supply chain management process easier. It incorporates tools to help users predict supply chain disruptions and solve them before they occur, reducing waste and optimizing the process.  

KEY FEATURES 

Supply chain management with SAP Business Suite includes an array of tool, with features for demand planning, production planning, inventory management, transportation management, and more.  

Demand Planning 

SAP SCM’s demand planning feature has a demand forecasting toolset that helps companies predict product demand and adjust production accordingly. Users can analyze past ordering patterns to ensure the supply chain can produce the inventory needed to complete future orders. The feature also offers demand sensing, which sees demand signals and uses AI to automatically adjust and keep the supply chain on track. By utilizing historical data analysis, statistical models, and AI, the demand planning feature provides the most accurate forecasts possible. These forecasts are essential for businesses to prevent overstocking or selling out of product, which can increase costs and result in lost sales.  

Production Planning 

Production planning for SCM works to organize aspects like machine capacity, labor, and tool availability into a detailed plan for production. This module can automate the scheduling and production planning process, allowing the planning team to spend more time on higher-value tasks. It also allows businesses to simulate scenarios and predict the potential impacts they may have on the supply chain. These production planning tools can help businesses prevent supply chain disruptions and delays, keeping the process running smoothly. 

Inventory Management 

SAP’s inventory management tools provide an overview of inventory at all times and allow users to track the movement of all goods and products. This system integrates with SAP Warehouse Management to provide real-time stock numbers, and the straightforward access to inventory information provided by this system can help companies make more informed and accurate decisions. Inventory management also offers batch management, allowing businesses to track expiration dates and ensure that the first products in are the first products out of the warehouse. This helps companies reduce the waste and spoilage of their products.  

Transportation Management 

Transportation management works to integrate freight settlement, order management, and transportation processes to help enhance the overall supply chain. SAP’s Transportation Management (TM) module includes tools for strategic freight management, including insights to streamline quote-to-contract processes. It also offers tools for order management, which allow businesses to track the lifecycle of orders in real time. The transportation planning feature helps users optimize shipping routes for goods and products, along with other transportation requirements. This overall optimization of the delivery process can help save companies money on transportation and shipping costs.  

COST CONSIDERATIONS

While SAP SCM can offer many benefits to businesses, there are some challenges for companies to consider before implementation, particularly regarding budget.  

SAP is expensive and a large investment for companies, and SAP SCM is a complex system to run. When purchasing this software, companies will either need to have highly experienced employees who know how to manage the software or pay an additional fee (on top of the software cost) to hire resources to implement the software. In addition, the cost of SAP software isn’t limited to the initial payment. The software will require maintenance, meaning companies must pay for upgrades in order to access the latest features.  

Before making the decision to jump in with SCM, be mindful of these cost considerations. 

LOOKING AHEAD 

SAP SCM offers many capabilities that can help businesses streamline their operations. By integrating each step of the supply chain, SAP SCM helps improve efficiency and reduce costs for its users. However, the tool is expensive to implement. Before purchasing this software, companies must consider their unique business needs and ensure this software aligns with their long-term goals.  

If you need help finding out if supply chain management with SAP Business Suite is a good fit for your business, our team at Crescence can help. Contact us today to learn more.   

 Contributions from Natalie Pollock