Experiencing End2End Digital Supply Chains with SAP and their Partners

The senior executives who manage the SAP Digital Supply Chain organisation in Middle and Eastern Europe (MEE) provide us with insights into the enabling power of digital solutions, collaboration and technology. As they align these hot topics to SAP’s expertise, capability, and partnership-led approach to solving challenges, they lead us through the key trends and opportunities of 2023.

Andreas J. Wagner, and Chief Operating Officer for Digital Supply Chain MEE

Dr. Johannes Tulusan deliver their cautiously optimistic view of the year ahead.

AP’s optimism is founded in business projects that were planned and being executed long before the current economic shakeup. Across SAP, teams are looking to improve the solutions they already offer clients, switching from on-premise to cloud-based options, for example, and demonstrating how to increase product traceability and improve environmental, social and governance (ESG) performance.

Dr. Johannes Tulusan remains cautiously up-beat and explains, “You have to see the glass half full. Global circumstances might not improve in the near-term, but they give decisionmakers the chance to rethink how to operate their business. Resilience in supply chains is already very important, and sustainability will definitely become important too. We at SAP are in a good position to support our customers on those fronts.”

Andreas J. Wagner starts his assessment by saying that supply chain visibility and supply chain flexibility are key differentiators in business. “The supply chain function is not a backoffice function any more,” he explains. “It can either be a source of strength or weakness. Think about the loss of sales because of stockouts and the loss of loyal customers.”

He continues, “It has really become a strategic topic for our customers. Championing the design to operate process in the market can be a key differentiator because you will have digital and integrated processes and can really showcase the end-to-end value of the solutions within your key processes.”

This is about not only innovating and breaking down silos within a company, Andreas states. “You also need to standardise your connections with the outside world,” he says. “It's a very important process. For example, in the area of design innovation you already need to check early in the process whether the necessary suppliers are available and whether they can support needed quality and quantity before you even produce master data in an enterprise resource planning system,” he says. “And you also need

SAP Integrated Business Planning and the CAMELOT team helped us shape our future digital supply chain based on a state-of-the-art planning application. We’re closing in on our goal to become and stay the first choice for consumers worldwide.

Dietmar Baumann, Program Manager Digital Supply Chain (Global Digital Services), BSH Home Appliances Group

Master Uncertainty Supply Chain Resilience with a Demand-Driven Approach

Changes in consumer behavior, shorter product lifecycles, climate events or supply shortages unsettled supply chains even before the Covid-19 pandemic. The disruptions showed that traditional supply chain planning approaches meet actual demands less and less accurately. To manage the New Now of complexity and volatility, organizations need a more resilient approach for end-to-end, customercentric supply chain planning. One of the most promising approaches is the Demand-Driven methodology and the transformation with Demand-Driven Supply Chain Management (DDSCM).

Demand-Driven Planning in SAP IBP for more resilient supply chains

DDSCM helps navigate the challenges of the New Now and controls variability across value chains. It maximizes contribution margins by increasing the flow of material through value chains resulting in higher service levels at reduced inventory. On the operational level, Demand-Driven Material Requirements Planning (DDMRP), as defined by the Demand Driven Institute, puts DDSCM into action. It is comprised of known and well-established methods such as Material Requirements Planning, Lean, and the Theory of Constraints.

In 2019, the DDMRP methodology has been realized in SAP Integrated Business Planning (IBP) by SAP and Camelot ITLab as strategic development partner. SAP IBP for Demand-Driven Replenishment enables relevant material and information flow in SAP IBP Camelot also is a global implementation partner for this solution. The unique relationship between Camelot and SAP spans more than 25 years. It is best described as a 360-degree partnership: Camelot is co-innovation partner, global implementation partner and customer of SAP.

Significantly increased performance

The “Demand-Driven” concept is leveraged successfully by global companies in various industries with the help of Demand-Driven Replenishment in SAP. It implements integrated processes based on tactical planning and operational pull replenishment and leveling. This paradigm shift within the supply chain towards pull replenishment based on the principles of demand-driven materials requirement planning is empowering planners for what-if simulations, allowing improved decision-making. The effects are optimized planning results using forecast algorithms and predictive analytics while becoming more agile with respect to changing customer demands and market conditions. As a result, they achieve a significant reduction in variability and a stabilization of the material flow in their supply chain. The benefit is a substantially improved service quality and increased agility of the supply chain due to a reduction in throughput times of up to 82% and inventory reductions of up to 70%.

Demand-Driven: A Cornerstone of the Intelligent Enterprise

End-to-end Demand-Driven supply chain planning directly supports the efforts towards an Intelligent Enterprise, enabling organizations to make impactful changes in order to grow more resilient, more profitable, more customer-centric, and more sustainable. For all companies relying on their supply chains, the Demand-Driven approach in SAP IBP helps achieve a competitive advantage and become more intelligent and resilient. Therefore, DDMRP now becomes a feature in SAP S/4HANA Core. 2021 IBP releases were a significant step to realize this vision with new integrated DDMRP scenarios across SAP IBP and S/4HANA. Now, organizations can leverage SAP IBP with time series and order-based planning for running the first four steps of DDMRP, and, as a fifth step, integrate supply elements to SAP S/4HANA or SAP ECC.

SAP IBP for Demand-Driven Replenishment can be used in combination with any SAP ERP landscape and thus provides simulation capabilities, supply propagation across networks in one run, and more accurate net flow calculations. Supply elements for all location products can be created and propagated directly in SAP IBP using the DDMRP principles.

HOW TO START YOUR RESILIENT SUPPLY CHAIN JOURNEY:

The Camelot Supply Chain Resilience Center Service includes a structured approach that guides organizations through every step of their transformation journey.

to think about how you can quickly qualify a second or a third source in case of supply chain shortages of existing suppliers. You can only become successful with the close collaboration between sourcing and design – so between an internal function and the network outside of the company.”

What software solutions, technologies and strategies do SAP executives deem to be critical for enabling supply chain resilience in 2023? The benefit of cloudbased solutions, Andreas and Johannes agree.

Johannes considers Scandinavia and North America to be well advanced in adopting cloud solutions, while Switzerland is picking up adoption quickly; in comparison, Germany and Austria are somewhat behind. He acknowledges that there are businesses and industries that are not yet ready to use a full cloud approach for a critical key process, understandable when there is a highly automated production line, for example. He says the adoption process starts when there’s a need to improve flexibility or find better ways to address issues such as global supply chain shortages and higher energy costs. As decisionmakers assess the right time to make the switch, they are balancing multiple factors against each other. A cloud approach means embracing change in the way software architecture is hosted. Continuing capital investments in data centres versus new cloud innovation investments can be quite a big stumbling block, Johannes acknowledges. “Businesses do realise innovating is key to staying competitive,” he says.

Another challenge comes when deciding which cloud software vendor to work with. There are so many newer ones to choose from that finding the right solution for a business’s existing products, processes or production can be difficult without expert guidance.

Johannes says, “Something that seems to be the ‘best’ solution might not actually be easily integrated into, say, an existing application landscape.” This is where SAP’s proven capability, established reputation, experience and network offer confidence when compared with less well-known “challenger” suppliers.

This is another area where SAP capabilities can add value in terms of cloud services, security and innovation. Together with its strong partner ecosystem, SAP has been helping business leaders respond to a constantly changing world, and recover from supply chain disruptions.

The advantages of SAP’s partner ecosystem are discussed with the leadership of SAP’s MEE regional digital supply chain partner organisation on page 35.

Considering other challenges to face in 2023, Andreas points out the issues of security and the rise in the number of hacking attempts. “If you have your IT server in the ‘basement’ of your factory, it is at higher risk of hacking right now. There’s also a risk that in the long run you won’t have the right resources any more, or enough IT staff to maintain it overall. We are seeing labour shortages,” he warns.

The lack of data centre knowledge is partly the result of a shift to cloud solutions, and while fewer younger workers are entering the labour market, there are more older workers retiring. The imbalance between generations is affecting many industries and services. In January 2023, the German Chambers of Commerce and Industry (DIHK) reported that more than half the nation’s companies were finding it difficult to fill vacancies due to a lack of skilled workers. In DIHK’s survey of 22,000 companies, 53% reported such shortages.

Next, Andreas and Johannes highlight the trends of nearshoring (bringing manufacturing operations or supply closer to a company’s headquarters or end customers), onshoring (basing operations in a company’s home country), and reshoring (returning operations to a home nation) as key components to maximising risk-resilient supply chains that are backed by technology.

After the challenges of the pandemic years, the vulnerability of the global supply chain has been further exposed by geopolitical unrest. For a very long time, the focus has been on building lean, low-cost operations that were predominantly offshore, but this left companies defenceless against the supply and demand issues that the