03 supply chain performance management solution in detail

7/31/2019 03 Supply Chain Performance Management Solution in Detail

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SAP Solution in DetailSAP BusinessObjects EnterprisePerformance Management Solutions

The SAP® BusinessObjects™Supply Chain PerformanceManagement applicationhelps companies maketheir supply chains more ef-fective and responsive in theface of complex and fast-changing market conditions.By focusing on the right pro-

cess metrics, companiescan track performance, diag-nose bottlenecks, and un-cover opportunities. This

way, companies can takeinformed action towards im-proved supply chain perfor-mance. Enhanced supply

chain performance will inturn improve financial per-formance by reducing costs,increasing working capital,and strengthening customerloyalty.

SAP® BUSINESSOBJECTS™SUPPLY CHAIN PERFORMANCEMANAGEMENTIMPROVING SUPPLY CHAINEFFECTIVENESS



4 Improving Supply ChainEffectiveness

4 Standards-Based End-to-EndProcess Visibility

4 Know Your Supply ChainPerformance, at Any Time

5 Focus on Metrics that Matter6 Automated Data Collection from

Operational Systems7 Insights Derived from Actual

Business Processes7 Business Agility, While Assuring

Information Integrity7 Proactive Diagnostics8 Uncover Interdependencies

Across the Supply ChainNetwork

8 Deliver Alerts About Deviations

from Performance Targets

9 SAP BUSINESSOBJECTSEnterprise PerformanceManagement Solutions

9 Find Out More

CONTENT

3SAP Solution in Detail – SAP BusinessObjects Supply Chain Performance Management



manufacturers, and logistics servicesproviders. To succeed, you requireactionable and timely insights into yourentire supply chain performance acrossend-to-end business processes.

The SAP BusinessObjectsSupply Chain PerformanceManagement applicationhelps you measurably im-prove the effectiveness ofsupply chain operations andbetter deliver on corporatemandates such as lowering

costs and improving returnon working capital. In addi-tion to providing a more ac-curate measure of whether

you are meeting your supplychain goals, the applicationcan warn you of potentialbottlenecks and identify

new opportunities.

Know Your Supply Chain Performance,at Any TimeSAP BusinessObjects Supply ChainPerformance Management provides you with much-needed visibility intosupply chain processes such as orderto cash. You stay clearly informedabout performance metrics such asshipment reliability, perfect-order fulfill-

Actively managing the performance of your supply chain has never been moreimportant. Increased globalization, vola-tility in demand and commodity costs,regulatory requirements, and greaterdependency on suppliers and other

partners have significantly increasedthe risk of doing business. Knowing your inventory positions, deliverydates, and fill rates is not enough. Youmust also understand the impact ofsupply chain changes on total cost orcash flow and optimize supply chaineffectiveness for better corporateresults. This requires end-to-end visibili-ty into factors that drive performance –such as cash-to-cash cycle time, over-all supply chain cost, or the quality of

your order fulfillment.

There is no shortage of data for thispurpose. However, much of this criticalinformation may be buried within yourenterprise systems and dispersedacross multiple documents, systemrecords, and databases. You may noteven know what data you need to makecrucial decisions. Your supply chainmetrics may also lack formal definitionsand standards common in finance andother areas of your business. In addi-

tion, it’s likely that neither your busi-ness managers nor your IT departmenthas the time to create the modern andflexible information architecture yourenterprise requires to address itsevolving supply chain needs.

The SAP® BusinessObjects™ SupplyChain Performance Management appli-cation helps you measurably improvethe effectiveness of supply chain oper-

ations and better deliver on corporatemandates such as lowering costs andimproving return on working capital. Inaddition to providing a more accuratemeasure of whether you are meeting your supply chain goals, the application

can warn you of potential bottlenecksand identify new opportunities. Func-tions for root-cause diagnostics let youtake measured responses whereneeded.

As a packaged application, SAPBusinessObjects Supply Chain Perfor-mance Management can significantlyreduce the complexities, cost, and riskassociated with deploying this type ofsolution. Relying on best-in-class tech-

nology, embedded data-integrationfunctionality, a calculation engine, andan intuitive user experience, the appli-cation has been purpose built, precon-figured, and preintegrated to workeffectively. Built from a business per-spective, the application contains datamodels and metadata based on leadingindustry standards. It can automatedata collection wherever it is availableand proactively diagnose a given situa-tion. This means faster time to value ata significantly reduced price point and

lower risk versus custom-builtapplications.

Standards-Based End-to-EndProcess Visibility

Today, you may design, manufacture,ship, or sell products almost anywherein the world. At the same time, youmay deal with a complex network ofbusiness partners including suppliers,

IMPROVING SUPPLY CHAINEFFECTIVENESSTO OPTIMIZE ITS IMPACT ON ENTERPRISEPERFORMANCE

4 SAP Solution in Detail – SAP BusinessObjects Supply Chain Performance Management



ment, or supply chain cost (see Figure

1). Furthermore, you get to understandthe underlying factors such as produc-tion cycle times, order backlogs, or warehouse cost, and even correlationsand mutual impacts of one on theother.

These insights help you to take immedi-ate action for short-term benefits –adjusting batch sizes to compensate forfuel cost increases, for example – andto improve supply chain effectiveness,responsiveness, and performance in

the long run. Enhanced supply chainperformance will in turn improve finan-cial performance by reducing costs,increasing working capital, andstrengthening customer loyalty.

Focus on Metrics That Matter

In today’s IT-heavy supply chain networks, there is no shortage of datapoints. In any given situation, however,only a few numbers are truly important.Unable to identify the right key perfor-mance indicators (KPIs), managers mayfocus only on improving the measuresunder their immediate control – anapproach that fosters silo thinking andfrequently sacrifices overall supplychain network effectiveness for depart-mental efficiency. For example, isolatedfocus on capacity utilization may result

in excess inventories. Likewise, merelyreinforcing departmental efficienciessuch as reducing departmental costmay simply shift costs acrossdepartments.

Figure 1: SampleScorecard

As a packagedapplication, SAPBusinessObjects Sup-

ply Chain PerformanceManagement can signif-icantly reduce the com-plexities, cost, and riskassociated with deploy-ment of this type ofsolution. Relying onbest-in-class technolo-

gy, embedded data-integration functionality,a calculation engine,and an intuitive user ex-perience, the applica-tion has been purposebuilt, preconfigured,and preintegrated to

work effectively.




With the right metrics architecture, anorganization can break down functionalsilos and align stakeholders behindcommon goals – such as improvingcash-to-cash cycle time, reducingtotal supply chain cost, or deliveringon perfect-order goals. The SAPBusinessObjects Supply Chain Perfor-

mance Management application helps you identify and monitor the metricsthat really matter for your organization(see Figure 2). At the enterprise level,these might be perfect-order fulfillmentrate, forecast accuracy, or supply chaincost. At the department level, suchmetrics might include on-time deliveryby suppliers, plant utilization, or order-cycle time.

The prebuilt metrics architecture withinthe application is based on the supplychain operations reference (SCOR)model and other industry standardsframeworks, yet is flexible enough tomeet your particular requirements.Metrics are defined, documented, andassociated with specific individuals

within your supply chain network. Thisfosters accountability – a key premisefor strategy-aligned supply chain execu-tion. In the end, the right metrics driveindividual behavior, and behavior drivesenterprise performance. And when itcomes time to upgrade, the metrics you’ve defined will still be intact.

Automated Data Collection fromOperational Systems

Transactional IT systems are optimizedfor efficient document processing, notfor easy information access. Vital data

is captured in enterprise systemsacross multiple points along the ordermanagement process, from order cap-ture over goods issue, shipment,invoicing, and accounting. Unlockingthis information is key to accuratelymeasure supply chain performance, toproactively identify opportunities andbottlenecks, and hence to improve sup-ply chain effectiveness. However, thetraditional way to capture this informa-tion is via extensive, custom-built busi-

ness intelligence projects, involvingbusiness requirement analysis, datamodeling, and custom development.This approach is risky and expensive,often prone to failure or budget over-runs. As a result, despite significantadvances in business intelligence tech-nology, many business users still canaccess only basic supply chain informa-tion because development time is solong. And all too often, information isnot presented in the proper contextbecause of lack of time and business

user expertise. For example, dash-boards could highlight only primitivedata – such as line-item details of ashipping notice or its aggregated num-ber for a specific plant.

Diagnostic metrics

Level 3 metrics

Level 2 metrics

Level 1 metrics

Strategic GoalsSupply ChainEffectiveness

MaterialAcquisition Cost

Planning andFinance Cost

+

Perfect Order Fulfillment

Supply ChainManagement Cost

-+

OutboundTransportation Cost

Finished GoodsWarehouse Cost

Customer

Service Cost

Order Management Cost

-

Fuel Cost Express freight Returns Invoices outstanding

Figure 2: Example of a Metrics Hierarchy Within the SAP® BusinessObjects™ Application

Strategic Goals

Level 1 Metrics

Level 2 Metrics

Level 3 Metrics

Diagnostic Metrics

Supply ChainEffectiveness

Perfect OrderFulfillment

Supply Chain

ManagementCost

OrderManagement

Cost

Material Acquisition

Cost

Planning andFinance Cost

OutboundTransportation

Cost

Finished GoodsWarehouse

Cost

CustomerService Cost

+

+

-

-

InvoicesOutstanding

ExpressFreight

ReturnsFuel Cost




Insights Derived from Actual BusinessProcessesSAP BusinessObjects Supply ChainPerformance Management uncovershidden information from enterprise sys-tems by retrieving and semantically

linking relevant pieces of informationacross supply chain management andrelated financial processes. The appli-cation then automatically calculates theresulting metrics, providing you with afull picture of supply chain performanceacross end-to-end business processes.For detailed analysis, you can evendrill down into operational detail in theunderlying enterprise resource planningsystem to display, for example, a salesorder that had to be delivered via

express shipment.

This automated data collection andanalysis is delivered at a fraction of thecost and with considerably less IT proj-ect risk than associated with traditionalcustom-built solutions. And becausethe data is based on reliable sources(through prepackaged integration with SAP transactional software, forinstance), you can be confident in itsaccuracy and relevance. Various busi-ness scenarios are supported, such as

collaborative demand and supply plan-ning; manufacturing network planningand execution; and logistics and fulfill-ment management.

Business Agility, While AssuringInformation IntegrityWith change the only constant today, you must adjust enterprise strategiesand tactics more frequently than in thepast. If, for example, raw-material pric-es spike unexpectedly, you must review

your cost management strategies. Sim-

ilarly, increased competition or new

market opportunities may force a newproduct strategy. It pays to stay agileand responsive in such environments.

SAP BusinessObjects Supply ChainPerformance Management helps ITstay in control and react swiftly tochanging market requirements – with-out lengthy project-change requests.Business users can define new metrics(see Figure 3), adjust threshold values,and customize dashboard views – with-out draining scarce IT resources. If the

impact of fuel costs on transportationcosts declines with the introduction ofhybrid vehicles, for example, the appli-cation can immediately reflect thosechanges. Business users can changerelationships and definitions for KPIsand immediately see the results ofthose changes. It is also possible tochange scorecard contexts as the sup-ply chain strategy evolves – for exam-ple, moving from a geographical orien-tation to a category orientation. As

business requirements and metrics

architectures evolve, the data struc-

tures built into the application assureinformation integrity, without expensiveproject rework.

Proactive Diagnostics

In a dynamic marketplace, changes ina single parameter (intentional or not)may significantly affect your entire sup-ply chain – as well as your financialposition and market capitalization.Changes in safety stock may simulta-neously impact supply chain cost, on-

time delivery, and carrier utilization.

How do you set the right target valuesfor your supply chain strategy? How do you handle transportation costs thatrise to unacceptable levels? Supplychain practitioners must often chooseamong competing requirements andunderstand why programs fail. Theymust know the right questions to askand have the right diagnostics function-alities, as well as proper alerts and con-

textual guidance, to identify potentialproblems as quickly as possible.

Figure 3: Example ofMetrics ManagementFunctionality




Uncover Interdependencies Across the

Supply Chain NetworkFunctions for impact analysis withinSAP BusinessObjects Supply ChainPerformance Management help youqualify relationships between supplychain metrics (see Figure 4). You cantie back performance issues (such asincrease in overall transportation cost)to functional issues (such as an in-crease in fuel cost by a certain carrieror an increase in express freights fora certain region). That helps identifypossible root causes for breakdowns

or potential bottlenecks, and thenimprove the success rate of decisionsby understanding broader decisionimpact.

Deliver Alerts About Deviations from

Performance TargetsToday’s supply chain managers andexecutives are busy people. They don’t want to spend time surveying dash-boards, no matter how well-designed.Instead, they need to manage byexception – driving immediate attentionto the real issues requiring informedaction.

With SAP BusinessObjects SupplyChain Performance Management, devi-ations are indicated via alerts, and

interdependencies across metrics areclearly marked. In addition to knowingthat there is an issue, you can gain

insights into the underlying operationaldrivers – and their possible resolution –by analyzing interdependencies acrossthe supply chain network. Besides up-to-date information on current supplychain metrics, the application can pro-

vide alerts based on historical trendanalysis, plan-versus-actual compari-sons, and internal or external bench-marking comparisons.

SAP BusinessObjectsSupply Chain PerformanceManagement helps youidentify and monitor themetrics that really matter

for your organization. At theenterprise level, these mightbe perfect-order fulfillmentrate, forecast accuracy, orsupply chain cost. At thedepartment level, such met-rics might include on-timedelivery by suppliers, plant

utilization, or order-cycletime.

Figure 4: Example ofImpact AnalysisFunctionality




SAP BUSINESSOBJECTS ENTERPRISEPERFORMANCE MANAGEMENT SOLUTIONSIMPROVED EFFECTIVENESS AND PERFORMANCECONTROL

SAP BusinessObjects Supply ChainPerformance Management is part ofSAP BusinessObjects enterprise per-formance management solutions – acomprehensive set of solutions thathelp your company capitalize on the

value of your existing data assets. Thesolutions can make your enterprisemore agile – with the greater organiza-tional alignment, visibility, and confi-dence you need for optimal control andcompetitive advantage. The solutionsare built on a proven intelligence plat-form, and are designed to integratesmoothly with SAP Business Suitesoftware; SAP BusinessObjects gover-nance, risk, and compliance solutions;and SAP BusinessObjects information

management solutions. This lets youmaximize business profitability, managerisk and compliance, and optimize yourcorporate systems, people, andprocesses.

Find Out More

For more information on SAPBusinessObjects Supply Chain Perfor-mance Management, please call yourSAP representative or visit us online at www.sap.com/sapbusinessobjects

/epm.

Functions for impactanalysis within SAPBusinessObjects

Supply Chain Perfor-mance Managementhelp you qualify rela-tionships betweensupply chain metrics.You can tie back per-formance issues (suchas increase in overall

transportation cost) tofunctional issues(such as an increasein fuel cost by a cer-tain carrier or an in-crease in expressfreights for a certainregion).




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SummaryThe SAP® BusinessObjects™ Supply Chain Performance Management application helpscompanies measurably improve supply chain effectiveness, for more responsive supplychain networks and improved cost control. By focusing on the right process metrics, com-panies can identify and diagnose bottlenecks and uncover opportunities to take informedaction towards improved supply chain performance.

Business Challenges• Misaligned targets due to lack of understanding of the impact of supply chain activities on

enterprise performance• Lack of timely visibility into end-to-end operational processes such as order to cash• Daily surprises and firefighting due to lack of proactive insights

Key Features• Business content – Comply with leading frameworks such as the supply chain operations

reference (SCOR) model• Data extraction and transformation – Access data and gain insight more quickly thanks

to preintegration with transactional systems and precalculation of metrics• Analysis and reporting – Produce more useful reports with semantically consistent navi-

gation across information• Impact analysis – Qualify relationships between supply chain metrics

• Metrics management – React quickly to changing market conditions by readily definingor refining metrics and threshold values

Business Benefits• Insight into operational and related financial performance while complying with perfor-

mance management standards, thanks to standards-based support for end-to-endprocesses

• Relevant and timely information with automated data collection derived from actual busi-ness processes

• Full understanding of operational drivers, opportunity discovery, and timely awarenessof deviations from performance targets thanks to proactive diagnostics

For More InformationCall your SAP representative or visit us online at www.sap.com/sapbusinessobjects/epm.

03 supply chain performance management solution in detail

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