How SAP S/4HANA Digitizes the Entire Supply Chain
To stay ahead of the curve in the digital age, enterprises will have to adapt their processes in all lines of business. SAP S/4HANA, the next-generation business suite from SAP, aims to tackle this challenge. But can it really boost efficiency and performance across the entire supply chain?
In the third part of this blog series, we will focus on how SAP S/4HANA enhances and automates processes in purchasing, production, and logistics, and illustrate the new possibilities it brings.
Globally connected purchasing and procurement
The main challenge of the purchasing department is to acquire materials at the lowest possible price, while ensuring that the quality of the final product is maintained. And in 2015, as many as 77% of companies worldwide were still issuing invoices on paper, even though this is inefficient, labor-intensive, and prone to costly errors.
SAP S/4HANA is able to address this issue thanks to its open SAP HANA platform. SAP S/4HANA can be easily integrated with Ariba, a global business commerce net-work connecting buyers and suppliers around the world. Data can be exchanged. It allows businesses to more easily exchange data over the network with their suppliers and partners, reducing paperwork and cutting costs. It also helps companies to build stronger relationships with suppliers and provides them with have access to an alternative source for procurement, when necessary. Furthermore, the open SAP HANA platform offers a high level of extensibility. The platform also enables companies to connect their ERP system to live information from the Internet. The purchasing team is notified when prices are low, so that they can source the required materials at the lowest possible cost.
How to keep up with the demand for highly personalized products
The demand for made-to-order goods that are tailored to specific needs is increasing—in the wholesale sector as well as in retail. To meet the customer’s expectations, job production, or a ‘batch of one’ approach, is often needed. However, this presents a huge challenge to production facilities and cost-efficiency.
With SAP S/4HANA, companies can integrate their supply chain and accelerate production by around 50%. By connecting sales, purchasing, manufacturing and logistics, businesses can ensure that the right materials are available when needed—even for highly customized products. This approach helps to minimize wasted resources and can cut inventory holding costs by 17%. In addition, companies can further reduce spending by scheduling more energy-intensive processes to run overnight when energy costs are at their lowest.
There is also an increasing demand for predictive maintenance, where products are equipped with sensor technologies to monitor the condition of components and help prevent breakdowns. The SAP S/4HANA platform connects to the Internet of Things to make this possible. By capturing data on smart products, SAP S/4HANA can notify service engineers technicians when maintenance is required. This enables predictive maintenance, prevents unplanned downtime, and makes products more reliable. Service staff technicians arrive at the right place, at the right time, and with the right tools and spare parts.
Increasing transparency and flexibility in logistics
In logistics, it is crucial to respond to any delays or unexpected peaks in demand as quickly as possible. To utilize warehouse space more efficiently, and quickly identify bottlenecks, businesses require highly transparent logistics processes and reliable in-formation.
SAP S/4HANA enables enterprises to manage capacities and inventory levels in line with actual needs. Real-time material requirements planning means that safety buffers can be planned more cost-efficiently. Transparency into logistics processes is increased through a single source of truth, so all items can be tracked and traced, wherever they are. Employees are promptly notified if production is delayed or there is an unexpected peak in demand so they can quickly begin to reschedule.
To demonstrate exactly how much of an impact SAP S/4HANA has on the entire supply chain, we have created the story of LaGarda. This fictional B2B enterprise is based on real-life experience and results from numerous itelligence projects and is designed to show you how your business can benefit from the next-generation business suite, too.