Taking a peek at mySAP (Strategic Supply Chain Design area)

What is the scope of mySAP's solution space? While dealing with SCM, one has to meddle with the ERP system that one finds within a firm. mySAP is one of those leading ERP providers that is making inroads into the SCM space as well. Here is the solution space of mySAP as outlined on their website.
The main solution function areas are captured in the figure below (which I shamelessly copied from their site - I wonder where the jury of copyright matters rests on the matter?).


Each of the solution areas has its own mini-web site which explains some of the capabilities ensconced therein. So let's go one by one starting bottoms up:

1. Strategic Supply Chain Design: Three areas under this category.

• Supply Chain Definition : You can model every part of the supply chain (such as locations, transportation lanes, resources, products, and so on.) using the Supply Chain Engineer in SAP APO. The Supply Chain Engineer allows you to place locations on a map and link them with the corresponding transportation lanes and product flows. Furthermore, you can drill down to all elements belonging to the supply network, or request information about single or combined elements in the network. For example, you have the ability to see which products belong to a particular location. You can also add products to this location or modify the location's master data. Master data can also be transferred from SAP R/3 bzw. SAP ERP using the Core Interface (CIF). Materials are limited in their validity and availability. This has to be taken into consideration throughout the entire supply chain management solution. A central maintenance instance for interchangeability relations is offered that provides information for all planning applications. This secures consistent planning of discontinued material stock before using follow-up material stock. For a service parts supply chain, the supply chain definition is extended with the Bill of Distribution, which not only describes a location hierarchy but also allows the modeling of virtual locations (which are physically the same locations as aggregation locations in the location hierarchy, but are logically only used to model the direct customer facing demand of those aggregation locations), virtual consolidation regions (to consolidate the demand of several locations for slow moving parts) and inventory balancing regions.

The Supply Chain Engineer in SAP APO sounds a lot like the tool that I developed (based on the transshipment model) that allows for strategic level planning for supply chain components. The great thing about the Supply Chain Engineer is the integration that it provides with the ERP system which is how it should be ideally.

• Supply Chain Monitoring : The Supply Chain Cockpit (SCC) consists of a highly intuitive, graphical interface that acts as the top enterprise planning layer covering all planning areas such as manufacturing, demand, distribution, and transportation. All employees in the Plan -> Source -> Make -> Deliver cycle of supply chain management can use it to their advantage. As the gateway to SAP APO, the SCC makes dealing with a vast supply chain easier and more manageable. SCC allows you to:
  
  • Create individual work areas so several planners can work simultaneously on different parts of a supply chain.
  
  
  • View the supply chain from all angles, down to the smallest detail, to minimize the complexity of the relationships among supply chain components.
  
  
  • Measure supply chain performance with KPIs (key performance indicators) that are stored in SAP Business Intelligence (SAP BI).
  
  
  • Respond immediately and accurately to new developments by tracking alert situations.
  
  
  • The SCC can be configured to suit conditions within a wide variety of industries and business situations.
  
  
  
  

Now, we take a step down into the actual nitty-gritty about supply chain planning. I take heart in the integration of several supply chain roles that the above function area provides above while simultaneously bringing to their tables information about every nut and bolt that has been catalogued and tracked in the ERP system. I can only wonder about the information overload but I suppose some improvement in the meta level aggregation of data will be provided sooner than later.

• Alert Monitoring : The Alert Monitor is a stand-alone SAP APO component that enables a unified approach to monitoring planning situations. It notifies you of any critical situation that occurs in one of the SAP APO applications, such as Demand Planning, Supply Planning, Production Planning and Detailed Scheduling, or Transportation Planning and Vehicle Scheduling. Alerts are displayed in various ways, either directly in the Supply Chain Cockpit, in the cockpit's control panel, in the application, by e-mail, fax, pager, SMS, WAP pages, or the SAP Enterprise Portal inbox. Using a series of event triggers and alarm conditions, the Alert Monitor can automatically identify problems in the supply chain. It can also monitor material, capacity, transportation, and storage constraints. In addition, it can handle metrics such as delivery performance, cost flow, and throughput. It reports exceptions, including orders that exceed forecasts or orders that fall short of forecast and therefore may lead to excess inventory if production is not adjusted accordingly. Based on this monitoring process, you can readjust plans whenever needed.

This is the closed loop effect in action when it gets applied to the supply chain area. Whether you planned it right or not, designed it right or not, you ought to get information about how well things are working in the real world. I suppose you could track/monitor your favorite performance indicator here. However, I am wary of something. If you're familiar with control theory, you'd appreciate the explicit definition and structure of open and closed loop systems i.e. systems are constructed with the underlying structure made quite explicit - you wouldn't be hunting around for implicit feedback loops. The above three areas when taken under the Strategic Supply Chain Design functionality is an implicit analogy of the control systems methodology without any elucidation of where and when that analogy fails to transform from the control theory space to the business space. Or in other words, one can never be sure of where to attach the feedback loops and more importantly what parameters (whether they should be first order, second order or even third order differential terms or their rough analogical business terms) ought to be put in those loops. Rather as indicated by the Alert Monitoring function, you are alerted to what you wanted to be alerted about which readily implies that the feedback loop is given over to construction by individuals who may or may not be sophisticated about systems thinking. After all, you often hear about velocity in the supply chain and that is a good first step in this direction but where do you hear about acceleration - in ramp up? In practice however, ramp up is often treated as a special case where in all hell may break loose at an inopportune time.

2. Supply Chain Analytics:

• Service Fill Monitor : Service fill monitoring provides an up-to-date view on the fill rates for direct order fill, redirected order fill, or referred order fill rates. Fill rates can be determined either on an order line or on a quantity basis. The service fill monitor allows analyzing specific product segments or specific locations within the service parts supply chain.

This is a first order customer service performance indicator which is entirely within the purview of a firm's activities. This indicator will only tell you about the overall performance of the firm with respect to specific product segments or locations within the firm. A low reading here means that there is a problem somewhere and not much more. A high reading here might indicate that assets and resources might be inefficiently positioned or used.

Service Loss Analysis : Those orders that could not be filled by the promised ship date and time, are considered as service loss. The service loss analysis provides help in performing a root cause analysis of the service loss by storing the situation of the supply chain at the time of service loss, attempting to classify the loss reason into predefined categories, and keeping the combined data available for later manual analysis.

Another first order customer service indicator which is related to the first one above inversely - Service Fill Monitor.

Supplier Delivery Performance Rating : Supplier Delivery Performance Rating is an analytical tool which allows to measure the suppliers' logistical performance and compliance based on ASNs received for expected shipments, the quality and timeliness of those ASNs, the received shipment quantity compared to the promised and the capability of suppliers to respond to changes in the supply plan within the bounds defined in the supplier contract. The result is a weighted score of the above categories. The tool allows analyzing the overall supplier score as well as drilling down by supplier location, delivery location, product group etc.

This indicator gives the firm the chance to be the top dog when it comes to monitoring the fill rate/loss rate with respect to your suppliers.

Inbound Delivery Monitor : The inbound delivery monitor analyzes shipments from a supplier to the supply chain network or within the network and determines average transportation times for all segments as well as deviations. It compares the measured leadtimes against predefined standard times and creates alerts when late shipments are to be expected.

If you wanted to dig down into the actual performance of a suppier, you'd look here but then if you've reached this level of detail, you either have too much time on your hands or there is some problem with your supplier.

Key Performance Indicators : Key Performance Indicators (KPIs) provide a means of judging the performance of business processes internally by time period, collaboratively with others within your supply chain, and externally by benchmarking against similar companies. mySAP SCM supports the metrics in the Supply Chain Operations Reference (SCOR) model created by the Supply Chain Council, and includes more than 300 pre-configured supply chain key performance indicators (KPIs), such as Delivery Performance, Forecast Accuracy and Return on Assets. These measures can be used as they are, or modified and enhanced to fit your specific situation.

The information goes on to detail over 300 pre-defined performance indicators that are available. The question of how the feedback is to be structured seems quite relevant here. Even if one imagined that the 300 indicators can be reduced by an order of 10, keeping track of 30 performance variables is too complex for an operations level guy. All I can say is - STRUCTURE, STRUCTURE, STRUCTURE. Without an underlying structure of a business model and its specific loops - this is a dead end when it comes to making decisions on the basis of so many variables.

Strategic Performance Management : On a strategic level, SCPM gives you the feedback needed for true closed-loop supply chain management-- which is key to driving continuous improvement, delivering superior performance over time, and ensuring that your supply chain continues to be efficient and competitive. Here there are two areas of concentration:

• Balanced Scorecard SEM-CPM (Corporate Performance Monitor) supports the definition, analysis, visualization and interpretation of key performance indicators and Balanced Scorecards and thus increases the effectiveness of managerial strategy finding and implementation. Elements of SEM-CPM are Value Driver Trees, Measure Catalogs and Management Cockpit scenarios. SAP SEM with its component SEM-CPM offers innovative concepts for the interpretation and visualization of Key Performance Indicators (KPIs). The concept of the Balanced Scorecard, for example, includes non-financial measures in the enterprise performance management and thus goes beyond the scope of regular management reporting.


• Sales and Operations Planning in SAP APO. Allows monitoring of various plans from sales, marketing and manufacturing to keep in line with the overall business plan.
  

It is hard to see how the SCPM , a category of performance indicators, as described above achieves a closed-loop supply chain solution because most of the above corresponds to the firm in itself and not the firm's supply chain. Sure enough, some of the firm's activities have a direct impact on the direction and execution of the supply chain but that is an indirect performance evaluation.

Operational Performance Management : On a day-to-day operational level, the solution provides constant surveillance of key performance measurements, and automatically generates an alert when there is a deviation from plan, so that you can keep processes working at maximum efficiency. The Supply Chain Cockpit in SAP APO allows constant surveillance of the entire supply chain. And the Alert Monitor and Broadcasting functions draw attention to bottlenecks and allow you to inform users of potential problems in their area.

This is a category of performance indicators dealing with day-to-day operations and problems there in.

Supply Chain Analytical Applications : Applications Analytical Applications provide the basis for measuring and optimizing across the entire supply chain. It is more than just reporting; it is a closed-loop scenario that feeds information back into the transactional systems. It includes the collection of data from various operational systems (including non-SAP) to create the basis for Analytical Applications. Data from Dunn & Bradstreet and Nielsen can be collected as well as data from the Web. Analytical Applications also include alerts, workflows, and what-if analyses.

Frankly, I don't understand a word of the above. The notion of feedback as outlined above would indicate the readjustment of certain parameters within the ERP system based on the analysis generated by the SCAA (Supply Chain Analytical Applications). But that implies that the SCAA rather than being strategic level planning tools and applications, they refer to tactical and operational level analysis tools which would implement the notion of fine tuning. Do they?

Collaboration Performance Indicator : In an increasingly collaborative environment, it is important to measure the performance of the interactions of every partner involved in the supply chain. This is exactly what Collaboration Performance Indicators (CPIs) do. A Collaboration Performance Indicator (CPI) is the measure of performance associated with the responsiveness of all organizations involved in a process with cross-organizational interdependencies. The information provided by a CPI can be used to determine how an organization's cooperation compares with an agreed-upon standard, and is therefore a key component for this organization's joint move towards best practice.

Again, it seems to be a repition of some indicators from Supplier Delivery Performance Rating set of indicators but I don't think that I can say anything more about this until I get some first hand information.

The next functional area is Transportation, which will be addressed in a future post.

posted by AJ @ 1:23 PM