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Understanding the Power of Exception Monitoring

Benefits of Exception Monitoring
By
David Carroll

One way to think of exception monitoring is that it is a catalyst for change, letting you know what processes are out of balance and identifying where your energies need to be expended. The goal of understanding the power of exception monitoring is end-to-end supply chain integration. From sales and operations planning through demand management, material production scheduling, material requirement planning, all the way to production and process execution.

For many siloed departments — who may informally refer to themselves as, “We’re production” or “We’re sales” or “We’re quality control”, this is a massive departure from traditional thinking. Siloed departments are unable to remove the blinders, focusing only on their department’s specific role rather than relating to the big picture of the supply chain. Because they cannot see up and down the supply chain through one system of record, they mistrust the data they are receiving and tend to extract and manipulate information from SAP and force it into their own personal information systems, such as Excel spreadsheets.  Small wonder that in their eyes, SAP doesn’t work the way they imagined it would.

Benefits of Exception Monitoring

By truly using SAP exception monitoring the way it should be used, the entire supply chain works as a well-oiled machine, quickly adjusting and fixing demand/supply imbalances. Eight exception groups, each with a vast number of messages that address the specific imbalances, provide more information on the imbalance, so steps can quickly be taken to fix it. There is a message for everything — incorrect master data, behavior that does not match the rules, incorrect or broken processes, bad data, overdue elements, breakdown in service, and much more.

Now, how does this process work in the real world? Suppose, for example, that exception messages reveal a process has not been started on time because a process order or purchase order has not been released.  That’s your indication you may need to reschedule production or change sequencing dates because the supply chain is in jeopardy. Or, suppose that teams are just loading supply and not looking at the end game: their capacity to fulfill demand.  This might be a wake-up call for management to re-examine goals.

Every exception — every imbalance — can be addressed, and hopefully, rectified. When supply and demand are in balance and you understand your full capacity picture, your goal shifts from “What am I going to make” to “what do I need to make.”  Managing by exception requires understanding, teamwork, and a shared passion to take SAP usage to a higher level. When companies can make that commitment, the rewards are endless.

For more information on this topic listen to our free webinar recording on the topic of “Is Your Organization Mature Enough to Cut 50% of Hidden Cost from Your Supply Chain?

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