As history tells us, supply chain innovation is an ever-changing process that can only be ignored at the peril of our bottom line. Especially during the pandemic years, organizations have rapidly discovered how crucial it is to optimize supply chain operations to resiliently meet unexpected supply chain disruptions and challenges.
The need for agility and resilience is required at both ends of the spectrum, though. The supply chain is challenged to protect margin and eliminate waste while demand is soft, and capacity abounds. Yet it also must be hyper efficient and effective when demand is firm and the prospect of rationing and allocation looms.
It is during times like this that we understand how important it is to rely on a single source of truth that enables us to react decisively to big increases or decreases in demand. By effectively deploying SAP, a leading provider of enterprise software solutions, we possess the innovative tools and technologies to optimize our supply chain operations quickly and to seize the competitive edge.
But supply chains are not just about technology alone. They are dependent on the efficacy of three “Ps”: people, performance, and process. All must be aligned and working seamlessly to ensure success. We need to ask ourselves: what role does strong leadership support play in navigating SAP-enabled supply chain transformation? How can fully equipped leaders effectively support and guide their teams through the process? And what does it take for a CEO, CIO, or supply chain executive to seamlessly navigate the complex, often volatile supply chain world they are facing?
Understanding SAP Supply Chain Transformations
Before we dive into the importance of leadership support in SAP-enabled supply chain transformations, it's essential to understand what these transformations entail. Supply chain transformations involve the integration of SAP solutions into an organization's existing supply chain operations. The goal of these transformations is to optimize supply chain operations, reduce costs, enhance customer satisfaction, and improve the overall efficiency and service capability of the supply chain.
Supply chain transformations are inevitably complex and complicated and involve multiple stages, including planning, implementation, and testing. These transformations require a significant investment of time, money, and resources. And they can end up being disruptive to an organization's daily operations.
Importance of Leadership Support in Supply Chain Transformations
One of the most critical factors for the success of supply chain transformations is strong leadership support. Without leadership support, these transformations will likely fail. Leaders play a critical role in guiding and supporting their teams through the complex process of deploying SAP solutions. To do so, they must provide clear direction, create a sense of urgency, and ensure the necessary resources are available to support the transformation. Leadership support is essential at all stages of the supply chain transformation process. During the preparation phase, leaders must ensure that the project is aligned with the organization's strategic goals and that the necessary resources are allocated to the project. During the realization phase, leaders must provide guidance and support to their teams, keeping the projection track and addressing any issues promptly. Finally, during the verification phase, leaders must verify that the project is addressing the supply chain outcomes originally sought, and that the necessary changes are embedded, appropriate, and will be sustained.
Challenges Faced in Supply Chain Transformations
Deploying SAP-enabled supply chain solutions is not an easy task, and there are many challenges to face during this process. One of the most significant is the complexity of the functions themselves. SAP require a significant amount of education and expertise to implement successfully.
Another challenge is the resistance to new process and behavior changes that can arise during the transformation process from employees who are comfortable with the “old way.” This can lead to a lack of engagement and buy-in from team members. Additionally, disruption to daily operations that occurs during the realization phase may create road blocks.
A Successful Transformations With Strong Leadership Support
A strong, focused, and aligned leadership team with a clear outcome expectation (key metrics to measure performance) embarked on a transformation of the supply chain. The goal was to best harness and deploy their available people, deploy fit-for-purpose, best-in-class business processes, and set key expectations for the achievement of metrics.
To reach their goals, they increased utilization of SAP to drive improved service levels, schedule attainment, inventory performance, and operational costs. The results were instructive:
- 23% average inventory reduction of active materials
- 31% inventory turns improvement
- 18% reduction in obsolete inventory
- Improved Available to Promise (ATP) and Material Availability Check (MAC) utilization and outcomes
- Capacity evaluation, production scheduling and sequencing with schedule attainment measured by utilizing standard SAP capabilities
Organizations are able to reduce reliance on spreadsheets, increase the effectiveness of information and material flow. At the same time, they will be able to optimize the use of MRP, procurement and exception management capabilities and decrease workarounds by moving planning, analyzing, and execution into SAP.
By creating more simplified, standardized, and optimized supply chain process, they eliminate the use of numerous customizations, enhancing the ability to seamlessly migrate to S/4HANA in the future. In addition, the IT landscape is simplified, and third-party tool usage is minimized. You can read about different types of SAP Supply Chain Transformations across different industries on our success stories page of our website.
How Does Leadership Sustain These Results?
To ensure the long-term success of supply chain transformations, continuous leadership support is essential. This support can take many forms: ongoing education and development for team members, regular updates and communication with stakeholders, and a commitment to continuous improvement and innovation.
Through this continued leadership support, organizations can ensure that their supply chain solutions remain effective and relevant in a rapidly changing business environment. They can also go that extra mile to confirm their teams are engaged and motivated to achieve the organization's goals.
A governance model with a fixed cadence momentum sets priority and targets, reviews metrics, and provides supply chains with a showcase opportunity to directly converse with executive leadership. That is critical to achieving and maintaining successful outcomes and ensures a more seamless transformation.