There are many reasons why it is important to manage by exception. Some include reliance on a single record of truth, full integration throughout the supply chain, greater efficiencies in process and implementation, balanced achievement of supply and demand, improved customer service, and far greater cost efficiencies. Yet there is one more urgent reason to prioritize managing by exception: preparing for the world of S/4HANA.
All Paths Will Lead to S/4HANA by 2027
S/4HANA is a digital platform bringing greater speed, information, and visibility to organizations to empower better decisions. But it stands to reason that new tools with old rules and behaviors will not work. Those organizations that are mature enough to seamlessly make the transition to S/4HANA are three times more likely to have higher net profit margins and annual revenue growth than industry averages. To participate in this growth, all organizations currently using SAP must come to a realization, “Are we truly ready for S/4HANA or will we be forced to go back to a full implementation, which will be costly, risky, and a radical change to our organization? Or, will we migrate unoptimized processes, data, and behavior that will accelerate the chaos?”
If your organization is constantly firefighting and rarely addressing the root causes of what is going on in your supply chain, you are not ready — and you are not alone. Studies show that most companies use less than 25% of SAP’s capabilities, mostly due to a gap in understanding of how to leverage SAP most effectively.
Managing by exception — learning from and acting upon the alerts that indicate a breakdown between supply and demand — is one vital component of unleashing the power of SAP to get you ready to work with unified data, end-to-end supply chain connection, and a higher level of predictability. Yet fewer than one in 10 companies understand what exceptions are and how to use them to their advantage.
As you tread the path to S/4HANA, remember: a tool is only as good as the craftsman who wields it. Now is the time to commit to managing by exception; this will not only improve your current operations in SAP but also enable you to take advantage of the large costs and benefits difference between a S/4HANA implementation versus migration. By optimizing your supply chain predictability, you can claim a stronger competitive position in the years ahead by improving service levels and minimizing costs.
To find out more about this topic please read our white paper “Managing by Exception: Cut 50% of Hidden Cost from Your Supply Chain.”