How do I prepare my Supply Chain for SAP S/4 HANA?

October 18, 2017 by Kelly Kuhlman

How do I Prepare my Organization for SAP S/4 HANA?

I recently spoke at a conference about the Hitchhikers Guide to Supply Chain optimization and preparing for the imminent SAP S/4 HANA wave.  For those of you not familiar with the “Hitchhikers Guide to the Galaxy” book or movie, the main character, Arthur Dent, is woken one morning by construction crews about the demolish his house to make way for an intergalactic highway that is being built through the planet earth.  This initiates a plot, about Arthur traveling through galaxies with his towel looking for the answer to the ultimate question of Life, the Universe, and Everything.  The story is so reminiscent of the world we live in now and how those of us in the supply chain world, that make, buy, sell or distribute products will need to make way for the new digital “highway”… and, of course, find a way to capitalize on it.

What history has taught us is that this S/4 HANA wave will have many similarities to other waves we have had to endure.  Remember the days when we all heard that mainframe technology would soon be dead and would be replaced by client-server?  Then there was the certain “end of the world” due to Y2K’s extra two-year digits.  The internet phenomenon changed the way we share information and advancing mobility technology put us humans in charge of the user experience.  What we have found is that no matter which impending disruption we are about to face, without addressing the user adoption, people behavior, data discipline and process change, organizations will continue to chase the technology and never realize the business benefit.

Before you think this is just another article about the Digital Transformation – it is not.  It is, however, about how to prepare for it and benefit significantly while getting ready.  Let me explain:

Why was SAP S/4 HANA Created?

SAP S/4 HANA was created to provide companies with a digital platform for gathering information rapidly, responding instantaneously and disrupting business processes and, even, business models.  As the new SAP slogan implies: “Run simple, run live”.  What exactly does that mean and what is the impact on all of us who run SAP as the backbone of our business?

Here are a few S/4, SCM “Live” enhancements:

• SAP S/4HANA introduces MRP Live: an MRP run optimized for SAP HANA
• MRP Live reads Material Receipts and Requirements and calculates shortages in real-time
• Real-time Advanced Available to Promise (aATP)
• Dynamic Forecasting, Demand Sensing and other continuous functionality improvements.

Running your business in a “Live” fashion is a great concept, although not new by any stretch.  The technology now makes it more achievable than ever, but don’t ignore the significant impact on your business. Let’s take MRP Live as an example:  The major components that impact an effective MRP run and accurate MRP results are:

• Transactional data not reflecting reality,
• Master data not reflecting the true business rules, and
• Processes that are not agile enough to adapt to the changing.

With MRP currently running once a day, business processes have been adapted to allow people to focus on MRP’s exceptions during that day and stabilize the supply chain.  Running MRP Live means that, as the demand changes, so does the supply and the requirement instantly. . . real-time, . . . all-the-time . . . live!

This leads to many questions; Is our organization ready and are our processes and people ready for those changes in real-time? Do we have true data integrity in place to ensure that the result of MRP live is real and not erroneous due to “bad data”? Do we have the Master data governance in place to adapt rapidly as the rules change? Do our people have the knowledge and discipline to react to ongoing requirements changes?

More often than not the answer to these questions is a resounding “no we are not!”.  So how do you prepare your organization to be ready for “Live” and ensure your people have the physical ability to adapt?  We have listed 8 practical steps to help prepare your organization:

Foundational Areas of focus

1. Fundamentally decide that SAP will be the single source of truth
2. Increase the user knowledge and adoption through education
3. Eliminate the spreadsheet (and other 3^rd party solutions)
4. Change user behavior and discipline while measuring the change
5. Ensure TRUE business ownership (technology is the vehicle for change, but not the actual change)
6. Implement true cross-functional organizational integration

Specific areas of focus

1. Leverage the power of MRP
2. Optimize the end-to-end BoM

• • Ensure the Integration of Capacity Planning
  • Ensure the right Production Strategies
  • Establish optimal lead times in Master Data

Is your Supply Chain ready for SAP S/4 HANA?

Digital is exciting and S/4 HANA is a great platform on which to capitalize on the digital era.  But be cautioned, as, in previous technology disruptions, we need to ensure that the modern-day organization is ready to capitalize on the impending change.

If you are interested in more information on this topic, the upcoming SCM Optimization Bootcamp 2.0 will help attendees to further their understanding on how to optimize and prepare at the same time, radically transform their organization to leverage the S/4 Business Suite.