Have you ever felt overwhelmed attempting to determine what needs to be done to improve business results? In our working with organizations across the world, it is apparent that no matter the industry, the country or the company, supply chain challenges are universal. If you are reading this article, you probably run your company with SAP, but are you using SAP to help run your business?
One simple solution is to prioritize — use standard SAP transactions to identify high priorities. For example, standard SAP tools enable us to evaluate the average dollars for each material. It automatically sorts the largest at the top. What’s the value of this? Well, every dollar invested in inventory is no longer available for the business. Don’t get me wrong: Inventory is very important — business would not function without it — but is the level correct? Do you have the right thing, at the right place, at the right time? Or, do you have high levels of inventory, but still manage to stock out of critical components?
To break it down, there often is so much data in SAP, the thought of analyzing it at the material level is quite daunting. Say your CFO just stopped in and informed you the company must reduce inventory by 10 percent. Let’s assume you have 10,000 materials with an inventory value of $100,000,000. So it’s simple: Drop inventory by $10M.
But where to start? Use SAP tools to target high-value materials. Typically, 10-20 percent of the materials make up 80 percent of the inventory value, so start there. Looking at 1,000 materials is much less daunting than 10,000, and you can break it down further into manageable levels by using standard transactions.
Just beware: In order to perform analysis in SAP, it’s essential to work in the system. This means you must align the master data in SAP to business processes, keep transactional data current and use SAP as one system of truth. Yes, work in SAP; it is designed to run organizations just like yours. If you are working outside the system today, it will take dedication, knowledge and commitment at all levels in your organization, but we find that, in 3-6 months, most organizations are able to function in the system as designed.
To sum up:
Learn how Reveal helps transform clients’ supply chains to harness the benefits of SAP.Tags: SAP Best Practices, Supply chain, Supply Chain Optimization