SAP AG 1999 SCM / 1 Supply Chain Management in the Age of Electronic Marketplaces Claus Heinrich...

SAP AG 1999 SCM / 1

Supply Chain Management in the Age of Electronic Marketplaces

Claus HeinrichMember of the Executive Board, SAP AG

SAP AG 1999 SCM / 2

Content

Evolution of Supply Chain Management

mySAP.com – Enabling Collaboration andCommunities Beyond Commodity Trading

Learning from the Financial Markets

SAP AG 1999 SCM / 3

Content




SAP AG 1999 SCM / 4

Production-oriented Planning: MRP II

My Company

Managing the production processes within one manufacturing plant

SAP AG 1999 SCM / 5

Supply Chain Management

My Company

Optimizing the entire supply chain processes withinone company (considering partner‘s constraints)

SAP AG 1999 SCM / 6

Supply Chain Management : Extending the Enterprise

Concentrating on core competencies bycollaborating with partners to

search for mutual benefits

My Company

SAP AG 1999 SCM / 7

Supply Chain Management: Entering into Communities

Using electronic marketplaces to optimize the complete processes within business communities

My Company

SAP AG 1999 SCM / 8

Content




SAP AG 1999 SCM / 9

Learning from the Evolution of Capital Markets

Direct TransactionDirect capital investmentRisk distribution

First Capital MarketsIncreased participationIncreased liquidityStandardizationSecuritization

ExchangesDefined procedures and

standardsServices (brokerage, financing,

hedging, derivatives)

Integrated ServicesBank processing integrationService passed on to consumerSpeed, service, perfect competition

$ $

$ $

$ $

Value - Added

Increased participation

Speed Market

overviewAdded

servicesActive mgmt

of exchange

Ease of participation

Remote access to exchanges

SAP AG 1999 SCM / 10

Learning from the Evolution of Capital Markets

$ $

Direct Transaction

Markets

Exchanges

Integration

Stocks Oil Clothing TurbinesExamples:

Commodity Standardizedproducts

Highlyconfigurable

products

Financialproducts

$ $

$ $


Influencing Factors

Minimal logistics

make tostock

engineerto order

CommodityStandardized

products

Highlyconfigurable

productsFinancialproducts

Increasing transaction complexity

Decreasing number of players

More difficult price setting

Decreasingproduct

standardization

Value chaincomplexity


Extending the Reach of Electronic Marketplaces with Information Technology

Minimal logistics

make tostock

engineerto order

I N F O R M A T I O N

M A T C H I N G

T R

A N

S A

C T

I O

N

V A

L U

E A

D D

E D

S E

R V

I C

E S


Decreasingproduct

standardization


Content





Information

make tostock

engineerto order

I N F O R M A T I O N


Information offering needs to be at least as good as in other information channels (agents, telephone, catalogs…) Personalized, structured and detailed Interactive Up-to-date

Information need increases with product complexity Industry-specific content required

Decreasingproduct

standardization

Minimal logistics


Example: Environmental Health & Safety Information

Marketplace

EH&S Expert

EH&S Marketplace

Chemicals supplier BuyerProduct 1

Ingredients:E201E205E601

Product 1Ingredients:

E201E205E601

XML: List of

ingredients

XML: Material Safety Data Sheet (MSDS) Dangerous goods classification Hazardous materials classification Risk phrases / Safety phrases

MSDSMSDS


Electronicsignature

Reduce costs for creation of Material Safety Data Sheet

Reduce costs by selecting products with less hazardous ingredients

Reduce costs for safety procedures

Download


Matching

make tostock

engineerto order

M A T C H I N G


Matching exceeds matching of price and date

Matching needs to incorporate supply chain dimensions Availability, costs for

intermediate storage, taxes, ... Complex, agent-type matching

rules can continuously search for opportunities & substitutes(push & pull)

Decreasingproduct

standardization

Minimal logistics


Example: Available to Promise

ATPServer

1. Which vendors

leadtimeslead

times

Marketplace

2. Get deliverable dates Integration as close as

vendor allows

3. Generate delivery schedule Multi-vendor Calculate transportation

times

4. Propose delivery schedule & price

articlequantitylocation

desired dates

real-time

leadtimeslead

times

periodicupload

Vendor 2

Vendor 3

Vendor 1

periodicmanualinput


Demo: Tendering for Engineering Products

MarketplaceSupplier Manufacturer

Create bid invitation

Define specification

Collaborate on design

Collab. Engineerng

Collaborate on design

Review BidsReview BidsCreate bid

Tendering

Receive notification Accept bidAccept bid

Supplier directory


Transaction Processing

make tostock

engineerto order

T R

A N

S A

C T

I O

N


Reduce logistically complex transactions to the simple exchange of goods for cash.

Success of electronic market-places beyond MRO procurement requires sophisticated integration to back-end systems Pricing Tendering process Procurement transaction

Marketplaces need to operate in heterogeneous IT environments Open XML-based interfaces XML conversions or service

Decreasingproduct

standardization


Transaction Processing

TraditionalTransaction Processing

Marketplaces asCommunication Catalyst

BuyersSellers

BuyersSellers

EDI

(Edifact,

Odette,...)

XML

XMLXML

XML

XML

Order Order

BOM BOM

Different languages, cultures Communication standards Timezones

Defined transaction procedures Neutralized business culture Technical (XML) mapping facilitating

integration


Completing Complex Transactions Today

Transport Logistics

Letters of Credit

Foreign Trade

Financing

Currency/Country Risk

Goods/Credit Insurance

Foreign Trade

Transport

Banks

Insurance

Transport

Banks

Insurance


Requirements in Transaction Processing

Risk management Letters of credit Peripheral risks

Legal procedures Contracts Foreign trade Environmental …

Subsequent supply chain processes Transportation Intermediate

Storage Delivery

schedule of supplier

…

Financing Overall

transaction costing

Insurance Liquidity …


Solution: Marketplace Services

MarketplaceIntermediary services

Efficiency of Transaction services

Lower Transaction costs

Single service providers

Buyers

Service companies

TransportBanks Foreign TradeInsurance

Sellers

Goalto reduce transaction to exchange of

goods for cash


Value-Added Services

make tostock

engineerto order

V A

L U

E A

D D

E D

S E

R V

I C

E S


To increase liquidity and participation extra value-added services beyond transaction processing are added

These can focus on extending: Ease of transaction processing Risk management Financing options Outsourced processes Paid services

Service providers as marketplace drivers

Decreasingproduct

standardization

Minimal logistics


Situation Today: Supplier & Demand Match

Supplier 1 Buyer 1

Supplier 2 Buyer 2

Supplier 3 Buyer 3

Geography DemandSupply


Marketplace Service: Demand & Supply Optimization

Supplier 1

Supplier 2

Supplier 3

Electronic Marketplace

S

U

P

P

L

Y

D

E

M

A

N

D

Marketplace Services Negotiations Demand aggregation Transportation Intermediate Storage Payment Supply Chain Optimization

Buyer 1

Buyer 2

Buyer 3


Marketplace Service : Storage and Transport Management

BuyersSellers

WAREHOUSE

WAREHOUSE

WAREHOUSE

WAREHOUSE

Transport

BuyersSellers

WAREHOUSE

Transport

WAREHOUSEThrough centralization of transport services, warehouse and transport logistics can be geographically optimized when liquidity and participation is

sufficient


Marketplace Service : Financing and Risk Management

Marketplace BuyersFinancial Service companies

Banks Insurance

Sellers

Account Services including: Payment settlement Non-cash settlements Periodic clearing Internal netting Factoring Billing services Risk (Currency, credit, country) hedging Credit rating Account services (checking, interest…) Outsourced receivable/payable management

6070

Adding value in: Reducing costs Improving forecasting Improving liquidity

6070

800


Marketplace Service : Collaborative Forecasting

Demand / supply aggregation

Statistical methods

Guided negotiation process

Alert notification

Interfaces to planning systems

Information services

Marketplace

Tier 1 Suppliers Buyers

Tier 2 Suppliers


Volatility of Supply and Demand

Order Order

My CompanyKey Suppliers Key Customers

demand

supply

inventory


Collaborative Forecasting

My CompanyKey Suppliers Key Customers

Collaborative ForecastingCollaborative Forecasting

demand

supply

inventory


Use of Market‘s Liquidity

My Company

demand

supply

Supply Demand

Usage of auctions to Sell exceed inventory Cover shortage

Marketplace

Key Suppliers Key Customers


Marketplace Service : Specification Management

Collaborative engineering to align specification of productsVersion mgmt.Reconciliation

Database for product specifications open to selected partners

Reference for selling process

MarketplaceSellers Buyers


Evolution of Collaboration Processing

Bilateral Communications

Dependent on stable relationships

Multilateral

Basic matching

Value-adding services

Process integration


SAP as Software Provider for Electronic Marketplaces

Marketplace

Integrated electronic marketplaces lead the supply chain management process to a new level

B2BProcure-

ment

B2BProcure-

mentCollaborativePlanning

CollaborativePlanning

ATPATP

BWBW

Foreigntrade

Foreigntrade

CostMgmt.Cost

Mgmt.

CostMgmt.Cost

Mgmt.

FinancialsFinancials

SCMSCM

ProductLifecycle

Mgmt.

ProductLifecycle

Mgmt.

Trans-portation

Trans-portation

......

InternetSales

InternetSales

TravelTravel

PriceConfigurator

PriceConfigurator

MarketplaceInfrastructureMarketplace

Infrastructure


Supply Chain Management in the Age of Electronic Marketplaces

Claus HeinrichMember of the Executive Board, SAP AG

SAP AG 1999 SCM / 1 Supply Chain Management in the Age of Electronic Marketplaces Claus Heinrich...

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Transcript of SAP AG 1999 SCM / 1 Supply Chain Management in the Age of Electronic Marketplaces Claus Heinrich...