Endorsed Business Solutions SAP Enterprise Inventory ... · PDF fileEndorsed Business...

Endorsed Business Solutions

SAP Enterprise Inventory Optimization by SmartOps

xApp EIO

© 2006 SmartOps Corporation. All rights reserved.Confidential and Proprietary 2

IVNSmartOps

Enterprise Inventory Optimization


What do the Analysts say?

ContractManufacturers

ComponentManufacturers

Supply Chain

Operations

Engineering

Sales/Marketing

HQ/Finance

ServiceOperations

In-HouseManufacturing

“Inventory has been and continues to be the lifeblood of supply chains. Properly managed,it drives revenue and efficiency for companies. But as the nature of supply chains changes, so must the policies used to manage inventory. Traditional inventory management practices are being made obsolete by increasing global supply chains and contract manufacturing, more dynamic product life cycles, and multi-channel distribution..”Aberdeen, 2006

Complex Supply Chains Make Inventory Optimization Critical


Analyst Reports – Inventory Optimization

According to analysts including AMR Research, Aberdeen, and Gartner the Inventory Optimization solutions market is the #1 SCM growth

market and spending priority

http://www.aberdeen.com/default.asp


Most companies still use simple solutions

How Companies Manage Inventory Policies Today

26%

35%

27%

13%

0%

10%

20%

30%

40%

General Rules ABCD Rules Basic SafetyStock and

EOQcalculators

Multi-echelonInventory

Optimizarion

Increasing supply chain performance

Source: Aberdeen Group, 2006



The EIO solution provides a enterprise-scale process for dynamically optimizing inventory levels in multi-tier distribution and manufacturing supply chainsEnterprise Inventory Optimization is a key component of Dynamic S&OP and Sense and Respond business processes

Industry Pain PointsAs the business innovates, globalizes, and grows in complexity there is increasing pressure to provide perfect product availability while, at the same time, reduce inventory, operating cost, and working capitalCustomer service KPIs including order lead time performance and order fill rates are below best-in-class and a key factor for customer satisfactionHigh inventory levels tie up working capital and reduce Return on Capital EmployedIncreasing supply and demand uncertainty causes planners to spend too much time expediting and “firefighting”Product proliferation and globalization means planners and analysts have less time to manage more and more products and supply chains

Solution CapabilitiesMulti-echelon inventory optimizationAdvanced demand, production, and supply analytics leverage SAP ERP, SCM and BITotal supply chain view and operational synchronizationEfficient management by exception workflowsIndustry data model and data validation process Flexible workflows, content, and reporting through SAP Portal or SmartOps user interfacesPreconfigured Standard Data Interfaces with SAP


Value Proposition

SAP Enterprise Inventory Optimization by SmartOps delivers an immediate and sustainable step-change improvement in supply chain performance

1. Stabilize and Improve Product Availability– 5-10% increase in Order Fill Rates and On-time Delivery– 20-30% reduction in average Order Lead Time– 50-75% reductions in Order Lead Time variability

2. Reduce working capital– 20-40% reduction in Total Chain Inventory costs– Optimal and visible multi-echelon SKU-Location inventory policies (“Fix the Mix”)

3. Improve planner and analyst productivity– Automated, reliable process allows planners to focus on highest value products and

customers– Visibility into inventory cost drivers

4. Quick and large ROI– Investment payback within 3-6 months– Low TCO with joint development, delivery, and support with SAP integration


SmartOps Overview

Great companies and relationships

Leader in Inventory Optimization, SAP xApp and SAP Endorsed Business Solution

Over $12 Billion of inventory being managed, over $3 Billion in documented customer value

Complementary extension to SAP ERP, SCM, and BW

Broad SAP SponsorshipHigh growth and profitabilityHeadquarters in Pittsburgh,

offices in Philadelphia, and Germany

Leader in Inventory Optimization, SAP xApp and SAP Endorsed Business Solution

Over $12 Billion of inventory being managed, over $3 Billion in documented customer value

Complementary extension to SAP ERP, SCM, and BW

Broad SAP SponsorshipHigh growth and profitabilityHeadquarters in Pittsburgh,

offices in Philadelphia, and Germany

http://www.jabil.com/

http://www.conagrafoods.com/

http://www.honeywell.com/


Bayer MaterialScience

Leading developer, manufacturer, and marketer of plastics, polyurethanes, coatings, and adhesivesDynamic integration of Enterprise Inventory Optimization (EIO) with SAP ERP and SCM platformLess than one year payback on investment

"Integrating inventory optimization software into our daily operations is one way by which we plan to meet our goal of improving supply chain efficiencies while achieving customer requirements throughout our products' lifecycles. These types of process and technology improvements are designed to achieve a high level of supply chain excellence and bring significant value to Bayer MaterialScience."

John Houston,Senior Vice President

http://www.bayermaterialscience.com/internet/global_portal_cms.nsf/id/home_en

http://www.pu.bayer.com/db/pu/pu_cms_internet.nsf/id/8A1ADF4921451EA9C1256F6A0025B32D?open&ccm=020080010

http://www.pu.bayer.com/db/pu/pu_cms_internet.nsf/id/8283A2D77BAC35C2C1256F770047BD3B?open&ccm=010010020070010


Customer Success Story

Bayer MaterialScience Case Study

Company ProfileIndustry: ChemicalsRevenues: $13B

Business ChallengesLarge volume of SKUs with many unique packaging configurations, customer-specific products, and customer-specific service level targetsSizable number of products with intermittent and low volume demand as well as seasonal products with different periods of seasonalityCustomer order sizes range from very small (single drum) to verylarge (full tank truck)Many unique processing stages with intermediates sold directly to end customersProduction Capacity is shared across many products with large batch sizes and/or fixed production sequencesMultiple plants with similar capabilities and tight capacities drive dynamic sourcing and network alignmentsFlexible policies allow for demand to be fulfilled from multiple ship points including plant warehouses and distribution centers with various container optionsDistribution networks can be unique to each product with finite “hard”capacity constraints of storage containers

http://www.pu.bayer.com/db/pu/pu_cms_internet.nsf/id/bayflex-basics_en?open&ccm=020070040


http://www.pu.bayer.com/db/pu/pu_cms_internet.nsf/id/A60B48395D0AA53AC1256F7700442153?open&ccm=010010020070010


Customer Success Story

Bayer MaterialScience (continued)

Project ObjectivesInitial goal to reduce total inventory by 10% while improving customer service for Bayer MaterialScience NAFTA region Focus EIO process on large number of low volume stochastic products to allow planners to more efficiently focus on higher-volume, more predictable products

Why SmartOps?True multi-stage optimization across a global networkAbility to handle time-varying demand patterns to model seasonal and intermittent demand items as well as new and obsolete productsVision and product roadmapAbility to effectively deliver implementation servicesCustomer referencesPartnership and integration options with SAP

ImplementationInitial go live in February 2005 interfaced with SAP R/3 and APO

Benefits RealizedSustained inventory reduction of 12% while maintaining service level targets, exceeding the initial conservative goal of 10%

http://www.pu.bayer.com/db/pu/pu_cms_internet.nsf/id/2DD38E9C30B07862C1256F6A0025B330?open&ccm=020070050


Endorsed Business Solutions


xApp EIO



What are some example Customer benefits of an Endorsed Business Solution?

SAP-SmartOps Joint Development

– Sharing of current and future solution map – collaboration on ongoing development

– SAP testing and solution qualification of SmartOps solution

– Interfaces are supported by SAP and SmartOps as the products are updated, reducing cost and risk

SAP-SmartOps Joint Delivery

– Coordinated pre-sales, sales, and value engineering builds a clear value proposition and reduces sales/purchasing process complexity and risk

SAP-SmartOps Joint Support

– SAP provides Level 1 support and customers may use SAP OSS to manage the customer service process


High-Level Solution Architecture

ERP

SCMICH

EM RR ATP

SOPAPO

BW

Portal and UIReports and Scorecards

SA

P S

tand

ard

Inte

rface

Data Gateway

SDLT

Data Store

Inventory Optimization

MIPO

Data Processing and Analytics

DIM SIM PIM

Dashboard

User Interface

Reports

MM PP

http://www.sap.com/index.epx



Flexible, tight integration with SAP ERP, SCM, BI

ERP

SCMICH

EM RR ATP

SOPAPO

Bus. Whse (BW)


SA

P S

tand

ard

Inte

rface

Data Gateway

SDLT

Data Store


MIPO


DIM SIM PIM

Reports

Dashboard

User Interface




ERP

SCMICH

EM RR ATP

SOPAPO

Bus. Whse (BW)


Data Gateway

SDLT

Data Store


MIPO


DIM SIM PIM

Reports

Dashboard

User Interface

Analytics and Optimization that leverage SAP ERP, SCM, and BI

SA

P S

tand

ard

Inte

rface




ERP

SCMICH

EM RR ATP

SOPAPO

Bus. Whse (BW)


SA

P S

tand

ard

Inte

rface

Data Loadset

Processor

SDLT

Data Store


MIPO


DIM SIM PIM

Reports

Dashboard

User Interface

Analytics, Reporting, and Exception Management in the context and UI of your choice



Example SAP (R/3 & APO) - SmartOps Integration Scenario

SmartOpsDIM

SmartOpsSCI

SmartOpsSIM

SmartOpsMIPO

SAP APO SNP

SAP APO DP

SAP APO PPDS

SAP R/3

MM PP

Lot Sizing Application

Consensus Forecast

Supply Chain Analysis

Production Plan / Schedule

Time varying Safety Stocks

Manufacturing Run Cycles

•Current Inventory•Customer Orders•Stock Transfer Orders

Supply Plan

•Network Topology•Supply Ratios•Transportation Times

•Historical & Future Forecasts•Shipments History

Future Forecasts and Forecast Error Updates to Lead Time and Variability

Transactional PO Data

•Items•UOMs•Locations•Network Topology•Supply Ratios•Transportation Times•Dwell Times•Manufacturing Run Cycles•Manufacturing Frozen Windows•Service Level Targets•Costs•Bills of Materials•Shelf Lives•Current Inventory

•Order Processing Times•Manufacturing Times•Replenishment Frequencies•Service Times

•Historical & Future Forecasts•Shipments History

•Bills of Materials

SAP BW

Z-Ta

bles

•Recommended Deployments

•Items•UOMs•Locations•Dwell Times•Service Level Targets•Shelf Lives•Costs


Why SmartOps Product Differentiation

Advanced demand, production, and supply analytics leverage SAP ERP, SCM and BIMulti-echelon inventory optimization enables lean supply chain postponement strategiesTotal supply chain view and operational synchronizationPowerful what-if scenario analysisEfficient management by exception workflowsIndustry data model and data validation process Flexible workflows, content, and reporting through SAP Portal orSmartOps user interfacesPreconfigured Standard Data Interfaces with SAPProven in very large scale implementationsOver $12 Billion of Inventory under management, over $2.5 Billion of customer value


The Overall Objective for the SAP/SmartOps partnership is to enable best-run supply chains for SAP customers

+The world’s leading provider of business solutions

Solution backbone

World-class integrated solutionsPreconfigured processesIndustry-specific prepackaged solutionsReliable technology

The market leader in Inventory Optimization and Stochastic Models

EIO Expertise

Deep and broad industry knowledge and referencesxApp partner, tight integration with XI ContentImmediate impactFast implementation

Best-in-class Industry solution for Integrated SCM

Customer Value

Enable best-run supply chainsLower TCOShorter implementation projectsMinimizing riskDecreasing project costsImprove relationships

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