sap ariba supply chain
- 1. April, 2019 SAP Ariba Supply Chain Process Collaboration
- 2. Supply Chain Management Major Challenges 1 Forecast inaccuracy, demand variability & lack of real-time insights 2 Poor Visibility Not having right processes in place to respond to volatile demand in real-time Lack of end-to-end visibility and coordination across the supply chain 3 Lack of Integration 32% 70% 70 days High Safety Stock Levels High Inventory Carrying Cost Stock Outs Low OTIF and Customer Satisfaction Extended lead times of manufacturing is outsourced in a typical company of suppliers lack visibility into customer order management Average on-hand inventory in manufacturing supply chains Suppliers Owned Factories Contract Manufacturers Suppliers R&D Retailers Distributors Enterprises Direct Consumers Multi-Supply Multi-Product Multi-Channel SUPPLIERS MANUFACTURERSCUSTOMERS Supply chain network complexity and impact of globalization Source: Supply Chain Insights 2014
- 3. Supply Chain Variability Retailer Orders Actual Consumer Demand Volumes Time Retailer Warehouse to Shop Manufacturer Forecast of Sales Production Plan Consumer Sales Time Qty Retail Orders to Wholesalers Time Qty Wholesaler Orders to Manufacturers Time Qty Manufacturer Orders to Suppliers Time Qty
- 4. What Does This Mean for Your Customer Inventory Levels Supply Chain Disruptions Revenue Loss via Stock-Outs Manual Data Exchange Paper Based Invoicing High Excess & Obsolete Inventory High Expediting Costs Potential Revenue Loss due to stock outs Higher Buyer / Planner FTEs1 Erroneous Invoicing Low Predictability of Supply High Potential for Supply Disruption Lower fill rates Lower Revenue Per Employee Long Invoice Lead Times High Inventory Carrying Cost Higher Cost of Quality as a % of Revenue Lower Overall Equipment Effectiveness6 Poor inventory reporting and status capabilities Potential Supplier Compliance Leakages High Cash Conversion Cycle Poor User & Supplier Experience
- 5. When you can predict, it is no longer scary
- 6. Review forecast & alert buyer Create constrained supply plan Supplier Managed Inventory Run MRP (Export Depo, Plant) Confirm & transmit POs/schedule lines View, confirm and ship POs Follow up with Suppliers Review consensus demand Share purchasing forecast Collaborative Supply Chain @ Your Company Manufacturing ? Quality Quality Collaboration Visibility to Sub-Contractor Pre and post Dispatch quality notifications Invoice Management and Payments Consignment Movement Visibility
- 7. SAP Ariba Supply Chain Processes Orchestration with Visibility Beyond boundaries of your Organization Forecast Collaboration Supplier Managed Inventory PLAN INVOICE & PAYMENT BUY & MAKE PO Collaboration (all PO types) Vendor Consignment Subcontract/ Contract Manufacturing w/ Multi-tier orders Share forecast Scheduling Agreement Release Quality Notifications Quality Inspections Quality Reviews SUPPLIERBUYER Forecast commit Share demand, inventory and min/max levels Provide & execute against shipment plan via scheduling agreement Place, inquire and receive order Confirm order and provide advanced shipment notification Report consumption of consigned stock Provide rolling delivery schedule w/ different firming levels Execute against firmed orders (released) Place order with components Provide notification of components’ shipment Provide component inventory & order visibility Notify buyer of components’ receipt Provide component consumption Communicate & respond to quality notification Request test results, COC, COA Collaborate and share quality documents Self-Billing/ ERS Invoicing Provide self-bill/ ERS invoice based on GR Provide payment notification Vendor Invoice Processing Provide invoice processing status & payment notification Provide invoice based on PO/ ASN Return Order Collaboration Place return order & provide return ship notice Provide credit memo Request & respond to quality notification Submit test results, COC, COA Collaborate and share quality documents External Manufacturing Visibility Provide Manufacturing and Inventory Status
- 8. Ariba Network :World’s Largest B2B Trading Platform It has ~ same GDP as India 3.8Million Companies on the network Companies 60Companies Join the Ariba network every hour 2.7Trillion in annual commerce 461Million Documents annually processed (all types) 579Thousand Timesheets processed annually 190Countries Our customers and suppliers are located 187Thousand Catalog on Ariba Network 338Thousand Leads sent annually to sellers 19.6Million Users Open & extensible Plattform Global Supplier enablement & Onboarding service True Global Network with Connect Once
- 9. Connect Once With Network effect. Powered by SAP Cloud Platform Integration (CPI) SAP Ariba Cloud Integration Gateway SAPCloudConnector SAP PI/PO Or Any Middlware SAP CPI (Customer Managed) SAP S/4 HANA Add-On SAP ERP Add-On Third Party SAP CPI (Supplier Managed) Supplier Systems Supplier Standards X12 EDIFACT OAGIS GUSI EANCOM PIDX xCBL cXML One-click deployment SAP PI/PO Test central Portal Integration wizard Developer tools Buyer Buyer/Planner Supplier
- 10. Supplier customer service Available every step of the way to ensure success FTEs in group languages to provide smooth transition and support locations around the globe700+ 21 9 Supplier Onboarding Catalog, Fulfillment Risk, Pay Term Strategy Category Experience Integration Experts 24/7 Hotline Sourcing Best Practice Supplier Communication Onboarding / Taxes Event Monitoring Training Supplier Mobile App Transformation Success Additional ServicesSupplier Management Organization
- 11. SAP Ariba Supply Chain Collaboration CustomersDiscreteProcessConsumerOther DO NOT SHARE ELECTRONICALLY OUTSIDE SAP
- 12. Microsoft & SAP Ariba Business Transformation Study $300M working capital improvement 5% OTIF improvement $15M reduction in COGS Check out the full video here 1. Public Financial Statements, DIO: Google Finance, Net Cash Flow from Operating Activities: AmigoBulls 2. Seeking Alpha, Microsoft: Cloud Growth Exceeds Expectations, Shares Priced for Additional 50% Upside, July 2017 3. The Motley Fool, Warren Buffett: 3 Ways to Protect Your Savings From a Crisis, 2015 Microsoft benefits from SAP Ariba Supply Chain Collaboration DIO represents the amount of time capital is tied up in inventory DIO is a measure of operational efficiency and financial performance The cash and cost value proposition of improvements can be calculated via DIO and it’s publicly available in financial statements Shorter DIO improves working capital and increases cash flow; and cash is king! Increases in cash enables investment in it’s various forms, for example acquisitions, expansion, CAPEX, research & development, dividends, share buybacks, etc. On Microsoft, “The company’s stock price should continue to increase over the coming years as this growth in earnings and free cash flow is proven out.”2 -- Seeking Alpha July 2017 Companies can be profitable but still run out of cash “Cash...is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent”3 -- Warren Buffet MICROSOFT FINANCIAL PERFORMANCE1 29 22 Q1 2016 Q1 2017 25 23 Q2 2016 Q2 2017 23% 9% Days Inventory Outstanding (DIO) Net Cash Flow From Operating Activities Q1 2016 Q1 2017 15% Q2 2016 Q2 2017 19% 24,860 28,500 33,330 39,510
- 13. “Bringing a new supplier online was taking anywhere from 6 weeks to 2.5 months. Now we are doing it in less than a week” ~ BASF What are SAP Ariba Network Customers saying? “It took us two and a half years to get 14 suppliers on EDI. It’s taken us less than 6 months to get 60 suppliers on the SAP Ariba” ~ Dulux
- 14. April, 2019 Supply Chain Collaboration Solution Details
- 15. Supply Chain Collaboration Base Package Forecast Collaboration Inventory Collaboration Quality Collaboration SAP Ariba Network Forecast / Demand visibility Forecast Commit Standard PO Order Collaboration Scheduling Agreement and Schedule Line (Delivery Schedule ) Collaboration Outsourcing Manufacturing Order Collaboration Consignment Order Collaboration Quality Notifications Quality Inspections Quality Reviews Demand/inventory levels Planned shipments Replenishment Order Multi-Tier Order Collaboration Return Order Collaboration Handling Unit ( Packaging Instructions and Barcodes) Supply Chain Monitor Invoice Collaboration SAP Ariba supply chain collaboration
- 16. Buyer Creates Unconstrained Forecast in IBP Supplier Receives Forecast Supplier Adjusts and Publishes Forecast Commit Buyer Receives Forecast Commit Buyer creates constrained forecast based on Supplier Commit Buyer publishes constrained forecast Planning Forecast Collaboration Integration with SAP SAP Integrated Business Planning Forecast Commit • Forecast in IBP is send to suppliers who are on-boarded on the SAP Ariba Supply Chain Collaboration platform • Supplier commits forecast and sends it back to SAP Integrated Business Planning SAP IBP SAP HANA SAP IBP SAP IBP SAP IBP SAP IBP
- 17. Planning Forecast Collaboration Forecast Commit Scenario (Supplier View)
- 18. Supplier Managed Inventory Collaboration SMI Demand, Inventory, Min/Max Create / Update PO Replenishment Order buyer supplier CAPABILITIES • Optimize inventory levels • Ensure supplier compliance to min/max inventory rules • Improved order fill rates in demand driven supply chains • End to End Process Support for Supplier Managed Inventory SMI • Support of Push based Replenishment leveraging Min/Max • Ability to create Replenishment Order by Suppliers • Dashboards providing min/max alerts and planned shipment calculations • Flexible key figure configuration BENEFITS Buyer Supplier / Contract manufacturer
- 19. Inventory collaboration CSV upload capabilities for Suppliers to share Inventory/Planning/Production status with Buyers
- 20. 20PUBLIC© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ High Level System Demonstration
- 21. April, 2019 Supply Chain Collaboration Solution Details Order Execution Collaboration
- 22. Order Execution Collaboration Scenarios • Standard PO Order Collaboration • Scheduling Agreement and Schedule Line (Delivery Schedule ) Collaboration • Outsourcing Manufacturing Order Collaboration ( Sub-Contracting Process) • Consignment Order Collaboration • Return Order Collaboration • Multi-Tier Order Collaboration • Handling Unit ( Packaging Instructions and Barcodes) • Supply Chain Monitor • Invoice Collaboration
- 23. Standard Order Execution Collaboration Network $2.7 Trillion of Commerce with 3.8 Million Trading Partners Purchase Order Order Confirmation Shipping Notice Invoice / Credit Memo Supplier Portal/Mobile App/Interactive Email GRN Notification Service Entry Sheet Service Entry Approval Payment Advice OC IBD GRN Parked SES SES Approval Invoice /Credit Memo Post Payment Run PO ECC / S4HANA Collaboration simplicity with a single business network Embedded supplier onboarding services End-to-end process orchestration to validate and enforce compliance Network intelligence, data & insights to reduce supply chain risk World’s Largest network of trading partners 100+ Business Rules InvoiceInvoice Park Your Company
- 24. Scheduling Agreement Collaboration Schedule agreement release (FRC/JIT) Goods receipt notice Self-billing/ERS invoice (option A) Payment Advance ship notice Invoice (option B) buyer supplier CAPABILITIES • Improved visibility into availability of supply • Greater transparency for suppliers into longer- term and near-term demands of their customers • Flexible invoicing options, including self-billing and supplier-generated invoicing • Extends rolling delivery schedules to suppliers • Indicates the degree to which the lines of schedule are binding. • Firm zone (go-ahead for production) – this is firm and fully binding • Trade-off zone (go-ahead for procurement of input materials) • Planning zone (forecast) BENEFITS Buyer Supplier / Contract manufacturer
- 25. Contract manufacturing collaboration process CAPABILITIES • Allows buyer to leverage purchasing power while maintaining visibility and control into contract manufacturing process • Improves visibility into availability of supply, inventory, and production status • Informs CM about product ordered and components to be used • Enables buyer and CM to share component consumption data • Enables contract manufacturers to report receipt and consumption of components with relevant batch information, ensuring greater predictability of supply BENEFITS Subcontract purchase order Goods receipt notice Component ship notice Payment Component inventory status Component receipt notice PO confirmation Component consumption notice Advance ship notice Manufacturing visibility Self-billing/ERS invoice (option A) Invoice (option B) buyer supplier Buyer Supplier / Contract manufacturer
- 26. Consignment collaboration process CAPABILITIES • Improves buyer cash flow and inventory turns by deferring transfer and payment of goods until they are consumed • Minimizes risk of material stock-outs • Reduces replenishment lead times • Provides suppliers with visibility to movements related to consigned inventory • Obtain and share visibility into material movements with suppliers • Signal change of ownership of inventory and settle payment to suppliers BENEFITS Buyer Supplier / Contract manufacturer Consignment purchase order Component stock receipt notice (POD) Consumption: consignment transfer Payment PO confirmation Advance ship notice Self-billing/ERS invoice (option A) Invoice (option B) buyer supplier
- 27. Create Drop Ship PO to Raw Material Suppliers Create Subcontract PO to Co-Packer Receives PO Confirmation Receive Ship Notice Component Stock Updated Receives PO Confirmation Consumption Update Received Receive Ship Notice Stock Received in WH (Optional Quality & Batch) Invoice Received & Posted 1 13 2 8 10 15 17 18 20 Receives PO Confirms PO Create Ship Notice Receipt Confirmation Receives Copy Receives Subcontract PO Receives Copy Receives Copy Create Component Receipt (Optional Quality & Batch) Confirm Subcontract PO Report Consumption Create Ship Notice Receipt Confirmation Create Invoice Raw Material Suppliers Co-Packer 3 4 5 6 7 9 9 1112 14 16 17 19 2122 Multi-Tier Order Collaboration (Co-Packer, Drop ship Scenarios) Buyer
- 28. Multi-Tier Order Collaboration CAPABILITIES • Improved order fulfillment and reduced inventories based on multi-tier supply chain visibility • End to End Multi-Tier closed loop process orchestration support • Support of drop ship orders and shipments from lower tiers into upper tier or contract manufacturing locations • Providing visibility to Logistics Providers to manage transportation as needed between the tiers. BENEFITS Drop Ship Order Visibility Drop Shipment Visibility + Good Receipt capability
- 29. Handling Unit and Packaging Support Automated Packing & Customizable Barcode Labels CAPABILITIES • Suppliers allowed to provide shipments based on packaging specifications • Easier label printing and automatic packaging, saving time and resources for suppliers • Efficient goods receipt processing for buyers • Enhanced UI to support handling unit visual presentation and control • Packing instruction support through CSV and new business rules • Handling of unit-based PDF (bar code) label generation based on industry standards • B2B & Portal Enabled BENEFITS
- 30. Supply Chain Monitor Exception Management CAPABILITIES • Supply chain visibility for Buyers and Planners • Real time supply chain exception management • Buyer/Planner dashboard view to monitor supply chain • Alerts related to orders, forecast, inventory and quality • Ability to manage exceptions with approvals within the solution • Time phased graphical views for open purchase orders and shipment status BENEFITS
- 31. Invoice Collaboration Ariba Network Line & Header Tax Tax Code Compliance Contract Compliance 90% First Pass invoices Supplier Name/ID Bill To / Ship To PO Number required? Non-PO Inv allowed? Invoice No. VAT/ Tax ID Remit Access PO Line Reference Unit of Measure Price Variance Currency Subtotal Amount Total Amount Consumption Variance Receipt … … Exception Exception Exception Invoice Invoice Invoice Invoice Invoice B2B (ERP to ERP ) Integrated Supplier Invoice Portal Supplier (PO-Flip Invoice) Smart PDF Based Invoice Paper Based Based Invoice
- 33. 33PUBLIC© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ High Level System Demonstration
- 34. April, 2019 Supply Chain Collaboration Process Details Quality Collaboration
- 35. Quality Collaboration Scenarios • Quality Notification Buyer/supplier ability to collaborate on deviations during manufacturing, inspection or post goods receipt. • Quality Inspection Supplier ability to send inspection result along with certificate. Supplier ability to send certificate (CoA, COC) on Ship notice as mandated by Buyer. • Quality Review Unstructured Collaboration tool for buyer/supplier. Customer can define their own review type.
- 36. Quality Collaboration Quality Notification CAPABILITIES • Better collaboration between buyer and supplier to collaborate on quality issue with email notifications. • Customers/Supplier can check the process status of their notifications whenever they want.. • Seamless integration of quality notification process between ERP Quality Management module and Ariba SCC . • No need to open duplicate QN for the same defect in case of multiple batches/parts • Advance access control based on the user role/permission • Ariba network will allow supplier to notify customer about quality deviations during inhouse production or Subcontracting components that the customer/supplier has sent to the contract manufacturer • Ariba network will allow buyer to notify suppliers quality issues with finished product discovered during goods inspection. • Ability to link PO to QN. Supplier should be able to navigate from PO to QN on click of hyperlink • Add new business rule - Do not allow Supplier to create ship notice for the complaint quantity if there is an open QN for the PO. • Quality notification with multiple parts/batches • Customer ability to define QN type by category BENEFITS
- 37. Buyer Initiated Quality Notification
- 38. Supplier Initiated Quality Notification
- 39. Quality Collaboration Process Quality Notification
- 40. Quality Collaboration Quality Inspection CAPABILITIES • Better collaboration between buyer and supplier to collaborate on quality process. • Customers/Supplier can check the process status of their inspection whenever they want.. • Seamless integration of quality inspection process between SAP ERP Quality Management module and Ariba SCC . • Advance access control based on the user role/permission • Customer ability to request quality inspection from the supplier/contract manufacturer • Suppliers ability to Send inspection results for the inspection lot/characteristic • Supplier ability to send certificate of analysis (CoA) as an attachment along with inspection result • Customer ability to share the final usage decision/inspection status to the suppliers. • In case of inspection initiated manually before ASN, introduction of business rule to allow suppliers to send ship notices only after receiving acceptance of inspection results. • Email notification to buyer and supplier in case of inspection request, result, review and usage decision • Add new permission for the Supplier user to view or create/update the quality inspection BENEFITS
- 41. Quality Inspection Collaboration: Source Inspection Send PO/SAR Order Receive OC OCOC Order Invoice Receive Invoice Invoice Supplier AribaNetwork Result recording Quality Inspection Usage decision Quality Inspection Inspection Result/CoA Send inspection status Quality Inspection Send inspection request Inspection lot Receive ASN ASNASN/GR Result confirm/lock Buyer
- 43. Quality Collaboration Quality Review CAPABILITIES • Easier communication (threaded conversation) between buyer and supplier users. • Reduction in cycle time for review, eliminate administrative burden. Increase compliance. • Allow users to get the relevant email by opt for email per supplier/customer, review type and event based. • Easy to find the review based on different criteria and keyword search. • Ability for the quality users to support the collaboration on Batch record, Change request, customer complaint and general use cases. • Change Request : Change request allow quality users to collaborate on any change such as process, material, equipment's. Provide subtype (to be configure by buyer) to distinguish different type of change request. • Customer Complaint : Customer Complaint allow quality users to collaborate on any product complaint, investigations from customer’s customer, Provides fields such date of complaint, sample available for the review request • General : General review type allow quality users to collaborate on any other review which is not supported by other reviews. Provide subtype (to be configure by buyer) to distinguish different type of review. Ability to link a review type with PO, ASN, OC and or QN. • Buyer admin can also define further review type for other use cases and ability to hide standard use case based on supplier. • Buyers admin ability to upload master data such as Line of business, product family, part and plant combination to allows users to collaborate even if customer/suppliers are not exchanging POs. BENEFITS
- 44. Quality Review
- 45. 45PUBLIC© 2018 SAP SE or an SAP affiliate company. All rights reserved. ǀ High Level System Demonstration
- 46. What Does This Mean for Your Customers Reduce Inventory Levels Mitigate Supply Chain Disruptions Prevent Revenue Loss via Stock-Outs Automate Data Exchange Intelligent Invoicing & Payment 4 - 12% lower Days in Inventory1 1 - 3% lower Logistics Cost2 8 - 23% lower Revenue Loss Due to Stock-outs1 9 - 25% fewer Buyer / Planner FTEs1Effort 20% -50% Higher Invoice process efficiency ↑ Predictability of Supply ↓ supply chain disruptions, which globally totaled $56B3 ↑ Fill Rate ↑ user experience ↓ Invoice Cycle Time ↓ Excess & Obsolete Inventory ↓ Cost of Quality, which can be 15 - 20% of Revenue4 1 - 2% higher Overall Equipment Effectiveness6 ↑ inventory reporting and status capabilities ↑ touchless processing ↓ Inventory Write-Offs 16 - 45% lower Supplier Defect Rate5 1. High End Range % improvements: SAP Performance Benchmarking 2017, low end range is 35% of high end range 2. Book: Ronald Ireland of Oliver Write Associates & co-published with APICS , Supply Chain Collaboration: How to Implement CPFR and Other Best Collaborative Practices, 2005 3. The Load Star & British Standards Institute, Supply Chain Disruption Cost $56bn Last Year - And There's More Risk to Come, 2016 4. ASQ, Cost of Quality, 2013 5. LNS Research, Quality Management in the Boardroom, 2016 6. LNS Research, Building the Business case for EQMS: Executive Positioning and Actionable Improvements, 2016 7. Individual corporate benefits may vary depending on the level of maturity within an organization.
- 47. Thank You “If you don't change what you are doing today, all of your tomorrow’s will look like yesterday.”