The following commentary can also be viewed and commented upon on the Supply Chain Expert Community web site where Bob Ferrari is featured as a guest contributor.

Is was not too long ago when many in our community were often frustrated by the lack of recognition by senior management to the impacts and positive effects that global supply chain capabilities can have on business results.  Where supply chain functional teams merely overhead cost centers? Many sought out academic studies that directly tied business or stockholder performance results to developments in supply chain.

Not so any more!

If you have been watching the various financial and traditional news networks these past days, you may have noticed all of the CEO, Wall Street analyst and reporter interviews all commenting on whether the devastating earthquake in Japan will have an impact on the particular company, industry, or least we mention, an Apple product like the iPad2.

This week I was viewing Bloomberg News and noted and interview with Timothy L. Main, the CEO of global contract manufacturer Jabil Circuits. The scrolling sub-title on the bottom of the screen was “Supply Chain Impact”.  Mr. Main’s message was that it is still too early to assess overall supply chain impacts, and it might take weeks to know the real impact.  Wisely stated, and no doubt Mr. Main was briefed by his supply chain planning and procurement teams. Similarly the CEO and Chairmen of General Motors and others have come forward to provide statements regarding the current state of supply chain impact.

IBM published an insightful Chief Supply Chain Officer study that was conducted a couple of years ago.  Of the five concerns identified by the most senior supply chain managers, the number two concern was the elevated sense of risk provided by extended supply chains.  It is a safe bet that if that survey were conducted today, risk would likely be the number one concern.  Of more interest however was an observation brought out by the supporting questions, which uncovered a disconnect between Chief Financial Officers, the majority of whom (in excess of 60 percent) stated their company has a risk mitigation plan in place, vs, the senior supply chain manager, who stated the opposite, that risk was an ongoing concern.

Today’s hyper-intensive world of Wall Street instant trades and hedging can brutalize any company’s stock with the hint of bad news, especially that related to a company’s supply chain.  It is therefore no surprise that CEO’s and CFO’s are speaking out about the status of their supply chains in the wake of the Japan crisis.

In the coming weeks we will all discover what the real impacts turn out to be, and how companies and supply chain teams rise to and overcome the challenges that will occur.  Thus far, the impacts are clearly pointing to be patterns of component shortages in lowest tiers of industry supply chain such as semiconductor, high tech, automotive and other others.  In the end, robust planning, supply chain analytics, responsive sourcing and strong ties with component engineering will likely be important differentiators in the weeks to come.

While it was not to long ago that supply chain recognition may have been taken for granted, another global in-process case study is now underway, which will once again etch that supply chains, and their planning and execution capabilities absolutely do matter for business results.  Japan will eventually get through this crisis. Supply chain and procurement teams will rise to the ongoing challenges.

In the end, we will all discover the importance of investing in supply chain people, process and technology capabilities.

Bob Ferrari

This is our fifth Supply Chain Matters commentary regarding the SAP Insider sponsored Logistics and Supply Chain Management conference being held in Orlando this week. Readers can review each of our previous commentaries at the following links:

One

Two

Three

Four

As the conference comes to a close, I will touch upon some summary impressions I’ve gathered from this conference.  Readers are certainly welcomed to share any of their own impressions on the comments section associated with this posting.

I’ll begin with some observations of SAP activities and direction within the logistics and supply chain management area.  It was good to note that SAP has finally acknowledged that technology needs to come in smaller, more manageable increments that can both be implemented in rather reasonable periods and deliver overall value in a more timely manner.  A previous marketing and deployment focus on end-to-end process management, such as collaborative demand and supply planning, logistics and fulfillment management was the initial SAP focus, but that is defaulting to the new Rapid Deployment Solutions (RDS) programs that are now beginning to rollout in the SCM area.

Many of the SAP speakers touched upon RDS in their presentations, but not with a lot of emphasis and conviction.  Other than the Howells/Peterson keynote, there was no overarching presentation outlining the full compliment of RDS offerings for SCM.  Richard Howells and SAP Analyst Relations did clarify the following:

The S&OP RDS (Level One) was made available at the end of 2010

Customer Collaboration (SAP SNC) and Warehouse Management will be delivered at the end of this month.

Several other RDS offerings related to Demand Planning, Global ATP, Supplier Collaboration, Transportation Management Event Management and Service Parts Planning will be delivered in the second half of 2011.

Some further observations:

The legacy of the rollout of Transportation Management continues, and hopefully, Release 8 will be the charm.  This has turned out to be the most frustrated area for SAP supply chain execution support, and hopefully Release 8.0 will be the charm.  Judging from the names I heard as part of the customer advisory council, the voice of the customer was not lacking.

I noticed at least two or three different versions of SAP Business Objects software being utilized in demos by SAP presenters.  The same for multiple user interfaces across some SCM related applications.  It might be wise to have a consistency in look and feel.

The best user-oriented presentation that I observed was the presentation on implementation of supply chain performance management at Coca Cola, which was ably delivered by John Chiang.  What impressed me was that Coke insisted on adopting standard, out-of-the box technology for implementing SAP Performance Management, and managed to do so within the existing SAP Business Warehouse environment, which also leveraged exiting IT infrastructure. Coke also adopted standard SCOR metrics and KPI methodologies which helped to springboard adoption. Also noted was that with 12 years of experience with SAP technologies, Coke was pleasantly surprised that this application worked right out-of-the-box.

Regarding end-user experience presentations, I was a bit disappointed that there were fewer in this year’s U.S. conference, but that may be a reflection of the current economy where SCM and IT professionals are rather busy.  Past Insider SCM conferences provided a balance between SAP represented and user-represented talks. I trust that will be adjusted for next year.  I noted a lot of attendance and participation in the various informal breakout sessions organized around common SAP technology topics.  The two that I sat in on were lively, interactive and informative.  I’ve noticed a trend in many conferences of late where peer learning and interactive exchange is gaining more interest and attraction for conference attendees, and this was yet reinforcement.

A tip of the hat to all of the SAP Insider staff who provided outstanding on-site services and assistance to a well-attended conference.  There were guides everywhere eager to help 1700 attendees find sessions and other venues or assist with needs. While Disney food is not what one would classify as ‘gourmet’, the on-site service was exemplary and friendly.

A final thought.  Supply Chain Matters has penned many commentaries related to the increased challenges being faced by supply chain and IT functions, and that is especially pertinent for the SAP-oriented community.  In our view, it is rather important to stay abreast of SAP direction in SCM technology and service offerings, since there are now a lot of moving parts.  The good news is that SAP is responding to needs in SCM, but the clarity is for customers to seek out.

Bob Ferrari

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It is day three of this SAP focused supply chain conference and my top agenda item was to attend a deep-dive sessions on SAP’s new solution extension, SAP Supply Chain Response Management by ICON-SCM. The presentation was anchored by Mike Lipton of SAP and Steve Lykken of ICON-SCM.  I provide some initial impressions of this new solution extension in a previous commentary. This presentation did not at all disappoint and helped to fill-in some of the strategy and architectural components of this new offering for SAP installed base customers.  The session was well attended and the audience had very detailed and perceptive questions during the Q&A period.  The most obvious: How this application interrelates and integrates with the existing SAP SCM planning and collaboration applications?

Supply Chain Matters will have more detailed commentary in upcoming postings, but for the time being, we can share some initial impressions.

First, this application is significant because it is yet another acknowledgement from a large ERP vendor that supply chain activities are moving at such a rapid pace, that planning organizations require a tool that focuses on quicker what-if planning, simulation and response management.  High tech and consumer electronics firm’s deal with these challenges daily, but more and more, other industry settings are manifesting these same conditions. Readers may recall that last year, Oracle introduced the Oracle Rapid Planning application with similar goals.  The fact that two of the major ERP vendors, and other best-of-breed vendors are now focusing on this capability is good news for the market.  It also perhaps validates some of your own organization’s perceptions regarding the need for planning tools to be able to keep-up with the new, faster clock speed of business these days.

The second implication is that as SAP customers gain further awareness of this application, there will need to be a very definitive educational plan from SAP Solution Management on the various options for deployment and integration.  A lot will be industry and value-chain dependent, along with the experience level of the particular SAP customer.  We believe that there is much more to come concerning this solution extension, and SAP customers would be wise to keep a keen eye on communications related to SAP Response Management. Pricing has not been discussed and future integration development schedules may remain fluid for the remainder of 2011.

This author is getting ready to catch a plane for the next destination, and we plan to have one other summary commentary concerning this conference in the next day or so.

Bob Ferrari

This is our third Supply Chain Matters commentary regarding the SAP Insider sponsored Logistics and Supply Chain conference being held in Orlando this week. Readers can review our first commentary here, or second commentary here.

This was another jam-packed day of presentations and interchanges and I spent the majority of my time attending customer presentations and focused breakout sessions.

The morning started with a keynote delivered by Richard Howells and Karen Peterson, both vice presidents with SAP SCM solution management.   Messaging to the audience highlighted key developments for both supply chain planning and execution:

• Noted for planning was the November announcement of SAP solution extension Supply Chain Response Management (ICON-SCM), which we noted in our previous part two commentary. Steve Lykken, Vice President of Business Consulting for ICON-SCM was invited to stage to present the use-cases for this solution extension, which evolve mostly with what-if planning and more rapid planning to yield a high-level delivery plan. SAP customers who have already deployed ICON included Hewlett Packard, Tellabs.
• Also mentioned was SAP’s solution extension, Information Interchange by Crossgate, which is a B2B content engine targeted for use by SAP Transportation Management and SNC customers.
• For supply chain execution, noted was that two of the most significant multi-year internal development investments within SAP SCM has been focused in augmenting transportation and distribution functionality.  Transportation has an unfortunate long legacy of frustration with SAP customers, and SAP now believes that Transportation Management Release 8.0, released in December, will address customer needs.  I was informed of a rather deep and stellar list of SAP customers who comprised the advisory council for functionality and user features in this new release.
• There are a number of planning and execution Rapid Deployment Solutions targeted for release through the remainder of 2011, and Supply Chain Matters has requested approval to share the actual PowerPoint schedule shared with the audience.

The remainder of my day included sitting-in on presentations from Coca Cola and Mars, as well as Insider Breakout Sessions where multiple customers and prospects exchanged learning and insights relative to implementing and supporting SAP APO and other SCM suite applications.

Some common themes touched upon in the majority of these venues included:

• Having a strong and visible project sponsor.
• Starting with manageable scope, small steps, and out-of-the box functionality, allowing users to gain comfort with the new technology.  Change management is an important consideration in any technology implementation. The speaker for Coca Cola was pleasantly pleased that the implementation of Supply Chain Performance Management worked right out-of-box supporting over 350 key performance indicators based on the Supply Chain Council’s SCOR Framework.
• Tapping the value of the learning resources available in either SAP and consultant partner best practices and learning.  ASUG application focused forums were often cited and praised.
• In problematic implementations, having SAP development and support contacts are invaluable in the timely resolution of technical problems.

Stay tuned for further Supply Chain Matters commentary from this week’s SAP Insider Logistics and Supply Chain Management 2011 conference.

In the meantime, readers are encouraged to share comments and questions.

Bob Ferrari

This is our second Supply Chain Matters commentary regarding the SAP Insider sponsored Logistics and Supply Chain conference being held in Orlando this week. Readers can review our first commentary at the following link.

This afternoon, I had the opportunity to sit with Lori Mitchell-Keller, Senior Vice President of Suite Solution Management at SAP.  Her responsibilities include the SAP Supply Chain Management, Product Lifecycle Management (PLM) and Manufacturing solution suites.

In our discussion, we touched upon a number of broad topics. They included the contributions that the solution management teams fulfill for SAP, the planning for HANA enabled applications within the future of SAP’s SCM and Manufacturing suite, SAP’s recent solution extension that involves ICON-SCM, and some potential SAP customer confusion related to SAP’s Rapid Deployment Solution offerings related to SCM processes.

SAP SCM focused customers may have noticed that SAP is moving toward broader integration of SCM focused applications with various other SAP applications that include SAP Business Objects Business Intelligence, SAP Performance Management, and other SAP Business Suite and ERP applications.  This effort began almost two years ago under the umbrella of end-to-end process management, and now transitioning into various Rapid Deployment Services (RDS) packaged solution offerings that provide customers the ability to implement in manageable intervals of defined scope functionality.  In our discussion, we specifically touched upon some messaging confusion related to SAP support for S&OP, in that there is already an SAP S&OP support application (Level 1) in release status.  A level two version of S&OP that incorporates more elements of HANA is scheduled for later this year. Supply Chain Matters advises SAP customers to make specific inquiries among their respective SAP account and SCM specialty sales teams to ascertain each of the distinct offerings and release timetables, including S&OP support.  Attendees at this conference should also take the opportunity to seek additional information from various SAP and partner representatives attending this conference.

On the topic of SAP of SAP Supply Chain Response Management, Ms. Keller clarified that there are actually two distinctive parts of ICON-SCM functionality, Response management and Collaboration Management.  SAP has licensed the Response Management functionality of ICON, which has been positioned as a prime integrator with SAP APO SNP to provide customer increased capabilities to perform what-if scenario analysis of supply chain plans and to better respond to unplanned events. As we noted in our initial commentary, SAP moved at an uncharacteristic light speed pace to acquire and integrate this specific part of ICON-SCM.  Keller reiterated that SAP Supply Network Collaboration (SNC) remains SAP’s prime application for supporting collaboration and coordination of a customer’s external supply chain. That stated, there is bound to be continued confusion and SAP teams will need to continue their product roadmap educational outreach efforts.

Stay tuned for our continued Supply Chain Matters and SAP Insider commentaries regarding this week’s conference.

Bob Ferrari