Supply Chain Event Management
Supply Chain Events carry with them documentations (increasingly electronic) that enable systems to be developed to capture and respond to their occurrence in the supply chain. It is the establishment and documentations of these recordable Supply Chain Events and deployment of technology tools to monitor and report on these events that constitute and creates a supply chain event management system. The goal of the SCEM is to improve Supply Chain effectiveness and reduce operational costs by managing events. This goal is achieved by reducing the variations in the Supply Chain and number of surprises by changing unplanned events into planned events. This is accomplished by proactive notifications to supply chain managers when specific events occur (e.g. inventories are depleted, shipment delayed) allowing managers to respond in a way that ensures customer satisfaction by putting corrective action plan for remedy.
Companies that have deployed SCEM systems can expect to achieve operational and economic benefits by delivering high customer satisfaction and reducing internal supply chain management costs. These cost reduction can be achieved by lower inventory levels, lower manufacturing costs, economical transportation cost and reduced labor costs. The areas where the concept have yielded high benefits are balancing of supply and demand, supporting product launches, monitoring large number of products or markets and tracking of key supply chain performance indicators. The primary benefit of SCEM system is seen on the cross-functional visibility integration of end-to-end business process both within and external business partners. An examples would be proactive notifications on inventory reduction, shipment delay or carrier tendering process where Supply Chain managers are notified in advance to correct the issues and remedy the situation.
SAP Event Management
With SAP Event Management, an application within the SAP SCM business suite, SAP not only supports the SCEM concept but also provides pre-configured visibility scenarios that customers can leverage for their own implementations. SAP Event Management provides near real-time visibility into Supply Chain at granular level, based on expected events and/or exceptions via web status portal, overdue list, alert framework, workflows and analytics to identify business priorities, escalations paths and guidance in resolving variations. This functionality ensures that the right information is available for the right product at right time and place to right persons allowing effective decision making and efficient running of business processes.
With SAP Event Management the Supply Chain Visibility can be broken into three core areas of visibility: Process, Product and Performance.
- Process visibility monitors the lifecycle status of business process from an end-to-end perspective. Example would be monitoring the purchasing process, order fulfillment or transportation processes.
- Product visibility revolves around output of product (i.e. stock items, physical assets, and inventory). This visibility is not only at aggregated global level but also at granular level (e.g. individual equipment levels).
- Performance visibility empowers business users to know more about their business process performance by highlighting the critical path and also gives them the ability to track the physical assets movement in supply chain.
SAP Event Management Components
SAP Event Management has four main components which serves as an engine for management and monitoring of business events:
- Event Processor – Receives incoming messages with one or several supply chain events, logs and validates events, decodes data using mapping definitions and correlates the message with active event handlers (lists all expected and unexpected events).
- Event Controller – Creates changes, activates and deactivates event handlers, processes events and forwards events to rule processor and expected event processor.
- Expected events processor – Monitors the expected events and unexpected event to ensure they match the original planned dates and rules, recognizes the delay in event and provides list of overdue events.
- Rule Processor – Applies set of rules to an event, coordinates the reaction to event, transfers alerts and responses to users via alert management framework. Also helps in initiate workflow for follow-up activities to reported events.
SAP Event Management Visibility Scenarios
SAP delivers pre-configured visibility scenario correlating to common SCEM processes. The component of these visibility scenario includes functional and technical documentation, scenario specific customization setup in SAP Application system and Event Management, Netweaver BW contents for key performance metrics reporting. The visibility scenarios delivered are:
- Procurement – This scenario tracks the purchase order acknowledgement of delivery date and quantity, delivery of goods, invoicing and payment process. The communication primarily between supplier and buyers.
- Production Malfunction – This scenario integrates the production scheduling, production execution and plant maintenance in a manufacturing environment. Beside management of production order, the scenario manages the process when machine breakdown in shop floor.
- Order Fulfillment – This scenario covers the tracking of customer delivery process, from creation of sales orders to warehouse outbound deliveries, shipments and proof of deliveries from customers.
- Transportation – This scenario covers the transportation and custom issues for inbound and outbound processes in an international shipment scenario. The scenario covers both transportation chain process on sea and road.
- Outbound and Inbound Delivery – This scenario monitors the warehousing activities for inbound and outbound deliveries with granularity of handling units.
- Returnable Transport Items – This scenario tracks the physical assets of company in form of returnable transports items (e.g. crates, pallets, containers) which are circulated across business partners locations.
- Seasonal Procurement – This scenario covers procurement from creation of purchase order for seasonal items to the availability of articles in the distribution centers. The seasonal articles is planned and ordered in advance to met the latest order date and reduce storage costs. The scenario tracks the merchandise timeline along the supply chain with long lead-times.
- Railcar Management – This custom development scenario offering from SAP helps in tracking and on-site yard management functionality for railcars. It allows customers to view the location and status if railcars at a plant, warehouse, rail yard or any other facility. The scenario monitors crucial events of outbound and return trips such as switching, loading, unloading, cleaning, weighing inspecting and sealing.
Implementing SAP Event Management
The success of SAP Event Management implementation is high when you take a process-based approach instead of technology focused approach. The recent evolution of service-oriented architecture (SOA) enables end-to-end business process visibility opportunities for companies to expand their solutions without huge investment in infrastructures. The implementation activities can be broken down in three phases:
- Supply Chain event assessment – Lists all the critical supply chain event that would cause ripple effects up and down supply chain when the schedule do not run as planned. Identify the severity of events in term of costs, quality, and service
- Supply Chain event transition – Identify the source of event data and define action plans for reacting to unplanned events. Define tolerance and threshold on business process monitoring and notifications. Implement the solution with phased approach.
- Supply Chain event measurement – Extract the event data for performance analytics to identify the business critical paths and root cause analysis. Perform trend analysis to drive continuous improvement toward corporate objectives.