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A way to improve your supply chain by utilizing your ‘shelfware’

Hello, again.


Not sure you remember me or waiting for me coming back.


I am very sorry for long absence because I left SAP last month (Oct, 2010) and have been very busy since then.


Along with my transition, I have no access to The specified item was not found. and neither possible to keep them updated nor respond back to your questions.

So please feel free to post your questions here in my new blog if there is any.


I have decided to restart my blog around SAP Global Trade Management (GTM), which is a versatile module of SAP ERP, may allow your business more powerful and efficient than ever WITHOUT purchasing new license from SAP.

Yes, what if you could optimize your supply chain without purchasing additional software?

It sounds too good to be true?

No, it’s not.

If you own SAP ERP, you are already entitled to implement SAP GTM module with NO COST (I meant this in terms of SAP software license), please take some time and think about how you can adopt this GTM module to your business.


In my previous blog, I introduced key components and integrations of SAP GTM, so let’s say each subject was cut and diced by product/technical views.

Since I left SAP and restart my career as a consultant, I would like to turn this toward business view.


What does that mean?

That means that how SAP GTM can help your business and what value you can get out of it.



1. SAP GTM 101

For those who don’t know SAP GTM or did not read my past blog, here is 1 min explanation.





– SAP GTM is a module of SAP ERP as well as SD (Sales Distribution) and MM (Material Management) modules

– Have been developing and enhancing by SAP since late 90s (more than 10 years old), 100% build/grow on SAP DNA

– 100+ SAP Customers already run SAP GTM in production system and used over 12 different industries (Trading, High Tech Consumer Products, Agriculture, Steel, Oil & Gas, Aerospace, Retail, Chemical, Building Material, Wholesale and Entertainment Equipments)


Is this good enough?



2. What SAP GTM can do?

Well, this is a good question.

If I need to explain this in one sentence, SAP GTM allows you to integrate and streamline sales and purchasing processes effectively and economically.

What does this mean?

If your company has a business unit, which sourcing a product/service internally/externally and sell (purchasing), distribute it to internal/external customer (sales), SAP GTM could be a perfect SAP module to realize that business processes in SAP.


SAP GTM has 4 key components below;

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Please see my past Blog for the detail explanation respectively.



3. How we utilize SAP GTM?

As I said in section #2, why you thinking of SAP GTM is that your company has business unit/process which manage sales and purchasing processes into one process flow and SAP GTM could better optimize it than using SAP SD/MM modules.

Let me call this process ‘Trading’ for now, I know you call this in different way and have heard it at many prospects/customers interview, but let’s use trading as a common word here.

If you hear ‘Trading’, you either speculate it cross-border business like export/import or commodity exchange at future market, but that is not what I meant here.

You physically purchase a product/service and sell it, like Amazon, you order a book and they get it from somewhere for you and ship it to you, that is it. Amazon has never make/publish a book, they always source it like local book store does and sell it from inventory or have book supplier ship to Amazon customer.

If your company has this Amazon module, you definitely would like to recognize this sourcing and selling processes into one process because it’s an end-to-end process.

Your customer does not care much about where the ordered book came from, but you as a business organizer cares ‘from where’ and ‘to where’ because you get paid when you complete this end-to-end transaction.

So you need a business tool to support and this tool has to provide you with visibility, process efficiency and flexibility for change management.


Wait, you understand and agree first two, visibility and process efficiency, but don’t get it for third one, flexibility for change management.

Well, okay let’s talk about why that is important and key factor.



4. Showcases in Consumer Electronics/Products with SAP GTM

Do you remember what was happened in Consumer Electronics/Products industry 30 years ago (1980s)?

No iPhone, no Internet and no fancy electric gadgets we have today, instead, very standard home electronics like tube TV, VCR, stereo etc are very hot products on the market.

Around that time, Japanese Consumer Electronics Companies like Panasonic, SONY, TOSHIBA dominated market share, was believed as a symbol of high quality, less expensive product brand and everybody looking for a punch mark said ‘Made in Japan’.

So these companies sourced raw material from oversea, build product(s) and ship it everywhere world.


And now, have you seen any Consumer Electronics/Products with ‘Made in Japan’ around you?

Rarely, don’t you?

Instead, you found tons of products with ‘Made in China’ or other Southeast Asia countries.


Why this happen?

Simple, it’s too expensive to manufacture the product(s) in Japan. Oh, don’t get me wrong, still these companies making products in Japan, but don’t ship oversea (export).

They segregate market region by region and shift production oversea dramatically in last 30 years. This trend called ‘Build by market’, which means company needs to make product(s) in the market where they want to sell.

There are many reasons why they do this, low labor and supply chain cost or hedge currency risk etc.

These companies, however, get these benefit, instead, need to take drawback which is complicated supply chain process across regions.  A headquarter locates in Japan, production companies locates somewhere in Asia and global sales offices/branches all over the world.


Case 1 (Consumer Electronics)


Sales data (quote) is entered into system from sales offices/branches all over the world, a business unit at headquarter recognize and extract it by product  (production companies/plants) level.

Once this dispatch process is done, split item order (purchase) is sent to production companies/plants respectively and shipment is arranged by the conditions.

To manage this cumbersome order process, you need a business solution and that could be SAP GTM.



Case 2 (Consumer Products)


Second case is that company set up a regional branch in Asia region and this branch organize business for headquarter.

Headquarter runs demand forecasting and creates order schedule. This will be a baseline order for a regional branch in Asia and they place purchase order(s) to local suppliers.

Suppliers manufacture the products for Consumer Products Company (OEM model) and ship to regional branch.

Regional branch receive the products centrally, sort it out and arrange the shipment as directed by headquarter.


If you look at these two showcases, they making and selling different products, but business function and supply chain model is really close. Headquarter in Case 1 and regional branch in Case 2 are acting a business organizer between two parties and handle sales and purchasing information simultaneously.

Especially you need visibility, process efficiency between sales and purchase data/processes and case 1 may require the integration with Export/Import system/application, case 2 may require the one with Advanced Supply Chain Planning system/application and more.

This is the 3rd point I mentioned above, flexibility for change management.

Business is changing or forced to change regardless you want or not, IT platform needs to have flexibility for future change, what if end business user say, they want CRM integrated or what if financial user say, they want the integration with Treasury for currency hedging tomorrow.

Does your system have that flexibility today?


SAP GTM has that as nature and this is why they have been chosen.



5. Take it higher

You can realize and operate this supply chain scenario using siloed ERP modules like SD for sales and MM for purchasing plus Add-ons.

As a matter of fact, I would say most of SAP customers have done that and thought they have done (Never think about improvement or better solution to replace since then) because next project would be as painful as it was and requires resources (financial fund, people and time).

But what if you don’t need additional software (just because you already bought SAP GTM as part of ERP), you can ease financial fund. What if software module (SAP GTM) you are going to implement is designed/used same technology/tips (like pricing, output, partner function, text control etc) you already knew, you don’t have to hire expensive external consultant all the time (You can get this project done with your internal resources). Lastly about time, this is NOT a full big bang project but incremental improvement; it’s NOT months project but weeks.

If you are good at project management, you can minimize the impact for current operations and maximize the value (eliminating Add-ons) and lower TCO with less effort.


Once again. If you brave enough, you can find some inconsistencies or high TCO operation/scenarios in your current SAP system or ask third party professional to assess your system, there are many potential opportunities to improve your IT asset.


You deserve it because you invested in past and you just did not cash it out yet.



Thank you for your reading and please post your question or send me your question/feedback via email.


Thank you,


Nob Kusumoto


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      Author's profile photo Dhandapani Satheeshkumar
      Dhandapani Satheeshkumar
      Hi , It is great to know about this module, Also all your previous blogs are very valuable, if you can find one place like Wiki, it will be of great help for one to get refered.

      Thanks again.


      Author's profile photo Former Member
      Former Member
      Blog Post Author
      Hi DSK,

      Thank you for your comment and an idea for Wiki.

      I had a Wiki around SAP GTM for SAP internal when I was in SAP, but  was not open in public.
      I, however, think this is a great idea and will set up one here on SCN.

      Please stay tuned.

      Thanks, Nob

      Author's profile photo Former Member
      Former Member
      Hi Nob,
      Could you comment and provide more information about Compensation Management which seems to be part of GTM?  In particular, I am interested in condition contracts and how they work.
      Author's profile photo Former Member
      Former Member
      Blog Post Author

      Yes, SAP Compensation Management (Not Vistex one) is part of SAP GTM and using it's business framework.

      Of course, I can write up something about it, but there is a very good article on public website.

      The information on this website is pretty enough to understand what SAP CM is.

      If you need more technical or detail information, that requires a consulting service which I can help.