Deciding on supplier collaboration solution from SAP can be elaborate exercise as SAP provides multiple products in this area.
One is SAP SNC (Supply Network Collaboration) which is part of SAP SCM suite. The other product is SUS(Supplier Self Services) from SAP SRM suite. Though there is some noise about merging of these two similar products by SAP, still concrete information is yet to come on this front. So how do we decide which product to choose for supplier collaboration.
First of all let’s try to understand the need of supplier collaboration in today’s scenario. In the current world scenario, supply chains are getting increasingly complex and networked with multi country sourcing, multi level supplier relationships like contract manufacturing, OEM, subcontracting etc. coming into picture in a big way. Also, with dynamic demand variation, it becomes imperative to respond quickly without creating large ripples in the entire supply chain.
In today’s world there is much broader scope for supplier collaboration, as it is required in multiple areas like quality management, delivery management etc.
The need for an integrated approach towards supplier collaboration is fuelled by the following objectives:
- Reduce time to market for new products by using design collaboration with suppliers
- Reduce transactional costs and paper work
- Respond to demand changes with agility
The concept of supplier collaboration and its obvious benefits has been known to organizations for long, but the adoption rate has been quite low. Solutions like Vendor Managed Inventory etc. have been there for quite some time. However these were were mainly targeted at Tier 1 suppliers falling under high volume and high value category. There is still considerable scope to extract business value by looping in Tier 2 and Tier 3 suppliers under supplier collaboration program, but the challenge here lies in providing a cost effective collaborative solution.
Closing the Loop with Tier 2 & Tier3 suppliers
Though supplier collaboration sounds like an ideal solution to solve supply chain problems, in real world its increasingly difficult to deploy a truly integrated supplier collaboration solution mainly due to following challenges:
- Lack of cost effective solutions to loop in Tier1 and Tier2 suppliers of organizations
- Data exchange in secured manner
- Cost of maintaining network for establishing collaboration
- Rules and regulations in different countries
SAP now provides two competing products SAP SNC and SUS for supplier collaboration.
Though these two products look to provide seemingly similar functionalities, but if you scratch beneath the surface, important differences start to emerge.
SUS (Supplier Self Services) came up as an add-on functionality of SAP SRM offering supplier collaboration solution. The functionalities introduced were – PO collaboration, Scheduling agreement collaboration, Services procurement collaboration.
SUS evolved into mainly two deployment scenarios:
- Direct procurement
- Services and Indirect Procurement
Direct procurement ( MM – SUS) scenario integrated SAP ECC with SUS and facilitated PO collaboration, ASN management and Invoice collaboration.
Services procurement scenario initially started with EBP-SUS(both are components of SAP SRM) integration . It provided PO collaboration, Service entry collaboration , Invoice collaboration functionalities. However a major limitation was its inability to provide integration with SAP ECC backend.
As of SAP SRM 7.0 and ECC 6.0(EHP4), SAP now provides both direct procurement and services procurement with MM-SUS scenario.
An important additional functionality with SUS is supplier self registration and supplier data management.
SAP SNC on the other hand started initially as SAP ICH(Inventory collaboration Hub) product. SAP ICH was mainly targeted to provide real time inventory collaboration and Vendor Managed inventory functionality. SAP ICH subsequently evolved into SAP SNC and was merged into SAP SCM suite to mark the broader footprint in supplier collaboration functionality.
With SAP SNC (EHP1) and SAP ECC (EHP5), it now provides a much broader spectrum of functionalities like Quality Collaboration, Delivery collaboration along with direct procurement collaboration like VMI, Kanban, PO collaboration and Work order collaboration.
So how do we pitch SAP SNC vis-a-vis SAP SUS. The advantage with both solutions are that both are accessible through web interface and do not require dedicated network like WLAN etc. as required for EDI interfaces. So even smaller and medium suppliers can be onboarded easily. Also they exchange data with XML messages, therefore it is easy to integrate it even with non-sap backend systems.
As a customer one needs to evaluate its current SAP /non-SAP system landscape, its business processes and future roadmap of supply chain enablement to arrive at a decision.
For large manufacturing organizations, it makes sense to go for SAP SNC as they can reap major benefits through enhanced collaboration functionalities. They can do without SUS, however, if services procurement are significant spend, then SUS can be implemented as well.
For services industry like utilities, energy, IT etc., they can do without SNC and need only SUS as the majority procurement is for indirect goods and services.
At the end, I think, there has to be a trade off decision between reducing TCO and realizing spend savings by implementing any of the supplier collaboration solutions.