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Strategy Planning in Supply Chain Using SAP SCPM

This is the time where there is a need to improve our understanding of the antecedents of measurements and relationships of the basic types of measurements to the key logistic processes in supply chain. SAP Business objects supply chain performance management (SCPM) provides a solution to help CEOs, CFOs and the operations manager in measuring and monitoring the end to end  logistic processes of the organization.

As a start with the traditional approach to opt a strategy which describes five forces that drive industry competition i.e., potential entrants, suppliers, buyers, industry competitors and substitutes which was reported by entry barriers as capacity requirements, switching costs, distribution channel access, raw material access, government policy and exit barriers as economic, strategic ; the SAP SCPM uses slightly different in terms of operational excellence, product leadership, and customer intimacy. Here operational excellence will focus on cost reduction, product leadership will emphasize to speed to market of its new product offerings, and customer-intimate strategy will value flexibility and responsiveness in its logistics activities, especially customer service.

In SAP SCPM the strategy is to learn the past, have foresights, and leverage core competencies. Once you come up with a strategy map then you can compete for the position in tomorrows than competing within today’s industry.  To execute this strategy a planning follows and involves

  1. Objective setting, that is, predetermination of the intended outcomes.
  2. Extensive and ongoing audits of the external and internal environments.
  3. Analyses and decision making, including changing decisions previously made based on newly acquired knowledge.
  4. Contemplates the implications of current decisions and future possible decisions.
  5. The forecasting and scheduling. It contemplates and directs measurement of actual performance and emergent outcomes to allow for their comparison to planned performance and intended outcomes.

Unless the supply chain manager predetermines what performance is intended or expected, it makes no sense to measure it. The value of a measure can inform a decision only if it can be compared to a stated target; otherwise, it is non-actionable, and not worth calculating.

In Past planning the design of a logistic system focused on inventory policy, facility location, and transport selection/routing. Today, supply chain planners are also concerned with sourcing, outsourcing, and integrated information systems that extend beyond the direct, or unilateral, control of the firm. These planning activities include tasks and relationships which can be interpreted by SCOR (Supply Chain Operations Reference) model which is a part of SAP SCPM.

Segmentation and mass customization strategies have added complexity. Cycle time compression and customer-mandated quality in execution have created a need for urgency and precision in planning. Several major initiatives confront planners such as asset productivity, horizontal management information substitution, integrated planning, and system flexibility. With increasing integration of business activities within and between different businesses, SAP SCPM success calls for connectivity, collaboration, interdependency, and influence, not unilateral command and control.

Generally, a company pursuing a strategy of low cost, opts for a centralized and wide span of control logistics organization, while a more customer-intimate firm prefers smaller, more focused, and flexible logistics organizations.

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