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…on we go. SAP supply chain optimization without getting ripped off.

Fifth: “A good talk: nice; actual experience: priceless”. Have you ever sat through a presentation and then you felt like… ‘What was that all about?’ Might have been someone talking about a subject they never actually experienced. It is amazing to me how some people who never worked for a manufacturing company think they can all of a sudden give advice on how you should map out your value stream or use heijunka! (It’s like a fat guy telling the pretty girl how to loose weight)

Yes, they know all the buzzwords and they make great use of it – value streams, the perfect plant, lean operations, heijunka, etc. – and then they are unable to explain the Kanban principle (the most simple there is). It is because they might have read a lot of literature but they have never experienced it themselves. You can read as much as you want about American Football and after a while you probably even do a presentation on it and talk at a conference about what offense, defense and special teams you will put on the field, but when it comes to that third down in the fourth quarter, with a minute to go… not in a million years would I take your advice, hadn’t you ever played on a football team. It doesn’t matter if that experience comes from a professional level or from a junior high school team. It’s the actual experience, of seeing it in action, that counts. (that’s why some of the best coaches have never played in the NFL).

Sixth: “not everything can be done using SAP – ERP standard”… there are things SAP standard just can’t do. That is why SAP signs up partners with add-on tools and enhancements to cover white spots in the SAP functionality. If you try, at all cost, to do everything with standard SAP, you will end up with missing functions (lot size simulation, safety stock optimization), missing information (XYZ or LMN or EFG analysis and essential key figures) and, in case you’re doing inventory analysis with the LIS; with graphs, reports and technology that was exciting during the late ’80s.

Don’t let an adviser tell you to not ever look into SAP certified Add-Ons or one of these really helpful tools to make your user’s life easier and provide them with the functionality to continuously and sustainably optimize inventories and service levels. When they claim: “SAP functionality is all you ever need”, then they have probably never experienced an optimized supply chain themselves and only see implementations. During an implementation you are constrained by budget, timelines and your users are still overwhelmed with all the functions available in standard SAP and how to make them work. However, if you are ready to go above and beyond basic supply chain management with SAP, you will need an XYZ analysis, a useful and technologically advanced KPI framework, and, Advanced Planning and Optimization (the adviser told you to not use APO either, right? trust me, it’s because they don’t know it)

I mentioned some of these enhancements in previous blogs and strongly suggest to have a closer look.

Seventh: “supply chain optimizations don’t work with ‘silo’ subject matter knowledge alone”. Don’t they tell you to break down silos? And then they work inside them too! Many consultants are focusing on a single piece of the SAP software. Like ‘Procurement’ or ‘Inventory Management’. They usually know a lot about that subject and they probably also know direct interfaces into the other modules, but I don’t believe that that is enough. Especially in supply chain management and optimization you should have deep knowledge in ALL areas since the impacts are severe.

As an example… I have witnessed advisers coming in to suggest an inventory reduction first and once that is done, they worry about production scheduling. If you reduce your purchased parts inventory based on some information like high dead stock, high averages or inventory turns alone, you are doomed to starve the lines and everything your production schedulers try to save the world, will fail and frustrate the hell out of them.

Check on the multi-functional knowledge of the consulting company. If they are talking on and on about Procurement and Inventory reductions, ask them about the effects of an inventory reduction and how Purchasing Automation can possibly help keeping your lines busy with the making of the right product in the right quantity at the right time.

Some others put a huge focus on Sales & Operations Planning and keeping an accurate forecast (btw… ‘accurate forecast’ is an oxymoron). That is all great, but if they don’t worry about what happens after the plan is in place (demand smoothing for the production line, MTO vs. MTS setup and the according  measure of the service level, procurement forecast for the purchasing of the needed raw materials and use of the appropriate scheduling model), you’re not providing a solution or solve any problems.

Planning is not a stand alone activity; neither is procurement or inventory reduction. Make sure you are working with consultants who know that.

… the last three bits out of ten in a little while.

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