Supply Chain Blog Series : Transforming Supply Chain and Procurement in the Global Networked Economy
Greg kicked off the session by introducing the Ariba Company ( and explaining the business reasons and go forward plan for the new Ariba (Leader in Business Networks & Spend Management) as part of SAP (The leader in enterprise applications) and how “we are combining the best of both companies for unsurpassed business collaboration and performance”.
Greg explained the concept of the Ariba Network and how “commerce Graph-aware business applications, like Ariba Network, are inherently more intelligent and will affect the next wave of business productivity”. He discussed haw a true business network is:
- Open to any back-end system, connection technology, vendor and protocol and not constrained by single standard
- Intelligent enough to catch errors before they happen, aggregate data and opportunities and not be just an integration gateway
- Comprehensive enough to include all trading partners and collaborative processes
Greg used findings from a recent McKinsey report (“The Rise of the Networked Enterprise) to make the point that “networked enterprises were 50% more likely than their peers to have increased sales, higher profit margins, gain market share, and be a market leader.”
Hans took over the session to delve more deeply into what that means to a supply chain executive. He discussed how ”companies are doing business in an
environment where supply chains are under increased pressure and where EVERYTHING is a balancing act”. He gave some examples of this and how we are balancing a demand picture that is increasingly volatile and supply and resulting logistics processes that are increasingly complex and
difficult to quickly respond to this volatility. He also explained that with the advent of the internet and social media consumers and customers are more informed than ever before, and this raises customer service expectations. From a logistical perspective delivering the “perfect order” is a balancing act between on-time delivery and the cost of profitably delivering the agreed level of customer service. And on the supply side, customers are again demanding higher quality products, but we face the eternal request to “reduce supply chain and production costs”
On top of all this, we are in an era of ongoing economic uncertainty fraught with changing buyer behavior and consumer spending that is increasing only
marginally. Balancing costs with prices, service levels, and promotion within the supply chain has never been so critical.
It’s time to rethink our Supply Chains
Hans explained that “the companies thriving in this environment treat the supply chain as a strategic initiative and use their understanding of the market and
fluctuating demand patterns to adjust their supply plans in real time”. Supply chain decisions must be made in context, with full visibility into potential
impacts on financial targets and KPIs. That means harnessing the wealth of big data — structured and unstructured — and turning it into insights in real time.
In addition, collaboration and agile responsiveness across global networks, as well as the ability for business users to quickly and easily sense, analyze,
and simulate information, must become the norm.
In short, he said, “we need to rethink our supply chains and the processes that drive them”:
- Rethink Responsiveness and visibility into the demand for all products, in all markets, at all times, and have the processes in place to enable real time replenishment and order promising
- Rethink Collaboration to build profitable business plans across departments and companies, and to have the ability to adjust these plans as the business dynamics change.
- Rethink Operations by introducing fast and lean demand & supply planning processes so that you can profitably plan and then replan based on the reality of supply, demand and manufacturing constraints
- Rethink Distribution by getting closer to the customer to deliver what they want, when they want it, or even better, before they know they want it.
- Rethink how we make decisions by leveraging real time insight and information to rapidly analyze and respond to business dynamics.
Road to a Real-Time Supply Chain
Hans went one to talk about the Supply Chain Value map and three main areas that SAP see as strategic moving forward.
- Sales & Operations Business Planning – There is a transition from traditional sales and operations planning to sales and operations business planning. Companies cannot afford to disconnect their sales and operations business planning from tactical planning. Business priorities and operational decisions must be balanced against a clear understanding of their financial impact. Using solutions that combine operations and financial data, the business can collaboratively create scenarios and simulate the effects of decisions in real time to increase supply chain profitability.
- Demand Driven Supply Chains – Many leading companies are embracing the concept of a demand-driven supply chain. In a demand-driven model, companies use true demand signals such as point-of-sale, social media, and market research data to sense customer demand signals immediately and respond in real time to build that demand into the planning processes.
- Logistics & Order Fulfillment – Ultimately, even the best planning solutions fall down if you can’t ensure efficient execution processes. With increased supply chain complexity, it becomes more difficult to deliver the perfect order. At the same time, transportation costs are rising across more complicated supply chains. Optimizing execution requires real-time visibility into shipping processes and track-and-trace capabilities, as well as automated warehouse and distribution processes and advanced transportation planning.
Hans finished the session by concluding “Innovations in the supply chain space provides a new opportunity for supply chain executives and IT professionals to rethink their companies supply chain and move to the Real-time supply chain processes”.
Thanks to both Greg and Hans for this great introduction to the event.
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