Check out a transcript from one of the question and answer sessions done with our #SCMBootcamp speaker Keith Searles of Reveal Consulting.
Achieve significant inventory reductions using standard SAP tools you already own:
An exclusive one-hour Q&A today with SCM expert Keith Searls
One of my colleagues recently moderated a web forum with SCM expert and Reveal partner Keith Searls on getting more supply chain intelligence from your current SAP systems.
Keith will be one of the featured speakers at SAPinsider’s 2013 Supply Chain Bootcamp seminar, July 17-19 in Chicago and November 13-15 in Las Vegas.
Marcy (Moderator): Welcome to today’s forum on managing your supply chain better with the tools you already have – including stock analysis, supply chain exception monitoring, and improved supplier collaboration.
Keith, thank you for joining us today! Before you respond to questions, I’d like to start with one from a recent blog you posted on Insider Learning Network titled: Can you get more supply chain intelligence from your core SAP ERP system?
If this is core ERP content – how is it that most people do not know how to access this functionality? It seems like a no-brainer. Can you describe what is unique about this promise to optimize standard tools?
Keith Searls: Hi Marcy, glad I could be here. That’s a good question. What many custome rs overlook is that it is possible — using standard SAP ERP functionality — to uncover and report on supply chain process performance, measure, analyze, and prioritize inventory and service level performance while moving the organization toward an exception minded business, as a way to set and monitor the critical KPIs that lead to tangible improvements.
Gary Byrne: Good morning, Keith – What are the most common/high-value KPIs that you see your clients tracking? And which tools/reports are they using to get there?
Keith Searls: As a start companies need to look into three main areas. Inventory analysis, process performance (what you plan vs. what you actual) and exception management. The key is to determine the gap between what you plan in the system vs. what are the actual behaviors. The further the gap, the harder it is to automate, drive down inventories and improve customer service levels.
Bette Ferris: Hi Keith – Do you have any tips for getting more timely alerts on stockouts?
Keith Searls: Regarding stock outs, there is no silver bullet here. In some cases, you do not want inventory until you need it (ie. plan on demand) in other areas, you want to guarantee inventory. If you have the planning and master data set correctly, your exception monitoring tools should tell you that you are close to stocking out BEFORE it is too late. This way you can take a pro-active approach.
Bernadette Thomps: Hi Keith – What would you suggested are the best ways to measure process performance? (Particularly the effectiveness of your planning like the accuracy of your forecast or safety stock/reorder point planning)
Keith Searls: Hi Bernadette – Process performance needs to be analyzed in all areas of the supply chain. For example, if you have a perfect production schedule, but your suppliers are late, then you can still have poor service levels. So I would suggest looking at Supplier performance KPI’s, production plan vs. actual and even up to the forecast variance on what you forecasted vs. what was actually required or ordered. SAP provides many standard reports in this area.
Bernadette Thomps: Hi Keith – Thank you, do you have examples of standard reports to measure process performances in these areas?
Keith Searls: Hi Bernadette – Within LIS there are a lot of create tools that can help in this area. We do webinars on this all the time and walk you through these tools. You may want to sit while in on one of them if you can. It takes a little knowledge to navigate.
Marcy (Moderator): Keith, regarding exception monitoring tools – is this essentially an alert notification based up on configured parameters?
Keith Searls: Hi Marcy – The standard exception monitor is a tool that tells you how you are performing on the supply side based upon demand. Depending upon the rules you put in the master data, the exceptions will tell you where you need to focus your efforts. For example, you are within the lead time, you have hit safety stock or you can cancel this production order. If you find yourself ignoring certain exceptions, then you need to re-think how you have setup your master data.
Scott Priest: From the presentation, it sounds like standard tools can take us pretty far. How do you compare the forecasting capabilities of the tools in your presentation to something like SCM Demand Planning, for example?
Keith Searls: The determination of the right tool (standard vs. SCM) is going to depend on a lot on variables including the sophistication of the organization and current status. We find many companies are not even planning within the system and are on spreadsheets. Not to mention, both tools rely on accurate information from the core. So it is critical that we can trust this data. This is why find most of the forecasts are very inaccurate.
Heather Black: Hi Keith – Can you share any best practices for using MRP specifically for procurement – especially problems with undelivered POs or with lead time issues?
Keith Searls: Hi Heather – The issues with lead time and PO’s will depend a lot on the root cause. There are many reasons that we see this, and I would suggest that you determine whether this is truly an issue with your planning or behaviors? Lead times need to be maintained on a regular basis and your standard reports and exception management tools will tell you how well you are performing in this area.
Laura Casasanto: Hi Keith – Thanks for taking questions today. For companies challenged by dead stock, do you have recommendations on KPIs or alerts to help identify those?
Keith Searls: Hi Laura – Dead stock can be a tricky one. What I would suggest is that, for analysis you break up your materials first according to types. (ie. Raw, Semi-finished, Finished, MRO etc.) Each of these are going to have different targets on dead stock. Determine what is acceptable in each of these areas. For example, WIP should be very low. There are some good stock reports that can help you monitor this, but they will only add value if they are run with the right parameters and time frame. The inventory analysis tools can also help to identify the “low hanging fruit” that may be contributing the most to dead stock.
Keith Searls:Thank you everyone for your questions. Glad you could join us today. If you would like to drop a note to me directly, my email address is firstname.lastname@example.org. Hopefully we will see some of you at the upcoming BootCamp!
Marcy (Moderator): Thanks to all who posted questions and followed the discussion!
A full summary of all the questions will be available here in the SCM Forum and in the SCM Group and the Supply Chain Bootcamp Group on Insider Learning Network. I encourage you to join this group for ongoing information and additional resources.
And finally, thank you again to Reveal’s Keith Searls for taking the time to respond to these questions. Keith will be one of the featured speakers at SAPinsider’s Supply Chain Bootcamp seminar, July 17-19 in Chicago and in Las Vegas November 13-15.
Still have questions? Make sure to attend our SCM Bootcamp this July in Chicago and get all your specific SCM optimization questions answered. Complete details are on our website at: http://bit.ly/10LwH0S