SAP S/4 HANA Simple logistics expected to combine features of multiple SCM applications

SAP ERP is well known in the market for its capability of integration of different business functions (like posting of a logistic transaction also triggers financial posting immediately and automatically). It has different modules (SD, PS, MM, LE, FI, CO etc) integrated with the same system . SAP is a product making company and their main revenue comes for selling of licenses for these products. Over the years , when most of the customers have implemented ERP , they launched new products (rather individual systems / applications) for almost every module of ERP (SD with CRM , PP with APO , MM with SRM , PS with cProjects & xRPM , WM with EWM , Distribution to TM etc) with advanced features in those applications and also obviously with strong integration capability with ERP. Today, SAP has several products offering similar functionalities like SRM, SNC, CLM, Ariba in procurement space. It is very difficult for the customer (and also for consultants ) which product to recommend to implement or continue. SAP also does not clarify / confirm in many such cases. However, we (as consultants) need to keep a close watch in which direction SAP is moving and that too with the latest launch of S/4 HANA.

SAP’s naming also creates confusion in many cases . HANA was initially launched as ‘High-Performance Analytic Appliance’ with tag on Analytics. Today, it is not an acronym and it is a name . SAP also confused whether S in S/4 should stand for smart or simple , later it settled with ‘Simple’.

Early adopters of HANA was mainly in the BW space , but there debates whether BW is really needed as HANA can provide real-time analytics in an OLTP tool / application. HANA is now being applied in all future SAP products due to its sheer capability of processing high volume of data in real time and that is the USP for S/4 HANA.

MRP , ATP , BOP (Backorder processing) , Closing cockpit (for financial period end closing activities) are some of the business processes which are very resource heavy and used to be run in batches in night (or off-peak hours) . MRP on HANA now runs much faster , can be run more frequently in a day (rather once in 24 hours) and hence the results are more dynamic (with respect to previously static data) . BOP used to take around 7-8 hours for a high volume plant for a customer, today with APO running on HANA it takes less than an hour.

Simple logistic is a part of S/4 HANA and is expected to be released in Q4’2015. As it appears (from documents / demos in Open SAP and other SAP documents in URL http://www.sapafricaforum.co.za/sap/downloads/S4HANA_Roadmap_Customer.pdf) SAP is now trying to combine features of many SAP applications in one single system like

1. PPDS & GATP of APO : HANA has the capability of crunching complex algorithms as APO does using live cache and probably that is the rationale for providing APO features like PPDS (Production planning & detailed scheduling) and GATP (Global ATP) as a part of simple logistics running on HANA. Multi-level explosion (MATP) , Location & material substitution, advanced BOP are some of the key features of GATP. Document on Simple logistics released by SAP says that it will have substitution functionality, advanced BOP but not clear (as yet) whether it will have all the salient features of GATP. There are also plans of APO’s DP (Demand planning) and SNP (Supply network planning) to be available in SAP’s new IBP (Integrated business planning) also running on HANA . Then the question comes , what will be the future of APO?

2. EWM : SAP launched EWM (Extended warehouse management) as a decentralised application for high volume warehouses with operational complexity and value added service. EWM can also be run on HANA and as it appears (from SAP’s roadmap for S/4 HANA) , EWM will be ‘ integral part of SAP S/4HANA

offering advanced warehouse process enablement’.As of now (and SAP also recommends that) , a customer can run some of their warehouse in ECC WM & some other warehouse in EWM and the choice of ECC WM or EWM sheerly depends on volume of transaction and complexity of operations for the specific warehouse. It needs to be seen what is the future for ECC WM ?

3. TM: Transportation management (TM) is a separate application designed for LSPs’ (Logistic service providers) as well as Shippers for advanced transportation planning, tendering capabilities etc. Functionalities of TM also appear to be in the roadmap of S4 HANA.

S4 HANA will not only have Simple finance and simple logistics, it is also expected to combine PLM and other applications (to be watched) in one single system S4 HANA. ERP ECC is the backbone when it interacts with other systems like APO , EWM & TM . It is always a challenge to keep the systems consistent with respect to master data and transaction data while interfacing with each other . Also APO does not have integration with TM and sometimes scheduling becomes a problem if the client uses both APO GATP and TM . Hope S4 HANA will reduce these challenges with integration by combining different applications in a single system . We also need to watch SAP’s plan with other application like EM , GTS etc with S4 HANA . Like TM has good interfaces with EM , GTS , GIS etc .So, if TM is integral part of S4 HANA , then those applications like EM , GTS also need to be combined in S4 HANA for their vision of merging different applications in one single system. Picture will be clearer as we go along, but it is quite clear that SAP is trying to merge different applications in a single system S4 HANA.