Tier to Tier Collaboration – getting closer? Two years ago I wrote about emerging technologies enabling closer tier to tier collaboration in the automotive industry. (http://scn.sap.com/community/automotive/blog/2013/03/28/supplier-capacity-testing–an-achievable-objective )
This concept is not new, it has been used in high tech for some time and current SAP offerings explicitly include capabilities to share forecast and commitment data as an input to scheduling (Clear to Build).
But in automotive, where scheduling agreements are used as the transactional document and even acknowledgements, let alone commitments, there are commercial and structural issues that have hampered adoption.
Early discussions tended to focus on understanding supplier capacities, both tooling and resource. For the customer of an engineered product who may have multiple tools at a supplier, knowing both the capacity of the individual tooling and the resources on which the tools are used is important, since the sum of the tooling capacity may exceed the resource, which will limit the quantity of parts that can be delivered.
This process is easily modeled in SAP Integrate Business Planning, and we’ve had many discussions with companies interested in the concept.
But to date, no actual attempts. It’s easy to understand why – most existing contracts don’t include provisions for sharing capacity information, and common portal- or edi- based collaboration practices do not provide a framework for entering or updating the required information. That often leaves us recommending use of Excel spreadsheets, which works fine but is part of a process that can include manual effort. So we’ll hold that thought.
Recently, I’ve seen requests that are closer to the high tech model, where the customer shares a forecast – either via EDI or as additional forecast extending beyond the timeframe for which releases are sent – and seeks supplier confirmation of ability and intent to deliver. From a “plumbing” perspective this is more simply enabled, both SAP Supply Network Collaboration and near term roadmap for the Ariba Collaborative Supply Chain include a forecast/commit sharing capability. We’ve demonstrated development versions of Ariba recently on several occasions.
There are still challenges, though:
• From the customer perspective, unless SAP APO is deployed, there is not necessarily a simple data element to capture the supplier’s response and make
it actionable in planning. More often, even in high tech companies, the supplier’s “confirmation” is merely information for the planner.
• The commercial impact of a “commitment” outside the firm, fab, or raw zones of a scheduling agreement release is not clear. This isn’t a technical issue,
but needs to be negotiated and understood.
• From the supplier perspective, unless an explicit allocations process is deployed (for example, SAP APO), there is likely not systematic data to
enable a “confirmation”. In general, this process is not used with scheduling agreements. So responding to a customer’s request will likely require manual
Nothing above that can’t be done, there may just be a little work required. And it’s coming, a customer recently said that he expects such a process will be the rule in 10 years. So how do we get there sooner?
May I propose IBP again? Not just for capacity modeling, but also for generating commitments. With IBP for response and supply (newly released) it’s possible to receive forecasts and make allocations of product given constrained supply, in other words, allocation of product with a reasonable chance of being produced. These allocations may be just the data a Supplier would need to share with a customer as a commitment. I’ve had several internal and external discussions on this topic lately, and look forward to more.
If you have an interest and are coming to Sapphire, look for me at the Automotive pod on the show floor, I’d welcome the chance to discuss this or other topics. And please note that I’m now an author: SAP PRESS will release my new E-Bite titled “SAP Integrated Business Planning: How Does SAP IBP Fit into Supply Chain Planning?“ on April 21st. See what SAP IBP can do, how it compares to SAP APO, and how these applications meet your advanced supply chain planning needs. https://www.sap-press.com/4174/.