SAP customers are looking forward to the transition to SAP S/4 HANA Enterprise Management. One of their challenges is to identify business benefits that justify the cost of such a project.
For wholesale distributors, two new capabilities in the latest releases of SAP S/4 HANA Enterprise Management focus on supply chain planning and execution that do just that. They are Demand Driven MRP (DD MRP) and Advanced Available to Promise.
What is Demand Driven MRP? It compliments standard MRP functionality by decoupling the supply chain with strategically based inventory buffers, which are managed and replenished using dynamic flow concepts. Quite a mouthful. I went to the Demand Driven Institute website to learn more –https://www.demanddriveninstitute.com/the-method . This is a proven planning methodology requested by many of our customers, and now SAP has built a solution that is certified by the Demand Driven Institute. On first read, it seemed this was mostly a solution for more complex manufacturing supply chains. However, I learned that many manufacturers start DD MRP with finished goods inventory. In other words, it is relevant for the wholesale inventory planning. This is the next generation of MRP which helps you reduce your inventory investment!
What is Advanced Available to Promise? SAP development has completely redesigned this application which is now a part of SAP S/4 Enterprise Management. It offers reliable order promise dates based on available stock as did previous SAP solutions. This new module also offers product allocation checks, new back order processing capabilities and release of delivery for last minute changes to sales order confirmations. For quite some time, I have heard requests for back order processing that allows distributors to prioritize which orders are filled when inventory is insufficient to satisfy all sales orders. The new Back Order Processing addresses this request. Taken all together, these capabilities are designed to improve order fill rates for your best customers.
Lower inventory investment and higher order fill rates is a great combination to give a distributor the ROI to invest in new technology and make them more competitive in today’s business environment. There are far more benefits than these to provide ROI for your migration to SAP S/4 HANA Enterprise Management, but these two focus on the core of your wholesale business, your supply chain.