Functional Reasons Wholesale Distributors are Moving to SAP S/4 HANA
SAP has developed a vast number of innovations is S/4 HANA, which continue to support a wholesale distributors journey to an Intelligent Enterprise. This blog introduces three of the wholesale distribution industry functional highlights which our in the latest release of SAP S/4HANA.
- Condition Contract Management (CCM) provides a central standardized solution for the administration of supplier rebates and chargebacks. Distributors use conditions such as pricing, quantity, and value conditions and with conditions that require subsequent settlement. Subsequent settlement is based on conditions agreed on during logistics processes but are settled later. They are relevant during processes such as procure-to-pay or order-to-cash. Condition Contract Management supports automated processes such as those for condition contract extensions, as well as corrections to accruals following changes to conditions. Distributors can also enter and settle contracts with a validity date in the past. A contract does not have to be entered before the documents relevant to business volume are posted. The condition contract settlement can be used everywhere where subsequent chargebacks based on business volume or quantity are to be settled with a supplier or with a group of suppliers. The settlement does not usually take place at document item level but, due to the high volume of documents, it is made based on cumulative key figures. These key figures are determined from the transactional document data. The condition contract settlement can be used for purchase order and sales order-based vendor cost recovery. Different data sources can be used to determine the business volume, for orders, deliveries, billing documents, point-of-sale data, or agreed fixed budgets.
- Advanced Available-to-Promise (aATP) is a wholesale distribution function in SAP S/4HANA that provides a response to order fulfillment inquiries in Sales and Distribution (SD). The order fulfillment inquiries consist of required materials and locations, as well as their respective requested quantities and dates. The result of the ATP check is based on the current stock situation and any future, anticipated or planned stock receipts and takes concurrent orders into account. Additional restrictions based on any other order attributes (like region or customers) can also be applied. The ATP function generates confirmation proposals for the requested material and plant, including confirmed quantities and dates.
- Demand-Driven Replenishment (DDMRP) helps a distributor plan and manage supply chains efficiently based on customer demand, rather than through traditional MRP procedures. This is done by strategically decoupling material flows, becoming less vulnerable to disruptions in the supply chain, and by protecting the flow through dynamically-managed buffer levels for relevant products. Optimally, the target is to ensure high customer service levels at the lowest possible inventory. With sufficient data to model customer demand, products or components relevant to Demand-Driven Replenishment can be sufficiently well-stocked to meet customer demand, but still stocked in low enough quantities to prevent excessive annual storage costs or losses due to expiry. Decoupling material flows at strategic locations can help avoid the Bullwhip Effect, which refers to increasing swings in inventory along the supply chain in response to changes in customer demand. These swings in inventory can expand exponentially up a supply chain and can cause excessive storage costs or losses due to expiry along all the levels of a supply chain.
This is just a list of three selective wholesale distribution related innovations which were released as part of SAP S/4HANA 1809. If this blog has caught your interest, there is a lot more information available via http://www.sap.com/s4hana.