What is happening in the Automotive Aftermarket Industry? | Part 3 – SAP’s Next Generation Service Parts Management
The SAP solution portfolio evolved immensely from the introduction of financial accounting (RF) and inventory verification and management (RM) in 1975. From R/2 evolving into R/4, Business Suite and now SAP S/4HANA, the software evolved to fit different business models supported by end-to-end processes and best practices.
Specific Portfolios are offered already to different industries – see the automotive example – covering end-to-end processes with cross-digital integrated capabilities. SAP announced one more step supporting industries by announcing the Industry Cloud. This is an innovation space for SAP, partners and customers to provide both industry cloud solutions and applications that complement the intelligent suite using the Business Technology Platform.
How does SAP software portfolio evolution relate with the aftermarket Industry?
In the first post of these series the main trends impacting the automotive industry and how they translate into the aftermarket were introduced. In the second, we addressed the main enterprise-wide digital capabilities that aftermarket players need to excel into in order to be ready to move into new business models and partake on the growth derived by innovation and technological development. We will culminate these series by explaining how these capabilities are addressed by the SAP’s new generation of Service Parts Management in S/4HANA.
SAP’s next generation Service Parts Management
SAP has a long and strong journey into the automotive aftermarket industry showing that it is an important market segment. Innovation within the SAP service parts planning (SPP) solution has been ongoing for decades and product development was tightly done in cooperation and collaboratively with several of the larger automotive OEMs companies in the Automotive Aftermarket. In 2018 it was decided to bring Service Parts Planning Solution into S/4HANA as part of the core Digital Supply Chain solutions to enable the Intelligent Enterprise Suite based on S/4HANA
Now, we are happy to announce that SAP S/4HANA Supply Chain for extended Service Parts Planning – one major pillar for service parts management solutions – will be launched as part of SAP S/4HANA 2020. The availability of the Service Parts Planning in S/4HANA means a supply chain planning offer for companies that distribute large volumes of aftermarket service parts to numerous stocking locations, and, at the same time, it natively integrates with demand captured, order management and execution processes making Service Parts Management an end to end solution.
The core areas of Service Parts Management sit on the intelligent suite, interoperating with SAP’s Industry Cloud access to vertical solutions that leverage SAP Cloud Platform supporting customers to accelerate business operations while balancing cost efficiencies with advanced technologies. Additionally SAP Service Parts Management has the possibility to leverage access to the Unified Business Network extending business processes beyond the core business, facilitating the seamless exchange of data and insights across businesses and geographies to drive greater levels of collaboration and agility with suppliers.
Finally, being in SAP S4/HANA allows Service Parts Management to benefit from SAP S/4HANA business technology platform main path of innovation with a simpler architecture and eliminating master data redundancy.
Therefore, SAP’s next generation Service Parts Management leverages business processes applications and technology making available to the aftermarket players an enterprise-wide functionality covering end to end processes in an innovative platform.
So how does the new Generation Service parts management reflect the capabilities referred in the SAP reference capability model for the aftermarket?
Going back to the SAP reference capabilities for the aftermarket reflected in the last post this is how the SAP new generation Service Parts Management reflects them:
Service Parts Planning
For those of you who know the Service Parts Planning integrated in the Supply Chain Management (SCM) Business Suite from SAP you are well aware that SAP service parts planning functionality is not a generic supply chain solution but a comprehensive, cross-component solution for supporting and managing the extended service parts network.
The new SAP S/4HANA Supply Chain for extended service parts planning (eSPP) has, as basis for its foundation service parts planning in SCM Business Suite. SPP in SCM Business Suite has proven their effectiveness, robustness and scalability already in major implementations and it was taken as baseline to build the next generation Service Parts Planning in S/4HANA. This move allows for a reduced complexity, reduce the risk of data inconsistency and it allows for a simplification of business processes (for example in capture demand processes – as being in one box allows it to read demand documents at run time without the need to integrate to a business intelligence or other legacy SP or non-SAP systems).
SAP’s Extended Service Parts Planning supports global complex supply chains. It links the complete distribution network for better visibility, coordination, and control. The solution is tailored for organizations in industries with complex distribution networks and high-volume with complex super-session chains. It supports as well sporadic demand which are very difficult to predict. Additionally, the extended Service Parts Planning addresses medium to low frequency moving parts – inventory reduction trough network.
Being in the SAP Intelligent Suite also allows eSPP to integrate natively to order fulfillment and supply chain execution processes within SAP S/4HANA. The solution acts as orchestrator of the complete global distribution network, delivering the unique possibility to provide a real-time connection between planning and execution so that as soon as differences are captured decisions can be taken in real time to balance inventory leveraging a global visibility and transparency. SAP’s extended service parts planning allows to manage globally supply chain networks from network design to demand planning, inventory and procurement to distribution planning and direct linking with supply chain execution in one only solution.
eSPP benefits as well from the capabilities and new developments provided by SAP Analytics Cloud. Customers adopting SAP Analytics Cloud profit as well from one analytics platform enterprise wide that can also connect with other application within or outside SAP portfolio.
Finally, as part of the product strategy for eSPP, it is ensured that it benefits from SAP’s global product strategy, being part of S/4HANA the product will be able rapidly integrate and adopt other innovations already available or part of the innovation path as for example, ability to intelligently integrate big data applications, machine learning and e-commerce applications.
Order Fulfillment Management and Parts Availability
Being part of S/4HANA allows service parts management solution to benefit from native integration between Order Fulfillment Management and Parts Availability.
S/4HANA Sales Order fulfillment Monitor allows a constant overview of sales order status as a central point of entry to analyze and resolve issues that prevent sales order from being fulfilled. These issues can be tracked based on different kinds of demand input but also on customer data or, for example, credit blocks or delivery blocks from order entry to invoicing. This allows a constant to monitoring of the sales orders in critical stages, collaborating with internal and external contacts, and efficiently address issues to ensure that sales orders in critical stages are fulfilled as fast as possible.
As an important and integral part of the order fulfillment process S/4HANA advanced available-to-promise provides accurate and reliable order to promise dates considering the relevant stock in real-time across the distribution network, while protecting company’s business priorities and profitability goals.
These functionalities will allow customers to streamline the order fulfillment processes and to provide to their customers accurate and reliable order to promise dates against actual inventory while protecting own profitable goals. The solution allows to set priorities based on back order processing enabling fast process of high-volume back orders. Additionally, advanced ATP allows to plan and manage allocation shortage to key customers and to improve customer service levels by intelligently selecting alternative sources of supply across the global distribution network.
This wholesome order management process increased customer satisfaction improves order fill rates and reduce logistics costs.
Supply Chain Execution
The new generation of parts management provides native integration with SAP’s Supply Chain Execution Platform providing warehousing capabilities with SAP extended warehouse management (SAP EWM), but also transportation capabilities with SAP Transportation Management (SAP TM). Both solutions enable efficient digital logistics and order fulfillment by orchestrating the end to end processes increasing speed and reducing costs.
As both SAP TM and SAP EWM are embedded in S/4HANA (but also decentralized) they offer full integration with core logistics execution processes. SAP EWM covers Inbound and outbound warehousing processes but also storage and operations.
EWM is suitable for low to very high complexity warehouse processes providing support with kitting and value-added business processes. SAP EWM offers as well different optimization processes in terms of warehousing orders, cartonization and pallet planning, wave management to stock consolidation. The solutions allow to optimize labor, storage and fulfillment costs.
SAP TM offers one single holistic transportation platform with automated transportation processes including business processes as cross-docking, import, export and end to end transportation visibility. This covers inbound, outbound and inter-company freight and supports different transportation modes. The solution allows to reduce costs and improve service, efficiency, and sustainability
Additionally, also in the Intelligent Suite supply chain execution platform Yard logistics allows to streamline planning, execution and settlement of yard tasks connecting to the internet of things. The Business Network platform allows as well for collaboration and Track and Tracing using Logistics Business Network with Global Track and Trace that integrates into the Intelligent Suite and allows to create visibility and collaborate across the supply chain.
Supply Chain execution cannot run independently from Supply Chain planning and these different processes and activities cannot be observed in silos. Therefore, this possibility of having end to end service parts processes in one system holistically brings transparency and real-time insight into the physical inventory within the distribution network and allow for fast efficient decision making.
Finally, on a digital integration perspective, as we see it, having Service Parts Management in S/4HANA is a first step on the digital integration journey. The Business Technology Platform where SAP S4/HANA sits will allow Service Parts Management as an end-to-end solution to partake into the its technological and innovation journey. For example, machine learning brings opportunities for self-optimized forecasts, blockchain might allow for consumers to track the lifecycle of electric batteries from materials to production to transport keeping tracking of the footprint and bringing more sustain abilities into supply chain. Additionally, IoT brings opportunities to proactive service scheduling for vehicle and fleet owners or for example to trigger procurement to supply chain execution processes based on parts sensors.
Also read this the blog post from the chief product owner SAP Parts Planning, announcing the first SAP S/4HANA release for extended Service Parts Planning, exploring the major enhancements, innovations and tight integration into SAP S/4HANA logic.
To get further insights in detail SAP portfolio for the aftermarket do reach out for us.
Summarizing these Series:
During SAPPHIRE NOW 2020, Peter Maier ( President SAP Industries and Customer Advisory) mentioned that in the Industry Cloud, ‘ The processes and data domains of the intelligent suite are a key asset for our customers.’ SAP’s investment into next Generation service parts management ensures that customers have the possibility to model service parts management, end-to-end processes and seamlessly access the data they generate. Building and modelling these processes end-to-end into S/4HANA will provide aftermarket players the digital capabilities they need. Leveraging this data will be the door for aftermarket players to thrive in a competitive market by turning the trends disrupting the aftermarket into an opportunity instead of a threat.
Now that we are at the end of this blogpost series, we are excited to hear your opinion.
What are your views on the future of the aftermarket? What other trends and digital capabilities should we consider?
Let us know your opinion in the comments.
Authors: Sara Mendes, Guada Joseph, Sebastian Scharfenberger, Uli Pfeffer, SAP Automotive Industry Business Unit (IBU). The Automotive IBU is a global team that represents SAP in the Industry and is responsible for driving sustainable business growth, customer satisfaction and solution completeness. The IBU Automotive team ensures the delivery of end-to-end solutions for the Automotive industry addressing current and future customer needs, and it enables the sales and consulting organization.