SAP Design to Operate: Understanding the strategy and its business value
As industry conferences reappear on my calendar and with them the opportunity to talk to supply chain professionals, three main themes surfaces above all in my conversations: Supply Chain Visibility, Supply Chain Productivity and Sustainable Supply Chain.
In the past years, we have seen how sensitive supply chain operations can be to market disruptions. The COVID-19 pandemic is the most recent and extreme example of this, but there have been others where supply chains were disrupted on a global scale, causing serious problems for businesses due to material and product shortages, distribution issues and many others.
At the same time, the world is experiencing new levels of social consciousness and unprecedented support for sustainable practices. As a result, companies have been forced to reevaluate their operations and adopt more sustainable supply chain strategies.
While each of these Supply Chain challenges and disruptions have different root causes, they all share one common factor: the need for real-time, accurate data across the entire supply chain to allow informed and proactive decisions that will help companies be more innovative, agile, resilient, and sustainable.
This article will explain the importance of SAP Design-to-Operate in your supply chain strategy and how it can help your organization achieve end-to-end visibility, become more resilient, and achieve sustainable supply chain operations
WHAT IS SAP DESIGN-TO-OPERATE (D2O)?
SAP D2O represents the entire lifecycle of products in an end-to-end, connected, and interoperable supply chain process from how a product is designed, planned, manufactured, delivered, to how it operates and is maintained. SAP D2O strategy supports three main pillars:
- To adopt connected, interoperable, and modular supply chain solutions that will enable companies to gain end-to-end visibility, thus increasing supply chain agility and resiliency.
- To leverage intelligent technologies such as Industry 4.0, IoT, ML, AI, etc., that will create new scenarios and opportunities to drive innovation and productivity that will lead to a competitive advantage.
- To optimize supply chain operations in alignment with sustainability targets to help companies become more sustainable and achieve environmental, social, and governance objectives.
There are multiple D2O key differentiators however, the most important one is having interoperable software applications and interoperable lines of businesses. SAP D2O interoperability is more than just integration between applications to allow data exchange but rather allowing applications to be able to communicate, coordinate, cooperate and collaborate with each other so that optimization efforts are not in silos but rather looking to optimize the whole.
SAP Digital Supply Chain application has been designed to be able to communicate with each other with out-of-the-box integration points thus enabling data and information exchange in an end-to-end business process from the design of a product to how they operate.
SAP Digital Supply Chain applications have been designed to effectively and efficiently coordinate efforts in a seamless bi-directional communication flow, for example coordinating and synchronizing the hand-over from product engineering to product manufacturing, or coordinating manufacturing operations with sales, shipment, and delivery commitments.
There are situations where lines of businesses will need to cooperate and negotiate on trade-offs to find the best possible business outcome, for example deciding on paying overtime production on a specific plant or ship from a different plant but spending more on transportation and logistics. This is very critical as supply chain trade-offs analysis can only be achieved with applications that provide end-to-end visibility and that leverage cross-application analytics with embedded intelligent technologies and simulation capabilities that will be able to assess the best overall outcome.
Finally, high interoperable supply chain applications allow for collaboration between the different supply chain lines of business or even with business partners to come up with new business models like the ones we have seen in history with vendor-managed inventory, JIT, JIS, collaborative forecasting, asset-as-a-service, outsourced manufacturing, etc.
HOW CAN SAP D2O END-TO-END VISIBILITY HELP ACHIEVE RESILIENT SUPPLY CHAINS?
Let’s first define supply chain resilience as the capability of a supply chain to recover, adapt, and be prepared for unexpected events and disruptions to maintain operational continuity. SAP D2O helps companies achieve resilience in the supply chain by providing a single source of the current state of all the activities happening in an end-to-end supply chain business process. It also gives companies the ability to identify, track, understand and manage risks and compliance requirements across the supply chain. This allows companies to better understand the root causes of any issues or disruptions in the entire supply chain so they can make the necessary adjustments to their strategies with more informed and proactive decisions that will minimize any impact from these disruptions.
HOW CAN SAP D20 HELP ACHIEVE SUSTAINABLE SUPPLY CHAINS?
A sustainable company is one with a clear strategy in place that enables it to operate in a socially, environmentally, and economically responsible manner. At the most fundamental level, sustainable supply chain operations ensure that the goods and services a company provides are available at all times, have the desired quality, and are produced with minimal negative impacts on the environment and society.
SAP D2O and its interdependencies help achieve sustainable environmental, social, and governance objectives by synchronizing sustainability targets with supply chain optimization models, embedding sustainability best practices and capabilities within the SAP D2O product portfolio, and providing end-to-end supply chain visibility into a corporate sustainability strategy. In this matter, for example, it can be possible to design products that can be recyclable, reusable, repurposed, and possibly returned to earth. From a planning point of view, if companies can gain full end-to-end visibility, it would be possible to plan demand, supply, and inventories that would also consider minimizing the carbon footprint of operations. From a manufacturing and asset management point of view, if machines and equipment are kept in optimal operating conditions and anticipating potential breakdowns and performance losses, emissions would be controlled or reduced, and less waste and scrap would be generated due to better process control. In logistics and distribution processes, it can help to better consolidate and optimize loads as well as optimize distribution routes, thus fewer emissions generated.
HOW CAN SAP D2O DRIVE PRODUCTIVITY?
SAP D2O natively leverages Industry 4.0 scenarios and use cases thus, enabling companies to go beyond operations to drive productivity via innovation. This helps customers not only to automate end-to-end business processes and interdependencies between lines of business but also, to take full advantage of emerging technologies such as artificial intelligence, machine learning, blockchain, etc., into their supply chain to solve complex problems faster, run simulations and provide better outcomes and understanding of the root cause to anticipate to potential issues and disruptions. Multiple SAP Industry 4.0 use cases can be found in the entire SAP Design to Operate process with scenarios such as Intelligent Products, Intelligent Factory and Logistics, Intelligent Assets, and Empowered People.
SAP D2O helps companies create open, connected, and intelligent supply chains. SAP D2O illustrates the importance of having an agile supply chain that can be quickly and easily adapted to meet customer demand. By integrating the different lines of business such as design, plan, manufacture, deliver and operate, allows companies to improve and optimize their entire supply chain performance. From a business value point of view, SAP Design to Operate can helps companies to:
- Gain supply chain visibility, agility, and resiliency with end-to-end connected and interoperable business processes.
- Increase productivity and dain a competitive advantage by leveraging intelligent technologies and creating new business scenarios and opportunities.
- Achieve sustainable environmental, social, and governance objectives by synchronizing sustainability targets with supply chain optimization models and embedding sustainability best practices within D2O.
- Optimize the entire Design to Operate business processes achieved by interoperable solutions that allow communication, coordination, cooperation, and collaboration.
So now, are you ready to achieve end-to-end visibility and optimize your whole supply chain? SAP Design to Operate can take you there!
In my following blogs I will be providing additional information onto each SAP D2O strategy pillars so please follow me.
For more information on SAP D2O visit the following links:
SAP D2O Video Teaser (30 sec.)
SAP D2O: Walk along the value stream (30 min video)