By: Shrikant Shelke, Lead Technical Architect

Consumer centricity has become topmost priority for companies in the Consumer Packaged Goods (CPG). Consumers are more demanding than ever. So, there is consistent demand for increased agility and price competitiveness. This is leading to increased SKUs (Stock Keeping Units) and shorter product lifecycle. It has become critical for CPG companies to become more responsive to volatile market situations.

This requires responsive supply chain powered by the platform that deliver agility. SAP’s S/4HANA Simple Logistics is new age solution delivering this for leaders in CPG industry. S/4HANA enables companies to innovate and evolve quickly. This blog highlights of some of the capabilities of S/4HANA Simple Logistics which are enabling companies to deliver highly responsive supply chain:

Advanced Available To Promise:

Leveraging in-memory capability of HANA, S/4HANA deployed powerful strategies into the system that enables improved backorder processing (BOP) to ensure key accounts are delivered on time and in full, even with a last-minute, short lead-time order. It takes previously confirmed stock from a lower-priority customer and reallocate to fill the new higher-priority order. Automation drives the decision more efficiently, identify and adjust to rapidly changing circumstances.

Demand Driven Replenishment:

In addition to the classical processes, Demand-Driven Replenishment help organizations:

• to achieve an improved and smooth material flow with less exceptions by keeping stock at the right spots within the supply chain and in the right quantity.
• In that way gaining responsiveness to react on real customer demand, covering it in a demand-driven way (and hence, also avoiding unnecessary production). There is a new analytical app for monitoring and adjustment of buffer levels.
• the adaptiveness via feedback based on real data analytics, by which the solution’s settings / parameters are improved and amended to the “real life”

This enables immediate production of individualized products, ensure high service levels at lowest possible inventory along all BoM levels and reach better quality and smoothen production flow by prevention of defects.

Accelerated MRP:

Availability of product at right time is very important in CPG industry as consumers don’t wait. Faster response to ever changing demand is key to ensure availability of products. Accelerated MRP is 10+ times faster than conventional ERP system. This enables faster demand propagation along the supply chain giving more chances for simulation & better planning quality to ensure availability in shortest possible time. Below are the key features of accelerated MRP:

• Embedded Production Planning and Detailed Scheduling (PP/DS) natively deployed without the need for complex integration data maintenance to accelerate MRP processing times from hours to minutes and enable intelligent constraint-based planning and scheduling.
• Real-time alerting based on current stock requirements situation as well as Real time Inventory picture
• Helps to analyze the current situation based on real-time information and focus on shortages

Real-Time Inventory Management:

Single source of truth of inventory in one system with overview of the entire inventory turnover situation for the selected scope of materials and/ or plants and for the selected time range.

• Parallel Posting: It is possible to post transactions concurrently, no matter how many trucks leave or arrive at the distribution center at the same time. The transactions can run simultaneously without locks, which avoids time lag.
• Optimized inventory: One of the most important goals for materials planners is to minimize inventory levels. In addition to ABC/XYZ Analysis for classifying inventory. It empowers planners with real time inventory turnover analysis. It, therefore, help optimize inventory and reduce working capital

Integrated Extended Warehouse Management:

For CPG companies, warehouse management operations are very critical. With embedded Extended Warehouse Management, S/4HANA simplifies system landscape to eliminate integration issues and still deliver flexibility to manage warehouse leveraging Extended Warehouse Management capabilities. It enables seamless integration for end-to-end planning and execution processes across product development, manufacturing, quality, warehousing and transportation.

• Extended Warehouse Management integrated into the S/4HANA core
• Flexible licensing alternatives for SAP EWM in S/4HANA for Basic Warehousing or Advanced Warehousing options based upon the business requirements
• Most of the capabilities of Decentralized EWM are retained in Embedded EWM
• Efficient sorting of Bins for put away and picking with bi- directional Storage type Search instead of uni-directional
• Provides complete transparency of stock in warehouse with Serial Number capturing and tracking at Delivery Item level (Only for activated ID/OD item types) , Warehouse Level (At each GR/GI) and Storage Bin level

Optimized Sourcing and Procurement:

Actively managing spending across various categories based on real-time insights will be able to generate significant cost savings and optimizes working capital. Below are few features which help increase operation efficiency and agility:

• Instant search capabilities: Searches across various documents and master data sets. So, a faster instant material, Supplier, rate etc. search for effective sourcing options is possible
• Lowers procurement costs : Increases material visibility with real-time stock and material flow insight through analytics with decreased stock buffers
• Real-time supplier evaluation: Ability to generate real-time analytics and Supplier analytics are traced on various parameters like on time deliverability, pricing, quantity variance, etc. which also mapped vendor’s contract expiry date to used contracts and contact leakages
• Reduced complexity: Reduced set of possible sources of supply with a clear and symmetric definition
• Consideration of quota arrangements is not dependent on any material master attributes
• Monitor critical business events, purchasing spend and supplier performance in Procurement Overview Page
• Increase supplier relationship and performance by using Activity and Task Management

Networked Business Partners:

Business Networks are playing important role for driving efficient collaborations with business partners such as Suppliers and Customer. This help organization respond quickly to market demand right from product development to ensuring product availability on correct shelf at right time. S/4HANA comes with pre-delivered contents/adapters to integrate with these business networks like Ariba Supplier Networks, FieldGlass, etc.

Embedded Analytics:

SAP S/4HANA embedded analytics provides real time insight with single source of truth and empowers business users to carry out business transactions with options to simulate for faster decisions.

• These analytics features are also integrated to core business processes (for e.g. customer segmentation, explore cross-sell & up-sale opportunity, make recommendations, planning & forecasting etc.) to make better-informed decisions.
• This also takes advantage of the underlying advanced analytics capabilities in the SAP S/4HANA platform to look beyond historic facts and figures to forecasting the future