helping the world run better with sap ariba supply chain

Helping the World Run Better with SAP AribaSupply Chain Collaboration and SAP Integrated BusinessPlanning Solutions

Table of contents

4 Executive summary

5 A historical perspective – Our understanding

6 A persona perspective of what is achievable

9 Business benefits

10 Why Olivehorse?

11 Next steps

Olivehorse and SAP Ariba proprietary and confidential | 3

Our understandingGlobalisation has brought with it enormous benefits byopening new markets and sources of supply for agile andinnovative companies, regardless of where they areheadquartered. But achieving success while maintainingflexibility, service delivery, and cost efficiency has requiredcompanies to outsource manufacturing operations as well asmany internal planning functions.

The flip side of this outsourcing has been a degradation insupply chain visibility as contract manufacturers, n-tiersuppliers, and distribution and logistics partners struggle toget a coherent picture of the supply chain and react quickly tochanges in forecast and demand signals. The challenges arenot limited to any particular industry or geography. A plethoraof data formats and means of exchanging data have furthercomplicated matters for supply chain partners.

An old challengeThe challenges are not new. For many years the growingcomplexity of global supply chains has driven companies toreintegrate, visualise, and embed intelligence in all supplychain processes from customer facing e-commerce tosupplier operations. The vision is to digitise the supply chainand mission-critical business processes supported across theextended enterprise with one single source of liveinformation.

There have been multiple approaches to address theproblem, hence the legacy of complex communications andplanning tools that companies are struggling with today.Every approach has had its share of successes; but for onereason or another, it has not had reach beyond an individualsupply chain, a specific industry, or it has required specificsoftware to be installed.

Executive summary

A revolutionary approachSAP Ariba is revolutionary in supporting multiple supply chaincollaboration processes over the world’s largest business-to-business (B2B) network – Ariba Network. Companies gainaccess to a single, cloud-based solution to collaborateeffectively with multiple tiers of suppliers and trading partnersin direct materials procurement, regardless of industry andenterprise resource planning (ERP) back-end. All the highlycomplex demand planning, material requirements planning(MRP), and associated changes remain in the companies’ERP and planning system, and these are digitally shared withsuppliers – live and in real time.

Business benefitsBenefits apply to both buyers and suppliers and range fromreduction of inventory levels, lower logistics costs, fewerstock-outs, and ultimately minimisation of supply chain risks.

Why Olivehorse?With a strong background in supply chain planning benefitdelivery using SAP solutions, Olivehorse Consulting Servicesis the ideal partner to support SAP customers’ transition to adigital collaborative supply chain supported by SAP Ariba. Ithas extensive experience implementing and improvingcustomers’ SAP Advanced Planning and Optimizationcomponent and has made early investment in capabilities todeliver SAP Integrated Business Planning solutionimplementations.

Next stepsThe best way to take advantage of our collective experienceis to take part in a free half-day information session where wecan help you explore your options based on requirementsand demonstrate the integrated solutions.

4 | Olivehorse and SAP Ariba proprietary and confidential

Strategic benefits of evolving from “hard-wired”integration landscapes to SAP Ariba

From complex “hard-wired” integration landscapes …Typical supply chain planning landscapes at SAP companiesinvolve a complex arrangement with multiple systemssending information into a planning engine.• SAP ERP provides execution and commercial information• SAP Supplier Relationship Management (SAP SRM)• SAP Business Warehouse (SAP BW) supports

management reporting and sales and operations planning• SAP Enterprise Inventory and Service-Level Optimization• SAP Supply Network Collaboration (SAP SNC)

Multiple integration frameworks are utilised to draw all thedata together and send to a planning engine, such as SAPAdvanced Planning and Optimization.

In such a complex landscape, as much information aspossible is gathered to create a complete, global picture ofdemand and a consolidated supply plan, MRP, anddistribution resource planning (DRP). The resulting systemenvironment is complex and hampers buyer/suppliercollaboration. Data exchange complexity is also a majorlimiting factor for supply chain agility. As an example,integrating advanced shipping notices (ASNs) via anelectronic data interchange (EDI) network to support planningwith more accurate stock information requires complexcustom integrations utilising point-to-point exchanges andcustom workbenches. These resulting hard-wired integrationinvestments lock companies to their suppliers, therebyreducing flexibility.

… to network integration and collaboration simplificationSAP Ariba provides a collaboration platform supportingmultiple supply chain processes, such as forecasting, vendormanaged inventory, and quality management. Collaborationprocesses are supported by the world’s largest businessnetwork for rapid supplier enablement. Suppliers connectonce, selecting an appropriate collaboration method (systemintegrated or portal).

Instead of the technical connectivity issues that havehistorically resulted in six-month implementations of complexEDI interfaces, SAP Ariba uses specific point-to-pointmessage exchange for a one-time connection for both buyersand suppliers. Connections use existing integration platforms– EDI, file, direct SAP integration through processorchestration, or native integration to SAP S/4HANA.

Suppliers have the same login to respond to all buyerprocesses from strategic sourcing to operational procurementand invoicing. Robust purchasing compliance checks enablesafe and scalable procurement between suppliers andcustomers. The platform not only supports strategic sourcingand operational procurement processes for both direct andindirect spend, but also supply chain planning for directmaterials. Native integration to your SAP ERP or SAPS/4HANA back-end operations makes this investment astrategically sensible choice.


Reimagine a collaborative planning process with keystakeholdersSAP Ariba can drive this change

Integratedbusiness planning

managerVP supply VP manufacturingVP purchasing

• Integrate suppliers into the process at an early stage to provide visibility and drive better decision making• Model suppliers’ ability to provide sufficient capacity to meet volume demand to drive more accurate supply reviews• Gain early commitment of the projected plans to improve order fulfilment and reduce inventories by avoiding overstock and

obsolescence or stock-outs• Plan potential supply chain disruptions and develop well-founded contingency plans with what-if scenarios• Understand the financial impacts of changes to the plan and adopt the best financial outcomes• Monitor supplier performance and response time to commit messages• Manage multiple data sharing agreements with different suppliers• Improve manufacturing visibility by receiving key inventory and process tracking data from suppliers and contract

manufacturers

Olivehorse recognises the need to harness technology advances and reimagine the sales and operations planningprocess by bringing all interested parties to the same table. This fosters an agile and lean approach to planningthat will drive a step change in business benefits.


SAP Ariba supply chain collaboration solutions and SAPIntegrated Business PlanningKey components of SAP’s digital framework for supply chain

Our team understands key stakeholder concerns when it comes to supply chain planning. We also understandhow they are best addressed using SAP Integrated Business Planning and SAP Ariba supply chaincollaboration solutions.• Execute high-level supply plans to determine what is required from whom, when, and how – all while ensuring

stock levels are managed at an optimum level for the organisation• Manage internal supply processes, vendors, co-manufacturers, and subcontractors to deliver according to the

plan while dealing with a supply base that is constantly changing• Provide information that is current and accurate for a streamlined planning process with visibility to anticipate the

need for re-planning• Manage end-to-end forecasting, demand planning, allocation, and execution across the business• Bridge the communication gap between sales and marketing, customer service, procurement and supply• Obtain a comprehensive financial view from volume and value forecasts


SAP Ariba supply chain collaboration solutions for digitalcommunication with suppliers

SAP Ariba supply chain collaboration solutions support collaborative processes between customers and suppliers for anefficient supply chain network that addresses the key concerns of supply chain stakeholders. The solutions integrate bothsystems and stakeholders to the common plan developed in the integrated business planning platform, thereby facilitating anorchestration of a multitier supply chains to reduce inventory.

The collaborative platform addresses key business challenges, such as:• Poor supply chain visibility, communication, and collaboration• Supply chain disruptions• Lack of multitier collaboration• Lack of supply and demand alignment• Inefficient and unreliable production process

Forecast/demandForecast commit

Purchase/subcontract order

Schedule agreement release

Component ship notice

Component inventory data

Goods receipt notice

Consignment inventory status

Quality notification/response

Self-billing/ERS invoice

Payment

PO confirmation

Component receipt notice

Manufacturing visibility

Component consumption

Advance ship notice

Deviation request /response

Invoice

BUYER SUPPLIER/CONTRACTMANUFACTURER

buyer supplier


Business benefits

Companies can achieve significant financial and business benefits across the supply chain by digitalising planning,collaboration, and track-and-trace operations. Reduction of inventory levels, lower logistics costs, fewer stock-outs andultimately minimisation of supply chain risks are the most important targets for supply chain optimisation. Top-performingcompanies report days inventory outstanding (DIO)2 of 29, while the average is 65 days,3 signifying a large disparity ininventory management practices.

• Increase real-time informationprocessing

• Increase transparency of forecasts,supply availability, orders,shipments, quality, and goodsreceipt

• Lower safety stock buffers• Reduce latency and lead times

Inventorylevels

Supply chaindisruptions Stock outs

12% lower daysinventory outstanding(DIO)1

25% lower FTEcost1

3% lower logisticscost1

23% revenue lossdue to stock outs1

2%Cash flow1,2

7%Revenue1,2

12%Cost1,2

Automated andelectronic transactions

ROI1Percent improvements: SAP performance benchmarking 2017; 2Financial benefits leverage SAP performance benchmarks combined with conservativeassumption of $1 billion for inventory, cost of goods sold (COGS), revenue, etc. depending on the metric.

11% cost increaseavoidance1

7% revenueloss avoidance1

• Improve visibility and control of tier-two supplier cost, inventory, andflow of material

• Decrease frequency of operationsstoppages resulting from a lack ofraw materials or components

• Reduce production change-over dueto material shortages

• Decrease risk of supply disruptions• Reduce expedited transportation

cost• Track quality characteristics and

compliance• Improve FTE document processing

efficiency and effectiveness


Why Olivehorse?

Olivehorse is well positioned to help customers drive procurement with purpose as a strategicinitiative within their digital transformation journey. Olivehorse consultants possess deep, market-leading knowledge and capability as well as a passion for solving your unique challenges. Itsteams bring real-world experience with an unrelenting focus on business value – meaningOlivehorse solutions are driven by the practical delivery of results.

Olivehorse constructs its teams and services with the knowledge that the delivery of effectiveoutcomes is dependent on addressing the following five dimensions: people capability, processexcellence, appropriate technology, data integrity accurate, and timely information.

ApproachAs part of a delivery project, Olivehorse transfers knowledge gained from many years ofexperience to the customer team. A flexible approach supports expertise as it suits your needs.

Industry knowledgeIn the supplier collaboration space, Olivehorse has designed and implemented many differentsolutions for strategic and large enterprise SAP customers centered on:• Complex integration scenarios and message exchanges with suppliers• Access to acknowledge and ability to confirm volumes and capacity• Integration of suppliers into the planning process to receive demand forecasts, provide move

plans, handle vendor managed inventory, and provide consignment stock visibility

We recognise that each type of supply chain carries unique challenges. Nevertheless, we alsobelieve that every sector can learn from good practice developed elsewhere.

Domain expertiseOlivehorse prides itself on offering an unmatched depth of experience and know-how in the SAPsupply chain planning area. Olivehorse has one of the largest European practices skilled in SAPIntegrated Business Planning and strong track record in collaboration projects. BasedOlivehorse’s experience in connecting suppliers to custom-built solutions, it is clear that SAPAriba supply chain collaboration solutions will revolutionise the way buyers and supplierscollaborate, provide standardisation, and reduce implementation costs and integrationcomplexity.


There are a number of ways to engage in the digital collaboration transition with the help ofOlivehorse. Olivehorse offers a number of services constructed to help customers explore,assess, and develop a road map to ensure implementation of the right solution designed tosupport your business practices.

As a first step, please consider taking advantage of the information session.

The information session is designed to address concerns such as:• If you are unsure about the value SAP Ariba supply chain collaboration solutions could

bring to your business• If you have never seen a live SAP Ariba supply chain collaboration solution demo• If you are unclear as to how SAP Ariba solutions fit in with other SAP products

The information session is a half day spent on site with your team that allows Olivehorseto:• Explain the functions and integration requirements for clearly defined use cases• Demo key aspects live on Olivehorse’s own systems• Discussion your current supply chain collaboration pain points and how SAP Ariba supply

chain collaboration integration could provide solutions• Agree the next steps for your journey

Olivehorse has significant experience creating digital road maps around SAP’s digitalenterprise, focusing on supply chain planning. So if you are wondering where productionplanning/detailed scheduling fits in with SAP S/4HANA, how to manage the replacement ofthe advanced planning and optimization component, or how to best operate a competitivesupply chain collaborative platform, Olivehorse has the experience to help.

Next steps

Olivehorse Consulting Services LtdCoventry University Technology ParkPuma Way Coventry, UKCV1 2TT; Tel: +44 (0) 2476 158572

For further information please contact:Peter ClancySAP Ariba SCC lead, [email protected]


www.sap.com/contactsap

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