Defining SAP SCM, and examining the importance of BI to SCM

The use of acronyms in e-business disguises the fact that behind every three-letter abbreviation is a complex collection of functionality. Take supply chain management (SCM), our editorial focus for this month. Some aspects of SCM are often confused with supplier relationship management (SRM), even by working SAP professionals. That’s why we thought it would be helpful to offer this brief technical primer on what exactly comprises SAP SCM and the latest developments.

SAP SCM consists of the following modules:

Advanced Planning and Optimization (APO)
Forecasting and Replenishment (FM)
Event Management (EM)
Supply Network Collaboration (SNC)
Extended Warehouse Management (EWM)

You can read more about SAP SCM components on the SAP Developer Network (SDN) wiki devoted to SCM.

One interesting development in SAP SCM is its relation to business intelligence (BI). If, following the example of companies such as Dell and Apple, you find yourself moving from a tactical to a strategic supply chain, you have to extract more data out of SCM. Otherwise, your forecasts, planning schedules and warehouse management processes won’t be as effective as they might otherwise be, and you may be stuck with a supply chain that’s only a cost center.

There a couple of options when it comes to apply BI to SAP SCM. You can:

• Use the innate analytical features of SAP SCM modules. While helpful for basis analysis, these features may not be able to deliver the advanced intelligence you need for strategic SCM purposes.
• Integrate an external BI system with SAP SCM.

If you choose to use an external BI system in this context, you now have a wider variety of SAP-specific BI choices and challenges than ever before. There’s SAP NetWeaver BI, which can integrate data from a Geographic Information System (GIS) or other SAP products into your SAP SCM system. NetWeaver BI is included in shipments of SAP SCM.

But the real strategic potential comes from SAP’s acquisition of BI specialist Business Objects. Some SAP customers (Callaway Golf comes to mind) have realized that applying Business Objects to SAP SCM and SRM modules will result in deeper and broader BI information than can be derived from the modules themselves, or from NetWeaver.

Research group AMR has demonstrated, for several years in a row, that companies with strategic supply chains are more profitable. One way to join the ranks of the supply chain elite could be to apply Business Objects’ capabilities to your SAP SCM and SRM systems.

Demir Barlas, Site Editor