Monday, May 20, 2013

Flexibility versus "Rigidity" in SAP - there is more to it than what comes out of the box.


If you decided to manage your operations with SAP, chances are that there are various opinions out there about the effectiveness of your SAP implementation and how well the software performs.

In my humble opinion, the success does not primarily (or even secondarily) depend on new technology or the use of new software like APO (regardless of what's communicated at SapphireNow or other conferences). It depends on how well you are engaging the tool you have.

It is a myth often used, that states, that SAP software is rigid. People say “you have to do it the SAP way”. Nothing could be further from the truth. Ask those people what the “SAP way” is, and chances are they can’t tell you. There is no “SAP way” on how to replenish and order raw materials, so that you achieve high service levels with low inventories. There are many pre-configured replenishment types provided in the respective table in the delivery of SAP’s suite of software, but that is only a start – and not the “rigidizing” package. You will find a PD there, a V1, a VV and the lot size HB. And someone who says that this is all you can use, is plain out wrong. As an example: a reorder point method that takes external requirements during the replenishment lead time into account (V1), works very well with a lot size procedure that increases the order quantity by exactly those requirements in the future, so that we end up with inventory above the reorder point when the stuff comes in. In SAP's standard delivery the 'HB' does not increase the lot size by those requirements! And maybe that is ok. Very often it is not.

But if your adviser claims that it is "the SAP way of doing things" you must get your biggest running back and crush through the defense as hard as you can... otherwise you won't score all season, because that adviser will neither protect you as a quarterback, nor will they open up any lanes for you to run through.

So add another HB (please don't call it ZB - see my blog "When SAP replaces ZAP") and have that one add external requirements. Now you have choices in a flexible (not rigid) tool to manage your operations.

Only when you don’t understand how to customize the SAP software, you will be limited by the delivery that comes out of the box. The real value of using SAP software, lies in the use of a very flexible and sophisticated tool to build your perfect replenishment system (and S&OP strategies, and production scheduling methods, and planning strategies) that stretches from materials planning through purchasing and the eventual availability check in the production order; supported by inventory analysis, exception monitoring and service level measurements that provide you with valuable insight to monitor the performance... and... to change that replenishment system (I call it a policy - see my blog on policy setting) when the situation changes and asks for it.

SAP ERP rocks!