Supply chain faces challenges as process digitalization expands

By Massimiliano C & Marco T, Consultants at Ayes Italy.

Supply chain central role and adaption to innovation

Nowadays all companies are interconnected with several other entities: suppliers, distributors, commercial partners and, sometimes, even their own customers.

In parallel, purchasing, production and sales management processes are developing at a spectacular pace.

For these reasons, supply chain is the business process which has been deemed to be the most strategic in the coming years, as it impacts directly on customer experience and represents both a very significant cost for the organizations as well as a great potential source of savings and revenues.

Supply chains must therefore adapt, leveraging on new technological platforms, both to reduce the timing of the decision-making process and to allow greater visibility on demand, primary lever of the planning process.

By digitizing processes and fostering customer centricity and business innovation, it is possible to make supply chain planning more productive, responsive and strategic.

This objective is typically achieved using ERP (Enterprise Resource Planning) systems. This process management software allows an organization to use a sole system of integrated applications to manage business and automate many back-office functions.

Among ERPs, SAP software, through its modularity, provides applications and services to support companies of any size operating in any market sector.

AYES uses SAP in a number of projects in order to obtain greater business agility to react effectively to changing market needs, thanks to an optimized integrated supply chain planning.

Perspectives & AYES vision

The continuous evolving of technology will play a fundamental role in the design and operational management of the supply chain of the future, making of the supply chain one of the central functions of companies – independently of the market sector.

Consequently, professionals dealing with the supply chain will have to be more specialized and have broader skills at the same time.

AYES, using its combined vertical and horizontal market approach, is well equipped to be part of this continuous evolution and to continue to bring added value to its customers.

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AYES, as a strategic technological partner for many global market leaders, uses a variety of methods and tools in its innovating supply chain consulting projects.

In this article we will focus on two key supply chain functions of the SAP ecosystem: Materials Management and Warehouse Management.

Materials Management in Supply Chain

The primary objective of the Materials Management function is to ensure correct supply of materials, minimizing costs related to inventory and material handling.

The Material Management module in SAP is known as SAP MM. It consists of a series of components related to the purchasing process, master data of materials and suppliers, inventory management, invoice verification or material requirement planning (to name a few).

One of the most important processes of the SAP MM module is Purchasing. This process starts with the edition of a Purchase Requisition (PR), followed by Purchase Order (PO), goods reception, invoice verification and supplier’s payment.

Warehouse Management in Supply Chain

Warehouse Management designates the process of coordinating incoming goods, their storage, their tracking and their distribution to the proper destination.

SAP Warehouse Management (WM) module provides flexible, automated support in processing all inbound and outbound processes, movement of goods and in managing stock in the warehouse complex.

SAP WM not only allows the company to monitor movements and quantity of goods in the warehouse but also to manage their delivery. It is therefore the most innovative and effective solution for making warehouse activities lean, fast and efficient.

Some of specific features of SAP WM include:

• Warehouse activities control such as managing storage bins and goods reception;
• Management and tracking of vehicles operating in the warehouse;
• Cross-docking that allows company to manage transportation of handling units across different distribution centers or warehouses till they reach destination.

AYES positioning: multidisciplinary & innovative services

AYES consultants take key responsibilities to support their customers in supply chain management. Activities operated or monitored by AYES include:

• ERP-based material handling to manage arrival «on time» on the production line;
• Reporting of any «missing» materials to proceed with the creation of a purchase requisition (PR);
• Stock optimization via performing materials handling from one project to another, when possible;
• Purchase order management (purchase requisitions, changes, cancellations, purchase order creation, order status monitoring);
• Alignment of the purchase orders with new needs based on changes in the production plan to ensure efficiency of the ERP system;
• Definition and monitoring of project KPIs;
• Data extraction and analysis with report creation.

AYES covers a very large spectrum of activities. As a multi-specialist player, not only can AYES adapt to a wide variety of different technical environments, but also often directly counsels customers on their strategic technological options.