The Mounties Ride with mySAP Supply Chain Management

The Royal Canadian Mounted Police (RCMP), known to many as the “Mounties,” is the respected, 130-year-old police service of Canada. It is unique in the world because it’s a national, federal, provincial and municipal policing body. The RCMP handles federal policing responsibility for all Canadians as well as contract policing responsibility for three territories, eight provinces and 198 municipalities. It was created by the Canadian Parliament in 1919 with a mandate to enforce laws, prevent crime, and maintain peace, order and security.

“As much on SAP as possible”

Like many organizations, the RCMP needs advanced information technology (IT) to handle its ever increasing workload. With 14 divisions, four regions and 780 detachments throughout Canada, the RCMP needs a reliable, robust supply chain system to keep its 18,000 police officers in uniforms and other vital gear. The RCMP first started using SAP R/3 3.0F in 1998 to tackle Y2K requirements. It upgraded to version 4.0B in 2000 and plans to upgrade to version 4.7 in 2005, said Mary Premo, systems officer at the RCMP. An important goal has been finding a better way to manage the uniform and equipment supply program. The RCMP needed a faster, more reliable system in place to design, acquire, store and distribute provisions, often needed in remote areas of the country.
“We wanted to be as much on SAP as possible without all these different systems around,” Premo said. Though still a work in progress, benefits of the new SAP-based system are clear. The RCMP is saving time and money, Premo added. The SAP modules in use by the RCMP are Funds Management (FM), Controlling (CO), Finance (FI), Plant Maintenance (PM), Sales & Distribution (SD), Quality Management (QM) and Materiel Management (MM), numerates Premo. MM includes warehouse management, inventory management and purchasing.

Simplified and standardized

The Regina Armourer Unit is a vital hub for the RCMP, but it is 1,600 miles away from the main warehouse in Ottawa. That distance presented an IT challenge for the RCMP as it created its centralized warehouse management system. As it stands now, the central warehouse management system includes a Counter/Stores Services Unit for walk-in orders by newly commissioned officers, a Warehouse Distribution Administration Unit with a call center and special ordering capability, and a Bulk Storage Unit with short-term, long-term and large volume items in stock.
A staff of 19 handles everything, including a 42,000-square-feet warehouse, 200 sales orders shipped per day, 450 stock transport orders shipped per month, 80 shipments received per month, 275 returns per month and 35 walk-ins per month.
The system can do many key tasks, including:

  1. Configure purchase orders.
  2. Create specialized printouts with unique terms and conditions.
  3. Create customized reporting screens that take into account trade laws and regulations.
  4. Create standard text and processes for all users.

The RCMP used what Premo called a “vanilla” integration of SAP, with only one customization to standard processes. “It is possible to overcome restocking, work order tracking and cross-docking issues using existing R/3 functionality,” Premo said. The only change was the addition of a user exit for customized procurement reporting.

Fewer errors, more precise ordering

Since the Mounties have many items that must be created to custom specifications, they used the SAP QM component to ensure the final product was done correctly before any payment was made to the supplier. “We want it to be blocked for payment until we are sure it meets our specifications,” Premo explained. One striking result of this new process is that the Mounties have had significantly fewer errors in orders for specially made uniforms and specially made female body armor.
Many other tasks are simpler too. Warehouse workers, for example, “don’t need to stock as much because ordering is more precise,” Premo summed up. “We were quite surprised at how easy it was to maintain a scheduling agreement,” she said. Wireless handheld scanners linked with SAP are used to track and store product data accurately. Eventually, the RCMP aims to have a completely Web-based supply system, Premo said.
Of course there have been challenges during the integration, including user buy-in issues. Premo said it takes time for users to learn and accept the new, standardized SAP-based processes. Also, some data had to be reviewed line-by-line to get resupply processes up to the two-week turnaround speed the RCMP wanted. And the RCMP will need to invest in new hardware over time.

SCM success for Mounties and many others

In addition to the RCMP, many SAP customers, partners and executives were on hand for the Las Vegas event, hosted by Wellesley Information Services in conjunction with SAP. SAP board member Claus Heinrich gave a keynote speech to share facts and statistics about mySAP SCM. Heinrich coauthored the book, “Adapt or Die: Transforming Your Supply Chain into an Adaptive Business Network,” in 2003.
He cited an independent study commissioned by SAP in fall 2003, “PRTM/SAP Benchmarking Study 2002-2003: Supply Chain Planning,” conducted by PRTM, a global management consultant. It showed that companies using SAP achieve a net profit that is 75 percent greater than the market average. That is, they achieve an average of 14 percent profit versus the market average of 8 percent.
Further, the study showed that mature SAP users attain 40 percent lower inventory days of supply and 45 percent lower overall cash-to-cash cycle time. They achieved a 63 percent cost reduction, which is equivalent to a 1.7 percent improvement to revenue, due to better inventory control. “SCM is becoming real mainstream software,” Heinrich said, and provides a quantifiable competitive advantage.

Sarah Z. Sleeper
Sarah Z. Sleeper