Software for Logistics Networks

Feature Article | October 25, 2010 by Wolfgang Müller

SAP SNC provides an overview of complex logistics networks (image: BASF)

SAP SNC provides an overview of complex logistics networks (image: BASF)

Tracking orders, adding scheduled deliveries, exporting assignments: Changing consumer behavior and global competition are presenting today’s companies with diverse challenges in planning their logistics processes. The number of external partners involved in their procurement processes is rapidly rising, making it increasingly difficult for them to maintain an overview.

Yesterday’s linear supply chains are today’s multilayer logistics networks. Organizations need to connect their retail partners on multiple levels while ensuring an uninterrupted flow of information among all those involved. Under these circumstances, transparent logistics management in combination with suppliers and consumers is growing ever more important.

Suppliers working together

No matter what the industry, suppliers collaborate on various levels. Partners confer amongst each other before making strategic decisions – such as binding agreements concerning production capacity, joint product design, and long-term pricing arrangements. On the tactical level, they share data previews and production and transport plans.

This area also includes cooperation on medium-term capacities, bills of materials and inventories, material availability, and contractual agreements. Finally, partners exchange orders, production assignments, invoices, and credit memos in the more immediate term on the operational level.

Next Page: CSR & easier to purchase

With SAP SNC, you can assemble logistics centers in intelligent networks (image: BASF)

With SAP SNC, you can assemble logistics centers in intelligent networks (image: BASF)

Making purchasers’ jobs easier

SAP Supply Network Collaboration (SAP SNC) – which enhances SAP ERP and SAP Supply Chain Management (SAP SCM) – helps support the achievement of these goals. The application is particularly useful for midsize and larger companies in the processing and manufacturing industry: Since suppliers can organize their deliveries themselves, purchasers no longer need to trigger each individual order transaction, which makes their daily work easier.

Meanwhile, material requirements planners can use SAP SNC to tailor safety stocks to seasonal sales conditions. The application offers diverse options in this process, supporting autonomous operation or seamless integration into back-end solutions from SAP on the customer and supplier side, as well as shared use in a hosting environment.

Proactive CSR policy thanks to transparent data

On the supplier side, SAP SNC promises improved capacity utilization, faster order-to-cash cycles, higher inventory turnover, and more on-time deliveries. The application’s further advantages include harmonized purchasing processes with better conditions, prevention or early detection of supply bottlenecks, improved levels of service, fewer rush orders, and lower transport costs.

In addition, real-time collaboration with suppliers and customers and the resulting high level of data transparency makes it possible to follow a proactive, sustainable policy of corporate social responsibility. Finally, SAP SNC users report that the application can help reduce storage costs by 30 to 70 percent.

Next Page: Integration via EDI & Web interface

Integration through EDI or Web interface

SAP SNC supports different means of integration into supplier networks, such as through an existing Electronic Data Interchange (EDI) infrastructure. Users can also exchange files in open XML format by e-mail and other transfer methods. Smaller partners, meanwhile, need not have their own EDI infrastructure or SAP system: A Web interface enables them to use the application with nothing more than a browser and Internet access.

As you can see, SAP SNC makes it possible to collaborate in a way that fits your company’s size, ordering frequency, and order volume. Everyone involved can view and confirm the latest delivery schedule updates, compare versions, and generate advance shipping notifications for customers when goods are issued. Here, the release process can be fully integrated into existing installations of SAP ERP and SAP Advanced Planning & Optimization as needed.

Web-based management interface

SAP Supply Network Collaboration transfers the orders customers create in back-end systems directly to suppliers. With the application’s Web interface, users can then track their status, read and add notes, and export the orders into commonly used file formats.

Delivery dates and quantities, shipping notifications, and confirmations can be sent back to the customer’s back-end system in the same convenient way. Meanwhile, SAP SNC provides suppliers with packaging support – such as in designing and printing labels, which can contain data on multilevel packaging hierarchies, handling units, and barcodes.

The application automatically transfers such information to customer systems in connection with shipping notifications. The processes surrounding supplier billing and the posting of credit and debit memos are also automated, and users can view the status of payments and invoices on the Web or on paper whenever needed.

Next Page: System requirements

System requirements of SAP SNC

SAP SNC requires an SAP ERP system and SAP NetWeaver Process Integration (SAP NetWeaver PI) technology to exchange data between SAP and non-SAP systems. However, only the company initiating the collaboration in question needs these installations; the customers and suppliers sharing information face no such requirements

Based on the use of open business standards, SAP NetWeaver PI makes it possible to bundle all internal and external system interfaces in a single management component that offers a series of extensive monitoring functions. For instance, if a company with multiple branches runs a separate ERP system at each of them, it still only needs one central installation of SAP SNC, which gathers and consolidates all relevant data.

Prototype demonstrates possibilities

SAP SNC is already quite prevalent in the United States, but has seen relatively limited use thus far in Germany. To demonstrate the application’s potential – both as a streamlined, standalone variant, and in connection with SAP SCM and all its components – BASF IT Services has developed a prototype based on SAP SNC 7.0.

The prototype covers essential business processes and can later also reduce the significant amount of customizing effort customers often face. Based on best practices, this approach can make users’ everyday work much easier: More than 10 predefined solutions – for handling order processing, dynamic replenishment, suppler-managed warehouses, and other elements – facilitate nearly any conceivable scenario and shorten the time required for implementation.

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