2. Supply Chain Management
Major Challenges
1
Forecast inaccuracy, demand variability &
lack of real-time insights
2 Poor Visibility
Not having right processes in place to respond to volatile demand
in real-time
Lack of end-to-end visibility and coordination across the supply
chain
3 Lack of Integration
32%
70%
70 days
High Safety Stock Levels
High Inventory Carrying Cost
Stock Outs
Low OTIF and Customer
Satisfaction
Extended lead times
of manufacturing is outsourced in a
typical company
of suppliers lack visibility
into customer
order management
Average on-hand inventory in
manufacturing supply chains
Suppliers
Owned
Factories
Contract
Manufacturers
Suppliers
R&D
Retailers
Distributors
Enterprises
Direct
Consumers
Multi-Supply Multi-Product Multi-Channel
SUPPLIERS MANUFACTURERSCUSTOMERS
Supply chain network complexity and impact of globalization
Source: Supply Chain Insights 2014
3. Supply Chain Variability
Retailer Orders
Actual Consumer
Demand
Volumes
Time
Retailer Warehouse
to Shop
Manufacturer Forecast
of Sales
Production Plan
Consumer Sales
Time
Qty
Retail Orders to Wholesalers
Time
Qty
Wholesaler Orders to Manufacturers
Time
Qty
Manufacturer Orders to Suppliers
Time
Qty
4. What Does This Mean for Your Customer
Inventory Levels
Supply Chain
Disruptions
Revenue Loss via
Stock-Outs
Manual Data
Exchange
Paper Based
Invoicing
High Excess &
Obsolete Inventory High Expediting Costs
Potential Revenue
Loss due to stock outs
Higher Buyer /
Planner FTEs1 Erroneous Invoicing
Low Predictability of
Supply
High Potential for
Supply Disruption
Lower fill rates
Lower Revenue Per
Employee
Long Invoice Lead
Times
High Inventory Carrying
Cost
Higher Cost of Quality
as a % of Revenue
Lower Overall
Equipment
Effectiveness6
Poor inventory
reporting and status
capabilities
Potential Supplier
Compliance Leakages
High Cash Conversion
Cycle
Poor User & Supplier
Experience
6. Review forecast & alert buyer
Create constrained supply plan
Supplier Managed Inventory
Run MRP (Export Depo, Plant)
Confirm & transmit POs/schedule lines
View, confirm and ship POs
Follow up with Suppliers
Review consensus demand
Share purchasing forecast
Collaborative
Supply
Chain
@
Your Company
Manufacturing
?
Quality
Quality Collaboration
Visibility to Sub-Contractor
Pre and post Dispatch quality notifications
Invoice Management and Payments
Consignment Movement Visibility
7. SAP Ariba Supply Chain Processes Orchestration with Visibility
Beyond boundaries of your Organization
Forecast Collaboration
Supplier Managed Inventory
PLAN
INVOICE &
PAYMENT
BUY & MAKE
PO Collaboration (all PO types)
Vendor Consignment
Subcontract/ Contract
Manufacturing w/ Multi-tier orders
Share forecast
Scheduling Agreement Release
Quality Notifications
Quality Inspections
Quality Reviews
SUPPLIERBUYER
Forecast commit
Share demand, inventory and min/max levels Provide & execute against shipment plan
via scheduling agreement
Place, inquire and receive order
Confirm order and provide advanced
shipment notification
Report consumption of consigned stock
Provide rolling delivery schedule w/ different
firming levels
Execute against firmed orders
(released)
Place order with components
Provide notification of components’ shipment
Provide component inventory & order visibility
Notify buyer of components’ receipt
Provide component consumption
Communicate & respond to quality notification
Request test results, COC, COA
Collaborate and share quality documents
Self-Billing/ ERS Invoicing
Provide self-bill/ ERS invoice based on GR
Provide payment notification
Vendor Invoice Processing
Provide invoice processing status & payment
notification Provide invoice based on PO/ ASN
Return Order Collaboration Place return order & provide return ship notice Provide credit memo
Request & respond to quality notification
Submit test results, COC, COA
Collaborate and share quality documents
External Manufacturing Visibility Provide Manufacturing and Inventory Status
8. Ariba Network :World’s Largest B2B Trading Platform
It has ~ same GDP as India
3.8Million
Companies on the
network
Companies
60Companies
Join the Ariba network
every hour
2.7Trillion
in annual commerce
461Million
Documents annually
processed
(all types)
579Thousand
Timesheets processed
annually
190Countries
Our customers and
suppliers are located
187Thousand
Catalog on Ariba
Network
338Thousand
Leads sent annually
to sellers
19.6Million
Users
Open & extensible Plattform Global Supplier enablement &
Onboarding service
True Global Network with
Connect Once
9. Connect Once With Network effect.
Powered by
SAP Cloud Platform Integration (CPI)
SAP Ariba Cloud
Integration Gateway
SAPCloudConnector
SAP
PI/PO
Or
Any
Middlware
SAP CPI
(Customer
Managed)
SAP S/4
HANA
Add-On
SAP
ERP
Add-On
Third
Party
SAP CPI
(Supplier
Managed)
Supplier Systems
Supplier
Standards
X12
EDIFACT
OAGIS
GUSI
EANCOM
PIDX
xCBL
cXML
One-click
deployment
SAP
PI/PO
Test
central
Portal
Integration
wizard
Developer
tools
Buyer
Buyer/Planner Supplier
10. Supplier customer service
Available every step of the way to ensure success
FTEs in
group
languages to provide smooth
transition and support
locations around
the globe700+ 21 9
Supplier
Onboarding
Catalog, Fulfillment Risk,
Pay Term Strategy
Category
Experience
Integration
Experts 24/7 Hotline
Sourcing Best
Practice
Supplier
Communication
Onboarding /
Taxes
Event
Monitoring
Training
Supplier Mobile
App
Transformation
Success
Additional ServicesSupplier Management Organization
11. SAP Ariba Supply Chain Collaboration CustomersDiscreteProcessConsumerOther
DO NOT SHARE ELECTRONICALLY OUTSIDE SAP
12. Microsoft & SAP Ariba Business Transformation Study
$300M working
capital improvement
5% OTIF improvement
$15M reduction in
COGS
Check out the full video
here
1. Public Financial Statements, DIO: Google Finance, Net Cash Flow from Operating Activities: AmigoBulls 2. Seeking Alpha, Microsoft: Cloud Growth Exceeds
Expectations, Shares Priced for Additional 50% Upside, July 2017 3. The Motley Fool, Warren Buffett: 3 Ways to Protect Your Savings From a Crisis, 2015
Microsoft benefits from
SAP Ariba Supply Chain
Collaboration
DIO represents the amount of time capital is tied up in inventory
DIO is a measure of operational efficiency and financial performance
The cash and cost value proposition of improvements can be calculated via
DIO and it’s publicly available in financial statements
Shorter DIO improves working capital and increases cash flow; and cash is
king!
Increases in cash enables investment in it’s various forms, for example
acquisitions, expansion, CAPEX, research & development, dividends, share
buybacks, etc.
On Microsoft, “The company’s stock price should continue to increase over
the coming years as this growth in earnings and free cash flow is proven
out.”2 -- Seeking Alpha July 2017
Companies can be profitable but still run out of cash
“Cash...is to a business as oxygen is to an individual: never thought about
when it is present, the only thing in mind when it is absent”3
-- Warren Buffet
MICROSOFT FINANCIAL PERFORMANCE1
29
22
Q1 2016 Q1 2017
25
23
Q2 2016 Q2 2017
23% 9%
Days Inventory Outstanding (DIO)
Net Cash Flow From Operating Activities
Q1 2016 Q1 2017
15%
Q2 2016 Q2 2017
19%
24,860
28,500
33,330
39,510
13. “Bringing a new supplier online was taking anywhere from 6
weeks to 2.5 months. Now we are doing it in less than a week”
~ BASF
What are SAP Ariba Network Customers saying?
“It took us two and a half years to get 14 suppliers on EDI. It’s
taken us less than 6 months to get 60 suppliers on the SAP
Ariba”
~ Dulux
15. Supply Chain Collaboration Base Package
Forecast
Collaboration
Inventory
Collaboration
Quality
Collaboration
SAP Ariba Network
Forecast / Demand visibility
Forecast Commit
Standard PO Order Collaboration
Scheduling Agreement and Schedule Line
(Delivery Schedule ) Collaboration
Outsourcing Manufacturing Order Collaboration
Consignment Order Collaboration
Quality Notifications
Quality Inspections
Quality Reviews
Demand/inventory levels
Planned shipments
Replenishment Order
Multi-Tier Order Collaboration
Return Order Collaboration
Handling Unit ( Packaging Instructions and
Barcodes)
Supply Chain Monitor
Invoice Collaboration
SAP Ariba supply chain collaboration
16. Buyer Creates
Unconstrained
Forecast in
IBP
Supplier
Receives
Forecast
Supplier
Adjusts and
Publishes
Forecast
Commit
Buyer
Receives
Forecast
Commit
Buyer creates
constrained
forecast based
on Supplier
Commit
Buyer
publishes
constrained
forecast
Planning Forecast Collaboration
Integration with SAP SAP Integrated Business Planning
Forecast Commit
• Forecast in IBP is send to suppliers who are on-boarded
on the SAP Ariba Supply Chain Collaboration platform
• Supplier commits forecast and sends it back to
SAP Integrated Business Planning
SAP IBP
SAP HANA
SAP IBP SAP IBP SAP IBP SAP IBP
18. Supplier Managed Inventory Collaboration
SMI Demand, Inventory,
Min/Max
Create / Update PO
Replenishment Order
buyer supplier
CAPABILITIES
• Optimize inventory levels
• Ensure supplier compliance to min/max
inventory rules
• Improved order fill rates in demand driven
supply chains
• End to End Process Support for Supplier
Managed Inventory SMI
• Support of Push based Replenishment
leveraging Min/Max
• Ability to create Replenishment Order by
Suppliers
• Dashboards providing min/max alerts and
planned shipment calculations
• Flexible key figure configuration
BENEFITS
Buyer Supplier / Contract manufacturer
22. Order Execution Collaboration Scenarios
• Standard PO Order Collaboration
• Scheduling Agreement and Schedule Line (Delivery Schedule ) Collaboration
• Outsourcing Manufacturing Order Collaboration ( Sub-Contracting Process)
• Consignment Order Collaboration
• Return Order Collaboration
• Multi-Tier Order Collaboration
• Handling Unit ( Packaging Instructions and Barcodes)
• Supply Chain Monitor
• Invoice Collaboration
23. Standard Order Execution Collaboration
Network
$2.7 Trillion of
Commerce with 3.8
Million Trading Partners
Purchase Order
Order Confirmation
Shipping Notice
Invoice / Credit Memo
Supplier Portal/Mobile
App/Interactive Email
GRN Notification
Service Entry Sheet
Service Entry Approval
Payment Advice
OC
IBD
GRN
Parked SES
SES Approval
Invoice /Credit Memo Post
Payment Run
PO
ECC /
S4HANA
Collaboration simplicity
with a single business
network
Embedded supplier
onboarding services
End-to-end process
orchestration to validate
and enforce compliance
Network intelligence,
data & insights to
reduce supply chain risk
World’s Largest network
of trading partners
100+ Business
Rules
InvoiceInvoice Park
Your
Company
24. Scheduling Agreement Collaboration
Schedule agreement release
(FRC/JIT)
Goods receipt notice
Self-billing/ERS invoice
(option A)
Payment
Advance ship notice
Invoice (option B)
buyer supplier
CAPABILITIES
• Improved visibility into availability of supply
• Greater transparency for suppliers into longer-
term and near-term demands of their
customers
• Flexible invoicing options, including self-billing
and supplier-generated invoicing
• Extends rolling delivery schedules to suppliers
• Indicates the degree to which the lines of
schedule are binding.
• Firm zone (go-ahead for production) – this is
firm and fully binding
• Trade-off zone (go-ahead for procurement of
input materials)
• Planning zone (forecast)
BENEFITS
Buyer Supplier / Contract manufacturer
25. Contract manufacturing collaboration process
CAPABILITIES
• Allows buyer to leverage purchasing power
while maintaining visibility and control into
contract manufacturing process
• Improves visibility into availability of supply,
inventory, and production status
• Informs CM about product ordered and
components to be used
• Enables buyer and CM to share
component consumption data
• Enables contract manufacturers to report
receipt and consumption of components
with relevant batch information, ensuring
greater predictability of supply
BENEFITS
Subcontract purchase order
Goods receipt notice
Component ship notice
Payment
Component inventory status
Component receipt notice
PO confirmation
Component consumption notice
Advance ship notice
Manufacturing visibility
Self-billing/ERS invoice
(option A)
Invoice (option B)
buyer supplier
Buyer Supplier / Contract manufacturer
26. Consignment collaboration process
CAPABILITIES
• Improves buyer cash flow and inventory
turns by deferring transfer and payment of
goods until they are consumed
• Minimizes risk of material stock-outs
• Reduces replenishment lead times
• Provides suppliers with visibility to
movements related to consigned inventory
• Obtain and share visibility into material
movements with suppliers
• Signal change of ownership of inventory
and settle payment to suppliers
BENEFITS
Buyer Supplier / Contract manufacturer
Consignment purchase order
Component stock receipt
notice (POD)
Consumption: consignment
transfer
Payment
PO confirmation
Advance ship notice
Self-billing/ERS invoice
(option A)
Invoice (option B)
buyer supplier
27. Create Drop Ship PO to
Raw Material Suppliers
Create Subcontract PO to
Co-Packer
Receives PO Confirmation
Receive Ship Notice
Component Stock Updated
Receives PO Confirmation
Consumption Update
Received
Receive Ship Notice
Stock Received in WH
(Optional Quality & Batch)
Invoice Received & Posted
1
13
2
8
10
15
17
18
20
Receives PO
Confirms PO
Create Ship Notice
Receipt Confirmation
Receives Copy
Receives Subcontract PO
Receives Copy
Receives Copy
Create Component Receipt
(Optional Quality & Batch)
Confirm Subcontract PO
Report Consumption
Create Ship Notice
Receipt Confirmation
Create Invoice
Raw Material Suppliers Co-Packer
3 4
5
6 7
9 9
1112
14
16
17
19
2122
Multi-Tier Order Collaboration
(Co-Packer, Drop ship Scenarios)
Buyer
28. Multi-Tier Order Collaboration
CAPABILITIES
• Improved order fulfillment and reduced
inventories based on multi-tier supply chain
visibility
• End to End Multi-Tier closed loop process
orchestration support
• Support of drop ship orders and shipments
from lower tiers into upper tier or contract
manufacturing locations
• Providing visibility to Logistics Providers to
manage transportation as needed between
the tiers.
BENEFITS
Drop Ship Order Visibility
Drop Shipment Visibility
+ Good Receipt capability
29. Handling Unit and Packaging Support
Automated Packing & Customizable Barcode Labels CAPABILITIES
• Suppliers allowed to provide shipments
based on packaging specifications
• Easier label printing and automatic
packaging, saving time and resources for
suppliers
• Efficient goods receipt processing for
buyers
• Enhanced UI to support handling unit
visual presentation and control
• Packing instruction support through CSV
and new business rules
• Handling of unit-based PDF (bar code)
label generation based on industry
standards
• B2B & Portal Enabled
BENEFITS
30. Supply Chain Monitor
Exception Management CAPABILITIES
• Supply chain visibility for Buyers and
Planners
• Real time supply chain exception
management
• Buyer/Planner dashboard view to monitor
supply chain
• Alerts related to orders, forecast, inventory
and quality
• Ability to manage exceptions with
approvals within the solution
• Time phased graphical views for open
purchase orders and shipment status
BENEFITS
31. Invoice Collaboration
Ariba Network
Line &
Header Tax
Tax Code
Compliance
Contract
Compliance
90% First Pass
invoices
Supplier
Name/ID
Bill To /
Ship To
PO Number
required?
Non-PO Inv
allowed?
Invoice No.
VAT/
Tax ID
Remit
Access
PO Line
Reference
Unit of
Measure
Price
Variance
Currency
Subtotal
Amount
Total Amount
Consumption
Variance
Receipt
…
…
Exception
Exception
Exception
Invoice
Invoice
Invoice
Invoice
Invoice
B2B (ERP to ERP )
Integrated Supplier Invoice
Portal Supplier (PO-Flip Invoice)
Smart PDF Based Invoice
Paper Based Based Invoice
35. Quality Collaboration Scenarios
• Quality Notification Buyer/supplier ability to collaborate on deviations during manufacturing, inspection
or post goods receipt.
• Quality Inspection Supplier ability to send inspection result along with certificate. Supplier ability to send
certificate (CoA, COC) on Ship notice as mandated by Buyer.
• Quality Review Unstructured Collaboration tool for buyer/supplier. Customer can define their own review
type.
36. Quality Collaboration
Quality Notification
CAPABILITIES
• Better collaboration between buyer and supplier to collaborate on quality issue with email notifications.
• Customers/Supplier can check the process status of their notifications whenever they want..
• Seamless integration of quality notification process between ERP Quality Management module and Ariba SCC .
• No need to open duplicate QN for the same defect in case of multiple batches/parts
• Advance access control based on the user role/permission
• Ariba network will allow supplier to notify customer about quality deviations during inhouse production or Subcontracting components that the
customer/supplier has sent to the contract manufacturer
• Ariba network will allow buyer to notify suppliers quality issues with finished product discovered during goods inspection.
• Ability to link PO to QN. Supplier should be able to navigate from PO to QN on click of hyperlink
• Add new business rule - Do not allow Supplier to create ship notice for the complaint quantity if there is an open QN for the PO.
• Quality notification with multiple parts/batches
• Customer ability to define QN type by category
BENEFITS
40. Quality Collaboration
Quality Inspection
CAPABILITIES
• Better collaboration between buyer and supplier to collaborate on quality process.
• Customers/Supplier can check the process status of their inspection whenever they want..
• Seamless integration of quality inspection process between SAP ERP Quality Management module and Ariba SCC .
• Advance access control based on the user role/permission
• Customer ability to request quality inspection from the supplier/contract manufacturer
• Suppliers ability to Send inspection results for the inspection lot/characteristic
• Supplier ability to send certificate of analysis (CoA) as an attachment along with inspection result
• Customer ability to share the final usage decision/inspection status to the suppliers.
• In case of inspection initiated manually before ASN, introduction of business rule to allow suppliers to send ship notices only after receiving
acceptance of inspection results.
• Email notification to buyer and supplier in case of inspection request, result, review and usage decision
• Add new permission for the Supplier user to view or create/update the quality inspection
BENEFITS
41. Quality Inspection Collaboration: Source Inspection
Send PO/SAR
Order
Receive OC
OCOC
Order
Invoice
Receive Invoice
Invoice
Supplier
AribaNetwork
Result recording Quality Inspection
Usage decision Quality Inspection
Inspection Result/CoA
Send inspection status
Quality Inspection
Send inspection request
Inspection lot
Receive ASN
ASNASN/GR
Result confirm/lock
Buyer
43. Quality Collaboration
Quality Review
CAPABILITIES
• Easier communication (threaded conversation) between buyer and supplier users.
• Reduction in cycle time for review, eliminate administrative burden. Increase compliance.
• Allow users to get the relevant email by opt for email per supplier/customer, review type and event based.
• Easy to find the review based on different criteria and keyword search.
• Ability for the quality users to support the collaboration on Batch record, Change request, customer complaint and general use cases.
• Change Request : Change request allow quality users to collaborate on any change such as process, material, equipment's. Provide subtype (to be configure by
buyer) to distinguish different type of change request.
• Customer Complaint : Customer Complaint allow quality users to collaborate on any product complaint, investigations from customer’s customer, Provides fields
such date of complaint, sample available for the review request
• General : General review type allow quality users to collaborate on any other review which is not supported by other reviews. Provide subtype (to be configure by
buyer) to distinguish different type of review. Ability to link a review type with PO, ASN, OC and or QN.
• Buyer admin can also define further review type for other use cases and ability to hide standard use case based on supplier.
• Buyers admin ability to upload master data such as Line of business, product family, part and plant combination to allows users to collaborate even if
customer/suppliers are not exchanging POs.
BENEFITS
46. What Does This Mean for Your Customers
Reduce Inventory
Levels
Mitigate Supply
Chain Disruptions
Prevent Revenue
Loss via Stock-Outs
Automate Data
Exchange
Intelligent Invoicing
& Payment
4 - 12% lower Days in
Inventory1
1 - 3% lower Logistics
Cost2
8 - 23% lower Revenue
Loss Due to Stock-outs1
9 - 25% fewer Buyer
/ Planner FTEs1Effort
20% -50% Higher
Invoice process efficiency
↑ Predictability of Supply
↓ supply chain
disruptions, which globally
totaled $56B3
↑ Fill Rate ↑ user experience
↓ Invoice Cycle Time
↓ Excess & Obsolete
Inventory
↓ Cost of Quality, which
can be 15 - 20% of
Revenue4
1 - 2% higher Overall
Equipment Effectiveness6
↑ inventory reporting
and status capabilities
↑ touchless processing
↓ Inventory Write-Offs
16 - 45% lower
Supplier Defect Rate5
1. High End Range % improvements: SAP Performance Benchmarking 2017, low end range is 35% of high end range 2. Book: Ronald Ireland of Oliver Write Associates & co-published with APICS , Supply Chain Collaboration: How to Implement CPFR and Other Best Collaborative Practices, 2005 3. The Load Star & British Standards
Institute, Supply Chain Disruption Cost $56bn Last Year - And There's More Risk to Come, 2016 4. ASQ, Cost of Quality, 2013 5. LNS Research, Quality Management in the Boardroom, 2016 6. LNS Research, Building the Business case for EQMS: Executive Positioning and Actionable Improvements, 2016 7. Individual corporate
benefits may vary depending on the level of maturity within an organization.
47. Thank You
“If you don't change what you are doing today,
all of your tomorrow’s will look like yesterday.”
