A Functional Perspective on SAP S/4HANA Simple Logistics

The latest releases have been rolled out in May to June 2016 for S/4HANA packages – the On-Premise (Edition 1511 FPS02) and the On Cloud (Edition 1603). There have been considerable enhancements and extensions about functionalities under logistics.

We will go through the detailed Business value and benefits of various offerings under Supply Chain and Manufacturing, Procurement and Sourcing. We will also discuss key functionalities offered in S/4HANA under each offering mentioned above.

SAP has put in huge efforts to clarify that SAP S/4HANA is a brand new product line by itself and isn’t the successor to any previous Business suites that it has brought out. But on closer inspection, it seems like the S/4HANA Enterprise Management Edition has functionalities to help enterprises in realizing the need for migration to give up the old Business suite. But the differences between On-Premise and cloud edition are not so vast that, both editions cannot be covered under a single viewpoint! That’s what we’ll do here. Comb through functionalities of both editions at one go!

Key innovations under each area are listed below, along with how the mentioned innovations will benefit any enterprise based on the best practices adopted using and into S/4HANA:

Procurement

Innovations under the procurement area are as given below:

Simplicity

Since procurement is synonymous with complexity in the form of manual work, time-intensive processes. It also has high volumes of line items and purchasing documents. S/4HANA reduces operation costs of procurement by providing a simple and highly efficient procure to pay process. Such a process is powered by Fiori apps. Role-based apps enhance the User experience and simplify it, with real-time analytics adding considerable Business value.

Visibility

Ad-hoc supplier transparency and performance evaluation bring about levels of process visibility that were not familiar in previous trends. Such transparency is based on detailed data points and SAP Ariba network integration for transactional data.

Adoption

As mentioned earlier, the procurement process being manual leads to higher cycle times and being prone to error as well. Self-Service Requisitioning in S/4HANA leads to high Business user adoption through consumer-level user experience. The interaction steps needed to obtain procurement information is a fifth the original number, which in turn leads to faster data which is more accurate.

Inventory Management

Innovations under the Inventory Management area are as given below:

Accuracy

When there is an absence of real-time analytics, along with process and data redundancies, there can be doubts regarding valuation accuracy or inventory figures. This is where SAP S/4HANA comes into play with detailed real-time processing of inventory postings. This leads to inventory with higher accuracy. Parallel inventory posting is also made possible for standard price-driven materials. This enhances the chances and volumes for On-Time delivery. An accurate valuation is also possible here as it is based on a single valuation method called the Material Ledger. All the mentioned functionalities are simplified through the use of Fiori apps.

High Inventory Turnover

More accuracy and visibility of inventory is possible across the board. Therefore safety stock can be an option for enhanced inventory turnover. This, in turn, leads to minimized working capital expense to the company.

Segment of One

Real-time processing in place of batch processing enables management of dynamic demand fulfilment for even lot size of one. This can be facilitated throughout logistics operations.

Material Requirement Planning/Capacity Planning

Innovations under the Material Requirement Planning/Capacity Planning areas are as given below:

Flexibility

Revenue loss is common because of poor delivery performance and stock-outs. Material flow issues can be viewed with great visibility and on high priority. Available capacities and receipts can be customized to a great extent to meet the required volumes.

Fast

Accelerated demand propagation through the supply chain is possible providing higher opportunities for enhanced planning quality and simulation. The speed can be up to 10 times faster.

Real-Time

S/4HANA offers real-time alerts based on current stock requirements situation along with real-time inventory overview.

MRP Fiori apps provide managing and monitoring of both external and internal requirements, material coverage, monitoring production or process orders. The plan is to have a single MRP system for planning including the APO PP/DS into S/4HANA.

It will also provide intuitive maintenance of master data and integration models. This will be a great innovation and will provide an edge for planning aspects of S/4HANA. This will result in the fulfillment of on-time orders. This is done with precise quantities through different checks for varied Business scenarios coupled with the execution of automatic back-order processing.

Conclusion

All the points mentioned above show us that SAP S/4HANA Simple Logistics is functional on many levels. This makes it a product for the Digital Enterprise, boosting the bottom line in every possible way.

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