SAP Sharpens SCM Offerings with SOA

By Gurvendra Suri
Chief Executive Officer, Optimal Solutions Integration, Inc.

According to AMR Research and ARC Advisory Group, the worldwide market for supply chain management (SCM) software topped an estimated $6 billion last year, and is expected to reach or exceed $8 billion by 2010. In 2006, for the 3rd straight year, SAP emerged as the top SCM vendor with more than $730 million in revenue, outpacing the market with growth of 6 percent.

The primary driver for SCM growth is the pressing need to manage increasingly complex, global supply chains that often include a mix of global suppliers, contract manufacturers as well as company-owned plants, third-party logistics providers and a network of transportation providers. Smartly managing this complexity and remaining flexible enough to meet the demanding and dynamic needs of customers is paramount for many companies whose core operations revolve around globally disperse manufacturing plants and distribution centers.

To help companies tackle this complexity, SAP is evolving its SCM solutions to further utilize an enterprise service-oriented architecture (SOA). Powered by the SAP NetWeaver platform—the technical enabler of enterprise SOA, mySAP SCM automates myriad cross-functional business processes by enabling fast and easy integration of disparate enterprise data sources.

For example, the SAP xApp Sales and Operations Planning (SAP xSOP) composite application, announced in January and made available to ramp-up customers in March, provides a consolidated view of all the sales planning-related data that flows through spreadsheets and applications used by numerous departments throughout a company. By enabling finance, sales, purchasing and production departments to collect, analyze and track all sales and operations planning data in a central location, the SAP xSOP facilitates much faster, much smarter decision making.

SAP’s recent investment in transportation management functionality for mySAP SCM demonstrates the company’s commitment to helping its customers increase visibility and control of global shipments while reducing the high costs associated with transportation management. Additional enhancements to transportation management due to be released in Q3 will include more service-enabling granularity, with ‘tractors,’ ‘trailers,’ ‘drivers’ and ‘shipment requests’ represented as individual business objects, affording greater flexibility to match real-world supply chain conditions, and greater enterprise-level accessibility to enable rapid, cross-application business process innovation.

On the warehouse management front, the SAP Extended Warehouse Management solution has been separated from the ERP solution and continues to grow in scope (the next release will include Labor Management). Functionality for extended warehouse
management now available in mySAP SCM includes support for inbound and outbound
processing, facility management and storage, physical inventory management and cross docking, and workload balancing tools.

Bringing to fruition SAP’s mission to deliver the business value of enterprise SOA, the SCM solutions team is continually working to expose as services key bits of functionality from core SAP enterprise applications. These services then can be linked together as composite applications that address company- and industry-specific needseither internally by SAP, or externally by SAP customers or SAP’s growing partner ecosystem.

By leveraging the inherent capabilities of NetWeaver and the infinite possibilities of enterprise SOA, SAP will continually evolve its SCM offering to provide customers greater visibility, broader and deeper collaboration and real-time flexibility and adaptability. Equally important to companies with vital supply chain operations, the NetWeaver platform and the enterprise SOA vision allow for continuous improvement without disrupting core processes.

Supply chains are becoming increasingly global, complex, and interdependent. Enterprises now require integrated solutions that transmit supply information in real time across technology and company boundaries. The comprehensive functionality of mySAP SCM touches on all aspects of supply chain operations, from planning and collaboration through execution and analytics. Moving forward, look for SAP to work closely with customers and partners to sharpen its SCM offering by service-enabling an ever-increasing scope of supply chain planning and execution functionality.