From steamboat to speedboat: How companies are speeding up procurement and inventory management

Always one step ahead

Companies in the manufacturing industry develop and produce a wide variety of products for a wide variety of end-use customers, their requirements and application areas. The portfolio is correspondingly broad from standard to customised products and components according to customer specifications. IT plays a crucial role in this trade: it needs to be future-proof, scalable and flexible – characteristics that SAP S/4HANA offers. However, anyone who needs support beyond the SAP standard, for example in the areas of purchasing, scheduling, inventory and material management, can obtain this from ifm's Supply Chain Excellence solution.

By: Sarah Meixner for ifm

There's no doubt about it: SAP S/4HANA gets companies up to speed quickly when it comes to the SAP standard, but still leaves unanswered questions on the topic of inventory optimization, for example. Think about the phrase "everyday feels like groundhog day". Employees of companies with active material parts in the six-figure range are very familiar with the fact that there is sometimes too much and sometimes too little stock. Likewise, it is often not possible to determine exactly whether too many or too few parts are being used and how high the actual demand is. It is precisely this situation that can be the starting point for a joint project between material planning, purchasing and IT, to find out together how things can run better in the future.

Finally fit for the future

At the beginning, a detailed analysis phase helps to identify the problems. It is advisable to leave no stone unturned here: Key figures, stock-out ratios, dead stock value – everything needs to be scrutinised. In this context, it is always important not only to scrutinise operational issues, but also the processes behind them. After all, inventory and process issues often go hand in hand at companies, so harmonisation is an important aspect of the overall project. Interviews with key users and all MRP controllers provide additional support. In the end, the results should be summarised in a specification sheet. The conclusion is often the same: the standard SAP software is not sufficient for all requirements.

Tidy up the vendor's tray

With the specifications on board, step 2 can be tackled and providers with suitable solutions can be contacted and introduced. To-do no. 1 is then usually to tidy up the chaotic process landscape. For example, the Z-programs that exist in many companies are a major challenge: in the past, a Z-program was written for each individual issue instead of streamlining the processes. This always results in new workarounds. One disadvantage that can also be noticeable in the new S/4HANA world is that every Z transaction in the S/4HANA system entails maximum testing effort. A standardised set of rules is also often lacking. Many decisions are based on experience, but also on gut feeling. And this is exactly how successful companies should not operate.

The new centrepiece: ifm's procurement software

The Supply Chain Excellence for Procurement solution from ifm can not only be introduced quickly, within a few weeks, but also quickly provides the much-needed clarity in the day-to-day business of material planning thanks to harmonised processes throughout – for example, the same level of information, the same layouts and the same jumping-off points for all colleagues. This means that it is clear where the required information is located, it can be called up quickly and, if necessary, the alert monitor is activated to request the missing part before the sales department complains. Playing the fire extinguisher because various parts are missing is now a thing of the past. Problems are solved before third parties notice them. Work efficiency increases immensely. To summarise: There is glory in prevention.

Next stop: ifm's inventory management software

As with procurement, there is often a lack of transparency and consistency in inventory management. It is often unclear where safety stocks come from, for example, or who adjusts and updates order points. Standards such as ABC analyses or simulations are simply not feasible with existing tools. One problem here can be that employees do not know where they should primarily start: With the suppliers? With the KANBAN systems? The answer to these questions is the Supply Chain Excellence for Inventory Management software from ifm. With the software, employees can see at the touch of a button where, for example, slow-moving items are accumulating without having to wait for analyses from controlling, which in turn are based on vague devaluation figures. Also on offer: an MRP rule set that is precisely tailored to individual company requirements and technically integrated into the ifm tool.

Users have also seen significant improvements in master data, which is now only updated centrally once a month, for example. If necessary, a small group of employees can also do this themselves. One recommendation here is: In order not to overburden colleagues, it is better to centralise this knowledge only in the places that are allowed to make decisions.

Both tools will be technically "ready" in just a few weeks. At first, the change may seem huge, but at the end of the day, the new solutions bring tangible added value for the entire company – and complex becomes smart and simple.

Note: In addition to procurement and inventory management, ifm’s Supply Chain Excellence solution also includes demand planning and manufacturing.