From IoT to ERP is the new mantra in the service sector and industry. The reason is obvious: on the one hand, almost all companies have an ERP system and the vast majority have one from SAP; on the other hand, there are sensors, actuators, and electronic switches in almost all technical devices. Combining these two sides of the same coin is now the order of the day. GIB is a successful SAP partner from the procurement and supply chain sector and has been part of the global ifm group for several years.
This year, GIB and ifm set out to accomplish what the market dictates. The two companies will become one consistent provider for the concept of “From IoT To ERP”. The technology company ifm is focusing on complete integration of business and production processes. On a horizontal level, ERP-controlled supply chain processes will be optimized and accelerated; on a vertical level, the shop floor and business processes will be linked. The data are evaluated with on-prem or cloud-based software, visualized, and fed into the ERP system with special integration software. Ultimately, “From IoT To ERP” is about efficiency and resilience. According to a new study by IBM and Celonis on supply chain resilience, Chief Supply Chain Officers (CSCOs) see hybrid cloud, AI, process mining and execution management as critical tools for addressing the challenges they face due to the disruptions of the past two years. 72 percent of CSCOs surveyed expect to automate their processes in the next three to five years, and 69 percent plan to accelerate cloud adoption to improve real-time access to data. This is where GIB and ifm come in: with sensors, the public cloud, and SAP software.
Supply chain modernization
For the study by the IBM Institute for Business Value in collaboration with Celonis and Oxford Economics, nearly 500 CSCOs from ten industries were surveyed. The results show: Companies are currently looking for ways to modernize their supply chains – and are increasingly relying on data and hybrid cloud strategies to do so.
Modernization and automation require a holistic view of the organizational structure and corporate processes. In an E-3 interview, GIB Managing Director Björn Dunkel says, “A stable procurement process requires a holistic view of the supply chain, transparency, and communication between departments instead of silo thinking. This must also be reflected in the software. An ERP system alone is not enough; it needs other solutions to support it. On a strategic level, SAP Integrated Business Planning for supply chain, IBP, can provide exactly that. IBP is a highly complex and comprehensive tool that digitizes the supply chain process end-to-end, and, as a complex planning tool, can show the chief strategists in the company the way into a successful future.”
Supply chain tools
However, in order to get the strategies on the road, a tactical and operational tool is needed. Björn Dunkel also knows this and explains, “The tools must be usable for supply chain and logistics managers, for planners and MRP controllers. This is exactly what the GIB software provides. It is natively integrated into SAP, so that we are in some way already part of the SAP standard.”
But what happens in the public cloud? SAP’s maxim, “Keep The Core Clean,” ensures that there can be no more integrated solutions, including in-house SAP IBP. “Data are thus outsourced to subsystems and processed there,” says Dunkel. “Sounds a bit like the good old days of relational databases, where that’s exactly what happened for performance reasons. Back then, we complained that this approach leads to data inconsistency due to no longer current evaluations. Consequently, the meaningfulness and actionability of all evaluations and recommendations decrease and the discord between the involved parties increases, since there are several truths, depending on how up to date the data are.”
The advantages of moving to the public cloud then lie almost exclusively in IT considerations: speed, maintenance, security, and scalability. Says Björn Dunkel, “This means that the innovation driver in supply chain management would not be the business, but rather the IT department.”
When it comes to moving applications to the cloud, companies’ preferences tend to be for both minimal and major architectural changes. That’s according to Information Services Group’s latest study on cloud buyer behavior. According to the study, enterprises can simply move and restructure their applications to work better in a cloud architecture, rewrite them as “cloud-native” applications, or decommission them and move them to a software as a service (SaaS) provider.
E2E procurement and logistics
A comprehensive end-to-end process in procurement and logistics is orchestrated across many areas. What is the optimal architecture for this? On-prem, hybrid cloud, or even public cloud? “We are open to all architectures and can already offer supply chain solutions for any ERP variant. Not fully everywhere, but we are working on covering more and more application areas and improving more and more of our customers’ processes, whether in the private cloud or in the public cloud, as a hybrid or on-prem model,” explains Björn Dunkel in an interview with E-3 Editor-in-Chief Peter Färbinger.
On-prem versus cloud
“In the end, it’s the application area that dictates the architecture we need for it,” says Dunkel, describing the situation. “Let’s take supplier integration as an example. Here, we are forced to leave our safe haven, the on-prem world, because we need to make ERP data accessible and, of course, we also want to receive data. Here, without question, a cloud solution is the better option. If the data remain in the ERP environment, I still prefer an on-prem solution. Now, of course, you’re wondering why we don’t just create a cloud solution that can be integrated with both on-prem systems and cloud ERP systems. That would indeed be an exceptional solution. Unfortunately, however, there are still too many question marks regarding SAP’s Business Technology Platform, BTP, which we want and need to use as a basis for development. For example, the billing system is not clearly defined, the technical foundation is not really transparent, and even the choice of programming language is still up for discussion.”
How would Dunkel define this challenge? “The topic of supply chain and logistics, with the sub-sector procurement, has always been autonomous in the ERP world in my opinion,” defines Björn Dunkel. The relevance of this sector to SAP is shown by the fact that the ERP world market leader has already dedicated a separate solution to it in the past: SAP APO. “Unfortunately, APO has not been a real success story. Why? Because SMEs unfortunately did not see the relevancy of it. In general, supply chain management was not integrated into everyday business at all,” GIB Managing Director Dunkel knows from his professional experience. In many companies, supply chain management was limited to material requirements planning (MRP), in which structured planning was replaced by diligence, commitment, and gut feeling. However, current events are causing SMEs to rethink their list of priorities, and the topic of supply chain management with all its sub-processes is suddenly rocketing to the top of that list.
More agile, more efficient, VUCA
“The confluence of post-covid challenges, inflation and supply issues, changing security requirements, and the demand for greater sustainability has created a complex business environment. This is forcing companies to rethink and redesign their supply chains to become more agile, efficient, and sustainable,” said Jonathan Wright, Managing Partner Finance and Supply Chain Transformation, IBM Consulting. “Technology, along with data-driven automation and artificial intelligence, are key to not only identifying inefficiencies in current workflows, but also identifying new opportunities.” VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) describes characteristics of the modern world that summarize the challenging business management environment.
“Due to the influence of VUCA on the supply chain, a different kind of supply chain management is required,” explains Björn Dunkel. “The key here is to let strategy and execution learn from each other. The constantly changing reality must be factored into strategic planning, preferably in real time. Complexity needs to be kept to a minimum.” Thus, users need an intelligent system that follows the CLUI (context-based, location-based, user-based information) principle to guide each supply chain manager to do the right thing at the right time. “And that is exactly what ifm’s purpose is and will continue to be,” says Björn Dunkel, who is delighted with the latest step of the merger of GIB and ifm. “With Supply Chain Excellence, we offer our customers a two-in-one solution: the SCM planning tool for managers and the tool for simplifying the daily business of employees.”
Supply Chain Excellence
GIB comes from the procurement sector and for some time now has also been involved in supply chain management, or more precisely Supply Chain Excellence. Now GIB will be merged into the company ifm: What does this mean for GIB itself and for existing customers as well as the SAP community? “With ifm and GIB, two very innovative know-how carriers – ifm in the area of operational technology, GIB in the area of information technology – have found each other. We are thus combining the OT level with the IT level and creating vertical digitization in addition to the horizontally digitized supply chain. It is therefore a win-win situation for everyone, especially for our customers and of course for those who want to become one,” says Björn Dunkel.
Can volatility, uncertainty, complexity, and ambiguity be solved by one vendor alone, and will we see heterogeneous communities in the future? “A clear no,” emphasizes Björn Dunkel in the E-3 interview. “It is always important to keep the big picture in mind. Holistic SCM consists of four pillars: demand planning, manufacturing, procurement, and inventory management. If these processes are not seen as silos but as part of SCM and the supply chain manager aligns the sub-processes like cogs in a clockwork, the result is a resilient supply chain.”
Put simply, GIB has always been a very successful add-on supplier for SAP R/3 and Business Suite 7. Björn Dunkel: “To better paint the picture of the role that GIB and Supply Chain Excellence, SCX, play, I would say we shifted from add-on to value-add-in. Unlike most other SCM solution providers, including SAP itself, SCX runs in the digital core of S/4 Hana. That’s exactly what we’re taking advantage of. We access the SAP core directly, which is where we find the customer’s treasure trove of data, including all past and current master and transaction data.”
The IBM study mentioned above found that Chief Supply Chain Officers can take concrete steps to develop and operate data-driven and sustainable supply chains. Nearly 9 in 10 of the CSCOs surveyed are implementing execution management and 77 percent are implementing process and task mining to optimize their operations. By 2025, 83 percent of CSCOs plan to implement AI-powered real-time inventory management, and 74 percent say hybrid cloud integration is critical to digitally transforming their supply chains.
Björn Dunkel confirms these survey results, “Based on this data, the complex supply chain is analyzed realistically at sub-process level with the help of system-internal intelligence. We offer users a transparent picture of their sub-process quality and show how the sub-processes perform in the complete end-to-end process. We then incorporate our extensive process know-how, which we have gained from decades of consulting, countless projects, and coaching in a wide range of industries. Based on this, we derive concrete recommendations for action that, with constant improvement and optimization, will lead to excellent supply chain processes.”
Opportunities and change
Eliminating inefficiencies in core supply chain processes represents a tremendous opportunity. Chief Supply Chain Officers know they need to make these adjustments, and in many cases, they are already doing so. However, they often don’t have the insight into the data and systems they need to understand where changes need to be made. Furthermore, they lack the tools to drive that change. “This is how we do our part to help our customers achieve a resilient supply chain, despite VUCA. In this way, we make successful companies even more successful. So, it’s actually quite simple,” describes Björn Dunkel his work in the SAP community.
This raises the question of whether the complexity of procurement and logistics can still be managed using traditional IT tools, or whether users will need a digital twin of their supply chain in the future. GIB Managing Director Dunkel says, “The ERP world is basically already an attempt to create a digital image of reality. This digital image is then used to forecast, plan, and control reality with all the variables, influences, and all the knowledge of the past. However, for this to be truly successful, it is also necessary to harmonize, compare, and analyze the data in ‘near real time’. This is not possible with paper, pencil, and gut feeling.”
Track, trace, quality
It’s the same in procurement: Is the part or material available or not? If so, where is it? Where should it be? Where is it going? It’s about locating and tracking as well as quality assurance. In other words, it’s about track, trace, and quality. That means integrating the physical world into the ERP system, integrating OT and IT. And what about the use of machine learning and AI in procurement and logistics in general? “In Supply Chain Excellence, we have already integrated machine learning and artificial intelligence. For example, we calculate safety stock based on neural networks or determine the best-fit forecast process. However, that’s not enough for us. We are currently working on a machine learning solution for optimized, detailed production planning. A first version is already being delivered in Release 23. For big picture SCX, we have anchored ML and AI as a fixed component. We’re working on using artificial intelligence as a decision support for a wide variety of operational topics around procurement.”
Another trend in the SAP community besides ML and AI is the discourse around a future cloud model. According to a recent survey by the German-speaking SAP user group DSAG, use of public cloud is not yet very widespread. What risk does ifm take with this concept? And why? “I can certainly confirm that,” comments Björn Dunkel. “The public cloud is still a bit exotic. And two years ago, we would never have dreamed that today, we have a customer who has decided to go down exactly this route – with us, of course. There are clear arguments in favor of the public cloud, for example data security, maintenance, up-to-date systems, and, of course, the return to the standard and away from sprawling customizations. Moving away from on-prem can also be a means of ensuring a company’s future competitiveness.”
Public cloud and SCM
Gigaset, a German manufacturer of communications products and solutions, has decided to move to the public cloud when it switched to S/4. It was important to the company that certain functions from the external solution for improving logistical processes in SAP could also be used in the public cloud. In close cooperation with its trusted solution provider GIB – in future ifm – which has many years of experience in the supply chain sector, the functions are now being transferred to the cloud. “Apps in the public cloud are ultra-modern in terms of design and usability, stylish, and can be operated from any mobile device,” describes Björn Dunkel the current situation.
The Fiori look and feel has really set milestones here. For management considerations and strategic evaluations as well as for finding basic structural problems in the process, this is a clear and intuitive solution. However, how MRP controllers get the information from their cockpit, with which they control all materials from one application, onto their screen, is a question not only asked by GIB Managing Director Dunkel. “In this case, the Launchpad quickly becomes unmanageable. We took on this challenge and, true to the Fiori premise of ‘three clicks to the finish line,’ developed an application that uses the advantages of the new world but takes the expressiveness of the old world into consideration. This has encouraged our pilot customer to continue on the path to the public cloud. And we realized that we could combine the best of both worlds, creating a way to gradually bring our proven suite to the public cloud.”
Björn Dunkel sums up the discussion as follows, “Our solutions are so popular because we are so good at creating transparency. For the day-to-day business of materials requirements planning, we have developed cockpits that display all the relevant information an MRP controller needs on one screen. No tedious transaction hopping. No twenty clicks to see if action is needed, and another ten clicks to unravel the mystery of what you’re supposed to do.”
Challenges for Chief Supply Chain Officers
The IBM Institute for Business Value, in partnership with Celonis and Oxford Economics, surveyed 500 Chief Supply Chain Officers (CSCOs) from a variety of industries. The goal of the survey was to gain a comprehensive understanding of how recent disruptions in global supply chains are impacting their short-term and long-term strategies and performance. CSCOs from ten industries were surveyed: Financials, Consumer Products, Healthcare, Electronics, Telecommunications, Insurance, Industrial Products, Manufacturing, Automotive, and Life Sciences, each representing five to fifteen percent of the total sample.
- 80 percent of CSCOs surveyed in the study said demand volatility was one of the biggest challenges, while 77 percent cited increased transportation and logistics costs.
- 76 percent rated bottlenecks in transportation and logistics as the biggest challenge.
- 71 percent said lower inventories of raw materials and goods have led to supply shortages and lost sales.
- 60 percent had to speed up product deliveries for customers, resulting in higher transportation costs.
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