How SAP S/4 Hana Simplifies Inventory Management

On average, U.S. retail operations have a supply chain accuracy of only 63 percent, resulting in delays and restocking issues. According to an industry report, more than 30 percent of organizations ship an order late due to selling a product that wasn’t in stock. Only 6 percent of companies report complete visibility on their supply chain, while 43 percent of small businesses don’t track their inventory. This can lead to more supply chain disruptions, causing significant financial losses.

Clear visibility and inventory tracking are thus the biggest challenges that manufacturing and retail industries face. This not only blocks the capital, but warehouses and storerooms add to costs. Both over-stocking and under-stocking can cause serious negative financial repercussions to the company. Hence, inventory management is crucial, and it is critical to opt for the right solutions and ensure business growth.

With the introduction of the new S/4 Hana data model, most inventory issues would be on the path to resolution. Interestingly, S/4 Hana comes with benefits like in-memory columnar storage. This means the system has one single new table with all the previous data, required technical fields, etc.

S/4 simplifies inventory management with a variety of features and benefits. With unlimited potential for managing daily operations, real-time data about sales and costs, and role-based design for efficiency, you can reduce costs and increase revenue by maximizing stock value and creating a dynamic supply chain. Let’s dive into some of the essential functions that S/4 empowers businesses with.

Inventory planning

Inventory planning measures how much of a product you need at any time. It’s like having a crystal ball when you set up a successful inventory management system. You know in advance the products you need to replenish when you need to place the order and how many products will be delivered. This helps reduce costs and lets you better manage customer demand.

S/4 allows for far-sighted inventory planning designed to increase the operational efficiency of your inventory management system. It enables you to implement key planning strategies like make-to-order, make-to-stock, MRP Live, and Kanban in your S/4 system. With its flexible architecture, you can use this feature to integrate seamlessly into your business processes, resulting in a more straightforward way of handling inventory management.

Executing inventory

The S/4 Hana platform provides unlimited potential for managing daily operations through an intuitive interface called Fiori. Utilizing this powerful tool, you can streamline your inventory data flow and better manage exceptions for enhanced visibility across your organization.

With exception handling and physical inventory features, you can better track damaged goods and reduce return rates, saving money on costs like medical claims and rework. Plus, transfer functionality enables you to manage returns and restock more efficiently.

Analyzing inventory

S/4 helps you understand your current inventory situation and predict future trends. You can gain access to real-time data and information on planned production and delivery patterns, forecasts, and exceptions in a few clicks. Analytics tools also let you conduct inventory analyses based on historical values or create custom queries that meet specific business needs.

It offers real-time data about sales and costs, role-based design for efficiency, and CDS views that allow you to see what’s offered and associated KPI data in one place.

How S/4 Hana adds value to inventory management

There are several ways that S/4 Hana inventory management adds value.

Storage location

Storage locations in S/4 are defined depending on the stock ownership, type of material, and other determinants. The storage location level is one of the lowest organizational inventory management units without implementing SAP EWM in S/4. There is a possibility that one plant may have many storage locations depending on the organization’s needs. Still, only one storage location can be assigned to only one plant at a time.

Stock room management

Stock room management with S/4 aids small warehouses that need simple processes covering basic warehouse activities. This solution offers the existing LE-WM customers a chance to keep their lean warehouse while shifting from ECC to S/4. Stock room management allows businesses to continue using basic warehouse functions while reducing risk during the transition.

Role templatization

S/4’s role templates allow users to configure their roles based on their company’s business processes. This way, manufacturing customers can develop a more specialized scope of activity for their staff members. If a company has a planned organizational structure, it will be easy to set up S/4 with the appropriate role template, covering most required functionality. Consequently, S/4 supports an efficient manufacturer-to-retailer supply chain administration, such as managing stock levels and sales forecasts.

Extended Warehouse Management

Extended Warehouse Management or EWM enables flexibility in system-guided goods movements and managing stocks in complex warehouses. This system also aids in the planning and optimization of warehouse space and resources. Also, to address complex warehouse needs and challenges, there are different ways in which EWM solution deployment can happen. EWM deployment methods have evolved and can be deployed as standalone EWM Classic, S/4 embedded, and S/4 decentralized, each offering different functionalities and advantages.

Conclusion

The S/4 Hana platform offers unique advantages in inventory management. With a complete overview of all inventory levels, you can more easily decide how to nurture your supply chain. Once you consolidate your data into a single source with Hana, it’s easy to connect the entire enterprise to ensure maximum efficiency. With all this information at your fingertips, you can pursue growth opportunities with greater confidence.