Manufacturers are trying to transform the insides of their organizations through digitization in an effort to become predictive and proactive. But the need for digital flexibility extends beyond the four walls of the factory floor and enterprise and into the external supply chain. Supply chains, after all, need to be responsive to disruptions in the form of weather, economic crises and even changing consumer demands.
“Because today’s consumers expect short lead times and higher flexibility when ordering products, it’s time for product companies to change the status quo,” said Eric Schaeffer, senior managing director and head of Accenture’s Industrial practice.
In response to the new needs of manufacturers in consumer packaged goods (CPGs), automotive, industrial machinery and other industry segments, Accenture and SAP this week announced plans to co-innovate, codevelop and jointly go to market with a collaborative offering that will provide predictive material requirements planning (MRP) capabilities. The technology will expand the capabilities of SAP’s S/4HANA in-memory enterprise resource planning (ERP) software, augmenting the suite’s demand-driven MRP planning to help organizations run more flexible, live supply chains.
The goal is to provide fast and simple MRP simulations that support analyses and forecasts, including capacity issues, component demands for negotiations with suppliers, engineering changes, and evaluation of the impact of demand changes or supply disruptions. Accenture’s team of experts will provide best practices, business case analysis and deployment support capabilities to accelerate customer adoption of SAP’s S/4HANA Demand-Driven MRP (DDMRP).
“Working with SAP at the development level and combining the power of SAP S/4HANA with Accenture’s industry knowledge and best practices, we can help clients transform into lean, agile, intelligent enterprises that gain more control and clarity over their operations,” Schaeffer said.
The announcement builds upon an initiative the two companies began in January 2016, when they outlined plans for a comprehensive program of ongoing collaboration on core development and go-to-market execution for SAP S/4HANA. The duo wants to provide customers with new planning capabilities while supporting real-time, end-to-end supply chain visibility and responsiveness.
The new capabilities may also help CPG companies dealing with the burgeoning e-commerce model, which has them struggling to figure out how to sell small quantities of products online. It’s an expensive model that is limited by supply chain flexibility.
“The SAP/Accenture collaboration goes a long way to addressing these challenges,” said Richard Howells, SAP’s vice president of solution management for supply chains.
“The DDMRP concept uses actual demand instead of forecasts to drive replenishment through a decoupled supply chain. It involves positioning the right quantities of stock where they are needed up and down the de-coupled supply chain and topping them up as they are consumed in a stable and repetitive sequence.”
In this way, materials and products are pulled through the supply chain using a simple “make to replace” and “ship to replace” mechanism in line with actual demand, eliminating the need for expensive and disruptive expediting and intervention.
“When replenishment is being driven by demand, not the forecast, it’s always accurate, so service-saving schedule changes are eliminated, supply is stabilized and inventories stay both right-sized and balanced,” Howells said.