SAP S/4HANA: Supply Chain Planning

RESEARCH REPORT

In brief

Traditional material requirements planning (MRP) has run its course; increasingly global and digital business requires a demand-driven approach.
Demand Driven MRP (DDMRP) applies breakthrough methodology and power of SAP S/4HANA for better supply chain management in volatile environments.
Through DDMRP, the supply chain becomes more plannable with less “firefighting;” benefits include improved inventory control and customer service
DDMRP for one Accenture client, an aircraft manufacturer, can reduce inventory up to 40 percent and sharply reduce its rate of missing parts.

Thinking differently about the supply chain

Across global supply chains, the move is well underway. Supply chain leaders are pivoting from their traditional focus on cost, cash and service to a new paradigm based on speed of material flow and real-time information visibility.

Fast material flow through the supply network will ensure inventory reduction, optimal asset utilization and increased customer service while maximizing return on investment. An intelligent supply chain, enabled by real-time material tracking and the Internet of Things, supports this new approach.

The Demand Driven Operating Model, combined with Demand Driven Sales & Operations planning and the Demand Driven MRP (DDMRP) process from the Demand Driven Institute, is the new standard for establishing and managing the supply chain amid volatile and difficult-to-predict global markets.

Through DDMRP’s breakthrough methodology, combined with the power of SAP S/4HANA, we’ve seen clients achieve tangible supply-chain improvement that benefitted the broader business.

Supply chain leaders need to shift from cost and service-focused supply chain management to material flow speed and real-time information visibility.

Potential DDMRP implementation benefits

-60%

Inventory reduction

+45%

Service level improvement

-85%

Lead time reduction

Our experience with clients also shows that DDMRP produces quantifiable benefits. For example, for aircraft manufacturer, we delivered a proof of concept for a new visual ordering methodology based on DDMRP.

We helped the client to deploy DDMRP and drive the organizational change. A new end-to-end ordering process, supported by visual tools, can lead to up to 40% inventory reduction and a significant reduction in missing parts.

The traditional MRP engine is no longer suitable to deliver an optimized supply chain in a world with increasing volatility, uncertainty and complexity.

Getting started with DDMRP

As an end-to-end methodology, DDMRP requires a profound supply chain management transformation, including a new approach to planning and execution that covers:

Training on concept and methodology.
Significantly adjusting business and planning processes.
Changing how planners assess and act on key performance indicators (KPIs).
Revising the planning organization and reward system.

How can Accenture help? We apply a unified approach and tested, holistic methodology to enable and implement the DDMRP operating model by coordinating the key elements for success:

Training - DDMRP transformation will only be successful if both leadership and the planning community truly believe DDMRP is the way to deliver breakthrough inventory and service results.
Piloting - Helping design and run a pilot for a representative supply chain to experience and compare the DDMRP replenishment orders with the current orders, analyze performance and metrics and design new tools and work processes.
Change management - Driving change in business processes, planning responsibilities, job functions, rewards systems, supplier relationships and KPIs.
Tailor-made solutions - Adopting the most suitable solution and road map based on the specific business situation and ensuring a smooth implementation.
Process (re)definition - Streamlining and integrating the planning process.