Discover Logistics with SAP

SAP ERP and SAP SCM

Martin Murray

• Publisher: SAP PRESS
• Year: 2013
• ISBN:
  9781592299270
• Edition: 2
• Topic: Computer Science
• Subtopic: Computer Science General
• Index: Computer Science

PART I: Procurement and Logistics Execution

1 Introduction to Logistics with SAP

The current versions of SAP software are the result of the nearly 40 years of development that has been driven by customers’ needs. In this chapter, we’ll examine the origins of SAP, the elements of logistics within SAP, and how the logistics functionality can help you manage your company’s key logistics activities.

Origins of SAP

SAP was founded in 1972 by five ex-IBM employees in Mannheim, Germany. Today, SAP is a market and technology leader in client/server enterprise application software. SAP provides comprehensive solutions for companies of all sizes and industry sectors. SAP is the leading vendor of standard business-application software and the third-largest software supplier in the world. SAP delivers scalable solutions that enable users to further advance industry best practices. SAP is constantly developing new products to help users respond to dynamic market conditions and help them maintain their competitive advantage.

In 1979, SAP released its mainframe product called R/2. This was the first product designed as an enterprise-wide solution for business. The R/2 product was a hugely successful enterprise resource planning software suite, and SAP soon dominated the German market. In the 1980s, SAP developed a broader market in the rest of Europe. And, in 1992, SAP developed the client/server application called R/3. This allowed SAP to bring the software to the U.S. market, and within a few years, SAP became the gold standard for ERP software.

When businesses chose SAP as their enterprise application software, they identified the integration of the modules as a key advantage. So, while many other software companies used a best-of-breed approach and developed highly complex interfaces to integrate the separate software packages, SAP built modules into one complete software package, allowing customers to extend functionality as needed. This approach of supporting and maintaining just one system, rather than several systems with different hardware platforms, has yielded a significant cost savings for companies.

SAP currently has more than 100,000 customers and 12 million users in more than 130 countries. SAP also employs more than 64,000 people in more than 100 countries.

SAP develops its software in collaboration with its customers, developers, and business experts. The current software was developed to incorporate the best industry practices. The collaboration of user groups, such as the Americas’ SAP Users’ Group (ASUG), with SAP ensures that the latest product reflects real-world computing needs.

ASUG has more than 140,000 individual members from over 3,700 member companies, as well as dozens of special interest groups (SIGs), which reflect specific industries, business processes, or particular technologies. Many SIGs are of particular interest to logistics users, such as inventory management, procurement, manufacturing, supply chain planning, distribution, and transportation. One of the key aims of ASUG is to influence future SAP product releases and direction.

Currently, two SAP enterprise application products are of particular interest to logistics users. The first has been the core product of SAP for a number of years, the SAP ERP software. The current release is SAP ERP 6.0 (SAP ECC is the engine behind SAP ERP, where ECC refers to ERP Central Component). SAP defines four distinct elements to the SAP ERP software: SAP ERP Human Capital Management (SAP ERP HCM), SAP ERP Financials, SAP ERP Corporate Services, and SAP ERP Operations. The SAP ERP Operations functionality contains the logistics functionality.

The second software suite that SAP offers for logistics users is the SAP Supply Chain Management (SAP SCM). This business suite is separate from the SAP ERP software and is for companies that are ready to build adaptive supply chain networks. The SAP SCM software suite is one of four software suites that are part of the SAP business suite. The other software suites that your company can integrate with SAP ERP and SAP SCM are SAP Customer Relationship Management (SAP CRM), SAP Supplier Relationship Management (SAP SRM), and SAP Product Lifecycle Management (SAP PLM). Figure 1.1 shows the business suites offered by SAP.

Figure 1.1 SAP Business Suite

The SAP SCM software suite includes strategic, tactical, and operational planning; supply chain execution; supply chain design; and analytics. The current release of this software is SAP SCM 7.0, which can be run as a standalone system or can be integrated with SAP ERP using the SAP Supply Network Collaboration.

In May 2013, research company Gartner Inc. identified SAP as the market-share leader for ERP and SCM software. The Gartner report on ERP software identified SAP as the market leader as measured by total software revenues for 2012, with a total market share of 24.6 percent worldwide. The closest competitor in the ERP market had only 13 percent of worldwide ERP market share. In 2012, SAP had a little over $6 billion in total ERP software revenue.

In the SCM software market, SAP had a market share of almost 25 percent, measured by total SCM software revenues for 2012. SAP increased its market share almost 5 percent between 2011 and 2012 due to the acquisition of e-procurement company Ariba.

Now that we’ve examined the origins of SAP and the current logistics software, let’s move on to the specific logistics functions within SAP.

SAP and Logistics

Clearly, SAP is a market leader in logistics and plans to continue to improve its offerings to customers. Let’s take a closer look at what you can do with SAP logistics, in particular how the SAP software incorporates the logistics operations.

“Logistics” has many definitions, but one good definition comes from the nonprofit Supply Chain and Logistics Association of Canada (SCL), which defines logistics as “the process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of meeting customer requirements.”

Note

The word “logistics” originates from the Greek word logos. In ancient Greece, some military officers with the title Logistikas were responsible for financial and supply distribution matters. It is believed that the word “logistics” came into being as a military term describing the need to supply arms and ammunition from a base location to a forward position.

Although logistics may have originated as a military term, the business world started to use the techniques associated with the movement and supply of material at the beginning of the twentieth century. The first time logistics was associated with business was in 1919 when the Chartered Institute of Logistics & Transport was founded, which was then given a Royal Charter from King George V in 1926.

The logistics function at any company requires that products and services are delivered to the customers efficiently and cost-effectively. The SAP ERP and SCM software suites provide your company with the functionality to ensure that you’ll have the correct materials at the correct location at the correct time, with the correct quantity and at the most competitive cost.

You achieve a competitive advantage when your company can manage a process the most efficiently. This involves managing your vendor and customer relationships while controlling your inventory, forecasting customer demand, and receiving timely information about all aspects of supply chain transactions. Figure 1.2 shows t...

Table of contents

• Notes on Usage and on the Screen Presentation
• Dear Reader
• Table Of Contents
• Preface
• Acknowledgments
• PART I: Procurement and Logistics Execution
• 1 Introduction to Logistics with SAP
• 2 Procurement
• 3 Inventory Management
• 4 Warehouse Management
• 5 Inbound and Outbound Logistics
• PART II: Product Development and Manufacturing
• 6 Product Planning
• 7 Manufacturing Operations
• 8 Plant Maintenance
• 9 Quality Management
• PART III: Sales and Service
• 10 Sales Order Management
• 11 Customer Service
• 12 Transportation Management
• PART IV: Implementation and New Technologies
• 13 Implementation
• 14 New Technologies and Conclusion
• A Bibliography
• B Glossary
• C The Author
• Index
• Service Pages
• Legal Notes