New strategies and tools to adopt

collaborative replenishment in
manufacturing in your SAP landscape
Christian Butzlaff, SAP (Palo Alto)

LEARNING POINTS

SAP-supportes templates and tools to make new

solution adoption easier and faster
SAP is offering an RDS solution for Consigned Vendor
Managed Inventory
You can fast track your Implementation in the Cloud

RETURN ON INVESTMENT

Lower TCO by enabling a common packaged solution to

address all types of customer collaboration
Fast track your implementation by starting in the Cloud

BEST PRACTICES
Utilize SAP Rapid Deployment Solution for collaborative
replenishment in manufacturing
Fast track your implementation by using pre-assembled
systems in the cloud

SAP Rapid Deployment Solutions

= Proven Business Value. Fast. Simple.

SOFTWARE
SAPs leading
business software
portfolio enabling
best run business

Business
Best Practice

Methodology &
Content

Proven business
value through best
practices addressing
specific business
needs

Accelerated
implementation
through tools,
configuration
content, templates
and education
material

SERVICE
Low risk
- Business
outcome at fixed
price

RDS Step by Step Guide

Consigned VMI RDS

RDS Name SAP rapid-deployment solution for collaborative
replenishment between manufacturing enterprises =>
Consigned VMI (cVMI) RDS
Solution for suppliers who have a consigned VMI model with
their customers
Launched Q4 2012

SNC for Customer

Collaboration:
Challenges with
Consigned VMI model

cVMI RDS addresses

consignment challenges

Configuration
Implementation Plan
Product Enhancements

SNC supports range of

Customer Collaboration
Models

Order-based
Standard VMI
Consigned VMI

Vendor Managed Inventory &

Consignment

Vendor Managed Inventory (VMI) is about

replenishment planning
Supplier determines replenishment
requirements for the customer and
automatically creates the customers
purchase order

Consigned inventory is about ownership

Supplier owns the inventory placed
at the customers location
Customer does replenishment
planning and communicates its
requirements to the supplier

Consigned VMI combines both

supplier owns inventory and does
replenishment planning
Supplier simultaneously meets
customers replenishment
requirements and minimizes his
own inventory investment

Consigned VMI - Characteristics

The customer delegates responsibility for efficient stock management of a material to
a supplier who has superior knowledge and experience
The supplier manages the stock of a specific material at the companys site; s/he can
be in charge of the replenishment task
The supplier owns the material until it is taken out of stock for use in production or
consumption or the customer decides to post the material in stock of its own
The customer pays the supplier once the material is taken out of the consignment
stock

SAP 2008 / Page

cVMI Business Benefits

Optimization of material replenishment
Reduction of inventory throughout the supply-chain (Critical in the case of consigned
material that is owned by the vendor)
Reduction of effective lead-time
Provides vendor with control and decision making especially in period of shortage as to
where production is allocated (Basis of customer service and prioritization)
Increases customer intimacy which is key to customer retention (The most impactful
initiative on long-term revenue generation)
It is a demand-driven replenishment process, in line with lean concepts.
Lower TCO by enabling a common packaged solution to address all types of customer
collaboration"

Supply Network in High Tech for

Consigned VMI
Different Network Models, e.g.,

Third-party Hub
Customer Hub
Company Hub
Contract Manufacturer

CS1
Component Supplier 1

3PL

(Supplier)
Component: C2, C3

3PL Hub

CP1

Component: C2, C3

CS2

Channel Partner 1

Component Supplier 2

(Customer)
Finished Product: F1, F2

3PL
3PL Hub

CP2
Channel Partner 2

Component: F1, F2, F3

OEM
OEM / BO
(Brand Owner)
Component: C1, C2, C3
Finished Product: F1, F2, F3

CM1
Contract Manufacturer
Component: C1, C2

3PL
3PL Hub
Component: C2, C3

(Supplier)
Component: C1, C2

CS3
Component Supplier 3
(Supplier)
Component: C2, C3

(Customer)
Finished Product: F2, F3

Physical movement of goods

Customer Collaboration Models

Customer/3PL

My Company

Customer

Model
Standard Order-based Pull
Non-Consigned 1

Consigned 2

Vendor Managed Inventory (VMI)

Push

Description
Traditional sales order based collaboration, typically around
commitment dates for deliveries or callouts on scheduling agreements
Vendor driven replenishment by min/max or other model, penalties
for exceptions

Non-Consigned 1
Consigned 2

Forecast Collaboration

1
2

Simple collaboration on customer forecast information generally

more for capacity planning. Can apply in conjunction with Standard
Order-Based and Vendor Managed Inventory models

Non-Consigned ownership transfer at time of shipment to/receipt by customer

Consigned - ownership transfer at time of usage by customer

Sample Scenario Consigned VMI

Customer Plant

Customer/3PL Warehouse
Consignment
Consumption

Inventory and
Consumption
Report

Invoice

Key processes:

My Company
(Supplier)

Forecast Collaboration
Consignment Consumption
Replenishment Planning
Consignment Fill-up
Inventory Reporting
ASN Update/Invoice

The Replenishment Cycle for cVMI

Supplier calculates /
updates
replenishment plan on
a periodic (daily) basis
Supplier invoices
based on inventory
report

Customer shares
Forecast (optional),
Inventory and
consumption during last
period
XML message

Supplier

Determine
Delivery Plan

Fill Up Consi.
Stock

Share
Forecast,
Inventory and
Consumption

Consume
Consignment
Stock

Customer

Supplier triggers
Consignment Fill Up and
updates Consignment
Stock

Customer consumes
inventory or moves
inventory out of
consignment
Legal change of
ownership

In the system
Supplier

Determine
Delivery Plan

Fill Up Consi.
Stock

Share
Forecast,
Inventory and
Consumption

Consume
Consignment
Stock

Customer

In the system
Supplier

Determine
Delivery Plan

Share
Forecast,
Inventory
and
Consumption

Fill Up Consi. Stock

Consume
Consignment
Stock

Customer

In the System:
Fill Up Consignment Stock

In the system
Supplier

Determine
Delivery Plan

Share
Forecast,
Inventory and
Consumption

Fill Up Consi.
Stock

Consume
Consignment Stock

Customer

In the system
Supplier

Determine
Delivery Plan

Share Forecast,
Inventory and
Consumption

Fill Up Consi.
Stock

Consume
Consignment
Stock

Customer

In the System:
Share Inventory and Consumption

In the system
Supplier

Determine Delivery
Plan

Share
Forecast,
Inventory
and
Consumption

Fill Up Consi.
Stock

Consume
Consignment
Stock

Customer

In the system: Determine

Delivery Plan
Supplier

Determine
Delivery PlanFill Up Consi. Stock

Share
Forecast,
Inventory
and
Consumption

Consume
Consignment
Stock

Customer

In the system
Supplier

Determine
Delivery Plan

Fill Up Consi.
Stock

Share
Forecast,
Inventory and
Consumption

Consume
Consignment
Stock

Customer

In the System
View and Compare Inventory
One common view, compare customer and supplier inventory data

RDS: What Does SAP Deliver

SNC Customer Collaboration VMI scenario (Up to 20 customers and maximum of 200 Total
products)
PI configuration for SNC interfaces
Forecasting based on the sales history and short term forecasting parameters.
Min/Max based Replenishment Planning &Setting up of Planning service Manager Jobs.

Publishing of RO to ECC which creates a Consignment Fill up order in ECC

Replenishment order confirmation back from ECC to SNC.
Creation of Consignment Fill up Order etc.
Set up of Inventory Overview & Set up of Inventory Comparison Query by data providing
partner
Custom report in SNC to extract the Customer Consignment stock from Suppliers ECC system
Visibility into batches at the 3PL /customers site; (no planning at the batch level or batch
traceability is offered)

Fast Forward with Pre-Assembled

SAP Rapid Deployment Solutions
Customer Project

Delivery
Traditional
Project

HW prep
SW install.

Business
Blueprint

Realization

Test

Go-live

SW

RapidDeployment
Solution

Pre-assembled
Rapid
Deployment
Solutions

+
SW and Content

Close custom gaps

guided by SAP Solution
Manager

Optional:
Delivered as Cloud-based quick
start Implementation can
start in the Cloud

How it Works Example

SCOPE

RDS CRM on HANA

RDS ERP on HANA
RDS HANA Analytical Foundation
RDS for Mobile Apps and Infrastructure

BUILD

MOVE

KEY LEARNINGS

The SAP RDS for collaborative replenishment in

manufacturing is available today
You do not have to wait, you cans tart your
implementation in the cloud

THANK YOU FOR PARTICIPATING

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