Technical white paper Optimize global sourcing in your supply chain environment

Transcription

1 Optimize global sourcing in your supply chain environment Enhance supply chain analytics with SAP HANA

2 Table of contents Optimize global sourcing 2 Get the fastest path to a global sourcing solution 2 Use GSO for supply chain operations 3 Put it to work 4 Move forward 8 Global sourcing is a crucial activity for most successful manufacturers. Leveraging advanced data and analytic capabilities helps to better understand and manage sourcing costs across a complex supply chain. Optimize global sourcing Global sourcing is an integral business function of procurement organizations where buyers make strategic decisions for the purchase of goods and services based on availability of low-cost materials and labor. By implementing successful global sourcing solutions, companies are reducing procurement costs and improving profit margins. These buyers must also conform to economic regulations established by governments, so enhancing their time to market from business to business is critical. Companies that have a well-integrated global sourcing solution for their supply chain get a number of benefits: Gain clear, consistent, and easily accessible visibility into sales and margin performance Get a single version of the truth regarding how inflation affects net margin across company codes, operating segments, and global geographies Eliminate delays in the capture and analysis of critical data Link cost price changes to supplier product or transport costs to reduce cost of goods sold (COGS) Understand how weather, demographics, and other external factors affect sales, costs, and margins Access analytics in convenient, easy-to-access executive dashboards Enhance complex IT environments and high workloads by reducing data latency Customize sourcing systems end-to-end to meet specific needs While the specific examples in this paper focus on retail sourcing, this global sourcing optimization approach can be used successfully across supply chains of virtually any kind. You can leverage a number of technologies to improve your global sourcing platforms, including mobility and cloud. In addition, improving business analytics with a real-time data platform can improve your global sourcing solution. Gain the benefits of real-time data platform called SAP HANA. 2

3 Get the fastest path to a global sourcing solution The in-memory computing (IMC) technology developed by SAP is called High Performance Analytic Application (HANA). In the supply chain context, SAP HANA can be leveraged to accelerate global sourcing capabilities. It enables companies to regain their business visions by giving them the results they want in an expedited way. SAP HANA leverages advanced data compression techniques to store information in the RAM, enabling performance that is 10,000 times faster than traditional disk-based systems. Think of it as moving from the traditional spinning disk approach to a solid-state drive. With the 2012 introduction of SAP business suite on HANA, organizations can now enjoy the very positive benefits of integrated transactional and analytics processing. This development validates the use of IMC technology for a far broader spectrum of general-purpose corporate applications. Search Big Data Mobile Cloud Real-time enterprise with SAP HANA Real-time sensing and responding Real-time planning and simulations Social Network Investments Predictive analysis Customer activity repository (CAR) Global sourcing optimizer future release Real-time reporting and analysis Global sourcing optimizer Figure 1. Review the possibilities with HANA 3

4 Organizations can leverage this in-memory computing to cache vast amounts of data constantly, ensuring extraordinarily fast search response times as IMC can handle very complex event processing. By storing session data more efficiently, IMC supports customized live sessions and better website performance. Search The Global Sourcing Optimizer (GSO) delivers the ability to search specific supplier spend, top- and bottom-performing suppliers, and best carriers to work with using Business Objects Analysis Workspace. Real-time planning and simulations Customer Activity Repository delivers an integrated platform for retail excellence. GSO can deliver key insights into price optimization and sales pattern analysis. Real-time reporting and analysis GSO can perform real-time reporting and analysis by feeding data into the HANA database on almost real-time basis. Use GSO for supply chain operations In the retail supply chain, SAP HANA can provide significant data, infrastructure, and analytic advantages by combining data from SAP or multiple data sources to provide a single version of truth. The DXC Technology Global Sourcing Optimizer leverages HANA-based computing to put robust analytics into the hands of financial controllers, buyers, and other critical business users. It provides exceptional insight into how inflation affects sales and margins. Buyers can leverage these tools to make better decisions on where to buy, how much to purchase, and how to negotiate optimized pricing. You can gain these tangible benefits: Improve cost of goods sold By analyzing year on year and actual point of sale data, organizations have achieved a 2% to 8% cost savings by leveraging the DXC Cost-Price Inflation dashboard. They can also analyze real-time sales data to renegotiate with suppliers to get a better cost point. Increase transportation cost take out Clients use this convergence of data to conduct predictive analytics tying sales demand and supply. This enables re-evaluation of their distribution channel from vendor to warehouse to store, identifying increases in transportation efficiency. These savings vary by company size, but have been in the region of 5% to 10%. Accelerate net margin savings By consolidating data from multiple systems, regions, and operating companies, organizations are able to analyze margin data by supplier and product. This enables them to review sales and cost data by vendor for improved pricing, directly impacting the bottom line. 4

5 Increase operation reporting efficiency Consolidated, nonenterprise resource planning (non-erp) data in real-time reporting is immediate and not delayed by 5 to 10 days to prepare reports for procurement. This lets operational teams analyze data and make recommendations rather than just preparing and socializing data for further review. This drives operational savings through labor efficiency in the range of two to five full-time employees per reporting team. See macro-economic effects on sales The GSO solution uses nonstandard feeds to include things like weather patterns and regional buying trends. This provides organization buyers and distributors with real-time effects of external factors on sales, enabling better procurement and distribution decision-making for near-term effects to accelerate distribution in specific regions. Put it to work Real-time reporting and analytics are how companies compete and win. In today s tougher supply chain environment, they can increase market share through predicative analytics. Here s how one major enterprise leverages the global sourcing optimizer approach to make faster and better business decisions. This international retailer uses an SAP HANA-powered solution to manage over 200,000 product lines SKUs in the retail world, to globalize its view of 8,000 suppliers and products, and reduce dashboard drill-down reporting from 30 minutes to 10 seconds. This highly successful international do-it-yourself (DIY) retailer employs thousands of professionals at stores in multiple countries. It serves millions of customers each week, and to do that, uses multiple management teams, technical systems, a range of commercial hierarchies, and performance indicators to source products across a complex, international supply chain. Make faster, more informed decisions In today s more demanding and competitive supply chain environment, this global retailer needed faster and more precise sales and product data by supplier, operational company code, and geography. Executives at the company envisioned a business information system that would give key personnel the data needed to make more rapid, better informed decisions. They hoped that by comparing key performance metrics across store, product category, and group levels more robust technology would support maximized sales and margins. The company s previous sourcing systems presented significant challenges. Some of these were: Planners lacked consistent and convenient visibility into sales and margins across the firm s vast operating and geographic environment due to disintegrated data sources. 5

6 Planners could see product codes and regions, but not detailed sales records aligned to the suppliers of these products. Executive dashboards often took up to 30 minutes to populate and present key supply chain insights, but data collation took days. There was no common measure of how inflation affected sales and cost price. The company could not link cost price inflation to supplier product and transport costs, nor could they easily evaluate external factors such as how weather or other variables affected sales and margins. The retailer also had not bought into the idea of using HANA and wanted more proof of its power and benefits in a mostly non-sap landscape. Use this robust solution DXC partnered with SAP and this international retailer to create a group business intelligence system. Leveraging the in-memory technology capabilities of SAP HANA and a rapid iterative development approach, the solution gave the company extensive global sourcing optimizer capabilities in less than eight weeks. Powered by SAP HANA, the DXC modeling approach analyzes price inflation by operating company codes, product hierarchy, and supplier across even the most complex, multinational supply chain. Financial managers can set foundation-level key performance indicators (KPIs) for sales, gross margins, and cost of goods sold, and track key retail industry metrics like SKU match rate for like-for-like products. Review pricing model outputs Sales and cost price inflation by operating company code, product hierarchy, and supplier Net inflation cost impact SKU match rate for like-for-like products, enabling consistent purchasing of same products in different operating companies Daily and ad hoc sub sales reports Slice and dice mass data in seconds vs. minutes, hours, or days Geographic weather correlation to product sales Group purchasing patterns with inflation and weather trends Foundation KPIs for sales COGS and gross margins The solution provides optimized global sourcing for more than 150 users across multiple countries, and provides business analysis support for sales, business costing, margins, transactions, inflation, and weather. 6

7 Gain business outcomes As a result, this successful retailer achieved its goal of building a more robust and granular business analytics platform that improves business outcomes. Executives can now access commercial information in dashboard views from tablets and browsers. Analysts gain detailed access to information without heavy manual intervention. The company now enjoys a single version of truth for key commercial metrics, supporting better analytics and greater trust. The company can now share best practice sourcing evaluations across its international operations driving improved sales and margin performance to the retailer s bottom line. This retailer has visibility to over 2 billion sales records; views were limited to product codes and regions in a past. Global view of all products across all regions, over 200,000 product lines. Global view of all suppliers with KPIs enables the company to determine best performing suppliers. Dashboard reporting is reduced from 30 minutes to 10 seconds. While this real-world example describes a retail-oriented environment, this DXC SAP HANA global sourcing optimization approach can be used successfully across supply chains of virtually any kind. Review dashboard report examples Figure 2. Top five suppliers with significant drop in cost price inflation 7

8 Figure 3. Weather impact on year-over-year sales and margins Figure 4. Top five suppliers with best margins 8

9 Move forward To compete and succeed in today s challenging marketplace, you need detailed information and reliable insights into how inflationary costs affect sales and profit margins at your fingertips. A new approach, driven by SAP HANA, enables retailers and other organizations to fully optimize global sourcing activities through real-time dashboards and predictive analytics. This new model puts powerful data and analytic capabilities into the hands of buyers, financial planners, and business executives. These insights translate directly into making faster, smarter decisions on where to buy, how much to buy, and how to negotiate the best possible price. A proven analytic and partner in the retail industry, DXC stands ready to assist organizations of all kinds to better understand and manage sourcing costs across complex, global supply chains. Learn more at /applications About DXC DXC Technology (NYSE: DXC) is the world s leading independent, end-to-end IT services company, helping clients harness the power of innovation to thrive on change. Created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise, DXC Technology serves nearly 6,000 private and public sector clients across 70 countries. The company s technology independence, global talent and extensive partner alliance combine to deliver powerful next-generation IT services and solutions. DXC Technology is recognized among the best corporate citizens globally. For more information, visit DXC Technology Company. All rights reserved. DXC_4AA5-3031ENW. March, 2017