Many people still equate SAP with Enterprise Resource Planning (ERP) and other solutions for “inside the four walls” business processes. The reality, however, is that SAP (a Talking Logistics sponsor) has a significant presence in the logistics realm too, and logistics remains an important focus area for the company moving forward.
This was one of my key takeaways from SAP Logistics Info Days last month. The two-day event held at SAP’s Newtown, PA office was for customers, prospects, and partners to learn and network with each other. The agenda featured customer presentations from Johnson & Johnson, Domino’s Pizza, Patterson Companies, Radiant Global Logistics, and Pacific Coast Building Products.
I presented at the event too. My presentation was on “Supply Chain Guiding Principles:
Navigating Toward a More Intelligent, Resilient, and Sustainable Future,” which was based on a research report we published earlier this year featuring insights from our Indago supply chain research community.
(Sidenote: Register for the upcoming LinkedIn Live Event — November 17th at 11:00 am ET — where I will share some insights and advice from the research.)
Due to another commitment, I was only able to stay at the conference for part of the first day. Nonetheless, here are some of my key takeaways from the sessions I attended.
SAP Believes in “Power of the Network”
In June 2021, SAP announced that it is taking “the first step toward creating the world’s largest business network with SAP Business Network, which will bring together Ariba Network, SAP Business Network for Logistics and SAP Asset Intelligence Network. Over 5.5 million organizations will benefit from being members of this connected community.”
Yes, SAP believes in “the power of the network” and it is an important component of its “Intelligent Logistics Enterprise” framework that aims to synchronize production, warehousing, yard, and transportation business processes across a “network-of-networks” platform, including freight networks, inter-enterprise networks, and visibility networks.
For example, in April 2022, Uber Freight announced a partnership with SAP. As described in the press release:
The new SAP Business Network for Logistics is a management platform where all supply chain players can connect, collaborate, and exchange logistics information to help streamline workflows and increase supply chain efficiency. Through an Uber Freight API integration, our mutual customers will be able to tap into instant, real-time pricing data and a national network of freight capacity, transforming freight-booking into an intelligent process.
SAP also has a partnership with visibility network provider project44. As highlighted in a September 2020 press release:
project44 announced advanced capabilities with SAP Business Network for Logistics. The latest enhancements include the addition of global ocean visibility and expansion of B2B connectivity for truckload and less-than-truckload (LTL) freight contracting. These brand-new native integrations are the next step towards delivering on a joint multi-modal strategy to provide organizations with a single view across their end-to-end supply chains.
I’ve been arguing for years that it’s the combination of software with connected networks of trading partners that will unlock the next wave of supply chain and logistics innovation and business value. SAP is not alone in embracing the power of networks, and its strategy might differ from those of its peers in the industry, but it’s clear that SAP has evolved its vision and investments beyond “the four walls” of the enterprise.
SAP S/4HANA Transportation Management: Growing Up
SAP S/4HANA Transportation Management was a late bloomer within SAP, especially compared to its SAP S/4HANA Extended Warehouse Management solution.
At the conference, Bill King, Director, SCE Solution Management at SAP, and Richard Kirker, Solution Manager at SAP Labs, shared some highlights about these two solutions. Bill joked that there’s been a bit of a sibling rivalry between the two solution groups over the years, with SAP EWM playing the role of big brother due to its broader market adoption compared to SAP TM.
There are a few thousand customers between the two solutions, across many industries and countries. There are more EWM customers than TM ones, but TM is catching up. In short, little brother is not so little any more.
When you think about all these companies that have deployed either or both of these solutions, they represent a lot of nodes on the SAP Business Network for Logistics. Many of these companies probably already work together as suppliers or customers of each other (or could potentially work together in the future). Simply put, within its current customer base, the foundation is there to enable “network effects” across trading partners — such as collaborative shipping, network-based BI and analytics, and the ability for network participants to discover and establish new business relationships.
Case Study: Patterson Companies
Headquartered in St. Paul, MN, Patterson Companies is a medical supplies conglomerate primarily in the business of veterinary and dental products. The company’s sales were $6.5 billion in 2021 (61% from its Animal Health segment). Here are some stats related to their logistics operations:
- 17 fulfillment centers (up to 200K sq. ft.)
- 43,000 packages shipped daily
- 500 fleet and LTL deliveries daily
- 23,000 orders processed per day
- 96% of customer base serviced with one-day ground
This case study highlighted Patterson’s journey from using a paper-based legacy WMS at its fulfillment centers prior to 2015, through its first SAP EWM implementation and go-live in January 2016, and then phased rollouts to 16 other fulfillment centers (each facility after the initial one took about 3 months to go live).
The presenters shared a lot of information, but two things stood out to me. First, with the help of its consulting partner, Patterson invested the time up front to clearly define its vision, strategy, and objectives. In other words, the journey was not just about deploying a WMS across its fulfillment network, but about enabling capabilities that would allow Patterson to grow and scale its operations effectively in response to ever-more-challenging customer expectations.
Which brings me to the second thing that stood out to me: When it comes to deploying advanced capabilities — in Patterson’s case, for example, the company is using vertical lift modules with pick-to-light, and picking robots and enabling audit by weight with gamification are on its roadmap — you must have a WMS system capable of supporting these advanced capabilities. Simply put, you can’t evaluate and select a WMS in isolation; you also have to take into consideration the ecosystem of technologies a WMS must support to achieve your objectives.
A Session I Wished I Could Have Attended
Since I wasn’t able to stay for the second day, I missed out on the Apple Warehouse Operator demo, a mobile app solution SAP introduced in late February 2022 (along with SAP Direct Distribution). Both solutions are available for download at the Apple App Store. For more about these solutions, check out Sean Ashcroft’s writeup in Supply Chain Digital:
“The Warehouse Operator app is for SAP’s Extended Warehouse Management solution [and it] allows warehouse workers to complete daily tasks using location awareness and computer vision. Using the built-in iPhone camera, they can also read bar codes instantly, even in low light and from a distance. Warehouse Operator can also read blurry, damaged, small, or irregular barcodes. Direct Distribution, meanwhile, orchestrates end-to-end last-mile processes from order taking and delivery to payment. The app allows employees to select a resource to work with – a forklift, for instance – and view real-time orders associated with that resource.”
You’ll certainly hear more from SAP in 2023 about “The Intelligent Logistics Enterprise.” Like its peers in the industry, more work is required to fully enable it. And customers have to be ready and willing to embrace it too (change management is always an obstacle). But just as logistics is moving up the priority list for C-level executives at manufacturing and retail companies, it is also moving up the priority list for SAP, which is great news for customers.
