How should complex supply chains be designed so that they are resilient to risks of all kinds and adapt agilely to dynamic market conditions? How can a cost-efficient procurement strategy be implemented that leads to tangible cost savings thanks to intelligent demand bundling and optimized operational procurement processes? How can the interaction with suppliers be optimized so that both sides benefit from maximum efficiency and transparency? One of the key prerequisites is the seamless integration of the entire supplier network into your own business processes – end-to-end via just one central platform.
Discover here how an global player in the automotive supply industry managed this balancing act – even though the organization was characterized by a high degree of inhomogeneity due to numerous takeovers. In the course of this project, a uniform IT infrastructure was created and standardized processes implemented for numerous single entities with large differences in terms of degree of digitalization, process design and IT landscape.
The first strategic decision on the path to harmonization was to replace the heterogeneous IT system landscape with the company-wide introduction of SAP S4/Hana. It quickly became evident that the harmonization of internal processes and systems would be only the first step and that the supplier processes, which until then had largely been run via Excel sheets and e-mail, would also require optimization. This led to the second strategic decision: to use the migration to digitize and automate collaboration with suppliers at the same time. An established industry solution and a partner with extensive experience in the automotive sector were required here.
SupplyOn was chosen for several reasons: Firstly, because of its decades of experience in the automotive business and the resulting numerous best practices. Secondly, because of the comprehensive process coverage and the ability to handle all supplier communication via one platform. And thirdly, due to the high number of connected suppliers and the associated overlap with the company’s own supplier base.
Reduce complexity with SupplyOn
Mixed scenarios with several providers were also examined during the selection process, but these were quickly rejected. Not only because external consulting companies such as Gartner clearly spoke out against them, but also because the advantages and synergy effects of a centralized solution were obvious to all parties involved:
- for suppliers: centralized access to all processes and data
- for everyone: no additional and superfluous interfaces that would need continuous updating and be a constant source of errors
Another advantage of SupplyOn for the customer was the fact that the complexity of the SAP project could be reduced, as SupplyOn offers some of the S4/Hana functionalities including supplier integration as standard. This eliminates the need for additional supplier connections to SAP and customizing, which saves the customer time and money with every SAP update. This applies, for example, to the VMI and complaints process as well as the sourcing process.
The target scenario: an end-to-end digitalized world instead of Excel mess
The customer’s goal was to extend its internal SAP processes end-to-end to the supplier and create a seamless data flow from the internal systems to the supplier and back again – globally, for all plants, for all supplier-related processes, for all suppliers, across departmental and company boundaries. Where Excel sheets were previously exchanged, in future data will be sent directly from the internal systems to the supplier – and the return processes will be correspondingly seamless.
This starts with the approval process for a new supplier and extends across the entire supplier lifecycle in all strategic and operational matters – from development and series production through to phase-out.
The processes in detail
- Supplier qualification: The starting point of a customer-supplier relationship is the qualification and approval of the supplier. SupplyOn maps this process, taking into account specific regions and commodities. Upon approval, the supplier is classified and the supplier data is transferred to the internal SAP S4/Hana.
- Supplier master data management: All relevant data that characterizes a supplier is collected here – contact details, plants, production capabilities, certificates, audit results, classifications, approvals, contracts, etc. A duplicate check rounds off this service to ensure that a unique data record is attributed to each supplier.
- Sourcing of production material – including technical feasibility check: In addition to the price and commercial conditions, numerous other aspects can be queried during the inquiry process and other divisions can be integrated into the process, for example the development or quality department.
- Sourcing of indirect materials: The main aim here is to structure and standardize processes throughout the company, in particular to bundle volumes across the entire organization (demand pooling), adhere to compliance guidelines and prevent maverick buying.
- Start of series production: Standardized processes such as APQP or PPAP can be used to check readiness for mass production, ensuring a smooth ramp-up.
- Procure-to-pay: An end-to-end process from requirement to invoice enables a highly efficient, largely trouble-free and error-free supply chain. Subsequent processes are based on predecessor documents, which not only eliminates manual effort but also minimizes potential input errors.
- Supplier lifecycle management: In day-to-day collaboration, SupplyOn can be used to map a permanent control loop that aims to continuously optimize processes and products. The initiative does not originate exclusively from the customer. The supplier can also make suggestions for improvement and initiate changes. This is made possible by a collaborative approach in both directions.
- Audit Management: Both existing and new suppliers can be qualified and categorized here. The result is saved in the Business Directory. This makes it transparent for everyone what status the supplier has: “preferred”, “standard” or “on hold”. From there, the supplier can be efficiently developed further.
- Performance management: Performance data from several sources – from the SAP system, from SupplyOn and from external data providers – is bundled here and displayed to the supplier in a consolidated way for targeted performance improvement. At the same time, scoring is calculated from this data and made available internally, for example to Purchasing and Quality Assurance. This creates full transparency across departments at the level of parts, component lists and suppliers.
- Complaint management with action tracking: Here, errors are analyzed in a structured manner and resolved systematically – in a way that not only solves the current problem, but also ensures that repeat errors are avoided thanks to process or system adjustments.
- Risk management: By integrating external risk data providers, threatening situations – natural disasters, crisis hotspots or similar – can not only be identified very quickly, but it is also possible to immediately analyze which plants and parts are affected in order to immediately find solutions and alternatives for potential shortfalls. This makes the company more resilient to risks of all kinds and gives it completely new options for managing and responding to escalation situations
The interlinking of all these supplier processes via one platform provides insights that were previously not achievable in the silo structure. Processes can be optimized end-to-end for the first time. To give an example, a buyer can no longer enquire about a supplier that has been set to “red” by the quality department. Or they can initiate necessary downstream processes with system support during the sourcing process.
Implementation and rollout
A pragmatic approach was chosen for the implementation in order to get up and running quickly: Processes that do not necessarily require backend integration were started immediately via the web interface. These include, for example, the sourcing and complaints process. The interface to the backend systems is planned for a later date.
As the S4/Hana rollout at the customer extends over several years – 160 plants are affected worldwide – this approach offers the major advantage that SupplyOn use can be started immediately in all plants, regardless of the status of the SAP rollout. At the same time, the integration of processes that are only manageable from the backend was tackled immediately.
On the supplier side, SupplyOn takes care of all the necessary steps to get the 3,000 strategically important suppliers up and running quickly. This includes, for example, a comprehensive communication package, a specific training concept and support for suppliers during registration and day-to-day use. In the long term, a further 7,000 suppliers are to be connected in order to benefit from digitized processes in the long-tail area as well.
Strategic goals achieved with SupplyOn
- Increased competitiveness through the rapid introduction of proven, industry-standard end-to-end processes with suppliers, which SupplyOn continuously develops and adapts to new requirements
- Increased resilience to risks and in escalation and crisis situations
- Increased agility in order to be able to react quickly to changing economic conditions. Also rapid integration of other acquired entities.
- Improved cross-departmental collaboration between purchasing, quality management, finance and logistics through the use of one central platform
- Reduced purchasing costs through intelligent bundling of demands across several areas.
- Higher product and process quality through close involvement of suppliers in improvement processes – including those initiated by the supplier
- Less frictional and administrative effort thanks to a holistic approach: everything from a single source and all processes via one system
