Your Supply Chain is Only as Strong as the
Weakest Link
Manufacturer
Continuous change in market dynamics
Fluctuating commodity prices
Increased Volatility
Supplier Viability
Credit crunch, business failure, bankruptcies
Failure of second and n-tier suppliers
Global production centers- impact of regional conditions
Higher operational risk and cash flow
pressure on 3rd party logistics providersHigher Operational Risk
Lower inventory levels, Just in Time, etc.
Challenges to Your Business in the
Current Economy
Top Executive Issues
Who are my most strategic suppliers?
Which of my strategic suppliers are at risk in the current crisis?
How can I pre-empt the impact of one of my major suppliers failing ?
What actions can I take to reduce the impact from such failures?
How can I measure the effectiveness of my actions to change course if needed?
Impact on Supplier Ecosystem
Exacerbated by Credit Crisis
Component
Suppliers
& CMs
HQ
Customer Service
Materials
Management
Supply Chain
Ops
Sales &
Channel
Management
Sales Ops,
Legal, Finance
Delayed, partial or missing deliveries Prices falling Product shortage Capacity bottlenecks
3) Early Signs
Supply Chain
Ops
Business Health Credit Worthiness SLA/Delivery performance
1) Supplier Health
Environment ecosystem imbalances Economic Weather Forecast
2) Economy & Environment
© SAP 2008 / Page 4
Business Impact: Risks of Revenue loss, increased competitive threat & unsatisfied customers
Delayed or unfulfilled deliveries Revenue Loss / Margins Dissatisfied customers & Channels Increased competitive threat
5) Customer Impact
Planning challenges, e.g. due to long planning cycle time
Disconnected processes, e.g. no feedback into S&OP
No consideration of product and supplier substitution options
4) Business Planning
Current Conditions Causing Extreme
Pressure on Suppliers
Qimonda's woes will zap gamers, PC and servers
usersQimonda's problems are already rippling across the globe and could take down others, as well as
cause a sharp rise in DRAM prices for users. Qimonda's problems could also zap computer
gamers and businesses in the short term because the company supplies DRAM or specialty chips
to around a quarter of each market.There could be a number of follow-on effects from the credit
crisis on Intel's business, including insolvency of key
suppliers resulting in product delays…‖Except from Intel’s 3Q08 report,
Parts Supplier Bankruptcy Could Delay Camaro Debut
The all new Chevrolet Camaro isn't the car that will make General Motors, but it certainly could
become the one to break the automaker if problems with a major parts supplier
manages to delay its February 17, 2009 introduction.
Supplier Bankruptcy Forces Chrysler Plant ClosuresManufacturing.Net - February 04, 2008
DETROIT (AP) — Chrysler LLC plans to close four assembly plants temporarily due to the
bankruptcy protection filing of one of its plastic parts suppliers, a company spokeswoman said
Monday.
Manufacturing.Net - February 04, 2008; Matthew Keegan, Ezinearticles.com, December 29, 2008; COMPUTERWORLD, Dan Nystedt (IDG News
Service) January 27, 2009. Intel’s 3Q 2008 report, October 3, 2008
How can Supplier Risk be Mitigated?
Assess the strategic importance of suppliers by analyzing the product portfolio
Identify key components and their suppliers
Analyze spend profiles to recognize strategic suppliers
Appraise the health of suppliers that can cause highest vulnerability
Ongoing reviews and audits of suppliers
Performance management of suppliers and internal impact analysis
Strategize and take actions to mitigate the identified risks
Use external data for due diligence on suppliers and market and industry trends
Proactive discussions with suppliers
SAP BusinessObjects Supplier Risk Management
Anticipate and Prevent Supply Disruptions
Key components at risk
Product deliveries at risk
Strategic importance of
suppliers
Annual spend with suppliers
Current supplier
performance & financial
strength
Leverage external data
feeds to get a holistic view
of the economic conditions
and your suppliers financial
health
Assess
Supplier impact on
operations
Financial impact
(Revenue, Margin)
Inventory impact
Supplier Impact on
customers
Orders impacted or at
risk
Dollar impact of
customer orders
Appraise
Detailed comparison of
actions to assess
effectiveness and costs
Identify detailed activities
for each alternative with due
dates, duration and point of
contact
Track progress of actions
Source from new vendor
Assist original vendor
Replenish from alternate
vendor
Act
Discover the Potential Factors that can
Cause Delays or Disruptions
Strategic
Assessment
Comprehensive view of supply risk via interactive dashboard to improve visibility and decision making
Better management over the vendor portfolio to identify, assess, decide and monitor multiple areas of supply risk exposure
External analytics (news feeds, credit ratings, etc) to supplement the ―within the fours walls‖ analysis of internal sourcing departments
Understand Your Supplier’s Performance,
Reliability and Economic Viability
Performance and
Financial health
Pop-up displays provide key
insight into Supplier Risks
and reliability indicators
Ability to see key trends of
metrics to identify anomalies
or deteriorating indicators
Current news article feeds
related to your supplier
ecosystem to ensure you
have the latest, up to date
information
Assess the Impact of Disruptions on Your
Customers and Business
Risk and Impact
Analysis
Unified view of holistic risk
exposure to assess the
impact of supply disruption
Ability to measure the impact
of supply disruption on key
metrics like sales, revenue
and inventory
Identify alternative sources of
supply from various suppliers
and assess their overall
viability in one place
[Preview alternative sources
of supply to establish
alternative mitigation actions]
Examine the Effect of Your Decisions and
Execute with Confidence
Decide on
mitigation option
Interactive Alternatives-
Analysis to allow users to
select different alternatives
for different situations
Detailed views into the
effectiveness and costs of
the various alternatives
Ability to track and monitor
the impact of the various
alternatives chosen
[Supports decision on the
optimal alternative action]
A comprehensive supplier risk management
solution for SAP BusinessObjects
Supplier Risk dashboard
Spend Perf.
Mgmt
Risk
assessment
and establish
alternatives
Risk Management
Analyze
spend and
supplier
profiles, act
on decisions
ERP
Other
External
Data
Federator
Protect Existing Value
Streamline cross-enterprise risk identification,
analysis, and mitigation
Prevent incidents and losses through automatic
risk monitoring
Create New Value
Increase the success of strategies and initiatives
Improve performance through risk-adjusted
forecasts and plans
Increase Enterprise Transparency
Ensure business units operate within appropriate
risk appetite
Improve governance by aligning business
processes, risks, and controls
Risk-adjusted management of enterprise performance
© SAP 2008 / Page 13
SAP BusinessObjects Risk Management
© SAP 2008 / Page 13
Maximize Savings, Reduce Supplier Risk
SAP BusinessObjects Spend Performance Management
Driving insight into vulnerable suppliers
Gain full spend visibility Automate data capture from disparate systems
Accurate and trustworthy data
Enriched supplier and spend data
Reduce supplier risk Pin-point single supplier dependencies
Identify vulnerable and non-viable suppliers
Establish supply risk mitigation priorities
Rapidly identify savings opportunities Find and act on savings potential
Pro-actively monitor contract compliance
Increase spend under management Set up performance goals
Incorporate external market conditions
Collaborate effectively to act on insights
GL
P-Cards T&E
BI
ERP
For more information: www.sap.com/spend-analytics
Seizing the Advantage in the Current
Global Economic Downturn
Gain a holistic view of your risk of supply disruption
due to performance or economic viability issues
within your supply chain
The Supplier Risk Management solution flexibly
complements and extends your existing IT
infrastructure and data sources
This Industry Value Accelerator comes complete
with proven deployment assets that will accelerate
your time to value and provide a quick ROI
Sign up for an onsite vision workshop today to find
out how what the Supplier Risk Management
solution can do for your business today
Supply Chain Operations
Supplier Management Visibility and Execution
End-to-end cross functional process
Chief Operating
Officer
Supply ChainManufacturing
Supply Chain
Planning
Materials
Management
Internal
Production
Operations
Contract Manufacturer
Raw Material Supplier
etc.
ProductionExecution &
Visibility
Outsourced Materials Visibility
Outsourced Materials Visibility
ProductionPlanning & Scheduling
Outsourced Workorder
Process
Subass’y & ComponentInventory
Optimization
Outsourced Workorder
Process
Plan/Source to Demand Signal
Plan/Sourceto Forecast
Collaborative Procure to Forecast
Supplier Managed Inventory
Collaborative Procure to Forecast
Supplier Managed Inventory
Production Planning & Execution
Manufacturing Network Planning
Material Supply & Replenishment
Proactive approach to supplier and economic shocks
Supplier & Industry
Indicators
SAPBenchmarks Credit Scores
IndustryBenchmarks
IndustryTrends
Others
Economic
IndicatorsMarkets Economic
DataBLS Others
Typic
al S
up
ply
Ch
ain
Flo
wS
mart
er
Supp
ly C
hain
Flo
w
© SAP 2008 / Page 20
Managing the Supplier Network
Current Situation
Manufacturers have made their supply chains leaner
Manufacturers have achieved lower inventory levels and rationalized their supplier lists,
BUT they have made their supply networks much more susceptible to risks
The current financial crisis has highlighted these risks to manufacturers, resulting in
potential delays to production and inability to meet customer commitment
In addition to financial crises, political, economic, and national security crises could create
the same disruptions to manufacturers’ supply chains
SAP helps manufacturers to manage risks in the supply network
Benchmarking and best practices to optimize the supply network
Instrumentation to proactively monitor suppliers by type, size, geography, segment, etc.
Systems to act on insight, plan for, and manage the risks to the supply network
© SAP 2007 / Page 21
Industry Value Accelerator to Compress
your Time to Value
• Virtual Source Table Structures• Mapping Rules• Virtual Target Schemas• Schema Definitions• XML Interface Files for SAP
• Business Objects Universe• Web Intelligence Reports• Xcelsius Dashboards
• Relational Schema (DDL Scripts)• Stored Procedures• Working Sample Database
• Data Dictionary• Deployment Planning Guide• Data Mapping Guide
• Workflow Guide• KPI/Metric Definitions• Deployment Considerations
• Data Model• Administration Guide• Deployment Planning Guide
Technical Content
Documentation
Establish risk assessment process and risk
mitigation options
Risk
management
process
Align risk exposure with
risk indicators and
corporate strategy
Establish [Define] risk
mitigation options, identify
balance between cost of
risk avoidance and
opportunity
Establish prioritization for
response investment
Balance cost savings and risk while acting on
the risk mitigation option
Balance risk with
cost savings
Evaluate chosen risk
mitigation option with spend
and supply metrics to
determine sourcing strategy
Review alternate suppliers’
history of operational and
financial health factors
Launch action to establish
alternate supply source or
plan for supplier
development processes
Leverages Powerful Capabilities from the
SAP BusinessObjects Portfolio
ANY SOURCE, ANY APPLICATION
– Designed to fully leverage the performance and functionality
of key SAP applications including SAP BusinessObjects
Spend Performance Management, SAP BusinessObjects
Risk Management and SAP ERP
– Flexibility to leverage data from other corporate applications
and data sources to build a comprehensive picture of your
firm's product specific exposure to Supplier Risk
– Easily extract critical information from your ERP or other 3rd
party on-demand reporting environments and data sources
ALL EMPLOYEES
– Role based view of key KPIs and metrics to
better manage your business
– Ability to embed within SAP ERP or other environments
ALL VIEWS ON INFORMATION
– Access your Supplier and Risk Management analytics
comprehensively
– Drill down to specific customers, orders lines, etc.
All Employees
All Views on Information
Data Accuracy and Consistency
Any Source
Scaleable Information Delivery
SAP BusinessObjects Spend Performance Management
Pre-packaged application
Data Connectivity SAP Extractors for FI, CO, MM, SRM, BW; Data
integrator for non-SAP
Supplier normalization and data enrichment;
Spend classification
Visualization & Semantics 7 supplier risk attributes, 5 supplier financial
health attributes
Supplier dependency sliced by 14 dimensions
Out-of-the box content 60+ out of the box metrics
Over 100 reports and dashboards out of the box
Supporting technical delivery Pre-packaged analytics and ad-hoc analytics
Set goals and performance thresholds
Collaboration tools including briefing book, pdf,
For more information: www.sap.com/spend-analytics
SAP COMMUNITY NETWORK SDN - sdn.sap.com | BPX - bpx.sap.com | BOC - boc.sap.com
© 2009 SAP AG
Copyright
© Copyright 2009 SAP AG. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.
Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.
Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation.
IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System x, System z, System z10, System z9, z10, z9, iSeries, pSeries, xSeries, zSeries, eServer, z/VM, z/OS, i5/OS, S/390, OS/390, OS/400, AS/400, S/390 Parallel Enterprise Server, PowerVM, Power Architecture, POWER6+, POWER6, POWER5+, POWER5, POWER, OpenPower, PowerPC, BatchPipes, BladeCenter, System Storage, GPFS, HACMP, RETAIN, DB2 Connect, RACF, Redbooks, OS/2, Parallel Sysplex, MVS/ESA, AIX, Intelligent Miner, WebSphere, Netfinity, Tivoli and Informix are trademarks or registered trademarks of IBM Corporation.
Linux is the registered trademark of Linus Torvalds in the U.S. and other countries.
Adobe, the Adobe logo, Acrobat, PostScript, and Reader are either trademarks or registered trademarks of Adobe Systems Incorporated in the United States and/or other countries.
Oracle is a registered trademark of Oracle Corporation.
UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group.
Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc.
HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C®, World Wide Web Consortium, Massachusetts Institute of Technology.
Java is a registered trademark of Sun Microsystems, Inc.
JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape.
SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.
Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company.
All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.
These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.