SAP AI – Powering the Digital Supply Chains
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Key Takeaways
⇨ Preventing supply chain disruptions and adapting to the continuous demands of the evolving markets and the business landscape is a priority for organizations.
⇨ SAP is strategically positioned to help companies adopt AI across the entire design-to-operate business processes with its integrated approach that allows businesses to digitally connect and enhance their operations throughout multiple stages of product and asset lifecycles.
⇨ SAP's AI-powered design-to-operate business model facilitates easier communication and balancing supply chain trade-offs among various functional teams.
Preventing supply chain disruptions and adapting to the continuous demands of the evolving markets and the business landscape is a priority for organizations. And this entails predicting customer demands, quality improvements, anomaly detection, and streamlining operations with predictive maintenance. These are only some of the must-haves that organizations need to operate and respond to disruptions successfully.
According to IDC1, improving agility in supply diversification is a critical priority for organizations. However, despite significant digitization investments, organizations are facing challenges with managing their supply chains. This is because supply chain-centric processes continue to operate in silos with poorly aligned objectives, and constrained visibility and transparency beyond their core processes and operations.
AI is not new to supply chain management. Many companies are already using AI to resolve supply chain challenges like sales and operations planning and other supply chain data pools to manage demand fluctuations, supply constraints, production scheduling, and dynamic distribution.
Data reveals that AI-enabled supply-chain management has allowed early adopters to improve logistics costs by 15 percent, inventory levels by 35 percent, and service levels by 65 percent, compared with slower-moving competitors2. AI in SCM solutions is set to reach $17.5B globally by 20283. From prediction and forecasting, preventing out-of-stock situations, curtailing late deliveries, handling product recalls efficiently, averting inventory spoilage, and decreasing supplier risk, the potential of AI use in supply chain management is vast.
AI-powered Supply Chains with SAP
SAP is strategically positioned to help companies adopt AI across the entire design-to-operate business processes with its integrated approach that allows businesses to digitally connect and enhance their operations throughout multiple stages of product and asset lifecycles. Incorporating AI into SAP Digital Supply Chain solutions allows companies to revolutionize their “design-to-operate” processes. This includes enhancing activities like identifying, procuring, designing, prototyping, and retiring products or services. This enables companies to simplify manufacturing processes and reinforce their overall product lifecycle management (PLM).
SAP’s AI-powered design-to-operate business model facilitates easier communication and balancing supply chain trade-offs among various functional teams. With insights into areas like planning, manufacturing, and logistics, businesses can leverage sophisticated analytics to determine the most cost-effective solutions, such as whether to invest in overtime production at a specific plant or absorb transportation costs from alternate facilities.
Additionally, supply chain planning and manufacturing departments can collaborate to design and fine-tune executable strategies for production and logistics. These strategies will ensure harmonized schedules across all business functions and with trade associates. Moreover, every department in the business can benefit from improved insights and predictive capabilities provided by an AI-driven control tower. This advanced system monitors and evaluates activities throughout the broader supply chain, preemptively identifying and addressing potential blockages to ensure smooth operations.
SAP’s AI-powered Design-to-Operate Process
Source: SAP
Optimizing Fulfillment with SAP Integrated Business Planning
For maximizing profits, ensuring high levels of customer service, and facilitating accurate supply planning, a comprehensive understanding of daily demand is crucial. The AI-driven demand-sensing algorithms in SAP Integrated Business Planning (IBP) for the supply chain can generate precise short-term forecasts daily by effectively processing large amounts of varied data – a task that traditional forecasting methods cannot accomplish. AI in SAP IBP can autonomously identify significant thresholds and trigger anomaly detection alerts as required. For instance, AI-powered master data anomaly detection and recommendations notify analysts if demand or supply jobs are taking excessively long. SAP IBP allows to enhance manufacturing precision, decreasing inventory holding costs, and adhering to delivery schedules.
Make to Inspect with SAP Digital Manufacturing Cloud and S/4HANA Manufacturing Solutions
By integrating AI into SAP Digital Manufacturing Cloud, the efficiency of shop floor operators is improved through streamlined visual inspection tasks. The SAP solution incorporates algorithms that process images of the manufactured parts, facilitating easier identification of flaws and their recording using the correct non-conformance code. This ensures any defective parts are properly managed.
S/4HANA manufacturing solutions also offer intelligent inventory analysis. These smart features enable companies to monitor and manage their inventory more efficiently, helping to optimize storage costs, maintain optimal stock levels, and minimize delays in production due to insufficient inventory. Advanced analytics provide insights into inventory turnover, obsolete items, and demand patterns, enabling proactive decision-making to improve overall operational efficiency.
Deliver Product to Fill and Manage Fulfillment with S/4HANA Cloud
SAP S/4HANA employs AI-driven manufacturing analytics to enhance resource management, automatically assigning manufacturing tasks to available resources. It also helps lower inventory holding costs by swiftly identifying slow-moving materials and boosts supply chain efficiency by providing accurate delivery date forecasts. It also supports manufacturing set up, product genealogy and traceability, packaging recycling, sustainability and management of service partners and data while facilitating supply chain collaboration. S/4HANA enables quick actions toward prevention with emissions forecasting and efficiently assigns optimal storage concepts and locations for new products.
Acquire to Decommission with SAP Asset Performance Management, S/4HANA, Predictive Asset Insights, & Enterprise Product Development
SAP solutions improve asset lifecycle management by utilizing AI, IoT, and rule-based frameworks. Customers can integrate sensor data, inspection results, and past maintenance records to facilitate predictive and prescriptive maintenance strategies.
- SAP S/4HANA: Detects and prevents master data anomalies and offers recommendations to avert asset failures.
- SAP Predictive Asset Insights: Detects irregularities in equipment’s real-time sensor data, enabling the creation of a maintenance backlog to address these issues. It also suggests object part and damage codes to conclude maintenance tasks efficiently.
- SAP Enterprise Product Development: Matches parts from 2D drawings with corresponding catalog items.
- SAP Asset Performance Management: Utilizes failure curve analytics to forecast potential asset failures at an early stage.
By collaborating with SAP, businesses can revolutionize their supply chain management using AI-driven insights and then expand and apply these capabilities throughout their entire design-to-operate business procedures.
1 IDC
2 McKinsey
