Against silo thinking and against island optimization

The provocative statement "With our software, we manage misery" dates back to 2006, when GIB had developed the Operations module, a software solution that supports operational activities in scheduling and materials management.

Michael Schuster, then managing director of GIB, explained that while the right tool brings benefits, the processes in the company must be coherent to make a big step forward in a sustainable way.

Even then, numerous customer projects showed that communication and information breaks prevailed along the internal supply chain, that the departments and divisions always optimized their own goals, even if these were counterproductive to the overall process and thus to the overall economic performance of the company. This dilemma has given rise to the buzzwords silo thinking and island optimization.

More than plug and play

"It was immediately clear to us that we couldn't just deliver a software plug and play. We also had to talk to our customers about their processes and help them to use the new tool profitably."recalls Volker Blöchl, who took up his position as senior consultant at GIB in 2008.

As an SAP implementation partner, the know-how about supply chain processes and how they can be controlled in SAP was already anchored in the company. Thus, a consulting package was put together for the software, which was intended to show the customer in the quickest possible way how he could use the information and insights he could draw from the software to optimize his activities and processes.

Today, GIB's solutions and services accompany the supply chain process end to end, from sales planning to production planning, inventory and materials management, and supplier control. Along the way, the Siegen-based company has built up expertise in the supply chain processes of a wide range of industries.

"Whether you're an aircraft manufacturer or a tire maker, a shipbuilder or a beer producer, consulting is about asking the right questions. It is invaluable to know, present and question suffering and solutions from other industries. In this way, we initiate an intensive thought process and break up many an encrusted structure"says Blöchl.

"More and more frequently, we have been asked in projects to take a close look at our customers' supply chains, identify gaps and disruptive factors, and show companies where and how they can optimize their processes"he reports, and Björn Dunkel, also managing director of GIB S&D, adds:

"I remember many conversations in which supply chain managers said that we at GIB should tell them how to optimize their processes. After all, we are the specialists."

This wish has now been realized in the new SCX Suite on S/4 Hana. The concept comprises a strategic and an operational level. At the strategic level, planning processes are analyzed and optimized by means of an iterative simulation process.

At the operational level, the planning results then flow into process control and are processed here.

Top-down view

The process indicators show in real time how well the respective area (production, inventory and material management, etc.) is performing. Clicking on the process indicator takes the user to the key performance indices (KPIs), which show where things are going wrong in the process. Another click on the KPI leads to the respective transaction, where the deficiencies can be directly identified and remedied.

In daily work, it seems rather cumbersome if the dispatcher or production planner has to click through the indicators and KPIs every day to get to his area of activity.

That is why the software offers a role-based entry. Here, the user finds his area of activity directly, has all relevant facts and tasks displayed at a glance and can start working immediately. They are shown whether they are currently in the analysis phase, in the planning phase, in the actual implementation or already in the optimization phase.

It all starts with the sales plan, with the demand planning process: First, it must be ensured that the right materials, namely the relevant ones, are planned. The planning horizon is calculated to twelve months. Ideally, disruptive imbalances in the system, e.g. missing clearing horizons and obsolete requirements, are made transparent and later corrected. This creates an excellent demand planning process.

This sales forecast then flows into production planning (manufacturing) and at the same time into supplier control (purchasing). In this way, the sales forecast can be used for all subsequent processes.

What it means ...

What does that mean for production planning, manufacturing? If you know today what customers will buy in the future, then you can create a stable production plan. The planner still takes into account his specific issues and challenges, but has the necessary transparency and information basis to work hand in hand with the upstream and downstream process sections (end to end).

What does this mean for supplier management, purchasing? If you know today what customers will buy in the future, then you can negotiate with a supplier in a targeted manner. You can make a sales plan partially transparent and thus negotiate prices, conditions and quotas in a cost-saving way, shorten replenishment times or reduce the size of lots.

What does this mean for inventory management (inventory planning)? If you know today what customers will buy in the future, then you can define stocking strategies, e.g. make to stock and make to order. In addition, strategic targets can be set for inventory metrics, which are then automatically maintained via intelligent rule sets. Such sets of rules additionally automate the maintenance of dynamic material master data, if desired.

Without island optimization

The software controls the flow of information and guarantees that each participant has access to the information relevant to his or her activity, regardless of the process step in which the information is collected or created.

Mehmet Kozan from Baier and Schneider, who have been working with the GIB solutions for years, puts it as follows:

"I would see the biggest benefit in transparency. Both across departments and within departments; that MRP knows how sales sales planning works, or that production planning understands sales sales planning."

Transparency

Transparency and communication are obviously key success factors in supply chain management, but what benefits does the GIB offering provide beyond that? The indicator model shows the weak points in the process. Only the knowledge of the specific weak point makes meaningful action possible.

The software solution offers each user exactly the information he needs for his daily activities. This makes the area of activity clear and easy to use. At the same time, the system prioritizes the fields of action so that all measures can be initiated in good time.

The GIB solution makes success measurable and comparable. In this way, one can learn from the other. The solution ensures the flow of communication. This makes silo thinking and island optimization a thing of the past.

If all process participants freed themselves from the fear of someone stirring their pots, i.e. if everyone was willing to cooperate and communicate, then the supply chain would function economically and in a goal-oriented manner; then the participants would act in the interest of the company. A software solution can support, uncover and guide here - the actors themselves must act.