Just make a plan

At the annual press conference, SAP CEO Christian Klein emphasized the importance of SCM.

Consilio is one of the leading SAP partners in the area of supply chain planning. We spoke to Jürgen Löhle, Founder and Managing Director, and Christoph Habla, Partner and Head of IBP, both from Consilio in Munich, about the state of development and future tasks.

You support companies with business strategies, particularly in the area of SAP, and especially in matters of digitization. What are your strengths here?

Jürgen Löhle, Consilio: Consilio's strengths lie primarily in supporting manufacturing companies in discrete and process manufacturing; hence our slogan "The Manufacturer among SAP Consultants". As a full-service provider for the transformation to S/4 Hana, we realize greenfield, brownfield and crossfield projects for companies on the one hand. On the other hand, we also provide support for optimization in areas ranging from production and logistics to finance and controlling. Our consulting services are based on a high level of process-related application know-how.

In other words, we are strong in process and organization, have in-depth functional-technical knowledge of the SAP application, and can thus strengthen our customers' competitiveness through digitization. This is confirmed by many long-standing customers from the upper midmarket as well as DAX companies. Our focus is always on the quality of the service and customer satisfaction.

It's not without reason that you also work closely with SAP at the development level. What makes the company stand out in particular?

Solder: We have exhausted the possibilities of the SAP software in very many projects with our customers, but did not want to modify it. For this reason, we sought dialog with SAP as early as the 1990s in order to further develop the standard software specifically in the area of supply chain management. This is how SAP became aware of us and called us in to develop innovative solutions within the SAP standard in the area of supply chain planning - for example, within the framework of the development of planning algorithms and currently a tank planning solution.

The term "turnaround" is currently booming, also in relation to the digital supply chain. What market trends do you see in this area?

Solder: A key issue at present is to create the basis for a digital supply chain by converting to S/4 Hana in order to be able to use integrated, intelligent technologies or real-time analyses in the future. Companies have recognized that they need a lean digital core in order to be able to react more quickly to innovations. Above all, supply chain solutions that enable them to remain resilient, agile, productive and sustainable are in demand. In supply chain planning, companies want to analyze and respond faster. To do this, supply chains and logistics must be highly automated and standardized, and manufacturing must be made more efficient with artificial intelligence, IoT and enterprise-wide integration.

There is also a great deal of potential, particularly in the integration of product development - not just in manufacturing. In addition, our customers also want to improve plant performance and reliability with intelligent technologies. SAP offers state-of-the-art solutions for this, such as Integrated Business Planning, Extended Warehouse Management, Digital Manufacturing Cloud, Engineering Control Center or Enterprise Asset Management.

Who do you turn to for solutions?

Solder: As described above, Consilio offers the greatest added value through the combination of industry as well as product know-how regarding SAP software for companies in discrete and process manufacturing. Especially S/4 Hana together with its cloud functionality provides very many solutions for manufacturing companies. How do I digitize production in a meaningful way in order to react faster? Or how do I create intelligent process optimizations through predictive algorithms in order to be able to mitigate negative market developments? In a nutshell: How do I create resilience in my supply chain and how do I perfect it?

SAP CEO Christian Klein often emphasizes that ERP and SCM are particularly in demand in difficult economic times. Can you confirm this view and will 2023 be a good year for Consilio and IBP?

Solder: Indeed, the supply chain is always a challenge for companies to predict the economic ups and downs and assess changing market expectations - these include ever-shorter delivery times or changing sales channels. However, recent years have added to the pressure on companies. In some cases, the economic cycles of upturn and downturn no longer go through years, but occur within a year.

This means: At the beginning of a year, all signs point to a boom, but after a few weeks
you are in a downturn. Accordingly, the demand for products changes quickly and the sales channels change just as quickly. With IBP, SAP offers the right solution for company-wide planning to enable fast, resilient and sustainable planning. We currently see a very high demand for this, even beyond 2023.

SAP is also seeing a lot of change. Tried-and-tested old solutions are being replaced by new ones - the keywords here include APO and IBP. Is the current focus on APO replacement or on new IBP business, and what do you expect for 2023?

Christoph Habla, Consilio: Among our customers, the ratio is roughly fifty-fifty; i.e., we have about half projects with customers who previously had no supply chain planning solution, and the other half are long-standing APO customers who now want to switch to IBP. The former are mostly mid-sized companies that previously found an APO installation too complex and expensive, while the latter are mostly global corporations. For 2023, we expect demand to continue to rise, as the current crises make supply chain planning topics even more important and because the end of support for APO is approaching.

IBP is functionally more comprehensive than APO. Is this more of an opportunity or more of a burden for existing SAP customers?

Habla: IBP actually offers more extensive functionalities than APO with regard to some topics - for example, in inventory management. In addition, the intuitive usability with Excel and Fiori interfaces, the flexibility, especially with regard to simulation options including far-reaching master changes, the evaluation options with Fiori dashboards and the performance based on the Hana DB advantages are positively received in all our projects with former APO customers. Even the cloud, which was initially viewed rather suspiciously due to IT security aspects, is now more of a selling point.

The main arguments in favor of the cloud are the reduced maintenance effort and the standardization with regular release upgrades, which also constantly provide new functionalities. In addition, the initial functional gaps compared to APO have now been closed, which is why even customers with complex APO installations can now switch to IBP with a clear conscience.

How many functions from IBP - roughly as a percentage - are currently in use at a typical existing SAP customer?

Habla: This cannot be said in general. Consilio has customers who basically only use the basic S&OP module or only create a forecast, as well as users who plan their entire supply chain from the customer to the raw part with various algorithms. So you can probably say about 50 percent, with a range from 25 percent to about 75 percent - 100 percent is not to be expected because of the comprehensive possibilities.

Where do you see the challenge of IBP customizing in the digital processes? Training, cloud, or?

Habla: As mentioned above, our customers are essentially satisfied with the intuitive usability, which is why we hardly encounter any challenges regarding training topics in our projects. Customizing itself by us or the customer's IT is also usually easier to perform than in APO. What both customers and consultants have to get used to, however, is the fact that it is not possible to intervene directly in IBP via development. This means that everything in IBP has to be done via customizing. In this respect, however, IBP has proven to be sufficiently flexible in our projects to date. For example, we were even able to introduce the IBP application as a supply chain planning solution for a leading logistics service provider such as BLG Logistics, although it was not originally designed for this purpose. 

Are tools such as Signavio also used in the design of supply chain planning?

Solder: A software solution only brings the maximum benefit if you also take the time to conduct an analysis in advance. Especially in the area of the supply chain, it is advisable to identify the optimization potential through an analysis. Often there are deficits in the processes, the organization or the arrangement, which do not lead to an improvement even by implementing the best software. For this purpose, we use various methods and tools for process visualization. In addition to Signavio, our repertoire includes process analyses with tooly such as Paxray or just MS-Office to show potentials with a value stream or inventory analysis.

SCM is a large market with powerful vendors. For an existing SAP customer, do you have any advice for a product selection after the discontinuation of APO? What decision criteria could an SCM expert use as a guide when looking for a product solution?

Habla: There are certainly a few solutions on a par with SAP IBP on the market for supply chain software. However, we usually encounter an "SAP first" strategy in the IT departments of our customers.
In other words, there must be weighty reasons for the individual company to decide in favor of another provider, which is understandable due to the complex integration into the existing SAP landscape. This integration aspect is certainly an important one - along with the planning processes and functionalities mapped in the solution, as well as usability. In these areas, however, SAP IBP was able to score points in most cases with customers who were still undecided about the provider. 

Mr. Löhle, Mr. Habla, thank you for the interview.