Why is it important in logistics to discuss and think about migration into the S/4HANA landscape? The classical SAP ERP solution will be phased out by the end of 2025. For this reason, companies need to make a decision on the way forward, specifically depending on their situation and their future system requirements.
SAP S/4HANA is the future, and: there is an embedded Supply Chain Execution suite available in SAP S/4HANA. The old LE-TRA functionalities are now covered by SAP Transportation Management Basic Shipping, part of the S/4HANA Suite. In addition to the basic version, a professional version exists with extended capabilities. Hence, the question now arises what the best fit for my supply chain setup is. This blog article outlines feasible options.
Finding the right solution starts with the right process
An S/4HANA transformation process cannot be considered in isolation. Organizational impacts, processes, employees and IT infrastructure are pivotal and require close consideration. Additionally, S/4HANA transformations open much more possibilities for real-time integration with partners in the value chain. These need to be involved as well. For this reason, successful transformations are the result of a closely intertwined decision process, considering multiple decision elements.
Logistics Business Improvement opportunities
Introducing S/4HANA opens up multiple process improvement opportunities and a state-of-the-art system landscape. Additionally, new add-on solutions such as Global Track & Trace or Logistics Business Network are easier to integrate in the system landscape. Last but not least, the S/4HANA technology lays a solid foundation to cope with IT-driven innovations such as AI or Blockchain technology and to integrate them into the future system landscape.
Feasible migration options depend on as-is system landscape
In order to decide for the optimal migration path, strategic elements need to be considered; What are the future requirements? What is the company strategy and vision for their supply chain? Depending on the answers to these questions the migration options can be outlined and developed. Typical examples include upgrading current SAP supply chain execution elements to S/4HAHA and migration to the latest available version of EWM and TM. If the logistics applications are outsourced to third parties’ solutions, they could be insourced to EWM/TM stacks. Therefore, either a phased approach can be taken into consideration or to insource EWM/TM at once. In case the decision is made for a phased approach, the TM can be migrated to the new SAP technology, with EWM being migrated in a second or later step. Furthermore, it is also possible vice versa.
System architecture strategy
System architecture strategies range from complete integration of all systems into one centralized solution or to a completely decentral one, which considers the different supply chain execution components as separate systems. Besides the degree of centralization, another pivotal decision point, that should be taken into consideration, is cloud-based versus on-premise. An optimal strategy cannot be derived without closely considering individual requirements, preferences and future vision of the company.
Deployment strategy feasibility
Deployment approaches consider either a greenfield or brownfield approach. A greenfield approach assumes typically that processes do not exist currently and therefore starts from scratch with the definition of processes to the future system. In contrast, a brownfield approach implies that processes are defined and need to be implemented in the new system accordingly. Both approaches come with specific advantages and disadvantages. The best fit depends on the company’s specific requirements, budget situation and legacy restrictions, for example. Typically, with a greenfield approach companies get the opportunity to gain a higher productivity and are able to leverage process optimizations options.
Licensing strategy for SAP Transportation Management: Basic vs. Professional in Transportation Management
For TM, the available options are Basic and Professional Shipping. The Basic option overs all core functionalities from LE-TRA. The Professional shipping version covers the end-to-end SAP Transportation Management functionality capabilities including automatic planning, enhanced freight cost calculation and integration options. Every company develops and implements its own business- and system processes which make them unique. This characteristic adds even more complexity to the decision process; One size does not fit all. Therefore, one of the most important questions is: “What is the future vision and strategy?” and then the decision for either Basic or Professional shipping can be taken. Additional and feasible possible option is to start in a first step with Basic Shipping and switch to Professional Shipping in a second or later releases.
Companies should ask themselves “What is the best GoLive strategy for our Supply Chain Execution transformation?”
One of the last steps of the transformation journey process is the GoLive. Different GoLive strategies are feasible depending on customer business and risk assessment. For example, a Big Bang, phased GoLive or a detailed roadmap can be used. Each option has its own advantages and disadvantages and needs to be aligned on individual requirements like “Fall back option needed?” or “Global rollout or side specific”. Since the GoLive has an impact on the whole company and affects multiple stakeholders, all parties need to be aligned and informed, so a smooth and easy GoLive can be made possible.
All companies will benefit from a supply chain execution changeover. The best approach for a changeover is company-specific and needs to combine company vision & strategy with knowledge of the complete SAP S/4HANA capabilities in order to leverage its full potential and gain competitive advantage. Without a starting point and a clear goal, the transformation will be endless and inefficient.
If you want to know more about the Supply Chain Execution transformation process, please have a look at our brochure.
We would like to thank Jochen Heydt for his valuable contribution to this article.