SAP HANA and Supply Chain Management - Walmart's Approach

Overview of Supply Chain Management (SCM)

1. Choose a business process that can supported by an Enterprise Resource Planning (ERP) system.  Give a brief description of the business process.
   
   
2. Being a system analyst, how could you improve the business process through the implementation of an ERP? Write a short proposal that contains the description and design of the elements below.  
   
   List and describe the most important ones.
   . Data
   . Processes
   . Reports
   
   
3. All reports must be neatly typed, double spaced, justified, Times New Roman 12point font. Standard format of a 1" each margin on the left and right sides with a .5" setting for the bottom and top.
   
   
4. With at most five (5) members in a group, prepare a plan that shows group collaboration and the contribution for each group member.  
   
   
5. Deadline for submission through the BB is on Thursday, Week 15.

 

Supply chain management (SCM) is the discipline that covers the end-to-end business operations carried out in every organization regardless of the manufacturing or service industries. Synchronization of a network of equipment and distribution options includes the acquisition of materials, the processing of materials into finished goods and the distribution to consumers of the products. One of the first retailing firms to centralize its delivery networks is Walmart. Walmart is now well known for their creative SCM practices. In using IT to control its supply chain operations, it is still among the best players. Walmart has made improvements on their strategic procurement to find goods from manufacturers that are willing to ensure that they can satisfy demand at the best price (lowest price strategy).

The business then forms strategic relationships with most of its suppliers, in return for the lowest possible costs, giving them the opportunity for long-term and large volume purchases. In addition, Walmart simplified supply chain management by developing supplier contact and partnership networks to maximize material movement with smaller inventories. It has identified the network of global manufacturers, warehouses, and retail stores as behaving almost like a single firm."The whole thing about Walmart was cooperation, a big part of what made them so successful is that."(Crowell, 2019,p.2)

SCM Modules are very significant in businesses like Walmart. Such modules help in managing and planning smartly to cope with customers’ demands. Also, as a main benefit, SCM modules enhance the communication, collaboration and sharing of data among different business lines or stakeholders. Implementing SAP HANA - SCM would also improve a variety of processes regarding orders such as fulfilment, inventory optimization and shipping.

Supply Chain Management (SCM) modules that Walmart uses in SAP HANA, stores data that help in managing their supply chain processes efficiently and effectively. For example, it uses an Organizational Master that includes general information about Walmart. And also, stores data about their customers, suppliers, and manufacturers to integrate perfectly with other modules like Customer Relationship Management (CRM) and Supplier Relationship Management (SRM). As Walmart needs to procure goods either externally from vendors or internally between different plants, the Procurement Process in the SCM module stores data needed about these processes.

For example, it stores data included in Purchase Requisition, and data about vendors as a Vendor Master who can offer such goods along with their conditions, like prices determined by user input. Internally, Walmart different branches can raise Stock Transport Order to get the needed goods that are available in another plant without any payments. Another process that Walmart uses in SCM is Inventory Management.

Data in SAP HANA SCM module

Such process needs data to maintain and monitor the flow of goods into and out of the Walmart warehouses. For example, data about plants that represent locations where goods and materials that are in Materials Master being received or issued need to be stored in this module. Also, inventory management needs to retrieve data from Vendor Master and any automatic or user input data that shows the quantities stored.

As Walmart one of the largest retailing companies with powerful strategies, with the use of SAP HANA and its modules capabilities; Walmart became a leading retail company. The Retail and Merchandise Management process would extremely help Walmart retailing efficiently. It stores data about their sales in different branches and pointes of sales, of either goods or services to final consumers who are purchasing for their own needs. For example, data about inventory levels and where items are placed in Walmart stores being saved in the module. Also, Walmart uses the Sales Order and Billing Management processes.

Where it stored data about sales quotations as a trigger to process the Sales Order, with specific conditions and quantities, date of delivery, customer information, and the goods or services they wanted that Walmart could retrieve data about them from Material Master. Automatic scheduling of billing makes it easy for Walmart to organize the order-to-cash process. After this process the module should store information about Billing Documents, that will be later posted in Financial modules in SAP HANA.

The procurement process of Walmart SCM is triggered by either low inventory of products or low shelf quantity. There are several tasks done during this step. First, the purchasing department at Walmart creates RQFs for manufacturers and selects the provider with the lowest price. Furthermore, The purchasing department usually makes contracts directly with manufacturers and avoids intermediaries to ensure cost reduction of procurement.  After validating and selecting the optimal provider, the department places a purchasing order (PO) and sends it to the selected provider.

Finally the department confirms the actual purchase by making the payment. Main data required here are vendor (manufacturer) master, organizational master related to the company’s general information, material master related to the ordered finished-goods (products)  and user input such as quantities. The main outcome of this step is creating the PO and processing the payment related to the PO.

Furthermore, the enterprise system used by Walmart (SAP HANA) provides a variety of features that would help in facilitating the procurement of products. Features could include contract management and Supply chain risk management. As for contract management, this feature helps and facilitates the collection, analysis, and access to data as well as support processes related to procurement and vendor contract documentation.

Processes in SAP HANA SCM module

In the previous step, the purchasing department takes the responsibility of placing a purchasing order. However, Walmart usually utilizes collaborative means for placing orders, it uses a Vendor Managed Inventory (VMI) system where the vendors (manufacturer) collaborate, maintain, and respond to the needs of inventory stockings for Walmart then place orders accordingly. Furthermore, VMI is facilitated by the use of advanced technologies like RFID to help at keeping track of inventory stocks and transform such information to the enterprise’s system. After the needs are determined by vendors, they create a schedule for orders to be delivered.

And after that, the inventory of Walmart receives shipment from the manufacturer and prepares it for stocking. Main data required in this step are material master for the received goods, vendor master that include information about the manufacturer, and other inputs saved automatically from RFID (e.g. quantities). The main outcome of this step is stocking received goods in their intended places in inventory.

Moreover, features of SAP HANA ERP utilized by Walmart have optimized many aspects of inventory within the supply chain. Most important features embedded in the system are stock monitoring, inventory analysis, and stock obsolescence. Such features have contributed in optimizing collaboration among Walmart and vendors as well as reducing costs related to inventory planning, monitoring, and management.  

However, inventory management is highly integrated with other processes within the SCM. As it’s integrated with Sales & Distribution, Logistics Management, and Retail management. This is facilitated by the use of a consolidated data warehouse, which allows enhanced reporting activities related specifically for inventory management, and generally for the Supply Chain.

The retailing step is the last in SCM yet one of the most critical steps within Walmarts’ SCM, adding value to Walmarts’ entire supply chain. According to Patrick (2018), retailing is considered as the final act where we are positioning our product or services in the hands of our customers whether this would be done physically or virtually.

Walmart is considered as the largest retailing company internationally, and its ability to maintain its strength in the retailing industry has rooted in the fact that this company has diversified their retail options & strategies in handling the retailing process by following consumer-focused strategies, emphasis on the digital age information, innovations, speed, personalized offers, and Sell-Box retailers..etc. These strategies enabled Walmart to become a market leader globally, but without a successful ERP System (SAP HANA) executing & monitoring these strategies would be difficult.

More specifically, let's explore how SAP HANA carried Walmarts' retailing management process that resulted in a positive impact. According to Walmart,  the company plans its merchandise requirements based on customers’ demand, market trends at regular intervals for their distribution centers which leads to placing a purchase order with their vendors. As a result, vendors deliver the merchandise ordered and it is recorded in the system as goods receipts against Walmarts’ purchase orders.

The outcome of this process will increase the inventory of Walmart's distribution centers and at the same time, it will increase the value of the inventory along with a liability that Walmart has against their vendors who accomplished the supplying. Once Walmart receives from its vendor against the delivery of merchandise is verified, any volume discounts and rebates are applied and further, the payment is released.

In case Walmart decided to do a replenishment process of their merchandise this will be automated using Requirement Planning; thus; purchase requisition will be created automatically converted into Purchase order proposal then confirmed or released as Purchase orders.

with the usage of SAP HANA the company is pushing the retail process into further modern generation by utilizing all functionality & features within SAP HANA, a snapshot of that is illustrated as follows:

First Fiori-ized user interface in SCM module, this interface enables the employees to handle the end-to-end process of retailing successfully with the ability to utilize data analytics functions on all types of master data ( customers, products..etc) that are included within retailing procedures.

Moreover, the employees can easily execute & monitor promotions, prices, and point of sale transactions. Walmart's retail processes are fundamentally linked to merchandise management. logically for the company to sell its products/ services there has to be accurate merchandising. Fiori-ized user interface within this application suite, helped in this area by providing employees with operational insights in real-time, for better decision making, enabling transparency in their work by having ad-hoc corrections.

Most importantly reduced the markdowns, with these insights Walmart can cope with seasonal demands & make sure that their products & services are available in no time therefore their markdowns reduced approximately between 5-10%.

Also, the functions enabled the company to easily extend its retailing by connecting with other business networks & work collaboratively to create a digital ecosystem. Moreover, Vendors are enabled to send shipping notifications to inform the delivery of articles that will include details related to the delivery date, time, and quantity. in case of inbound delivery shipping notification will be entered via manually or Electronic data interchange (EDI).

 

Walmarts implement a variety of strategies to do their sales, distribute their products & services towards their target market globally. for many years the retail leader has been able to generate a high level of sales revenue & reach customers in no time, which enabled Walmart to remain a consistent leader of logistics, distribution, transportation, and technology in one of the most competitive industries, partly due to an excellent implementation of sales & distribution management process nevertheless SAP HANA has enhanced this process towards excellence by enabling functions & features that will be further discussed in this section.

Generally, the sales & distribution process begins with the triggering event of placing a purchase order by customers that are transformed into a sales order by Walmarts’ sales department, the placing would be either virtually or physically. In this step, Walmart would usually extract master data related to (e.g customer, material, pricing conditions, credit management).

This step then carried on with multiple functions that included ( credit management, Sales, shipping, billing, transportation, sales support, and foreign trade) in which each of them is supported by the SAP HANA system. This step will affect Walmarts in multiple ways (outcomes), such as decrease of inventory in the warehouse, prepare for restocking, increase sales level, receiving payments..etc.

The key is to understand how Walmart has utilized its ERP system (SAP HANA) to succeed in this step & achieve successful supply chain management. The combination of innovative strategies that Walmart is adopting & the use of advanced technology made it a strong competitor.

Every Walmart store around the globe operates like a small organization, in which managers handle each store, department, customer, at a time. Moreover, the usage of RFID to increase sales, handle any out-of-stock situations in advance, cross-docking, and automated replenishment Walmart (2019). SAP Hana SCM module has helped to implement these tasks successfully for example:

1- Billing: Walmarts customers have the choice to choose the type of payment, SCM can track the billing data in real-time, invoice creation can be done manually/ automatically, real-time integration with other departments ( e.g. finance).

2- Shipping: enabling various methods of shipping, monitoring real-time creation of documents, scheduling delivery, return delivery..etc.

3- Sales Support: enabling real contacts with clients, direct marketing, reporting all data between customers & supporting staff.

SAP HANA embeds advanced tools for reporting like OLAP and OLTP that help in consolidating data from a variety of sources in a useful manner. Moreover, the SAP SCM module used by Walmart provides a number of useful reports that help management in a variety of aspects ranging from stock monitoring, vendors outline agreements, and others related to logistics planning.

Furthermore, for stock monitoring reports, it is usually useful for vendors as it helps them in monitoring stock levels of Walmart and generate orders accordingly, therefore enhancing collaboration between the two parties.

However, vendor outline agreement reports are used as a reference whenever a purchasing order is made with the selected vendor. Tracking such reports by the purchasing department could help them in streamlining their processes and make better deals with vendors (manufacturers), therefore reducing purchasing-related costs.

Moreover, other useful reports are inspection reports utilized by Walmart. These reports include data related to suppliers, products, and other related to quality management. Such reports are highly useful for inventory management as it provides several insights to improving quality management, therefore enhancing and facilitating quality-related decision making efforts.

Additionally, the enterprise system generates an important financial & accounting report, these reports help in managing suppliers, inventory, and customers related costs. In addition, these reports can help at monitoring costs incurred during the process of SCM. However, these reports include important indicators for management such as Inventory Turnover Ratio and Product Specific Sales and Profit Ratios.

Lastly Walmart Sales report, by using SAP HANA we are able to use Fiori application in which it generates sales reports that are demographic and rich in content. This includes a KPI modeler that monitors Walmarts’ sales performance, enabling them to create customized analytical queries. These sales reports are also able to be presented in the form of a dashboard to show Walmarts’ sale performance.

Even though Walmart has been known for its good Supply Chain operations, there is still room for continuous improvement to ensure as well as prolonging the competitive advantage Walmart has in its industry.

First As Chen (2019) suggests, Walmart's SCM operations can be further improved by the implementation of Artificial Intelligence (AI) technologies and more sophisticated tools of data science in conjunction with their existing enterprise system.

As for artificial intelligence, if Walmart invested in such related technologies such as using robots to automatically restock shelves or the use of sensors to track customers traffic in stores, it could provide a variety of advantages to the business that includes providing better insights for customer purchasing behavior and patterns, therefore, providing them with the better shopping experience, and facilitate and automate inventory operations. AI would be useful specifically for retailing steps as products would be easily and quickly arranged in-store.

Secondly, a variety of data since tools and analytics can be as well implemented along with AI. Walmart can utilize tools for predictive analytics, such tools can help at providing better and more accurate insights to customer demands to meet their specific needs which in turn improve customer satisfaction and sustain their loyalty. However, such tools would be beneficial for the ordering process as it would be automated and require less human intervention therefore less human errors. (Intel, n.d.).

Third, there are major concerns that many users have reported on issues regarding the difficulty in processing large data and calculation load in SAP HANA version, these analytical features will not be much of use if the processing is slow or the server has the tendency to crash; it is suggested to follow a hybrid solution where the ERP is partly run on the cloud or using virtualized servers to reduce the load.

Fourth, Walmart & other companies have faced issues regarding the compatibility of their hardware components with SAP HANA as it only runs on SUSE Linux certified hardware, it is suggested for SAP to take into considerations their updated versions should be compatible with companies’ infrastructure to make use of the entire suit.

Fifth, many companies reported that SAP HANA versions get outdated fast due to frequently updated versions which are irritating, require frequent backups, costly & time-consuming to the client therefore it is suggested to make updates when it is needed.

Lastly despite that re-engineering might be needed for this type of ERP system, SAP HANA is still considered user-friendly & very useful for such industries; thus; further enhancement regarding UI of the system can be taken & increasing the memory in HANA BOX.