canva-photo-editor (8)

SAP S/4HANA Logistics

SAP S/4HANA Logistics

 

SAP S/4HANA Logistics is the unofficial name for the collection of supply chain management lines of business (LoBs) that run on the SAP HANA platform. Sometimes referred to as “Logistics with SAP S/4HANA” and “SAP Simple Logistics,” it was built to run on SAP HANA and utilizes the SAP Fiori user interface.

 

History of SAP S/4HANA Logistics

 

SAP S/4HANA Logistics was first released in 2016. This name was dropped in 2017 for two main reasons. The first, SAP was beginning its pivot away from the “Run Simple” motto, which didn’t convey the nuance of some complex business processes. The second, SAP was adding additional functionality to its fledgling SAP S/4HANA portfolio—logistics capabilities joined the financial innovations SAP S/4HANA Finance had brought since 2014.

 

The collection of modules that make up the SAP S/4HANA Logistics LoBs contain solutions previously found in the SAP ERP or SAP ECC. This was done purposefully by SAP to better distribute functionality and place similar processes together.

 

SAP S/4HANA Logistics receives major yearly updates. As of 2019, its latest features include predictive materials planning, automated Kanban, and integration with SAP CoPilot.

 

SAP S/4HANA Logistics Innovations

 

Central to the SAP S/4HANA logistics solution are the process and reporting improvements available via SAP HANA’s in-memory architecture; SAP says reporting times in SAP S/4HANA are 1800x faster than SAP ERP. Many reports and tasks, like the Resource Scheduling for Maintenance Planners and Maintenance Scheduling Board, can be run with SAP Fiori applications designed with the end-user in mind.

 

Another innovation in SAP S/4HANA is the way available functionalities have been grouped in value maps instead of modules, as in the traditional SAP Business Suite. For example, the streamlined procure-to-pay value map shown in the table below consists of cross-functional technology offerings that were once mapped to multiple SAP Business Suite modules in SAP ERP.

 

Table 1.2

 

SAP S/4HANA Logistics Lines of Business

 

This change of streamlined functionality means that existing module naming conventions found in SAP ERP are no longer applicable. In the legacy suite, users would routinely utilize modules such as Materials Management, Warehouse Management, Plant Maintenance, etc. to complete their tasks.

 

With SAP S/4HANA’s value maps, these modules have been replaced by SAP with four complementary functional LoBs that fall under the broader umbrella term “SAP S/4HANA Logistics:”

  1. SAP S/4HANA Sourcing and Procurement
  2. SAP S/4HANA Manufacturing
  3. SAP S/4HANA Supply Chain
  4. SAP S/4HANA Asset Management

For each LoB, SAP offers functionality that is part of the SAP S/4HANA “core” and supplements it with add-on products.

 

Add-ons come in various flavors; some are embedded and can be activated on the same database, and others run on a separate platform but have standard integrations with the core SAP S/4HANA. Licensing fees may apply in both cases.

Sourcing and Procurement

The first step in the supply chain is, of course, getting the materials that are needed to fulfill orders. In the Sourcing and Procurement LoB, SAP assists users in identifying and acquiring materials through extended procurement, operational purchasing, contract and supplier management, and more.

 

01_005

 

Solutions such as SAP Ariba and SAP Fieldglass are considered part of the Sourcing and Procurement LoB.

Manufacturing

Once materials have been bought and delivered, they need to be turned into finished goods. In the Manufacturing LoB, SAP assists users in product creation through responsive manufacturing, production operations, scheduling and delivery planning, quality management, and more.

 

04_001

 

Legacy processes such as manufacturing extension SAP Manufacturing Integration and Intelligence (SAP MII), quality and quality issue management, and production planning and control are considered part of the Manufacturing LoB.

Supply Chain

Perhaps the most inclusive of the four LoBs, the Supply Chain LoB assists users in overall business planning, as well as storing and dispatching products when purchased. It covers processes including production planning, batch traceability, warehousing, and inventory management.

 

Solutions such as SAP Integrated Business Planning (SAP IBP), SAP Extended Warehouse Management, and SAP Transportation Management are considered part of the Supply Chain LoB.

Asset Management

It’s not just products that need to be taken care of—product-based businesses own manufacturing assets such as machines, buildings, and various tools. In the Asset Management LoB, SAP assists users in taking care of those in-house items from a maintenance perspective.

 

Maintenance management solutions such as SAP Enterprise Asset Management (SAP EAM), and EHS monitoring and reporting tools are considered part of the Asset Management LoB.

 

SAP S/4HANA Logistics Deployment Options

 

There are multiple avenues through which SAP S/4HANA logistics can be deployed. Here’s a brief overview of each.

On-Premise

An on-premise deployment encompasses traditional in-house IT infrastructure models. This deployment model describes an instance of SAP S/4HANA logistics that is physically hosted on company property.

Cloud

There are three cloud options for SAP S/4HANA logistics deployment, all of which involve the use of external cloud integration.

  1. In a multi-tenant deployment (formerly known as the public option), a company leases a siloed piece of server space shared with other clients running SAP S/4HANA.
  2. In a single-tenant cloud deployment (formerly known as the private option), a company places the SAP S/4HANA infrastructure and hardware in its own data center.
  3. In an SAP HANA Enterprise Cloud deployment, a company is given space to utilize SAP S/4HANA on SAP’s private cloud.

 

SAP S/4HANA Release Cycle

 

SAP S/4HANA receives multiple updates a year. Cloud-deployed instances will receive quarterly updates, while on-premise deployments are updated once a year, usually in September.

 

The naming conventions for SAP S/4HANA releases follows this four-digit format: year/month. For example, the 1909 release of SAP S/4HANA refers to the release that came out in the year 2019 (19), month of September (09).

 

Other Key SAP S/4HANA Logistics Terms

 

In addition to the information laid out above, there are a handful of important SAP S/4HANA logistics terms you should also know:

  • Advanced variant configuration (AVC): A feature of SAP S/4HANA that allows for a standard product model made up of materials, but allows for advanced processing such as setting up a configurable BOM, make-to-stock production, and make-to-order production.
  • Available to promise: The uncommitted portion of a company’s inventory and planned production, used to support order promising for customer orders.
  • Bill of materials (BOM): A list of individual components that make up a larger, finished product. Used in the planning and production phases of the product creation journey, this is typically shortened to the acronym “BOM.”
  • Business partners: In SAP ERP, the terms “customers” or “vendors” were commonly referenced—but in SAP S/4HANA, these are both known as “business partners.”
  • Demand-driven MRP (DDMRP): An MRP procurement approach that is centered around demand signals rather than other variables.
  • SAP Extended Warehouse Management (EWM): An advanced version of SAP’s warehouse management functionality that includes specialized processes for larger warehouses with medium- to high-complexities.
  • Embedded EWM and decentralized EWM: Embedded EWM refers to former SAP EWM functionality that is embedded directly in SAP S/4HANA, while decentralized EWM refers to instances of this functionality that can be run on a non-SAP S/4HANA system.
  • SAP Fieldglass: SAP’s tool for managing contingent (third-party, freelance, or contract) labor.
  • Materials management: A core logistics field that includes purchasing, goods receipt, material storage, consumption-based planning, and inventory management.
  • Material requirements planning: A planning practice for generating procurement proposals to fulfill external procurement and in-house production demands.
  • Production planning: A way for companies to benefit from historical data to prepare a forecast that can then be used in sales, operations, materials, and production.
  • Production Planning and Detailed Scheduling (PP-DS): A sub-module of SAP APO designed to handle complex and advanced supply chain planning, such as demand planning, supply network planning, production planning, and detailed scheduling. PP-DS is now embedded in SAP S/4HANA.
  • Sales and operations planning (S&OP): The process of determining how much product to produce, using demand signals, historical product performance, and other factors to produce at an efficient level.
  • SAP Advanced Planning and Optimization: SAP’s supply chain planning solution and the forerunner of SAP IBP.
  • SAP Ariba: A cloud-based procurement tool that includes a variety of independently operating applications.
  • SAP Integrated Business Planning: SAP’s cloud-based tool for supply chain planning, combining tactical and operations planning, analytics, and control into a single environment.
  • SAP Transportation Management: A tool used to manage efficient transportation logistics, typically of finished products between the warehouse and final destination.
  • SAP Warehouse Management: A tool used to manage day-to-day warehousing operations. This includes stock monitoring, managing incoming and outgoing stock, and maintenance work on stock in the warehouse.

Additional Resources

 

Eager to learn more about SAP S/4HANA logistics? These blogs and books can help.

Blogs

Books by SAP PRESS