Scale Up in Retail with SAP's SCM 4.1 Inventory Collaboration Hub

  • by Charlie Bienvenu, Director of SAP Supply Chain Management, Pragmatek Consulting Group
  • July 1, 2005
Although it was first introduced with SCM 4.0, few users have leveraged SAP Inventory Collaboration Hub (SAP ICH) to take control of large inventories in numerous locations. Those in retail and other industries with such requirements will find they can manage large operations more easily.
Key Concept
SAP ICH is heralded as SAP's strategic supply chain collaboration platform. Requirements of the magnitude retail operations demand often compromise APO performance or server cost significantly, due to APO's dependence on liveCache memory. Prior to ICH, retail companies had to consider implementing non-optimal solution designs, including interfacing legacy non-SAP tools with an R/3 execution backbone to handle such sizing challenges.
Scalability is one of the toughest challenges you'll face when implementing SAP's Advanced Planning and Optimization (APO) in the retail industry. In retail, it's often necessary to plan and model a very large number of saleable products that are stored in a large number of distribution centers (DCs) and retail stores. The number of "product-location combinations," i.e., the number of retail products multiplied by the sum of the number of DCs and stores, can exceed the tens of millions.

SAP Inventory Collaboration Hub (SAP ICH) was first available with SCM version 4.0, and it remains one of the more novel products in 4.1, the latest SCM offering. SAP ICH is tailored for the significant sizing requirements of retail and other industries with large product-location combination environments. Later, I'll describe how the scalability challenges of a well-known retail apparel conglomerate were met using an SAP solution based on SAP ICH and APO. Given the relative newness of the SAP ICH offering, I'll begin with a general introduction to SAP ICH.

Note
The SCM 4.1 software bundle consists of the APO technology that has been available since 1998 (Demand Planning [DP], Supply Network Planning [SNP], Production Planning and Detailed Scheduling [PP/DS], Transportation Planning/ Vehicle Scheduling [TP/VS], and Global Available to Promise [GATP]) and the newer SAP ICH and Event Management (SCM EM) components. SAP ICH and SCM EM were first introduced with verson 4.0 in late 2003 and were greatly enhanced for the current 4.1 release.

Charlie Bienvenu

Charlie Bienvenu is director of SAP supply chain management at Pragmatek Consulting Group (www.pragmatek.com). Pragmatek helps its clients realize significant productivity gains and increased profitability by applying process improvement techniques and optimizing SAP business systems. The firm's team-centered approach helps clients to diagnose problems and identify improvement opportunities that can reduce cost, increase revenue, and capture value. Charlie was previously with Capgemini as a senior manager in its supply chain management practice. Prior to that, he spent seven years with SAP America as a project manager in its supply chain management practice. He is a member of the Supply Chain Council, participating on its metrics committee, and holds a master's degree in quality management from Loyola University.

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