SAP ERP

ERP stands for Enterprise Resource Planning, which allows all business-relevant departments of a company to be viewed in context. SAP ERP is the main product of the company SAP SE.

The current version is SAP ECC 6.0 Enhancement Package 8. ECC stands for ERP Central Component or "Enterprise Core Component".

SAP ECC allows the IT-supported processing of a multitude of tasks that arise in a typical business enterprise. The modular structure corresponds to the organisational structure common in many companies. However, the modules are not completely independent, but their functions are closely interlinked in the sense of technical integration and the implementation of one module always has influences in other modules.

According to the ECC system, the three business application areas supported by ECC - accounting (SAP ERP Financials), logistics (SAP ERP Operations) and human resources (SAP ERP Human Capital Management) - are each assigned "modules" which are designated with a unique abbreviation. In the following, only some of the most important ones with a focus on logistics are mentioned:

SAP ERP Financials

FI: Financial Accounting

CO: Controlling

SAP ERP Operations

• MM: Materials Management with procurement, inventory management, invoice verification, valuation, goods receiving and services processing, material master.
• PP: Production Planning and Control, including MRP II, supplemented, if necessary, by the add-on product Advanced Planner & Optimizer (APO)
• PM: Plant Maintenance, including inspection, maintenance, repair, according to DIN 31051
• SD: Sales and Distribution with order management, shipping and transport, invoicing, credit management, foreign trade/customs
• LE: Warehouse management, dispatch and transport (Logistics Execution)
• EHS: Environment, Health & Safety (EHS)
• CS: Customer Service
• QM: Quality Management
• LO: Logistics - General
• PLM: Product Lifecycle Management
• PS: Project System
• AB: Agency Business (Settlement Management) (S/4HANA: Billing Management)
• WM: Warehouse Management
• TM: Transportation Management
• EWM: Extended Warehouse Management

as well as seven different modules in the area of Human Capital Management.

With the current "Enhancement Package 8" (EHP 8), SAP has already set the course for the transformation of its ERP systems towards the S/4 HANA platform. For SAP customers who use one of the classic ERP systems, the year 2025 is crucial. That is when support for the previous systems will end. This means that from 2025 onwards, SAP will only support ERP solutions that are connected to SAP S/4HANA. Security updates and new functions will no longer be rolled out for earlier ERP solutions.

alphachain does not carry out classic SAP ERP implementations but supports you in the development of an integrated SCM planning process using SAP IBP or APO while utilising classic logistics components such as MM, PP and SD. We also develop strategies for taking an existing SCM planning process with SAP ECC and IBP or APO to the next level and migrating it to S/4 HANA. 

You can read more about this in our IBP-ERP blog under "SCM with SAP ERP".

SAP Integrated Business Planning (IBP) is a product that has been growing steadily in terms of functionality and customers since 2015, and deals with the topics of Demand Planning (sales plan), Sales & Operations Planning (network planning) and Inventory Optimization. 

At the same time, there is integrated material requirements planning in the SAP ERP core (SAP ECC or SAP S/4 HANA), a stable, mature process since the 1980s, but one that is increasingly reaching its limits.

Challenges to an SCM planning process affect both products:

• Global SCM processes have changed dramatically in the period 1990 to 2021 and cannot really be planned or simulated in SAP ERP.
• The upcoming migration to S/4 not only changes the functions of this process in detail, the processes themselves change due to the incorporation of parts of SAP APO and the increasing functional richness of SAP IBP
• SAP HANA is not only a new and faster database, new analysis tools offer better and more timely analysis possibilities in all steps of the ERP planning process
• Cloud solutions require new interface concepts that go beyond the familiar EDI solutions

As a result, the conversion of SAP ECC to SAP S/4 HANA and the parallel replacement of SAP APO by SAP IBP in some core functions is not only a technical challenge, but also an invitation to redesign the entire SCM planning process in an integrated approach. 

A series of blog posts is intended to describe an integrated planning approach involving the ERP system and SAP IBP, to inspire what and how can be improved in the integration of SAP S/4 or SAP ECC with SAP IBP, and how the transformation of the planning process can be divided into manageable and meaningful sub-tasks or sub-projects. The focus here is on the ERP process and how sub-processes can be outsourced to SAP IBP by integrating IBP and have an influence on the ERP system.

The series of articles mainly deals with the ERP process described below:

The process steps shown are a simplified representation of the functions in SAP ECC and SAP S/4 HANA.

Read more about the individual process steps and their particular weaknesses in ERP in the first article of the series. The following articles examine in detail along the entire ERP planning process, step by step, the approaches to iteratively improve this situation by integrating selected processes in SAP IBP.