In a global business environment, opportunities abound but competition intensifies. To thrive in this environment, manufacturers and distributors are looking at strategies that will help them keep their edge. One of these strategies is global sourcing. Global logistics and sourcing allows manufacturers to engage suppliers from other countries to make their products – countries where labor and logistics costs are lower. It allows companies to secure margins or try to develop their own private labeling as a new sales opportunity. And it allows consumers to purchase products at lower costs through global sourcing channels.

Consumers today insist on more convenience, better quality, and lower prices. But how do you meet these demands in a tightly competitive marketplace where brand loyalty is decreasing? To remain competitive, you must take innovative steps to position your company as a cost leader. Global sourcing is one of those steps. Implemented successfully, it can help reduce costs and improve margins. But these advantages must be weighed against the cost, performance, and risk involved in the global sourcing process, much of which is hidden. Ultimately, success depends on minimizing risk.

It’s important to keep the risk factor in mind as you explore ways to realize continuous savings opportunities across all areas of operational and strategic sourcing and distribution. Only by carefully minimizing risk can you maintain your competitive position, avoid enormous losses, and enjoy the benefits of global sourcing.

Is your company ready for the kind of change global sourcing involves? Can you adapt your existing software to this change without additional IT investment? SAP has solutions that enable you to make this change based on your existing SAP® software. The SAP solutions for global sourcing comprise a powerful end-to-end business solution that can help you streamline processes at different business stages and enjoy clear visibility along your process chain, from supplier to customer. This visibility helps you see and avoid the problems that can put your company at risk.

The Right Supply Chain Logistics Management Solution for Global Sourcing

With SAP solutions for global sourcing you can source, store, deliver, and sell your products as well as forecast and analyze your business. The solutions provide your dedicated global purchasing team every function it needs to maintain a frictionless closed-loop supply chain.

The SAP solutions also enable you to forecast what kind of product is needed, determine how much is needed and when, create sales and purchase orders at one time, comply with import and export laws and regulations, store goods at your warehouse or deliver them to the customer back-to-back, and analyze the entire process after the fact.

The solutions cover these processes:

• Supply chain planning
• Order management
• Cross-border compliance
• Logistics execution
• Business analytics

The processes are fully integrated and supported by the SAP ERP application. Like all SAP solutions for global sourcing, SAP ERP is powered by the SAP NetWeaver® technology platform, which enables change and helps you align IT with your business. The platform also helps you obtain more business value from your existing IT investments, lower total cost of ownership, and reduce complexity across your entire IT landscape. It provides the best way to integrate all systems running SAP or non-SAP software. And because it unifies integration technologies into a single platform and is preintegrated with business applications, it reduces the need for custom integration.

Synchronize Supply and Demand

With SAP solutions, decision makers can perform strategic, tactical, and operational planning for procuring goods from external suppliers. Data forecasting results are automatically sent to subsequent SAP order management software without human intervention. Here’s how the process works:

• Supply demand planning and forecasting: You use state-of-the-art forecasting algorithms to anticipate demand for products or product characteristics and then model and plan new product introductions, trade promotions, or causal events that will significantly impact demand.
• Safety stock planning: You assign optimal safety stock – stock kept on hand to satisfy unexpected demand – and target stock levels across the entire supply network. This enables you to meet your target customer service levels while maintaining a minimum amount of safety stock.

Take the Pain Out of Order Management

Whatever you source, one of the most painful processes you encounter is order management. Completing the entire global sourcing process, including purchasing and sales, requires visibility and efficient data-handling functions that cover freight, insurance, and other expenses. This process is managed through a trading contract.

Trading Contract

With the trading contract functionality in the SAP Global Trade Management application, users can create a sales order and several purchase orders from one document at one time automatically. This powerful order management tool gives you full control of your business. It helps you integrate sales and purchase orders to manage global trade operations more effectively and streamline processes for expanded outsourcing.

A trading contract benefits your order management process by:

• Dramatically improving visibility into your outsource supply chain
• Eliminating legacy software processes and cumbersome manual processes
• Expanding outsourcing without increasing the size of your global purchasing office

Comply, Mitigate Risk, and Thrive

To remain competitive in today’s environment, you need to replace time- consuming manual procedures with automated processes for greater compliance and more effective cross border trade. SAP can help via import, export, trade preference, and restitution management software from the SAP solutions for governance, risk, and compliance.

This compliance management software includes a comprehensive set of functions that automate regulatory compliance and streamline global trade processes. These functions, combined with improved transparency up and down the import and export chain, help you reduce costs by reducing the need to carry buffer stock.

Compliance management software focuses on three areas critical for managing international trade compliance:

• Sanctioned party–list screening
• Export and import license management
• Embargo checking Manage Inbound and Outbound Delivery, Inventory

Once you have order management under control, you have to find a way to deliver products at the right time and place. To stay on track for the incoming ordered products, you must be able to store goods in the right place or immediately deliver them to the next destination. This ability directly impacts your service level agreement with your customer.

Logistics execution functions, offered as part of the SAP solutions for global sourcing, enable you to:

• Manage inbound processing through effective goods receipt (directed put-away)
• Manage warehousing and storage processes and maintain accurate inventory information
• Manage outbound processes with functions specific to goods issue

Support Strategic Planning and Decision Making

The SAP NetWeaver Business Intelligence (SAP NetWeaver BI) component provides a wide range of forecasting and analytical tools that support global sourcing decisions. For example, using SAP NetWeaver BI, you can easily create predefined reports and scorecards that:

• Ensure full compliance with the U.S. Sarbanes-Oxley Act
• Monitor vendor performance for on- time deliveries, out-of-stock situations, and returns resulting from damage or shipping errors
• Track true customer profitability and focus your efforts on real growth opportunities
• Receive an immediate and accurate picture of the cost of goods sold
• Retrieve ad hoc financial statements at any time

These reports can be tailored to meet the specific needs of your organization. And you can define your own analyses based on information you get from diverse systems within your organization.

Maximizing Your Global Potential

Are you ready to take advantage of the opportunities available in a global marketplace? If so, SophLogic is ready to help, with solutions that automate and streamline not just your sourcing processes but your entire IT infrastructure. These solutions reduce purchasing, operations, and execution costs and give you the clear visibility you need to avoid risk across your global supply chain. Leveraging this advantage, you can position yourself as a major cost leader.

Contact SophLogic today to discuss the right SAP solution or SAP Professional Services for your business.