The Digital Supply Chain podcast

Advanced Shipping and Receiving - a chat with Joerg Michaelis, and Peter Flensberg

March 05, 2021 Tom Raftery / Joerg Michaelis / Peter Flensberg Season 1 Episode 112
The Digital Supply Chain podcast
Advanced Shipping and Receiving - a chat with Joerg Michaelis, and Peter Flensberg
Show Notes Transcript

With the world moving rapidly to online ordering and Ecommerce - data visibility in transport and logistics is becoming more and more important.

With this in mind SAP has released a new solution called Advanced Shipping and Receiving. To find out more about this I invited Joerg Michaelis and Peter Flensberg to come on the podcast to tell us all about it.

We had a fascinating conversation - and I learned lots about this aspect of supply chains _ hopefully you learn lots too...

If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).

To learn more about how Industry 4.0 technologies can help your organisation read the 2020 global research study 'The Power of change from Industry 4.0 in manufacturing' (https://www.sap.com/cmp/dg/industry4-manufacturing/index.html)

And if you want to know more about any of SAP's Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

Peter Flensberg:

So you have a TMS, managing the transports, you have a WMS, managing the warehouse and you have an order taking system. So you have three systems you got to keep in sync. And that is even in the best possible case that you know, all the numbers match up. It is a challenge because you need to synchronize all those systems. And that's where we thought about how can we make this process smarter and smoother.

Tom Raftery:

Good morning, good afternoon, or good evening wherever you are in the world. This is the digital supply chain podcast, the number one podcast focusing on the digitization of supply chain. And I'm your host, global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today I have my two special guests. Joerg and Peter, gentlemen, would you like to introduce yourselves with maybe Joerg going first?

Joerg Michaelis:

Thank you, Tom, for having us. My name is Joerg. I have two roles at SAP. I'm the Chief Product Owner for extended warehouse management. And I'm heading the product management area for logistics application here in SAP Development and Engineering.

Tom Raftery:

Okay, Peter.

Peter Flensberg:

Yeah, my name is Peter. And I'm the head of product management for our transport management system. Been in that role for about 10 years following a number of different other roads.

Tom Raftery:

Okay, and we're here this morning to talk about a new product that SAP is rolling out correct?

Joerg Michaelis:

Absolutely. This is the best timing we could ever achieve Tom, just exactly six days ago. Last week, Wednesday, we shipped was a new S4 HANA feature packs release our new future logistics platform, we call it advanced shipping and receiving, which is the foundation for modeling logistics processes, which we face every day talking with our customers talking with our partners. And this is the intention of this podcast to give the listener a little bit some insights why we did it? What's the intention and where we are heading with this?

Tom Raftery:

Okay, so advanced shipping and receiving is what we're talking about. I can get an idea just from the name of some of what this does. But can you for people who you know, are hearing about this for the first time, which I suspect will be most people given its a new product? Can you give me an idea what problem it is you're solving for people?

Joerg Michaelis:

Peter, why not talking a little bit about the typical quality issues challenges we see talking to customers? I think we don't need to mention here any straightforward process because this doesn't exist anymore. What do you think?

Peter Flensberg:

Yeah, you're absolutely right. So in essence, we are talking about the process of sending receiving and moving product. And this is in logistics, the general challenge is usually that you have a very, you can have the best plan in the world. And then reality kicks in. So there's lots of lots of things that can go wrong, that can change, you know, customer is changing the amounts in the order, you want to pick something and it should be in stock, but it isn't. The truck has arrived due to arrived at a certain point in time. But he arrives earlier or later. It's a bigger or smaller truck, you cannot load what you had planned. Anything can happen in logistics. And this is exactly the challenge we also have from a systems perspective, historically, this has been distinct, usually standalone systems. So you have a TMS, managing the transports, you have a WMS, managing the warehouse, and you have an order taking system. So you have three systems you got to keep in sync. And that is even in the best possible case that you know, all the numbers match up. It is a challenge because you need to synchronize all those systems. And that's where we thought about how can we make this process smarter and smoother.

Tom Raftery:

Okay, so how are you making this process smarter and smoother?

Peter Flensberg:

Exactly. That's the big question. And yeah, I think first of all, it needs to harmonize that data model. So, you can imagine you have a representation of a move of product. In an ERP system, you have an order where you take where you say this is what needs to get moved to the customer. And then of course you have representation of the truck, which says what needs to be loaded we call this freight order and then you have a representation of what should arrive at the warehouse. And there we have a we used to have a an object for that as well. And we are bringing all these three things together in a harmonized data model. So whenever you do changes, you do it automatically in all those systems. So instead of having an isolated object in the warehouse, that is a copy of essentially what you have on the transport side, we bring this together. And basically both systems work on the exact same object. And that already helps address many of the issues that we used to face.

Tom Raftery:

Okay.

Joerg Michaelis:

I mean, as Peter said, one clear problem statement is the ability to handle exceptions, changes, updates, last time, last minute requests. And bringing it all into a single object simplifies this kind of operation. Of course, we talk about the same physical truck, we can also talk about the rail car or the vessel here, but let's simplify for now for the truck. So what the transportation planner sees on the truck is, the next stage is to be to be moved. But what the warehouse sees is what still what's in what's to be unloaded when it's arrived. And giving them one single object with an holistic view. And informing the transportation. Let's call it the clerk in the moment, the first pallet is scanned and unloaded. So the real time piece is, was really important to us that one objects was one single source of truth throughout many SAP applications. And Peter mentioned, the the sales people, the shipping people, the warehouse people. And I think Peter, we could even call it the customs, people who are part of our game here. And in the next month, we will all even invite the compliance people more deeply here, one single source of truth in real time, one single transparency piece on logistics processes.

Tom Raftery:

Okay, and to connect all of these things, I'm assuming that this has to be a cloud delivered solution, is that right?

Peter Flensberg:

Well, this is actually our main strategy moving forward. We do everything with a cloud paradigm in mind. So yes, you're absolutely right in the in the cloud, we will actually only offer the ASR solution. And historically, we've had other solutions. And of course, we're going to keep that running, because we've got hundreds of customers using that. So we will have in in the on premise world, we will have the coexistence of both worlds. And we will allow customers to move from the old solution over time to the new solution, side by side, actually. So we can enable the new functionality on a site by site basis. So you can have one warehouse using the new paradigm. And you can have all the rest running on the old paradigm. In the on premise world, we will do that, like this. And in the cloud world, we plan to only offer the new ASR advanced shipping and receiving functionality. And that will come later this year, in the in the next cloud shipments.

Tom Raftery:

Okay, and why is this happening now? I mean, why didn't this happen? You know, 10 years ago, or five years ago, or in five years time? Well, is there any reason it's happening now?

Peter Flensberg:

Yeah, maybe I go for so in my perspective is the following. As I said, at the very beginning, historically, a TMS has been a standalone system, and so has an EWM system, they have sitting next to an ERP usually, and they have only taken care of their specific task. And with the change in strategy that SAP introduced, like three years back four years back, S4 HANA, we have actually moved the standalone system into S4 HANA. So we now have one system that comprises the full functionality of a TMS and the full functionality of a WMS. And so we don't have to rely asynchronous communication anymore, we can just use the same database, the same table to exchange information. And then it becomes very obvious when you have redundant objects you know, you just don't need them anymore because in one system and you can access the system of what used to be a different system you have right away available, and you can access it directly and that makes the need for such synchronization. very obvious I believe.

Joerg Michaelis:

This is from the technical point I have nothing to so it gets really obvious being on the same stack with all the applications here and looking onto the market. We all suffered here the pandemic in the last months. And the only delivery channel is the e commerce channel. And we are so spoiled on these next day, same day delivery, behavior. Logistics has made a huge evolution in in the last years. And we need to give our customers the foundation to deliver Amazon kind of capabilities in a b2b environment. And even you cannot build a complex machine within a day the customer expectation is rising to say, Look, they can do it, why can we not do it? And so the the time is there to do it. Exactly. Now, of course, if you asked us, we would have left to two years earlier. For now, you would you would like to the solution already be there. But now it is there. And timing is never perfect. But we really see that we hit the expectation with it, we talk to customers. And exactly this is what they expect from an integrated SAP solution.

Tom Raftery:

Yeah, I know you're that was that's more what I was getting at really is, you know, with the rise of direct to consumer. Obviously, the likes, as you said the likes of Amazon will easily do next day deliveries. But if I go to my local grocery store online, for example, and do my shopping with them, it's a lot. Well, now it's easier to get next day delivery from them, but a year ago, much much harder. But to your point, yeah expectations very much have risen. Is it? Is it that who is the potential customer, you know, the likes of the local grocery stores or local electronic shop or that kind of thing? Or who do you think is a potential customer for this?

Joerg Michaelis:

Well, we believe when we start this endeavors, we will not talk to the local grocery store. We will we will sometimes a Customer Picks us or we pick them I don't know. And we are designing it in a way that we want to meet the expectation of the most complex customer.

Tom Raftery:

Sure, just just just just to clarify Joerg my local grocery store is El Corte Ingles who are one of the largest retailers in Spain. So I may have misled you slightly when I said my local grocery stores. Apologies for that.

Joerg Michaelis:

I think El Corte Ingles would be the perfect journey for this Tom.

Tom Raftery:

So do I given the record of deliveries of groceries for me Yes, please.

Joerg Michaelis:

Yeah, retail would have been a great one, we 100% believe this fits perfectly to retail as well. You're, you're a local one. And I can tell there's no secret in in our journey. We talked with customers who really run complex facilities. So we thought don't talk about a customer with a single warehouse with let's say 50 warehouse doors connected to the building. Then we discuss this with a we call it a core innovation customers which run rather I call it a small city as their factory campus. So is the central gate was I didn't count 20, 30, 50 Small, Medium complex warehouses on their premises with movements within the facility from inbound to outbound. So this was really important to us, we really believe sending a sack to a single location and loading it is one story but having and I'm referring again to a truck but I can tell this fits for other modes and unloading the truck in multiple locations. So, I mean we all want to utilize our trucks. So we cannot plan a truck which is just getting some pallets at a warehouse and then drives off full empty arrives half full, this was not the intention. So being able to load the truck with different ship to locations on the same customer facility and then doing the right on the loading step again so why not loading on the only on a single warehouse and then sending in half fully loaded truck out but then adding load was multiple locations respecting the load sequence of the customers. So we really wanted to the design was done in, let's take the most, I wouldn't say complex but most challenging environment so that we can be sure. It also works for the straightforward businesses.

Tom Raftery:

Okay. And if if people are interested in this, I mean, when is this available? How do they get it? How does all that work?

Peter Flensberg:

Oh, it's available since six days. So it is currently in the 2020 version of S4 HANA. Feature Pack, one that was released on the 24th of February. So, obviously, we are on a journey, we have now decided to bring it to market. But obviously, there's additional steps to follow. And we're certainly on the roadmap here. So we will add new features over time. But we believe that now Feature Pack one is a solid version to start with.

Tom Raftery:

Okay, and for people listening, today is the second of March 2021. This is the day of recording. So six days ago, we're talking the end of February, kind of 26th of February or so it went live. There or there abouts. You mentioned a roadmap there Peter, can you talk to I know we typically don't. But are there any future features that you might be able to speculate on? For for people who are listening kind of piques people's interest on the direction this might be going?

Peter Flensberg:

Yeah, well, Joerg already hinted at one very important point. And that is integration into customs operations. So at the very next step for us is going to be to integrate this new process into our customs solution. And that we expect to come in the next couple of months, obviously. And yeah, that is probably the next big milestone that we plan to hit. And then, yeah, we plan to add more features as we get feedback from customers about what works well, what needs to be improved, I think we're going to add more stuff over time.

Tom Raftery:

Okay, super.

Joerg Michaelis:

And one important topic, I would like to add here, as Peter mentioned, we used our enterprise tech S4 HANA. So everything is on the same stack. But we also facing customers asking to run multiple system landscapes, over multiple regions, or multiple warehouses within within the region. So this is as well, part of our roadmap. Now everything is designed to work fully integrated all on one system. But it's very clear, we enable this for hybrid system landscapes part of the cloud part on premise, we have really some high volume warehouses, which customers really asked for the server being on site or in the local data center. So there is a journey, we believe it's the foundation, we get good feedback, but it's clear based on this, we will continue in the next quarter by quarter to listen to our customers and partners. And incorporate the feedback here step by step.

Tom Raftery:

Okay, superb. Gentlemen, we're coming towards the end of the podcast, now, is there anything I have not asked you that you wish I had any topics we've not raised, that you think it's important that people be aware of?

Peter Flensberg:

Maybe I go first Joerg. And there's one thing any discussion about ASR wouldn't be complete without talking about our new order type we call it consignment order. The process of shipping and receiving is not only about coordinating systems, it's also about coordinating parties that do business together. So you have a supplier, you have a customer and you have a carrier. And we realized that we really have improvement area in the coordination between supplier and customer and the feedback from our customers is very, very clear. They have all been looking for an object that represents exactly the relationship between the customer and supplier in a perfect way. And this new object we call consignment order. So you have the freight order representing the truck and that is for the interaction between supplier and carrier and carrier and customer that is well represented by the freight order that that is what we always had. But if you think about the supplier customer relationship, they are not necessarily interested what's on the truck. They're interested, what do I exactly get? Yep. You know, if there's multiple stops on a truck, you don't care about the others who care about yours. And that is typically what is represented by a consignment order. And therefore, we have also changed the way we create our advanced shipping notice, because we use the consignment order in the interaction between customer and supplier now, and that has a perfect match. And we can have multiple consignment orders then on the freight order for the carrier. But between supplier and carrier, we have this new object between supplier and customer sorry, we have this new object that perfectly represents what they have to expect and what gets sent. And I think this is a very, very significant improvement, we realized it fits perfectly into the edifact world. And therefore we believe this in itself is a very, very relevant innovation that we have brought to market.

Tom Raftery:

Nice.

Joerg Michaelis:

Tom, ah Peter, I would also like to add one important topic. This is a complete new pace, a piece of orchestrating the logistics. Typically when we we do this customer, some customers get nervous because they they use our current solution. And they say, what what's the impact will be discontinued? Do I need to plan a big project I'm happy I'm I'm fine with what you have now. And the clear message is you can actively switch this on, you can switch over step by step, maybe by location by warehouse by country, so nobody needs to be scared or afraid that they should be excited. But for sure, but you know, customers don't like to change some customers existing flows. And very clear, nothing is removed, taken away. You can explicitly switch it on. That's, that's a real important message for for current customers. And I really believe we we mentioned, the capability, which was done before with multiple instances or multiple objects, inbound, or outbound or one warehouse and another now it's all one, we look at one single, I really like to call it the digital twin of your transport operation, from a warehouse view, and transportation view. And this also means it's one object, but we have two different UIs. For the warehouse worker, he is not caring about freight costs and planning steps and next stages and so on. He's just interested or she, what door? How long is it already in the unloading or loading state? How much is still to be done? That's the warehouse. let me simplify a little bit. Yeah. And so one object, two different views on the same kind. And I think this I would like to underline what is the strategy?

Tom Raftery:

Okay, so it's like a single cube of data and everyone gets to see their own slice

Joerg Michaelis:

That's a good, that's a good view on it. Yeah, I like this talk.

Tom Raftery:

Okay, super, super. Gentlemen, that's been really great. If people want to know more about yourselves Joer and, Peter, about ASR, or bout any of the things we've alked about on the podcast oday? Where would you have me irect them?

Joerg Michaelis:

I believe in the podcasts. It's always linked in the show notes, or we will find some LinkedIn groups for warehousing and transportation. And there's always a good chance to contact us and via those. Okay,

Tom Raftery:

super, super. That's been great. Thanks so much for coming on the podcast today.

Joerg Michaelis:

Thanks for having us.

Tom Raftery:

Okay, we've come to the end of the show. Thanks, everyone for listening. If you'd like to know more about digital supply chains, head on over to sap.com slash digital supply hain or, or simply drop me an mail to Tom raftery@sap.com. If ou'd like to show, please don't orget to subscribe to it in our podcast application of hoice to get new episodes as oon as they're published. Also, lease don't forget to rate and eview the podcast. It really oes help new people to find the how. Thanks. Catch you all next ime.