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SAP AG was founded in 1972 by five ex-IBM employees in Germany. The initial business software system was a Manufacturing Resource Planning (MRP) application. In the early 1990s, SAP developed a fully integrated Enterprise Resource Planning (ERP) system and in the mid to late 1990s, SAP expanded their enterprise software solutions to include Supply Chain Management (SCM) systems and customer relationship management (CRM) software. SAP is the world’s largest business software company.

The 2007 SCM system revenues were $835 million. Analyst firm Gartner recognizes SAP as the world leader in SCM software market share with a 19% global market share.

SAP's enterprise resource planning (ERP) and supply chain management software customers are global midsize and large enterprise retailers, wholesalers, and manufacturers. Manufacturing segments include aerospace and defense, automotive, chemicals, consumer goods, industrial equipment and life science.

SAP’s Business Suite of enterprise software solutions includes:

  • Customer Relationship Management (CRM)
  • Enterprise Relationship Management (ERP)
  • Product Life Cycle Management (PLM)
  • Supply Chain Management (SCM)
  • Supplier Relationship Management (SRM)
  • Merchandising, Store Systems and SCM


NetWeaver is SAP’s SOA (service oriented architecture) proprietary software architecture. NetWeaver and suites of application configuration, system integration and software customization tools facilitate various types of information system management.

  • Application Server for Business Applications and Web Services
  • Business Information Warehouse Integration
  • Business Process Manager
  • Business Rules Manager
  • Information Lifecycle Manager

SAP has collaborated with Microsoft to develop an interface between Microsoft’s Office Suite and SAP’s business processes and data. SAP users can access, synchronize and organize contact and activity data from the SAP database with MS Outlook and SAP analytical data with Excel.

Supply Chain Event Management (SCEM) includes autonomous configuration management tools and provides a framework to monitor and notify appropriate parties for configured events and milestones.

SAP does not have a full featured S&OP software product. Their prescription for S&OP is to cobble together a system using the following SAP solutions:

  • Demand Planning
  • Supply Network Planning
  • ERP and financial accounting suite for financial data
  • Customer relationship management for sales forecasting
  • Business Intelligence (BI)
  • Duet

For large enterprise clients with in house expertise, SAP provides the flexibility to customize various application solutions to the client’s unique needs and requirements.

SAP provides multiple forecast modeling techniques and auto-picks the best fit model for each inventory item. Forecasting accepts multiple sources of inputs, in addition to demand history, including causal forecasting, bill of materials, product lifecycle trends and promotional plans. Both internal stakeholders and external trading partners can collaborate in the planning. Full feature demand shaping and product lifecycle management requires SAP’s CRM software and PLM application. Order fulfillment is addressed with Sales Order Processing.

With SAP’s Demand Planning, ERP, CRM, PLM, BI, NetWeaver and Duet, customers have the flexibility to configure and structure demand management to varying unique needs and requirements.

SAP’s Supply Network Collaboration (SNC) can be implemented as a customer, supplier and contract manufacturer’s solution for collaborative inventory management. 

Supply Network Planning – SNP integrates purchasing, production, distribution, and transportation for analyzing and planning of mid-term and long-term sourcing decisions. Planning tools include capacity leveling, cost optimization and demand matching.

Distribution Planning – Planning evaluates which demands can be fulfilled and deploys transfers to replenish inventory and fulfill customer orders.

Replenishment – Inventory replenishment includes the ability to auto generate POs and delivery schedules from demand, sales orders, and sourcing agreements.

Vendor Managed Inventory – VMI replenishes customer inventories based on stock and sales data sent to the supplier or business partner. SAP SNC auto generates a PO from the vendor’s ASN.

Procurement Management – Strategic sourcing functionality includes long term planning and Bid, Contract, and Catalog Management. Purchase Order (PO) processing converts demand into POs, monitors PO activities, and settles invoices against receipts.

Yard Management – Users have visibility to inventories located in trailers. Inbound trailers can be sent directly to a door or a parking space in the yard.

Inbound Processing – Users plan and schedule inbound shipments. Pallet and carton auto-identifications are matched to the supplier’s ASN (advanced shipping notice) and a receipt is auto generated. Inventory is directed to bin locations based on multiple put-a-way strategies.

Outbound Processing – Sales orders and inventory transfers are filled from a Warehouse Order, which uses rules and algorithms to generate picks. Pick methods include LIFO and FIFO, Shelf Life Expiration and Partial Quantities.

Proof-of-Delivers (POD) are recorded to confirm the receipt of shipments at the destination locations.

Cross Docking – Inbound goods can be directed to the outbound process. Unplanned opportunity cross docks can be evaluated and detected during the inbound process.

Value Added Services – Value added services can be scheduled as part of the inbound or outbound processes.

Storage – SAP provides special handling requirements for tracking serial numbers and hazardous materials. Slotting optimizes the storage of goods based on cube, weight or future demand.

Planning – Forecast distribution software features include capturing requests, dynamic routing, credit checks and sending confirmations. Related software planning capabilities include:

  • Least Cost Analysis
  • Multi-modal Options
  • Service Levels Optimization
  • Zone Routing Optimization
  • Carrier Selection
  • Multi-Stop Optimization
  • Cross Docking Optimization
  • Load Optimization

Dispatch – Key software functionality is based on load, pickups, modes of transportation and route optimization. The dispatcher is empowered to perform and automate the following:

  • Assigns carriers to routes
  • Produces Shipment Documents
  • Generates EDI transactions

Visibility is provided throughout the shipment lifecycle.

Freight Charges and Settlements – Charges are calculated and settlements made with invoice audits or automated self-billing.

Fleet Management – Driver and asset management are available for customers who manage their own fleet. A key software feature of fleet management is optimizing the mix of private goods and common carriers.

SAP uses their NetWeaver platform to integrate SRM with their SCM, ERP, CRM and PLM solutions. The integration enhances the overall features and functionality of the SCM planning and execution solutions.

Catalog Management – SRM includes a centralized master database of spend and supplier data. Product searches are supported from other SAP solutions. SRM includes web and print publishing.

Sourcing – SRM manages and automates the supplier evaluation, negotiation and bid processes.

Contract Management – SRM provides the tools to assess and create a contract from the bidding process. The contracts interface with SCM execution to fulfill demand requirements. Contract monitoring tracks trading partner performance and compliance.

Supplier Compliance – SRM tracks and reports on qualitative and quantitative data against compliance agreements.

As with other SAP solutions, customer relationship management is integrated with the company's SCM and ERP products using SAP’s NetWeaver. Through the integration with SCM, CRM software provides additional data to demand planning and order fulfillment.

SAP’s strength includes an impressive lineup of Supply Chain Management software features and robust functionality. SAP and direct competitor Oracle are the only enterprise software vendors to have products for each area addressed in this evaluation. The two business software giants also provide the tools to meet or exceed the busines process automation and management reporting needs for most global organizations.

The NetWeaver software architecture is impressive in terms of functionality, features and tools, however, is proprietary technology. Software developers are generally not needed or their efforts are minimized with NetWeaver’s framework support for standard common IT functions such as defining process flows, business rules and information sharing.

SAP’s supply chain management system forecasting uses best fit forecast models. The selection of a forecast model is based on an item’s history at the time the model is selected. At a later date, changes in an inventory item’s demand behavior may result in using an incorrect forecast model.

Planning done through the Duet product will have a latency that comes with transferring spreadsheet data, as opposed to a connected browser or windows application working with real-time data.

For customers using SAP’s Enterprise Resource Planning software solution, the Supply Chain Management software solution is a strong candidate for most supply chain requirements. Without the ERP solution, SAP SCM becomes a less likely candidate. Some of the other SCM vendors have certified some of their software applications to be integrated and/or compliant with SAP’s NetWeaver architecture.

SAP’s suite of integrated CRM, ERP, PLM, SCM and SRM across customers and industries means that each customer has a much larger and complex IT footprint than a suite of products tailored to a specific industry. Smaller and midsized companies may not have the economies of scale and the systems expertise to support SAP solutions. Without any custom programming, a typical implementation requires SAP certified consultants and may take several months to implement a single module.

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