SAP Makes Supply Chain Moves

By Staff -- Logistics Management, 10/1/1999

Enterprise resource planning (ERP) software giant SAP has made no secret of its hopes to expand its presence in the supply chain management software market. It took steps in that direction last month by launching two initiatives to

expand its transportation management and warehouse management capabilities. SAP, which is based in Waldorf, Germany, has long said it would like to develop a Logistics Execution System (LES) suite of software that would integrate warehouse and transportation applications into its supply chain planning and optimization modules.

In a move that could potentially enhance its warehouse management capabilities, SAP America Inc. in September bought a 9.7-percent equity stake in Catalyst Inc., a WMS provider based in Milwaukee, Wis., for nearly $13 million. Last year, SAP bought a 51-percent share of an Israeli WMS provider, OFEK. At the time, SAP said it planned to use OFEK's expertise to develop a WMS application. OFEK is also involved in developing SAP's LES offering.

SAP says it's looking to Catalyst for implementation support for its logistics execution system suite. The two companies also announced a strategic alliance to develop an advanced interface between Catalyst's application and SAP's system. The advanced interface will allow companies to run supply chain execution business scenarios on a decentralized basis while maintaining a link to their overall supply chain management system. Catalyst's application will also become the preferred solution for mySAP.com, SAP's Internet strategy for promoting collaboration among businesses. In addition, the alliance will result in the creation of a "supply chain execution competency center" to support implementation of SAP's Logistics Execution System. That center will provide training and software support.

In a related development, SAP announced it would develop its own transportation planning and vehicle-scheduling module for release next year. SAP said it had selected the ILOG Dispatcher software component from vendor ILOG Inc. of Mountain View, Calif., in conjunction with the ILOG Planner software package, to add optimization capability to its transportation planning module. SAP will use the ILOG Dispatcher as a key building block for a vehicle-scheduling application that's in the works.