Outrunning the bear or how SAP approaches SCE

Editor’s note: This article was originally published on the web site of LM’s sister publication, Modern Materials Handling.

You’ve heard the old joke. Two hunters are in the woods when they startle a big old grizzly bear.

As the bear starts to charge, one hunter says: “I sure hope we can outrun that bear.”
The other hunter says: “I don’t have to outrun the bear. I just have to outrun you.”
That story says a lot about how SAP, number 1 on Modern’s list of the Top 20 providers of supply chain management software, is approaching the supply chain execution market today, according to Karen Peterson, vice president of supply chain execution solution management for SAP. SCE is the suite of applications that includes warehouse management, transportation management and other solutions that get things done in the warehouse, transportation departments and logistics.

For years, there has been a debate between ERP and best-of-breed SCE suppliers like RedPrairie, Manhattan Associates and HighJump about which approach is better: Getting an integrated solution from your ERP vendor or integrating a point solution from a best-of-breed provider.

The argument often came down to this: ERP was great for end users with relatively simple processes, like a facility handling full or mixed pallets; if you had complex order fulfillment requirements like piece picking or you wanted applications like labor management or slotting, well, you had to go best-of-breed to get the functionality you wanted.

Peterson, who was previously a straight-shooting analyst at Gartner, does not argue that best-of-breed still has more functionality than SAP. Instead, like outrunning the bear, she counters that she doesn’t have to be better than the other guys; she just has to be better than what her customers need. SAP, she says, has been making slow but steady improvements to its warehouse and transportation products that meet its customers needs.

“In the past we were disconnected from the end user community and now we’re working very closely with the operations people in our customer base to incorporate the functionality they need,” Peterson says. “While we think we’re seeing parity in WMS, what’s really important is that we’re meeting our customers’ functional requirements.”
From my conversations with others, I think Peterson is on to something. One supply chain analyst told me he has seen significant improvements in SAP’s SCE offerings. “On the WMS side, they are gaining traction with their installed base of customers and in certain ways, their product is stronger than the best of breed,” he said.

Those areas included:
-Support for manufacturing warehouses and the release of goods to the manufacturing floor …
-Support for the spare parts warehouse through integration with SAP’s supply chain planning solution ….
And, the fact that their warehouse control and warehouse management solutions are in one base, which allows for optimization of the manual and automated processes in a facility.

SAP still falls short of the competition when it comes to labor management and slotting, although he added that you get both without have to pay extra.

I think Peterson would agree with that take. “We still have some pieces to add to our functionality,” she says, adding “we have slotting, but if you have complex optimization, well, that’s a partner solution for us.” And when it comes to complex distribution or solutions for 3PLs that might service a wide variety of customers from one facility, those are areas where SAP is working to deepen functionality.

In fact, SAP has a five year road map for the extended warehouse and transportation management. Will the best-of-breed guys improve over that same period? Of course, but as Peterson says: she doesn’t have to outrun the best-of-breed bears; she has to meet or exceed the growing functionality requirements of her installed base and potential new customers.

As a former analyst, what is Peterson excited about? She says that SAP has invested in new technology tools, such as business objects, that will allow it to provide more visualization, better dashboards and reports and decision support tools. And, like virtually every software maker, SAP is looking at ways to deploy pieces of functionality to the emerging world of smart phones and pads on the shop floor or in the field.

“What excites me is that our customers are excited because we have functionality they need,” she says. “We no longer have to apologize for what we don’t have.”