Building Supply Chain resilience with Flexible Purchase Commitment in S/4HANA

Supply chains must be agile and responsive in today’s unpredictable and disruptive global environment. Ideally, suppliers would want to know in the early stages the exact order quantities of an item with enough lead time to procure raw materials and plan the production process and delivery schedule. However, that is rarely the case. For buyers, the inability to accurately predict size/color splits, sales regions, or store locations, early enough in a product life cycle leaves both suppliers and businesses with long lead times and more risk to a plan formed in some cases many months earlier. This in turn impacts margins due to overstocking and/or understocking, for example, having to sell seasonal items at marked-down prices.

To reduce the impact, one of the recent SAP developments with S/4HANA is the Flexible Purchase Commitment (FPC) strategy. FPC enables businesses to make high-level contractual commitments in the preliminary stages of planning with a promise to provide more specifics on the order later, giving not only the flexibility to adapt to market changes, but also allowing your suppliers to make raw material purchases and plan their production. This provides critical time to chalk out a plan without impacting the overall timescale thus minimizing losses, and maintaining a good relationship with your suppliers. Let’s dive in and understand Flexible Purchase Commitment in more detail.  

What exactly is Flexible Purchase Commitment in SAP S/4HANA?

Flexible Purchase Commitment within SAP S/4HANA helps businesses in all industry verticals, but especially Fashion and CPG, meet their requirements from their Supplier Network on time. Businesses can use Flexible Purchase Commitment to place orders with suppliers at a high level, such as the style, without committing to size or color or even a ship-to-location, giving them and their suppliers enough room/flexibility to start production and receive size, color quantities, and delivery destinations just in time. This allows both parties to adapt to today’s ever-changing supply chain.


Read more https://www.applexus.com/blogs/building-supply-chain-resilience-with-flexible-purchase-commitment-in-s4hana

Comments

Post a Comment

Popular posts from this blog

Efficient SAP Data Integration Using Ingestion Frameworks

Image
With exponential technological advancements in play, businesses need efficient and reliable ways to manage and integrate large volumes of data. Complex and comprehensive systems require robust data ingestion frameworks to ensure smooth data processing, compliance with regulatory standards, and maintenance of data integrity. This blog covers the critical aspects of data integration using ingestion frameworks, highlighting the challenges businesses face—such as handling diverse data sources and formats, ensuring data quality, and maintaining scalability—and pointers on how to overcome them. What is a Data Ingestion Framework? A data ingestion framework encompasses a set of tools and methodologies designed to efficiently collect, process, and load data from various sources into a central repository. It is fundamental in  modern data management , enabling systematic handling of vast amounts of data. Key steps include data collection, transformation, and loading, ensuring data integrity...
Read more

How Hyper-personalization Can Drive Customer Engagement, Conversions, and Loyalty

Image
In the previous   blog , we explored the different areas of business where hyper-personalization can play a vital role. Today we will look at the different benefits of hyper-personalization and how implementing a strategic initiative around a personal customer focus can lead to concrete value realization and give you large returns in the long run. 76% of consumers are more likely to consider purchasing from organizations that personalize -   Mckinsey [1] Hyper-personalization is all about  NOT  taking your customers for granted. An intelligent and personalized campaign can be more impactful, than a generic one that hits a broader customer base - with little to do with a single customer’s preferences. A segmented campaign with targeted messaging is more likely to persuade users and lead to healthy conversions. Even campaigns focused on the correct gender are a step in the right direction. I am sure everybody has been frustrated by a message addressed to you, the indiv...
Read more

Strategic Approach to Driving User Adoption in Business Transformations – 5 key steps

Image
  Despite investing in various digital transformation projects, many organizations overlook ensuring the success of each project before moving on to the next. This haste creates a digital adoption gap, where the promised benefits of technology capabilities remain unrealized due to limited user engagement. To bridge this gap and unlock the full value of software investments, leaders should prioritize and ensure effective user adoption before diving into the next project. After the implementation of digital transformation projects, business leaders often move on to the next initiative, with the deployed technology becoming a part of the tech stack. This challenge is intensified by diverse workforces across generations, from baby boomers to Gen Z, necessitating innovative training approaches. Success in business transformations relies on user adoption – engaging users, tailoring training, and addressing concerns. High adoption rates unlock added value, paving the way for growth and pr...
Read more