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Running O2C / P2P in and with SAP or any other ERP

With the growing interest in sustainability, future-robustness and maneuverability buyers and sellers demand their business partners to increase collaboration, to become more agile and to contribute heavily in sharing data electronically. They see real benefits in automating their interactions with business partners.

But although gains can be huge they do not come without a cost. So business partners are often very reluctant to jumping on this bandwagon. Moreover gains not always come in hard dollars but often manifest themselves in different ways - stronger bond with customers or suppliers - improved and aligned business processes - higher customer service. Business partners however not always see these gains to their advantage since they are more concerned about the costs of implementation.

People / businesses often think establishing electronic data sharing and process collaboration is difficult to accomplish / requires much customization effort. A few years ago that was fully true but today we see that many ERP systems provide support out of the box.

Some ERP systems provided that already for years - for example SAP, QAD, ... - If you are using SAP you have a wealth of functionality at your fingertips to make it work smoothly.

There is a lot of documentation available online to get it done without years of experience in SAP. At least I learned to work and configure SAP without training - just in depth knowledge of business processes and occasionally some help is sufficient.

But something you can not learn is what you want or need (business-wise) and how you want it. And as with everything in business, things do not happing overnight. You cannot go to the grocery and buy a cup of O2C or P2P and then poor it out over your Supply Chain.

However with the right approach, the right people on board and willingness / commitment of your own organization and business partners will get it up and running in a few months.

BUT ONLY when you have your data and processes aligned with proven business practices.

Data alignment

Data alignment is about talking the same language as your business partners. Ensure your products, your locations, your delivery and payment conditions are understood.

SAP provides a lot of ways to set up cross references with your internal language and the language of your business partners such as translation of partner address codes and products. Even without customization most of the data provided in electronic documents can be stored for replication later in the process.

I dealt with complex data requirements of large wholesalers and retailers without having to build new forms or extend tables. OK Yes! some user exits - hooks into the standard SAP functionality - had to be used to change the behavior slightly.

But a lot (you) can (do) be done by adopting GS1 Global Location Numbers (GLN) or D&B D‑U‑N‑S Number, and GS1 Global Trade Item Number (GTIN) - the EAN codes or Universal Product Code (UPC). And also implement standardized delivery terms (Incoterms) and payment terms.

Supporting product data classification - on the other hand - is still a major issue. The classification system of SAP is not equiped for handling the product data models of UNSPSC, ETIM, GS1 GPC. Manual setup is unfeasible due to the increased changeability of these models. That is where others tools are really needed to complement SAP.

Process alignment

How difficult can it be to align processes! There are a lot of reference models available for different industries:

SCOR Framework APQC's Process Classification Framework®(PCF) Business Process Framework (eTOM)

But yes, these are too generic! And we may not forget that each company has unique characteristics. That is why there is a lot to do before you are able to use these reference models.

What about simple models? Like these for goods and services processes.

Here you see the documents that are exchanged between buyers and sellers as well as the internal activities that happen to process or generate these documents. And for product manufacturers you see we talk about deliveries. While for companies delivering services it can be a combination of both models.

Now aligning business processes is not something you do inhouse. It requires sitting together with your business partners and go through all the scenario's you share. Then put them all in a decent process modeling tool, herewith generating already a part of the documentation for future use. Thereafter decide together which processes are good candidates to start with.

See for example: the quote-to-cash process of a bike manufacturer.

Or the process of an OEM manufacturer:

Common sense is the most important aspect here, you do not have to be an architect or IT specialist. You just have to talk business! That is difficult enough.

But apart from using standard SAP functionality, is there another way?

There are integration tools out there that can act as intelligent buffer for the outside world and your internal environment. Model-driven tools that not only help you collaborate with your business partners but also enable you to build some small extensions to your SAP system.

These tools help businesses that unfortunately or luckily do not have SAP but some other ERP.

See my post: Integration essential for online retailers

Let me know if you are intested in learning more about how you can establish business-to-business collaboration with your partners.

Tags: EDI, ERP, PEPPOL, SAP, e-Procurement, e-Invoicing, e-Ordering

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