Supernova Award Category
The Problem
Lenovo sought to upgrade its global supply chain and establish manufacturing plants in North America to serve the region's data center portfolio clients. The project served as the foundation for expanding Lenovo’s business, enabling improved manufacturing capability through an E2E supply chain IT platform in Lenovo’s USFC and Monterrey plants. Business and client requirements vary widely across Lenovo's portfolio, with servers, storage, and networking solutions often having more demanding manufacturing processes. The existing VMI (Vendor Management Inventory) system was old, slow and complicated, requiring extensive resources to maintain and support diverse portfolios. As the foundation for the entire supply chain, performance is critical—faster performance means faster order processing, logistics and manufacturing, leading to faster delivery to clients. To address these challenges, Lenovo decided to build new APO, VMI and CFE (Cost Forecast Engine) systems.
The Solution
In September 2014, Lenovo and SAP agreed on a contract to build a new APO, VMI, and CFE solution to support the IBM acquisition and to replace the legacy IBM supply chain networks. It is a total end to end solution built on the SAP HANA platform. Beta Tauri (the project name for phases 1 and 2) prepares Lenovo for business growth and supports the continued integration of the IBM server business. This includes over 2000 users. The new system eliminates all file exchange and the entire Oracle PCDW (Planning Consolidation Data Warehouse) has been migrated to SAP HANA. The non-SAP system, based on Oracle DB/WebLogic/JDA-i2 used FTP/Java/Oracle DB as the intermediary for data communication which made it difficult to maintain the system and identify problems. Now, Lenovo can store all PO and master data BOM information centrally. The whole architecture of the new VMI and CFE system is now simpler and easier to maintain.
The results
VMI is a highly automated execution system and a critical part of the Lenovo supply chain network. The Global Planning and Purchase Department now needs only 6-8 minutes to complete an executable plan of cost forecast and guide price of each material. This used to take at least 1-2 weeks to finish because the cost calculations could take 11 hours or more. Not only can users accomplish the same tasks much faster, they can also do recalculations at any time. In meetings, users can now immediately see the impact of cost and expense changes. By leveraging the power of SAP HANA, the new CFE system is now fundamentally changing the way Lenovo teams work, improving the efficiency of their supply chain network. In the past, business users would spend up to a week to create and review a full set of alternative cost plans. They’d create one in the morning and wait until the next day to see the cost impacts of the new plan. Now, the user can quickly complete a number of different simulated cost forecast plans as an alternative. All calculation changes are performed in the morning, and the alternatives are reviewed in the afternoon planning meetings, thereby saving up to 4 days of effort. Finally, technical information has become more user-friendly. With well-designed processes and an intuitive user interface, users can detect issues at any point by themselves and inform the IT support team quickly for a faster response and fix.
Metrics
The transition work completed to date reduces Lenovo’s annual TSA costs by $50M.The new VMI system supply chain process is three times faster than before.The new CFE system reduced execution time from days 6-8 minutes.Up to 4 days of effort saved in the time needed to different simulated cost forecast plans for planning and forecast meetingsFirst custom-developed non-SAP system on SAP HANA XS
Biggest pure native HANA application CDP project.7x data compression ratio and 2TB Lenovo (IBM x86) HANA server.100 UI5 screens. (Most screen have CRUD Upload/Download/Execution/Trigger.)330 customized tables.490 store procedures.500 roles (DB roles and virtual role; 95% are virtual)2000 business end users250,000 lines of SQL code. (Old and new processes do not include JS code)
For the Global Supply Chain and Planning Department: Because VMI was a 24/7 automated execution system, the entire planning support team needed to stand by or remain on-call at night. Approximately 50% of IT support tickets originated from business end-users related to the execution process. Issues included processes executing too slowly or being delayed, and data lost between the ECC/3PL and VMI components. Now, the solution relies on Data Service and OData services to handle all data communication between ECC/APO/3PL and the new VMI system, eliminating unnecessary integration and making the process much simpler and smarter. This means no more standing by or on-call.
The Technology
SAP HANA PlatformSAP Data ServicesVMI is similar to the SAP SCM SNC (Supply Chain Management Supply Network Collaboration) module, but includes many of Lenovo’s special business features, such as zero inventory and integration with the 3PL logistics system.CFE is a cost calculation system. It was designed for cost simulation processing, real calculation, analysis & finance control, and guide pricing for ECC material purchase.
Disruptive Factor
With this successful rebuild of Lenovo’s unique architecture, Lenovo and SAP demonstrated that SAP HANA is a powerful platform for custom-developed systems. For this reason, several other companies are considering similar approaches – planning projects to migrate SAP Business Warehouse data and processes to SAP HANA.
Innovation of BOM Explosion in SAP HANA. As we mentioned in the above section, CFE is a cost forecast system and is used to correct the price of material in the ERP system. Its core process is the Full Cost Calculation component. This calculation used to take more than 11 hours in the Oracle database. Full cost calculation means CFE expands all BOMs from top level to deep level, and then finishes all the BOM data one by one. This was a serialized process in the Oracle database. If you have more than 100 thousand BOM master items, each BOM has 5 levels. The old solution used a database cursor to loop all BOM item. It worked very slowly. The SAP solution introduces an innovative approach with SAP HANA. It uses the hierarchy calculation to replace most cursors that fetch data one by one from the BOM table, and completes the level join of BOM data in many memory variables. This solved the biggest performance issue for Lenovo. SAP even submitted a patent application for this technique. It is useful for projects with similar requirements.
Shining Moment
Lenovo was recently named as a 2016 SAP HANA Innovation Award winner for the Process Simplifier Category. Here is the entry: https://ideas.sap.com/D31262