SAP is an Enterprise Resource Planning (ERP) system that helps businesses manage supply chains. As supply chains grow in complexity and evolve into supply networks, they become more obscure. Identification of waste becomes paramount as inefficiency grows and critical visibility decreases. Identifying problem processes becomes difficult. This in turn causes frustrating delays, bloated inventories and higher costs. SAP gives you and your supply-network colleagues fast access to supplier information, creating a transparent supply network that fosters efficient collaboration for a more agile and responsive supply network.

Parts of a SAP Inventory System

SAP supply-chain management (SCM) ships with several components installed that allow the system to track, record and share inventory information among all parties in the supply chain. SAP uses a component called the SAP Inventory Control Hub to share inventory, audit transactions and log communications for reference over the Internet. The SCM includes a Vendor Management Inventory, or VMI system. The VMI allows vendors to transmit supply levels and other vendor data to the SCM system. The vendor can use the VMI in the SAP Supply Chain Management solution to manage supply concerns without an expensive out-of-pocket investment in an inventory-supply control system.

Supply-Chain Management

Regardless of what inventory-supply management software is used, a management system has to perform several essential functions. The SAP supply-chain management system comes with a variety of ability set, including a large array of supplies. A supply-chain management system must be able to handle increased inventory load and use alerts to notify suppliers of needed merchandise. SAP uses customized automated alerts based upon agreed upon criteria. For example, a 30-percent increase in demand. Alerts can be sent via many different communication channels: cell phone, email and even pagers. Vendors can update the SAP installation through email or a Web browser. SAP in-place system acts on inventory levels through the use of Extensible Markup Language (XML). It interacts with many different planning and transaction systems. SAP brings suppliers up-to-date fast and keeps them informed.

The Value of Collaboration

Supply-chain transparency increases competitiveness for all parties in a supply chain in a number of ways, such as improved customer service which reduces the risk of being out of stock. Lower production delays enhance delivery rates. Improved responsiveness reduces variability and increases capacity. Increasing capacity utilization reduces expenditures and lowers administrative costs. Accelerate automated processes by sharing real-time inventory information. The measure of your company's inventory needs will determine the overall value of collaboration. A collaborative supply chain reacts quickly to changing business conditions and uses resources to increase competitive advantages.


Successfully managing inventory is critical to success in the modern business environment. Profit margins are extremely thin and there is little room for waste or inefficient processes. SAP provides an inventory management system that builds collaborative, agile and therefore cost-effective supply chains that companies need to increase competitive advantage.