Complicated, multi-faceted supply chain operations live and die by the quality of master data. A cohesive data view across an entire organization is critical to mitigating issues across business units and running efficient supply chain operations.
However, data maintenance and governance are challenging for many enterprises, with 30% of respondents to the 2024 ASUG Pulse of the SAP Customer research citing this as a challenge their organization is currently facing.
Recently, Mohawk Industries implemented SAP Integrated Business Planning (IBP) for Supply Chain to establish cohesive, financially integrated supply chain operations. The flooring company used the solution to bring organization to its data, facilitating a successful end user buy-in and change management process.
Ahead of his presentation at the ASUG Best Practices conference (Oct. 14-16; register here), ASUG spoke with Christopher White, Director of Supply Chain Planning and Soft Surface Manufacturing Applications, about the implementation project and how SAP IBP for Supply Chain helped Mohawk address various challenges across the organization.
This interview has been edited and condensed.
ASUG: What is Mohawk’s current SAP landscape?
White: We connected SAP IBP for Supply Chain to a custom ERP system in 2022. We’re in the middle of our SAP S/4HANA migration. We're going to go live with our SAP S/4HANA implementation (on-premises) at the end of this year. When our SAP S/4 HANA migration is completed our bookings and shipments history—will remain in the custom ERP system. However, all new master data and transactions will come from SAP S/4HANA. So, we'll take the data sources from both systems using SAP Cloud Integration for Data Services (CI-DS) and import it into SAP IBP for Supply Chain. We publish IBP data to SAC and Business Intelligence systems.
ASUG: Looking at Mohawk’s business, what are some of the specific supply chain hurdles and challenges that you regularly encounter and are using SAP IBP for Supply Chain to address?
White: One of our challenges is, when we built SAP IBP for Supply Chain, we built it with customers, products, and location dimensions. We loaded our customer dimension with sales channels and brand information. A couple of times a year, it's routine for the company to realign the sales channels and brand information. When new data gets loaded into SAP IBP for Supply Chain, the master data is fine. Our stat forecast responds to the change of the master data.
The challenge we have is when the users enter their manual forecast. If they want to make an adjustment on the stat forecast, it's stored at the product, customer, and location level. When we change our customer IDs—because our channels and brands have changed—then one of the challenges we face is how to get that manual forecast realigned to the new customer IDs. We've played with the realignment tool but many of these changes represent many-to-many relationships. We found that that's a challenge for us at that point. Right now, we have to adjust it manually.
ASUG: What are some of the factors about SAP IBP for Supply Chain that made it the right solution for Mohawk?
White: We have a strategy where we want to keep our landscape simple. The question the executive leadership would ask for any solution is, “Why not SAP?” By default, we go with SAP solutions. When we were looking for demand management and supply planning, then the obvious choice was SAP IBP for Supply Chain. We would have had to have come up with a very compelling reason to use anything other than SAP. This is primarily to keep things simple and to make use of SAP integration capabilities.
ASUG: Can you walk us through the SAP IBP for Supply Chain implementation process, and discuss the hurdles you encountered?
White: It was a one-year implementation. We started in 2021 and went live in 2022. The biggest challenge we faced was user adoption. The way that we overcame that challenge was at the executive leadership level, where there was a recognition that SAP IBP for Supply Chain isn't just a tool but a whole process. Our leaders implemented a vice president position for the entire process across all the flooring North America business units. They drove it at the executive level. Additionally, they implemented a scorecard mechanism that scored each business unit on what features they were—and weren’t— using in the solution, so they could be measured. That drove user adoption.
In addition, our end users had to trust the tool. They were seeing data in a way that they weren't used to. After we went live, there were certainly questions. We had to articulate that there are numerous ways you can look at bookings and shipments, and this is how SAP IBP for Supply Chain is looking at those processes. Once the end users were taught and understood, they used the numbers generated from SAP IBP for Supply Chain. And all that data rolled up to the executive leadership team level. Now, they're all using the same data instead of different spreadsheets.
ASUG: How is Mohawk specifically leveraging SAP IBP for Supply Chain to impact your supply chain operations?
White: One of the big paybacks that we were looking for by implementing this solution was to have better forecast accuracy. One of our business units had a very strong supply chain process already in place; that put them ahead of some of the other business units. They also had a very strong forecast analyst. Given that, they were able to achieve a 10% improvement in their forecast accuracy after using IBP and following the company’s IBP process for about eight months. That was a significant benefit and one of the key benefits we were looking for from SAP IBP for Supply Chain.
We implemented the solution with five different business units. Each business unit was doing things and looking at the data differently. Within each business unit, there are also multiple business functions, including sales, product management, production planning, and finance. They were all using different numbers. This solution brought all five business units together, so they're looking at their demand planning the same way. And then it brought the different business functions together, so they're all speaking the same language.
ASUG: So, SAP IBP for Supply Chain really brought cohesion to Mohawk’s supply chain processes.
White: Yes. Now, there's one demand planning process across all five business units.
ASUG: What are the planning capabilities offered by the solution and how are you seeing benefit in this specific regard?
White: It's bringing more visibility to all the exceptions that we encounter. So, instead of using spreadsheets and everybody having different sets of data, now we're using one central set of data. Everybody has the same answer when they get together and discuss the supply planning issues they might be facing and what they need to address. That's been a big improvement, as opposed to everybody bringing their own version of the truth with a spreadsheet. Now, all the data is inside SAP IBP for Supply Chain.
ASUG: How did Mohawk approach the change management aspect of this implementation project?
White: It started before we went live. A big part of the change management process was the use of production data all the way through the entire development process. We brought in subject matter experts early on—as soon as we had something that we could begin to show them. Then, they stayed with us, reviewing and being trained on how to use the tool as we continued to fully develop it. Once we went into User Acceptance Testing—which was about a three-month process—we brought on all the users who were going to be using the solution. For about 90 days, they were trained in how to use the tool and given the opportunity to ask a lot of questions. They brought up a couple of things that we had to then fix and correct during UAT.
ASUG: What advice do you have for other enterprises that are ready to embark on their own SAP IBP for Supply Chain implementation journey?
White: Definitely prepare to do a lot of master data cleansing. That's key. I’d also recommend fully understanding the exception processes, not just the “happy path.” We often saw exceptions cause challenges that we weren't initially anticipating. And executive buy-in is key. You have to remember that the solution is not just a tool but the whole process that you implement around that tool. So, having executive leadership buy-in on that whole process is a significant advantage.
Hear more SAP IBP for Supply Chain insights at ASUG Best Practices on Oct. 14-16. Register here.