"Navigating Uncertainty: The Power of 'Just in Time' SAP for Supply Chain Dynamics"

Abstract

The Covid-19 pandemic and other recent disruptions in the early 2020s led to sections in the business press blaming just-in-time (JIT) practices for operational failings. Consequently , there are calls for moving away from JIT toward holding more inventory as preparation against future disruptions, which is referred to as just-in-case. The academic community is also divided. Some scholars argue that JIT is not resilient, while others maintain that JIT can continue providing superior performance even with disruptions. Motivated by this debate, we discuss various misconceptions about JIT that S4 Hana addresses the solution to problems effectively and enables that underlie this debate. Furthermore, we present different ways to adapt JIT for turbulent environments with SAP S4 Hana and other ERP segments and argue that companies can improve their supply chain performance if JIT supply chain submodules are implemented effectively during disruptions.

Full text

Journal of Technological Innovation
Etd. 2020
Volume 1 Issue 2, April-June 2020
Fully Refereed | Open Access | Double Blind Peer Reviewed Journal
http://jtipublishing.com/jti
"Navigating Uncertainty: The Power of ‘Just in
Time’ SAP for Supply Chain Dynamics"
Dilip Kumar Vaka
Supply Chain Architect, Deloitte Consulting US, Bentonville, Arkansas,
US Email ID’s: dilip4sap@gmail.com ,dvaka@deloitte.com ,
Contact: +14793675838, Linked in profile: www.linkedin.com/in/dilip-kumar-vaka-5a4983114
Abstract:
The Covid-19 pandemic and other recent disruptions in the early 2020s led to sections in the business press blaming
just-in-time (JIT) practices for operational failings. Con- sequently, there are calls for moving away from JIT toward
holding more inventory as preparation against future disruptions, which is referred to as just-in-case. The academic
community is also divided. Some scholars argue that JIT is not resilient, while others maintain that JIT can continue
providing superior performance even with dis- ruptions. Motivated by this debate, we discuss various misconceptions
about JIT that S4 Hana addresses the solution to problems effectively and enables that underlie this debate.
Furthermore, we present different ways to adapt JIT for turbulent environments with SAP S4 Hana and other ERP
segments and argue that companies can improve their supply chain performance if JIT supply chain submodules are
implemented effectively during disruptions.
Keywords: SAP, S4Hana Disruptions, inventory, JIT, just-in-time, supply chain resilience
1. Introduction
FIGURE 1. Overview of JIT Supply chain
Disrupted supply chains have been a hot topic in the
early 2020s, with shortages resulting from Covid-19
and related lockdowns. Then came the post-pandemic
consumer demand surge. At the same time, the
supply of commodities and gas was disrupted by the
Russian invasion of Ukraine and western countries’
sanctions on Russia. Popular media have blamed just-
in-time (JIT) practices in various sectors for these
disruptions. Example, the business press has singled
out JIT for the semiconductor chip shortages in the
auto industry along with disruptions to other sectors.
Worldwide auto production losses were estimated to
be $210 billion for the year ending in September
2021.Therefore, there is movement in the industry to
retreat from JIT to just- in-case, with Toyota’s pre-

Volume 1 Issue 2, April-June 2020
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pandemic stockpile of chips often cited as an
example.
In this article we will discuss the next generation of
just-in-time processing in SAP S/4HANAwhich will
help to enables smaller quantities of parts to be
delivered directly to the production supply area of the
line at the right time several times a day. This
includes, among other things, the processing of
quantity (JIT) and sequence (JIS) calls from both the
outbound and inbound perspectives.
1.1. Background
Just-in-Time (JIT) processing is a common practice
in manufacturing industries for efficient demand
driven and consumption driven production and
logistics across the supply chains. In the context of
Next Generation Just-in-Time Supply to Production,
a JIT call is sent from the production supply area to
the warehouse or external supplier, requesting
replenishment of materials. The sequenced JIT call
can be sent for vehicle planned order. The JIT call
specifies the quantity, date, time, destination
production supply area, destination storage location,
material and partner information, scheduling
agreement for each requested material, and so on.
The Next Generation Just-In-Time Supply to
Production scenario includes applications that cover
the following broad areas of operation: Manage JIT
Control Cycles - Create, modify, view, and filter Just-
In-Time (JIT) control cycles that are required to
create JIT calls for material replenishment in
production supply areas (PSAs). Using this
application, the Production Planner - Lean
Manufacturing creates and maintains a control cycle
for each material used in the production supply area.
For more information, refer Manage JIT Control
Cycles.
Request Replenishments for JIT Control Cycles - In a
production line, there are storage hubs known as
production supply areas (PSAs), where materials
required for product assembly are stored. When we
need material replenishment in a PSA, Just-In-Time
(JIT) calls need to
be raised. With this application, the Production
Operator – Lean Manufacturing can raise these JIT
calls using new JIT control cycles to request
replenishments from the warehouse or external
supplier. The control cycles have barcode that be read
using a scanner. You can also use this application to
trigger JIT calls whenever materials need to be
replenished in the production supply areas. For more
information, refer Request Replenishments for JIT
Control Cycles.
Transfer Stock for JIT Supply to Production -
Supports transfer of material stock from an
inventory-managed (IM) source storage location to
an inventory managed (IM) or Extended Warehouse
Managed (EWM) production supply area (PSA). The
quantity of stock that can be transferred is based on
conditions such as the requested quantity, delivered
quantity, available quantity, replenishment strategy,
and the minimum replenishment quantity that can be
transferred. For more information, refer Transfer
Stock for JIT Supply to Production.
Change JIT Control Cycle Status - Schedule jobs for
changing the lifecycle status of control cycles. For
more information, refer Change Status of JIT Control
Cycles.
Manage JIT Calls - View, edit, and cancel Just-In-
Time (JIT) calls that are either created manually or
through automatic planning. Also, possible to change
the priority of JIT calls, add supply date and time,
edit reference texts at three levels, update requested
quantity, monitor status of JIT calls, and navigate to
view the application logs. For more information, refer
Manage JIT Calls.
Monitor JIT Calls - Component Materials - As a
Production Supervisor - Lean Manufacturing, you
can get an overview of all JIT calls, at a component
level in your responsible area. In addition, using this
analytical application, you can navigate to view the
application logs. For more information, refer Monitor
JIT Calls - Component Materials.
Monitor JIT Calls - Component Group Materials - As
a Production Supervisor – Lean Manufacturing, you
can get an overview of all JIT calls, at a component
group level in your responsible area. For more
information, refer Monitor JIT Calls - Component
Group Materials.
Plan Supply to Production - Plan for the
replenishment of materials that are required in a
production supply area (PSA). You can easily
identify those materials that are in short supply by
checking the missing quantity values displayed for
control cycles and can either create JIT call manually
or trigger automatic planning and by scheduling
background jobs. Possible to create proposals to
simulate the stock situation. The JIT calls are created
based on demands such as planned or production

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orders and based on safety stocks for consumption
driven scenarios. For more information, refer Plan
Supply to Production.
Manage Communication Groups - Create
communication group that is a combination of
supplier and subsequent message partners with whom
the supplier is working with for supplying the
materials to production line needs. These
communications groups are assigned to control
cycles and the application is relevant for external
replenishments. When a JIT call is created, the
information is sent to responsible persons according
to the definition of communication group. For more
information, refer Manage Communication Groups.
Manage JIS Calls and Reorder - Manage just in
sequence (JIS) calls and reorder the component
materials for a same or different production supply
area (PSA). A JIS call is created based on the planned
order for a vehicle or as a trigger as soon as a planned
order is generated. In addition, provides sequence and
vehicle information, for example, sequence number,
vehicle planned order, and so on. For more
information, refer Manage JIS Calls and Reorder.
Posts Goods Receipt - Generate and post receipts for
the goods that are received for external replenishment
from a supplier to an inventory managed (IM)
destination production supply area (PSA) by updating
the stock at PSA along with scheduling agreement
and schedule line update of goods receipt. For more
information, refer Post Goods Receipt.
FIGURE 2: Supply Chain JIT digital Transformation
1.2. Manage JIT Control Cycles
With this application, you can create, modify, view
and filter Just-In-Time (JIT) control cycles that are
required to raise requests for material replenishment
in production supply areas. Control cycle (for
sequenced JIT calls or summarized JIT calls) is the
master data used to control replenishment of
materials. It determines the replenishment method to
be used between the supply and demand source, and
the quantity required. In the control cycle, you also
determine the replenishment strategy you want to use
to procure materials, the supply source that is to
provide and demand source that requires the material.
In case of control cycles with external
replenishments, scheduling agreement is mandatory.
Using this application, the Production Planner - Lean
Manufacturing creates and maintains a control cycle
for each material used in the production supply area.
Each control cycle goes through various status over
its lifecycle:
§ In Preparation: When a control cycle is not yet
saved and is in draft stage
§ Locked: When the control cycle is locked manually
and cannot be used to send replenishment requests
anymore. Any open
replenishments requests can be processed normally.
§ Ready for Release: When the control cycle is saved
manually with all consistency checks.
§ Released: When the control cycle is released
manually and is ready for productive use. In other
words, it can be used to send replenishment requests.
Control cycles can be created or modified, for
example, when a new material is introduced to
production. The Production Planner - Lean
Manufacturing may also need to align with the
warehouse manager or production operator to verify
stock availability before modifying (or changing the
lifecycle status of) a control cycle. Using a migration
tool, it is also possible to create multiple control
cycles and migrate the data. For more information,
refer Migrate Control Cycle Data.
1.3. Supply to Production with External
Replenishment
Just-in-Time (JIT) is suited for repetitive
manufacturing and discrete manufacturing scenario's
where the variations in configurations are less, but
volumes of production are high. The production
process requires very tight alignment between
external and internal suppliers and especially with
production warehouses that often operate the last
mile of replenishment to the production line.

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§ JIT internal replenishments are handled by
extended warehouse managed (EWM) or inventory
managed (IM) managed source and destination
locations based on the available stock in warehouse.
§ JIT external replenishments are handled by making
JIT calls to suppliers (generally who are in few hours
of distance) and by involving EWM processes to
fulfil the production needs.
In case of external replenishments, a scheduling
agreement (SA) is maintained in the control cycle for
a particular material. A SA has a material, target
quantity, and price and validity of the agreement. As
information to suppliers on the quantities of materials
that must be delivered and expected dates, the
scheduling agreement enables to record the current
status of the lines of delivery schedule in the system.
This status is then transferred to suppliers.
FIGURE 3: Supply chain JIT in SAP S4 Hana Cloud
2. Plan Supply to Production
With this application, you can plan for the
replenishment of materials that are required in a
production supply area (PSA). You can easily
identify those materials that are in short supply by
checking the missing quantity values displayed for
control cycles and can either create JIT call manually
or trigger automatic planning. This ensures that the
required quantity of the materials is available in the
PSA at the required time.
The planning procedure associated with a control
cycle determines if a component material is relevant
for automatic planning or not. You can directly create
a just in time (JIT) call for all control cycles listed
irrespective of the planning procedure. However,
automatic planning is relevant only for those control
cycles for which the planning procedure is demand-
driven or consumption-based. With automatic
planning, you can get a time-specific overview of the
stock availability of a material in a PSA. If the stock
level is less, you can create a proposal and simulate
the impact of the proposal on the overall stock levels.
If satisfied, you can save the proposal as an actual JIT
call, Key Features of SAP S4 Hana for JIT include.
§ View a list of all control cycles
§ Filter control cycles based on the component
material, production supply area, person responsible,
destination storage location, planning procedure,
missing stock at source, planning horizon, supply
date/time, priority type, creation date and time of
control cycles, replenishment strategy, JIT call
creation date/time, JIT call supply date/time,
destination warehouse number, and supplier ID. You
can also choose Adapt Filters to select additional
filters, if required
§ Track the stock availability of materials in a
production supply area by monitoring the available
quantity and the missing quantity
§ View planning elements, planning summary and
the proposals associated with each control cycle
§ Trigger automatic planning for materials for which
the planning procedure is demand-driven or
consumption-based
§ Create JIT calls manually from control cycles
irrespective of the planning procedure associated
with a control cycle
§ Create proposals to simulate the impact of
planning.
§ Create JIT calls from proposals.
§ The external replenishment from external suppliers
using SAP transportation management and logistics
execution for inbound goods or materials processing,
is supported. It is possible to view the Advanced
Shipping Notification (ASN), which is considered as
a supply element while calculating the stock.
§ Possible to do demand-driven replenishment
planning for primary and secondary control cycles
considering planning elements and planning
parameters of control cycles using the primary and
secondary storage bins as source. The secondary
control cycles can be for demand

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driven or consumption-based planning procedure.
The primary control cycles can be of any planning
procedure.
§ Possible to consider the contents of buffer in the
assembly production line. A new field titled Buffer
Indicator available for JIT calls with takt based
planning procedure.
§ Assess the demand for control cycles with takt
based planning procedure using the Automatic
Planning option.
§ Ability to retrieve physical stock for control cycles
with takt-based planning procedure based on actual
consumption at the assembly production line. The
following information is available:
§ Current stock at the destination bin for a material
§ Actual physical stock at the destination bin for a
material
§ For control cycles with takt based planning
procedure, possible to determine the future demands
based on the planning horizon duration for both
vehicle assemblies and complex component
assemblies. The planning horizon is converted to
number of tasks.
§ Possible to calculate and display demand date and
time by considering shifts and production breaks
(Shift Grouping) configured for complex component
assemblies. The demand date and time for production
demands within this application are calculated and
displayed based on the shift sequences configuration
such as the demand date and time do not fall within
the non-working hours.
2.1. Post Goods Receipt
Using the Post Goods Receipt (PGR) application, you
can post good receipts for component materials in
reference to external replenishment scenario, to an
inventory managed (IM) destination production
supply area (PSA). When a goods receipt is posted,
the stock at PSA is updated and life cycle status of a
JIT call is set to Completed once GR is posted for all
component materials within that component group.
When this SAP application is used, all aspects of
integration with SAP Transportation Management
(TM) and Logistics Execution (LE) in the inbound
process are skipped (bypassed) and direct GR is
carried out for the component material at the
destination PSA.
Key Features
§ Filter goods receipt based on JIT/JIS calls, supplier,
plant, lifecycle status etc
§ View a list of all component materials associated
with post goods receipt
This application uses the C_JITOutbGoodsPosting
CDS view.
FIGURE 6. JIT (Plan to GR)
3. Just-In-Time (JIT) Supply to Customer
Just-in-Time (JIT) processing is a common practice
in manufacturing industries for efficient demand-
driven production and logistics across supply chains.
Just-In-Time Supply to Customer covers JIT
processes from the perspective of a supplier. Though
there are various ways how JIT supply is
implemented, there are several commonalities:
§ Long-term supply relationships must be in place
between supplier and customer, with outline
agreements upon target quantities per component for
a contract period.
§ The customer sends forecast data for expected
requirements, in line with the planned production

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program, intended for production planning by the
supplier.
§ The customer sends JIT calls to transfer dedicated
requirements for delivery within a short-term
horizon.
§ A framework contract must exist which, in addition
to the quantity agreements, generally must also cover
the requirements on JIT supply.
There are different types of JIT calls in use in SAP
S4:
§ JIT calls requesting individual components without
reference to a production order. The quantity
normally is based on container sizes of the agreed
packaging material. This type of JIT call is referred
to as summarized JIT call or Kanban call-off.
Summarized JIT calls are often used where several
containers of a component could be placed at the
production, and its consumption is
usually constant or quite frequent. The request for a
JIT call is either consumption-based (by replacing an
empty container with a full one) or demand-based (by
projecting the short-term stock at the production).
§ JIT calls requesting multiple components without
reference to a production order, to be all delivered
together. The quantities of components are based on
container sizes of the agreed packaging materials,
whereas the volume of the JIT call in total represents
the overall transportation volume and meets the
capacity of the planned transportation unit (For
example, a truck). This type of JIT call is referred to
as delivery order or delivery instruction. In case the
customer organizes the transportation, the delivery
order is also called pickup sheet.
The delivery order plans the transportation of
components needed for discrete delivery, daily or
even more frequently, often in conjunction with
regular tours planned to optimize the supply from a
transportation perspective. It collects and schedules
demand from multiple places at the production.
§ JIT calls requesting multiple components needed
for a specific production order. A production order
often has a lot size of 1, like in vehicle or engine
production. This type of JIT call is referred to as
order-based JIT call.
Order-based JIT calls are in use when the customer
produces configurable products and components that
have a high number of variants due to the
configuration options, or are bulky so that space in
production is a limiting factor.
§ JIT calls requesting multiple components needed
for a specific production order, to be delivered in the
sequence of the scheduled production. This type of
JIT call is referred to as sequenced JIT call or Just-in-
Sequence (JIS) call.
Sequenced JIT calls are used for the same reasons as
order-based JIT calls, but in repetitive production,
where individual products are manufactured one after
the other. For example, as done in production of
vehicles and their complex components like engines.
With sequenced JIT calls, the customer expects the
delivery in exactly the production sequence provided.
FIGURE 7: S4 Hana Tools and enablers
4. Product features of JIT S4 Hana supply chain
FIGURE 9: S4 Hana JIT product features
§ With this application, you, as a Production
Supervisor - Lean Manufacturing, can get an
overview of all JIT calls (at a component material
level) in your responsible area.
§ The application, by default, displays a hybrid view
in which both the chart and the table are displayed. It

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is also possible to switch to the chart-only view or
table-only view based on your needs.
§ In the table view, you can view a list of JIT calls
based on the filter criteria that you specify. For each
component material, you can view details such as the
associated JIT call number, JIT call status, logs,
plant, source storage location, requirement date and
time, internal processing status, production supply
area, requested quantity, control cycle, and so on.
§ In the chart view, the application, by default
displays the Number of Component Materials and
Number of JIT Calls as the measures and the
Production Supply Area as the dimension. The chart
view helps you analyze data step by step from
different perspectives and makes it easy for you to
figure out the deviations and the abnormalities more
quickly and to take appropriate action right away. For
example, if the chart indicates that the number of
active JIT calls for a specific component material is
running low, the production supervisor can take
necessary steps, as required, Key Features
§ View JIT calls (component material level) in both
chart and tabular format.
§ Filter JIT calls based on fields such as the
component material, requirement date/time, lifecycle
status, plant, person responsible, source storage
location, internal processing status, control cycle,
production supply area, stock transfer status, external
replenishment, and supplier. Here, plant is a
mandatory filter field. You can also choose Adapt
Filters to select additional filters, if required.
§ Switch between the compact filter and the visual
filter. The values that you choose in these filters
impact the values displayed in the chart view and the
table view.
§ For example, in the visual filter chart Number of
JIT Calls by Lifecycle Status, if you select the filter
value Active, then the chart view and the
table view changes to reflect this newly selected filter
value.
§ View detailed information for any dimension
displayed in the chart through drilldown.
§ In the chart view, for example, Number of
Component Materials and Number of JIT Calls are
the measures, while the Production Supply Area is
the dimension. The dimension can be further
narrowed down to different levels in the parent
dimension. For example, inside a production supply
area, details of each component material can be made
available, by adding component material as an
additional dimension. The columns in the chart
represents the smallest dimension of the drill down.
§ Save your preferred filter settings as a variant (both
compact and visual filter values).
§ Download the list of JIT calls to a spreadsheet
§ Calculate deviation quantity in case of external
replenishment and internal replenishment of goods.
§ In case of internal replenishment, the deviation
quantity is calculated as the difference between the
picked quantity of goods and requested quantity. If
the picked quantity is less than the requested
quantity, the goods are under picked or less picked.
Whereas, if the picked quantity is more than the
requested quantity, it is over picked.
§ In external replenishment of goods, the deviation
quantity is the difference between the Advanced
Shipping Notification (ASN) quantity or delivered
quantity and the requested quantity.
§ You can also view the number of picked quantity
and requested quantity within the detail page of JIT
calls in the Manage JIT Calls application.
6. Conclusion
Just-In-Time supply chain manufacturing was
designed to help manufacturers reduce inventory-
related costs by receiving materials and producing
goods only when they are needed. Just-In-Time
scheduling is used to accommodate last-minute
changes to orders and prevent damage or spoilage of
inventory by preventing jobs from starting too early.
There are many benefits associated with Just-In-Time
production, but the main goals of this method are to
increase the efficiency of production while
decreasing waste to ultimately lower the production
costs and increase profits. On the flip side,
implementing JIT SAP S4 Hana solution
methodology requires producers to be able to
accurately forecast their demand to avoid running
into material shortages. The advantages of Just-In-
Time (JIT) manufacturing include the following:

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· Reduced Space Needed - With JIT you have a faster
turnaround of stock, which means that you do not
need a lot of warehouse or storage space to store
goods or materials. Ultimately, this will reduce the
amount of storage space your organization will need
to rent or buy, which will free up funds for other
parts of the business.
· Smaller Investments - JIT inventory management is
an ideal methodology for small production facilities
that do not have the funds needed in order to
purchase huge amounts of stock at once. Ordering
stock materials only when they are needed enables
you to maintain a healthy and smooth cash flow.
· Waste Elimination/Reduction - A quicker
turnaround of stock prevents goods that have become
damaged or obsolete while sitting in storage,
reducing waste. This again saves money through
preventing investment in any unnecessary stock and
reducing the need to replace old stock.
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