SAP acquires SmartOps to help customers optimise inventory and service levels in supply chain

SAP AG announced plans to acquire SmartOps, a leading provider of inventory and service-level optimisation software solutions. The acquisition paves the way for SAP to develop ‘real-time supply chain’ software solutions, leveraging the SAP HANA platform, which empowers customers to run their businesses in real time to analyse, predict, react and adjust instantly.

SmartOps provides key operating parameters and targets for Supply Chain Management (SCM) planning. The company’s solutions coordinate capacity, inventory, demand, lead time and product availability variables that enable customers to optimise inventory and service levels, freeing up working capital for innovation and growth. SmartOps and SAP have a longstanding relationship, jointly delivering best-in-class supply chain solutions to many large enterprise customers.

Companies around the world are facing the issues of volatile markets and growing logistics complexity. Winning this environment requires an excellent understanding of the demand for your products and a most efficient supply network.

This requires continuous work on sales and operation plans, which consider revenue and profitability right away. Core and centre of the sales and operations plan is to ensure highest customer satisfaction and lowest inventory levels. To reduce the demand uncertainty, better predictability and increased short term forecast accuracy is needed. Only this will keep inventory as low as possible during day to day operations.

SmartOps has developed large-scale, ‘stochastic’ algorithms that take the uncertainty and risk out of SCM processes. These algorithms use predictive analytics to help manage global distribution networks and vast, multi-stage supply chains.

Such solutions would be significantly enhanced by SAP HANA, allowing for processing of high volumes of data in real time. It also would complement and expand existing SCM sales and operations offerings from SAP, such as the SAP Sales and Operations Planning analytic application powered by SAP HANA, the SAP Demand Signal Management application powered by SAP HANA and the SAP Advanced Planning and Optimisation (SAP APO) component, paving the way for ‘real-time supply chain’ solution. The two companies intend to provide current customers the same, or increased, levels of support without disruption to their existing systems.

Building to provide customer value

A combined SAP and SmartOps holds the potential of offering great value to SAP customers. For example: SmartOps’ existing Inventory Optimisation Suite will complement and expand sales and operations planning solutions based on SAP HANA, enabling a ‘real-time supply chain’ solution to be built on SAP HANA. It also adds to the SAP portfolio of multi-stage inventory optimisation solutions that global businesses need today.

SmartOps’ new Enterprise Demand Sensing cloud-based analytics solution will enhance SAP Demand Signal Management, enabling customers to predictively and accurately manage their supply chain based on real-time demand and changing customer needs. The two companies intend to provide current customers the same, or increased, levels of support without disruption to their existing systems.

Founded in 2000, SmartOps released its first product in 2001. The company has had a formal business relationship with SAP, since 2006 and for the last four years has been a part of the program for solution extensions at SAP. SmartOps’ customers include major brands in the manufacturing, distribution, chemical, life sciences, retail, high-tech, and consumer product industries.

Analysts note the market for supply chain software is large and diverse in offerings and growing. They predict a yearly growth of 7.7%, to exceed US$ 9 billion, by the end of 2013. The dynamics of the market are shifting as well. Companies around the world face issues such as volatile markets and increasing logistics complexity.

Their sales and operations plan, which considers immediate revenue and profitability, demand the highest levels of customer satisfaction and the lowest possible inventory levels. Winning in this environment requires an excellent understanding of product demand and the most efficient supply network.

“We are at a turning point in the global market for supply and demand technology,” SAP senior vice president and Customer Engagement and Strategic Projects head Abdul Razack said. “With the addition of SmartOps, SAP will be able to dramatically accelerate and improve the performance of real-time world-class supply chain management solutions that give customers the decisive competitive edge to succeed and grow their business.”

“Joining SAP is both a strategic and exciting move for us,” SmartOps President/CEO Martin Barkman said. “Having already embraced the need for both on-premise and cloud-based solutions, the prospect of developing these on SAP HANA will propel us to new heights in technology innovation.”

As part of the acquisition, SmartOps employees will join SAP. The transaction is expected to close during the first quarter of 2013, subject to customary closing conditions.