How Illumina Leveraged SAP Integrated Business Planning (IBP) to Drive a 40% Reduction in Excess Inventory
38m 45s
In this ASUG Talks episode, host Jim Lichtenwalter interviews Leon Trevitt, Senior Director of Global Integrated Planning at Illumina, and Arpana Sixaria, Director of Life Sciences Solutions at SAP, about transforming Illumina’s supply chain with SAP solutions. Illumina, a biotech firm producing DNA sequencing equipment, faced challenges typical of the life sciences sector, including high inventory waste, lack of visibility, and working capital inefficiencies. To address these, Leon built a digital roadmap starting in 2016-2017 and implemented SAP IBP modules sequentially from 2018 to 2024, including demand planning, SNOP, control tower, inventory optimization, and response and supply, alongside EWM, TM, GTS, and Ariba integration. This approach, driven by business value rather than waiting for cloud migration, delivered significant ROI: a 30% improvement in inventory turns, a 40% reduction in excess and obsolete inventory, and 10-15% manufacturing efficiency gains. AI played a growing role, from forecast optimization to natural language assistants explaining planning decisions, with future plans for AI agents to automate tasks. The conversation also highlighted SAP’s broader roadmap, including autonomous regulated manufacturing and AI launch pads, emphasizing the need for clean data and orchestration. Key advice for similar transformations includes focusing on business problems, redesigning processes, leveraging value engineering, and starting despite imperfect conditions.
From the Americas SAP Customer Community, I'm Jim Lichtenwalter and this is Asak Talks.
A podcast devoted to conversations with the innovators, leaders and change makers shaping
the future of enterprise technology and the SAP ecosystem.
This week on the podcast, Supply Chains takes center stage.
According to the 2026, ASUS calls the SAP Customer Research 57% of Supply Chain Professionals
who participated in that survey said that optimizing costs is a high priority for their enterprise.
One of the best ways to optimize those costs is by eliminating the waste often associated
with running and managing supply chains in order to drive improved cost efficiencies.
In this episode, I sat down with Leon Trevitt, Senior Director of Global Integrated
Planning at Illumina and Arpanas-Sixaria, Director of Life Sciences Solutions at SAP.
They walked us through how Illumina, a biotech company used SAP Integrated Business Planning
to dramatically reduce the organization's supply chain waste among other improvements.
We also discussed how the organization is using AI and supply chain operations.
The roadmap for its IBP implementation and how SAP solutions are currently addressing
common supply chain hurdles, those insights and more this week on ASUS.
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Well, partner, Leon, thank you so much for joining us and walking us through the great
work you are doing.
I appreciate you all joining ASUS talks today.
Thanks, Jim.
Yeah, pleasure to be here and thanks for having me.
Yeah.
Nice having you here.
Leon, I'm going to start with you as a representative of Illumina.
Why don't you give us an overview of the organization and the customers that you all serve.
Illumina as a business, we manufacture and distribute next generation DNA sequence
in equipment.
So as you can imagine, sequencing DNA is a huge benefit to improving human health.
Our customers range from, you know, in the clinical space, helping people diagnose
where disease is and things like that, all the way into the research space where they're
doing new drug design, drug synthesis and things like that.
So broad applications and also into agriculture.
So sequencing crops and seeds to make food more sustainable.
So a very broad kind of customer base and application.
So Parna, you represent the SAP set of things.
You all worked with Illumina, one of your customers, to help improve some of the supply chain
planning challenges that they had.
To set the stage, when you speak to SAP customers, all out like Illumina, what are the main supply
chain challenges that they are facing right now in 2026?
Going to the conversation with Lexins, customers in Austin as what keeps them up at night and
most of them, at least in the supply chain division, I get answers surrounding, hey,
we wrote off a $200 million inventory worth this quarter, or we had about 60% of wastage
in our last trial.
You know, those are the real numbers that we talk about.
$200 million is a bigger number.
Of course, if you're looking at it in terms of what that looks like, but it is a very significant
number of inventory that companies kind of write it off.
And when you look a little deeper into why those numbers are happening, pretty much it
always traces back to the same place.
The planning systems and execution systems, they're on very different information.
It often, this information is not synchronized across the platform.
So what I would do is I'll do it, take three examples of what I see on the clinical trials,
which have worked very closely on the clinical trials by chain management.
The 50 to 60% overage is kind of has been accepted for decades.
It's 60% overage, yeah, it's common, write it off.
Because it is rather better to have a drug in X's than running out of the drug mid trial
and a patient failure, which is a very big huge regulatory event.
So it's better to keep all that overage.
So companies usually build in huge buffers as insurance.
And with the small molecule drug at a lower cost, it is manageable.
But now we are moving into biologics.
The cost structure is entirely different.
It's 60% overage on a biological drug.
It is tens and hundreds of millions of dollars.
It's not something that is a very small number.
And so the map doesn't sit right with the, with the right of that has been happening traditionally.
So that is one of the main supply chain challenge that I hear from, at least the clinical teams.
And on the commercial side, in the pharmaceutical sex segment, still, usually in the pre-COVID era,
the gross margins of these pharma companies were about 77%, 70%, 77% around that range.
Dimension right-offs are up to 4% to some 6% of the annual Dimension right-off is pretty much not an alarming thing.
But when you are adding up all those 4% to 5% across all, at least the 25 largest pharma companies,
it's in billions, the numbers are in billions, we're talking about.
So that is something that needs a fix.
And that's one of the huge supply chain challenges that I would say I keep hearing from my customers.
And coming to Meddywise's side, which I would also ask Leon to comment down that, 20 to 30% again.
Inventory sits pretty much in the field.
We call it as a field inventory, and it is not accounted for sometimes in the planning systems,
and sometimes in the procedure rooms, hospital sites.
Even the sales rep trunks, the inventory is sitting over there.
And planning system is usually not looking at any of the visibility.
They do not have the visibility of any of these inventory.
So the buffers are higher, and when it comes to working capital,
you have to have higher working capital because now inventory is at multiple places.
So whether it is in a sense, whether it is clinical trial, commercial side, Meddywise's,
the inventory, right-offs, or optimization, I would say is the major critical challenge in the life sense of feature.
Well, Pana, thank you for that robust overview, Leon.
How does that context, does that compare with the challenges you all are facing at Illumina?
It does. I mean, I think working capital visibility of working capital and the optimization
is a big focus for that.
For the longest time, we were, how can I put it, you know, kind of cash rich.
So the focus was really on customer experience.
As we start to move forward into 2026, there's a lot of geopolitical macroeconomic challenges.
The competition is becoming more apparent, and we need to be cost conscious.
So I think the focus on optimizing our working capital, making the right investments,
and where to fully leverage that is front and center in terms of how we drive forward with the strategy.
To be clear, yeah, we don't, we haven't experienced a $400 million dot-write off.
That one's scary.
But, you know, when you talk about scale, proportionally, yeah, it's a big focus area.
Obviously, it's just waste, and we're really looking through lean principles to just take
waste out of our processes and make sure that we don't create waste in our manufacturing
and processes and just optimize our investment in working capital where it makes sense.
We are digging a little bit deeper.
Can you speak to the organizational and industry-specific hurdles you all at Illumina were trying
to overcome by leveraging SAP solutions?
Very specific, so in Illumina's business, it's a bit of a blended supply chain.
There's a kind of hardware, you know, maybe more device type supply chain, as Abhana was
mentioning.
There's also a kind of pharma type supply chain because it's biotech where we're manufacturing
and creating enzymes and different biologics and industry-wise, that comes with some challenges
around managing shelf life and when products are going to expire.
So when we were looking at the SAP solutions, we clearly wanted to have visibility to all
of our processes in a quicker, more agile way so that we can make the right decisions in
the time you manner.
And then also, you know, really think about how do we maximize that investment in working
capital and make sure that we don't have any wastage.
So as we were looking at SAP solutions, it revolved around optimization, around integration
to each of the different tools, and real-time, quicker visibility to make better informed decisions.
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by clicking the link in the description. Leon, can we you give us an overview then too of the SAP
solutions you are using, especially as it relates to supply chain supply chain management operations?
Yeah, so we went through a journey as the owner of Global Integrated Planning, and I also
went into the supply chain digital road map. Back in, I'm going to say 2016-2017, I built out a digital
road map with each of the functions within supply chain, so plan, source, and deliver,
and we looked at our current state and we had a vision back in 2016-2017 of what does 2020 look
like, and obviously that was like six years ago. We refreshed that every year and kind of pushed
out the horizons. We took stock of the capabilities that we had and started to say, what capabilities
are we going to need in the future? We need to be able to drive up customer experience. We need to
make sure that we're optimizing working capital and making better investments. We need to look at
ourselves and operations plan in process, and how do we drive up the maturity in that, so that as
an enterprise, we make better, more enterprise level decisions. So we took stock of all of that,
we looked at the toolset that we had, and I always knew that we in the future were going to make
a transition from SAP ECC to SAP S4HANA Private Cloud Edition, the big long name there.
So to a certain extent, as I was building out that digital road map, I also wanted a future
proof fit for where we were going to go in the future. So as we looked across the suite of tools,
we clearly had a leaning towards simplified integration and things that were in within the SAP suite.
So we implemented SAP IBP. We started with the SNOP module and the demand planning module,
and then as we progressed through the road map, we subsequently implemented IBP control tower,
then we implemented IBP inventory optimization, and then we kind of rounded that off a few years
back when we implemented response and supply and transitioned to order-based planning.
So that was kind of like on the plan side. In the other legs, the other pillars of supply chain,
in deliver and source, in deliver, we implemented EWM, so extended warehouse management and integrated
that into ECC. We implemented transportation management, SAP TM, and integrated that into IBP.
We also integrated GTS, so SAP GTS, and implemented that.
So that kind of put a pin on the deliver side, and then in the source side,
we lend heavily into Ariba. We integrated supply chain collaboration or business network,
as it is now, into IBP, so that we could have a signal coming from our planning system
out to the supply base to get some forecast commit, look at capacity and constraints in the
supply base, and then make planning decisions around it. So we integrated that into the source space,
and then have other tools like concur and et cetera to manage spend.
So you have solutions that are touching basically every facet of your supply chain operations?
We do, we do, and I think the big thing for me was doing it in such a way that
we had the ability to integrate. So you know, you could have all of these tools that
is entirely possible that they could work in their own little silos within the pillar,
but you're going to lose a huge amount of benefit and agility if you don't have some sort of
integration. So integrating response and supply or order based planning into transportation
management and doing deployment. So when you're planning to move inventory between two locations,
having that integrated into transportation management so that you can tend to
free and make the right decisions around how I want that inventory to move was a great benefit,
or integrate in, as I say, IBP when we're planning into business network and collaborating
with suppliers. Again, it was about the integration for me, and then obviously thinking about I/O
and coming back to that working capital optimization, like how do I make the right decisions that
all of the different echelons of the supply chain to maximize my investment there when I'm
thinking about the working capital investment. Leon, you said you started conceiving and planning
for this back in 2016/2017 area. When did the actual implementation journey begin for you all?
And how many end users were eventually impacted by your usage of SAP solutions?
We started building out the roadmap 2016/2017, as I said. Obviously, as I wrapped up 2017,
I had to go in front of the steering committee and the executive leadership team and put a business
case together. That got approved at the end of 2017, and we kicked it off in 2018.
And then we had multiple phases of these projects. As I said, as we implemented various modules in
chunks to build it out between 2018 and 2024, I guess, actually. We didn't do a big ban,
we did it in sequential chunks so that we were making sure that what we delivered and deployed
generated the value from the business case. And it kind of created that momentum to say,
"Well, yeah, you did that last one. It went smoothly. It delivered the value. Let's now go and
implement the next chunk." And that was kind of the approach. In terms of users impacted,
there's 500 plus people in the supply chain that are impacted by these various tools and interact
with them. And then ultimately, the output and the integration goes into a manufacturing network,
which is global. So we have manufacturing in the US, in Asia, in Singapore, as a distribution
in Europe. It touched on those as well. We have about, I'm going to say, two and a half,
3,000 people in operations that have started touching on as well. So quite a big stakeholder group.
You all recently presented this customer story, this project at SAP Sapphire Nasega Annual Conference.
One of the things that struck me when I was going through some of the speakers and attendees
of the conference was the way AI was being used in this project. Can you all speak specifically
to how AI was actually being leveraged in Aluminas SAP supply chain operations?
So from SAP Perspective, before 2025, our planning tool was pretty robust in terms of time series
planning. And then last year, we, of course, we released the order-based planning, which was
using more of a shelf life. But in 26 or two release, which is our February release of this year,
we have strengthened our IBP and shelf life planning capabilities all the way into
those semi-finished goods and other bomb components as well. I'm calling that out because in our
life sciences world, whether it is farm or clinical, medis, minimum required shelf life and
component shelf life are pretty important characteristics. And now planning rungs can check all
these remaining shelf life of the API, semi-finished and everything, all with the bomb components.
And then can plan appropriately based on your shelf life parameters. And that's a very
significant thing for farmer because it really eliminates waste at multiple levels. So that is one
of the critical features, the component shelf life that was launched. And you also launched
something called a synchronized planning model where we don't have the master data is always in
sync. And you do not need to have a lot of integration with respect to your time series and
order-based planning. And it is all one big platform that is actually supporting everything. So
these are the rock structures I would say is where IBP has really mature to. So once these
structures are in place, that is where your AI really comes into picture. And from the AI agents
perspective, we actually launched a couple of agents in IBP, demand fulfillment agent, delta planning
agent. There was also something on the jewel that we launched, which is looking at compliance
monitoring there, which is exclusively for GXP systems and farmer systems. But the demand fulfillment
assessment agent, it is actually traces all the fulfillment gap between the shortfall, which batch,
which campaign, what is a constraint around it. So it looks at all those parameters and helps you
plan those. So there has already been a lot of work that is launched and much more is upcoming.
And of course, customers can develop their own AI models based on once you have these data structures
in place, all the building laws in place. To be specific around how we were approaching
AI, I think upon and nailed it in the early days, so I would say like pre 2025. The AI that we were
exploring and employing was more around primarily in the demand planners face. So we were using a lot
of AI and ML around demand forecast optimization, outlier detection, anomaly detection. So we were
using various tools and algorithms to try and get a better quality forecast. That was primarily
where we were trying to leverage AI in the true sense. Then as we start to step forward into
2025 and then some of the capabilities that Aparna was talking about, there are other capabilities
that SAPU deployed within IBP around. And I'll call them assistance as opposed to agents because they
they were more in the natural language space,
helping explain results.
So forecast display and ability.
So unless you're a data scientist
or you're really into forecast algorithms,
then there are people that are.
Knowing the nuances and the details
of double exponential smoothing
and the impacts of an alpha beta and a gamma
on your forecast model isn't really intuitive.
So the ability and the capability of an assistant
that can in natural language explain why your forecast result
is your forecast result is been a huge win.
So we've been exploring that and using that capability.
Similarly on inventory optimization,
and I know that I keep coming back
to working capital optimization,
but that's where the dollars are.
Explain in why your safety stocks at that node
in your supply chain and your hierarchy is that safety stock.
So is it increased because you increased your service level?
Has it increased because the demand for latency
or variability is increased or is it decreasing in this node
but increasing in this node because a lead time has been reduced
and your manufacturing is really humming
and they're in their lead times.
Explaining that in natural language
is a huge win in terms of engaging people to use the tools,
making it intuitive and really exploring the capabilities
that we've enabled to drive a benefit and a value.
So those are the ones that are kind of front and center.
We're exploring right now the idea of actually not
an assistant but an agent that can actually go do things.
And I think the panel touched on one
in terms of the demand for film and agent.
And then where can we actually have a true agentex solution
to be able to take on some of the work.
So some of the teams can add more value in generating
a better quality forecast as opposed to the steps
that I have to go through to actually execute that forecast
and demand plan through the supply chain.
So we took a kind of slower approach,
our approach around AI and generally transformation
is to look at our business processes
and redesign them to take out waste.
Then we look at technology to see where we can automate
as much as possible and drive efficiency.
Then we look at AI where I can use AI to get insight
and that would be kind of like in the assistant space,
insight that's intuitive, that's in a natural language
and people can understand it without being technically deep.
And then we step into an agentex space
where I can have AI or an agentex solution
actually go do things for me.
And we've kind of been taking that that four step approach
as we've been thinking about transformation generally
and it all happens to be within the SAP suite.
- Okay, great.
Leon, you mentioned earlier that all organizations,
not just once in your field are contending
with global business disruptions, supply chain disruptions.
- Yep, when we think about today,
how has aluminum supply chain operations changed
and become better equipped with SAP solutions
to contend with these disruptions?
- Yeah, now, okay.
We have a really, really good use case in this example.
So as I mentioned about our roadmap and our deployment,
we did it in chunks.
The second chunk that we implemented
in and around control tower to drive some visibility
and integration into the business network with Ariba
and then inventory optimization.
We deployed that during COVID remotely.
- Fun.
- Yeah, it was, so yeah.
So there was a lot of scenario planning
that we did in the previously deployed elements
around demand planning and SNOP.
We were using that for time series based on planning.
We had the ability to be able to do scenario plans
around the impacts of what we were going to be doing
during COVID to be able to make sure
that we could deliver the additional capabilities
on control tower and get more visibility
and inventory optimization.
And then, first forward, when we've got the whole suite,
whenever these macroeconomic or geopolitical challenges
coming up, we've got tools that enable us to quickly
be able to scenario plan and try and assess risk.
So we can have multiple scenarios
and when something plays out, whether it be tariff related
or whether it be some sort of transportation challenges
with not being able to ship to certain countries,
we can scenario plan the impact
that that has on the business really quickly.
Now, historically, that would be a lot of heavy spreadsheet work.
You'd have to make sure that you kind of reconciled it.
So it's made that much more agile
around how we respond to some of these challenges.
And it's a huge opportunity, as we think forward,
into the agentex space to say, well,
can I create an agent that is ready to go
when I need to assess one of these scenarios
and just let them do all of the work and then come back
with the recommendations with a human to be able to say,
yep, I approve with that right.
Well, we'll change shipping from Asia
and source it from Europe now because there's a thing
that I know the impact, I know the cost, so on and so forth.
So that's the future, but where we are now,
just leveraging the tools that we had to be able
to scenario plan and have those options ready,
much more agile and quicker than it was before.
- Lea, related to that value, can you give us an example
of some immediate ROI, alumni recognize,
when it implemented, IBP and Business Network Supply Chain
collaboration solutions?
- Basically, the big win for me was,
we got better signals to manufacturing.
So we were able to increase our efficiency
within manufacturing.
Numbers probably, you know, out of the gate,
probably 10 to 15%.
The real interesting one was when we then subsequently
implemented inventory optimization,
we had a 30% improvement in our turns.
We were better at where we needed to focus the inventory
and then the other one, the optimization of our excess
on obsolete, and we were able to reduce that by 40% as well.
So we could reduce 40% in our excess on obsolete
and we improved our turns by 30% overall.
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(upbeat music)
- You hear those figures being thrown out.
I think it speaks to the relationship
that SAP had with Illumina.
Can you go into a little bit
about how you all collaborated with the organization
during this project?
What did that relationship look like?
And how was it maybe a little different
than a regular software vendor customer relationship?
- I mean, from SAP Perspective,
if you look at how Illumina embarked on this journey,
they didn't have the perfect on-cloud
kind of conditions or everything to be perfect.
You know, they started their journey
with playing when they were needs to see,
not even on export.
So that is a great story
and how a collaboration works.
I would actually leave again to Leon
as how he worked very closely with SAP
on that collaboration, but it was a three-in-the-part
Illumina SAP and the SAP partner
for Illumina who has actually worked on these things.
With ECC connection and IBP was,
I would say also still not yet matured when actually
Leon was implementing IBP.
But the story here is that Illumina did not wait
for RISE, perfect conditions to be on the cloud,
for all the GXP master data on the cloud.
These shots started it pretty early in their journey
when with ECC connection.
So that's something that is really commendable over there.
- To answer a partner's question around collaboration.
So when we were going on this journey,
I actually went into SAP
and tried to build that relationship there.
And we went into value engineering
as a function that SAP provided.
So I worked really closely with the value engineer in team
and tried to assess where are all of the levers
and the benefits that we can really tease out
when we're going through this implementation.
So the partnership with SAP on value engineering
was invaluable in ultimately getting the business case
aligned and approved with the senior leadership team
and driving that forward.
Also to a partner's point, yeah,
we didn't wait around for things to be in the cloud
or go on to RISE.
We did it when we were still on ECC.
Another thing I would add is when we were going through it,
I was continually assessing,
'cause we were quite early in the IBP journey,
I was continually assessing the maturity
of each of the products.
So our first tranche of implement in IBP for demand
and IBP SNOP, SNOP was the first IBP module actually.
We went that route because at the time,
I wasn't confident on the maturity,
and this is back in obviously 2018.
I wasn't confident of the maturity of the,
what was called supply and response at the time,
and then,
naming convention about changed over time. So we actually implemented APO. So we implemented
IVP for demand, we implemented IVP for SNOP, we implemented APO SNP and we also implemented
GATP and APO. So that was the suite that we implemented and that was interesting because
it was a bit of a double edged sword because you know, I'd kind of done the big sell on
IVP and how this was the future. And when we deployed APO, rock solid, then it was like,
well, you promised me a Tesla, but you gave me a Datsun, but it was really, really rock
solid. So then there was a journey of, you know, taking pieces off the Datsun and replacing
them with Tesla parts, you sure we were implementing the other bits, but it was really around
capability and maturity. So we didn't just jam in a product, we really looked at the need
and how I was going to make sure that that product and the adoption and the implementation
were successful and it delivered the value. So we didn't really wait around for things
to be unrized, it was really driven from business value. And now, you know, we are where we
are, all of the suite within IVP is rock solid, it's integrated to all of these other, I'll
say, boundary kind of elements within the supply chain. I mean, it's built a foundation
that we can then subsequently say right now to use Christian's words. Now I can step
into the autonomous enterprise. Now I can go with assistance and agents and it took a
while, but the premise was always build a foundation, make sure that a future pure fit
for RS4 journey. And then we've got this really rock solid foundation that we can springboard
off. As we end today's conversation, APO, I do want to talk a little about the SAP supply
chain solution roadmap. How is AI factoring into that?
AI is everywhere now. You have heard it on XFR, the DIA, autonomous, regulated manufacturing.
And when we say autonomous, regulated manufacturing, we are actually bringing in a lot of business
functions under this all the way from procurement to finance, to supply chain planning, manufacturing,
execution. So it's all one big umbrella. So we are heavily investing in that and there
are so many use cases that are coming up in that. And the use cases for autonomous,
regulated manufacturing, ARM, what we call is not limited to SAP systems. So the information
sometimes rests in different systems. A third party system, sometimes it's a regulatory
information management systems or a third party planning solutions. We are not asking
customers to rip off everything and put SAP before you can do AI. So we are leveraging
a lot of information from other systems as well, but bringing in the right source of truth
and being able to do what if scenarios all the way from start of the scenario, all the
way into the execution of the scenario. That's where AI is going to sit. And we are also
envisioning that the launch pad for supply chain users are actually for all the business
users in future is going to be AI launch pad rather than getting into a GUI or a transaction
code or a fury app. It's going to be first to start your conversation with your AI bot
and then you dig deeper into those things. But I want to highlight that none of this
is possible if you don't have the right set of data and the right set of tools that actually
give you the data. Because I'm explicitly calling that out because now I'm seeing with
all the AI wave writing in, companies want to implement something pretty quick, but that
would be a bandaid fix because if you are implementing AI in a siloed system, it only
knows the boundaries of the system, the data that is in the system and what it can think
through in that system. But if you are looking at something which has a wider impact on
inventory, working capital, finance, every function like supply chain, it needs information
from a lot of systems. Whether it is GTS, your third party system, sometimes not only
a support system. So you need to look at when you're building an AI agent, it's important
to look at that. I would say the orchestration capability of multiple agents and the dashboard
that you want to see in future rather than just putting in a small fix, a small AI agent
and it actually gives you wrong information as well. So wrong information because the
boundary conditions are entirely different. So yeah, with SAP, as we are launching a lot
of AI capabilities, but emphasizing again on clean core and master data being synchronous.
And like Leon was mentioning, actually it's a textbook way of doing it. What Illumina
and Leon team has done it there is I go through the value of engineering. I identify what
your KPIs are, putting some numbers for those KPIs, what those KPIs mean in terms of
numbers where do you want to reach out and then look for what systems and solutions should
be in place to actually reach those. I don't meant that a little bit further as well
and say, and maybe this is any kind of advice to organizations that might be thinking about
this sort of similar transformation. I'm always looking for the business problem that
I'm trying to solve. The biggest challenge that I have with AI, hugely capable and very
exciting, is that there's a lot of people running around with an AI hammer trying to find
a mail to hit. So, you know, your CEOs or your COOs or CFOs would be saying, we should
be doing AI. You go and find, you know, a use case for AI and they'll run around the
organization just trying to make AI fit and sometimes to a partners point that will
just be within one silo and you won't get the value. So I mentioned it earlier, but the
approach of redesigning your business processes and taking out waste, finding out how you
can drive efficiency through automation and then looking at where AI can add value to
make you make higher quality better decisions quicker and then where can I automate and use
or where can I use an agent to actually take on the work. That's kind of the four steps.
One of the other things that I'd kind of wrap up with is we're also using SAP's toolchain.
So we're using a Signarvio, Linae, yes, and WalkMe as a toolchain to map out all of
our business processes. We're using process insights to say, where have I got challenges
in that process? Where could I redesign that process to make it more efficient? I've
also got AI within a Signarvio and within the toolchain and the future that we could
explore would be that Signarvio could tell me where one of these 200 agents could drop
in and help me with that process. So I think there's a hugely exciting roadmap with all
of the assistants and agents that are being released and to a partners point, it's about
finding the right fit for those tools in your process as opposed to trying to fit those
tools into your process. I love that advice, Linae. We have your advice in hand. Why
don't we end today's episode with Arpanha when we think about enterprises that are about
ready to embark on similar transformations to this? Is there any other advice that you'd
like to add on to what Linae just gave our listeners? Yeah, I mean, I would emphasize
value-engineering, identify KPIs and most importantly, don't wait for the perfect conditions
to start. Yeah, like there is a lot to learn from this story. ECC transformation with IVP
and now where they are, it's a phenomenal. Well, Arpanha, Linae, thank you all so much
for joining us up talks and walking us through this transformation journey we've all been
together. I appreciate your insights. Thank you. Thank you again, Linae and Arpanha.
Let's take a look at what's happening around the ASUG community. First, learn how the
upcoming SAP for utilities conference taking place in San Antonio, Texas from October 6th
to 9th can help attendees contend with common utilities challenges. Click the link to the
description to learn more about the education and knowledge sharing opportunities at the
events. Then, join ASUG on August 20th for a community conversation focused on how SAP
Lean Iax and SAP AI Agent Hub come together in a single governance control pane, giving
enterprise architecture teams, visibility, accountability, and runtime enforcement that
they need to cover AI with confidence. Click the link to the description to register
for the webcast. For ASUG, I'm Jim Lichten Walter. Thanks for listening.
Podcast Summary
Key Points:
Illumina, a biotech company manufacturing DNA sequencers, used SAP Integrated Business Planning (IBP) to reduce supply chain waste and optimize working capital.
Common life sciences supply chain challenges include high inventory write-offs (e.g., 60% overage in clinical trials), lack of visibility into field inventory, and unsynchronized planning and execution systems.
Illumina implemented SAP IBP modules (SNOP, demand planning, control tower, inventory optimization, response and supply) plus EWM, TM, GTS, and Ariba, starting in 2018 while still on ECC.
Key results included a 30% improvement in inventory turns, a 40% reduction in excess and obsolete inventory, and 10-15% manufacturing efficiency gains.
AI adoption progressed from demand forecast optimization to natural language assistants explaining forecast and inventory decisions, with future plans for AI agents to automate actions.
SAP’s roadmap includes autonomous regulated manufacturing and AI agents, emphasizing clean core data and orchestration across systems.
Advice for similar transformations
Summary:
In this ASUG Talks episode, host Jim Lichtenwalter interviews Leon Trevitt, Senior Director of Global Integrated Planning at Illumina, and Arpana Sixaria, Director of Life Sciences Solutions at SAP, about transforming Illumina’s supply chain with SAP solutions. Illumina, a biotech firm producing DNA sequencing equipment, faced challenges typical of the life sciences sector, including high inventory waste, lack of visibility, and working capital inefficiencies. To address these, Leon built a digital roadmap starting in 2016-2017 and implemented SAP IBP modules sequentially from 2018 to 2024, including demand planning, SNOP, control tower, inventory optimization, and response and supply, alongside EWM, TM, GTS, and Ariba integration.
This approach, driven by business value rather than waiting for cloud migration, delivered significant ROI: a 30% improvement in inventory turns, a 40% reduction in excess and obsolete inventory, and 10-15% manufacturing efficiency gains. AI played a growing role, from forecast optimization to natural language assistants explaining planning decisions, with future plans for AI agents to automate tasks. The conversation also highlighted SAP’s broader roadmap, including autonomous regulated manufacturing and AI launch pads, emphasizing the need for clean data and orchestration.
Key advice for similar transformations includes focusing on business problems, redesigning processes, leveraging value engineering, and starting despite imperfect conditions.
FAQs
Illumina implemented SAP Integrated Business Planning (IBP) to improve supply chain visibility, optimize working capital, and reduce waste. The implementation included modules for demand planning, S&OP, control tower, inventory optimization, and response and supply.
Illumina faced challenges related to supply chain waste, working capital visibility, and managing shelf life for products. They needed to optimize costs and make better decisions across a blended supply chain involving hardware and biologics.
The implementation led to a 10-15% increase in manufacturing efficiency, a 30% improvement in inventory turns, and a 40% reduction in excess and obsolete inventory.
AI is used for demand forecast optimization, outlier detection, and natural language assistants that explain forecast and inventory results. Illumina is also exploring AI agents for tasks like demand fulfillment.
SAP is focusing on autonomous, regulated manufacturing, integrating AI across business functions. The roadmap includes AI launch pads for users and emphasizes the need for clean data and synchronized master data to support AI capabilities.
Advice includes conducting value engineering to identify KPIs, not waiting for perfect conditions to start, and focusing on solving business problems rather than forcing AI into processes.
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