Enhancing supplier risk management with SAP S/4HANA and 3rdRisk

Introduction

In the intricate landscape of enterprise resource planning, managing third-party purchases and supplier risk is critical. SAP S/4HANA, a next-generation ERP suite, provides a robust platform by leveraging in-memory computing to deliver real-time data processing and analytics. Ensuring compliance and managing risks associated with third-party purchases demands specialised solutions. This blog delves into the technical implementation of 3rdRisk’s solution within SAP S/4HANA at NTT DATA DACH, focusing on how it meets the stringent requirements of the German Supply Chain Due Diligence Act (LkSG).

Understanding SAP S/4HANA

SAP S/4HANA is an advanced ERP suite that leverages in-memory computing through SAP HANA to deliver real-time data processing and analytics. Its key technical features include:

• In-memory computing: Processes large volumes of data at high speed using SAP HANA's columnar storage.
• Real-time analytics: Provides instant insights through embedded analytics and reporting.
• Simplified data model: Reduces complexity by integrating transactional and analytical data into a single source of truth.
• Integration capabilities: Supports seamless integration with various business applications via SAP Fiori and OData services.

Technical challenges in third-party purchase blocking

Managing third-party purchases involves several technical challenges:

• Data integration: Aggregating and analysing data from multiple sources and formats.
• Compliance monitoring: Ensuring adherence to dynamic and complex regulations like the LkSG.
• Real-time processing: Identifying and blocking non-compliant transactions instantaneously.
• Scalability: Handling a large volume of suppliers and transactions without performance degradation.

Carsten Hoffmann, Head of Central Purchasing at NTT DATA DACH, explains, "For us, the challenge was to implement a tool to fulfil the requirements of the German Supply Chain Due Diligence Act before 2024."

Our technical solution: Integration with SAP S/4HANA

3rdRisk offers a sophisticated solution designed to address these challenges by integrating seamlessly with SAP S/4HANA. Here’s how:

1. Architecture and Integration:
   • Modular design: The 3rdRisk platform has a flexible architecture that allows you to independently deploy and scale individual services.
   • API integration: Utilises robust RESTful APIs services to connect with SAP S/4HANA, ensuring real-time data exchange and processing.
   • Middleware utilisation: Employs SAP Cloud Platform Integration (CPI) to facilitate secure and efficient data integration between 3rdRisk and SAP S/4HANA.
   • Data mapping and transformation: Uses SAP Data Services for ETL (Extract, Transform, Load) processes to convert and synchronise data into compatible formats, ensuring data integrity and consistency across systems.
2. Compliance and risk management:
   • Automated workflows: Implements BPMN (Business Process Model and Notation) workflows to automate supplier qualification and risk assessment processes, reducing manual intervention and errors.
   • Real-time alerts and monitoring: Leverages SAP and 3rdRisk events to provide real-time monitoring and alerting mechanisms, enabling immediate identification and blocking of non-compliant transactions.
   • Regulatory compliance: Configured to meet the specific requirements of the LkSG, utilising SAP & 3rdRisk to ensure that all transactions adhere to necessary regulations.

"The main reason to choose 3rdRisk was their promise of a very short timeframe for tool implementation. Their expertise in third-party risk management was evident in stakeholder meetings." Harry Springer, Team Lead Procurement & Logistics at NTT DATA DACH.

Implementation process

The implementation process was structured and efficient, emphasising technical rigour and precision:

• Project planning: Utilised Agile methodologies to ensure iterative development and timely delivery of project milestones.
• Customisation: Employed 3rdRisk customise user interfaces and ensure a seamless user experience tailored to specific business and regulatory requirements.
• Integration testing: Conducted rigorous integration testing to ensure seamless operation with SAP S/4HANA and minimise disruption during deployment.
• User training: Provided comprehensive training for end-users and platform administrators, maximising the 3rdRiskplatform's benefits.

"The onboarding and implementation process with 3rdRisk was very successful. They delivered all milestones on time with minimal defects before our testing phase." Carsten Hoffmann, Head of Central Procurement, NTT DATA DACH.

Technical benefits realised

The collaboration resulted in several advanced technical benefits:

• Enhanced usability: The platform is designed with a user-centric approach, utilising 3rdRisk for an intuitive and responsive user interface, facilitating easy onboarding for new users and suppliers.
• 24/7 monitoring: Continuous monitoring of potential risks, enabling predictive analytics and proactive risk management.
• Scalability: Platform architecture ensures that the solution can scale horizontally, handling a large number of suppliers and transactions efficiently.
• Flexibility and support: The 3rdRisk team provided flexible solutions and quick support, ensuring smooth operations and continuous improvement through DevOps practices.

"We love the usability of the product, and our users appreciate its flexibility and the speed of support from the 3rdRisk team." Harry Springer, Team Lead Procurement & Logistics at NTT DATA DACH.

Conclusion

The integration of 3rdRisk’s solution with SAP S/4HANA at NTT DATA DACH showcases a robust approach to managing third-party purchases and supplier risk. This technical collaboration not only ensures compliance with the German Supply Chain Due Diligence Act but also enhances operational efficiency and risk management. For IT professionals looking to enhance their ERP capabilities, this case study provides valuable insights into the successful implementation of a third-party risk management solution.

For more technical details or to request a demo, contact us today!