Microsoft: Mitigating supply chain risk with the predictive power of Big Data and machine learning
Explore Microsoft’s journey with SAP
Microsoft Corporation invested in the SAP Integrated Business Planning for Supply Chain solution as the catalyst for its planning transformation. First connecting various IT systems for visibility across its operations, Microsoft now uses predictive planning capabilities for data-driven and actionable insights, helping it minimize inventory and supply chain risk.
| Industry | Region | Company Size |
| High tech | Redmond, Washington | 220,000 employees |
availability.
reduction in manual planning processes.
increase in on-time planning.
Director, Supply Planning (Devices), Microsoft Corporation
| Industry | Region | Company Size |
| High tech | Redmond, Washington | 220,000 employees |
availability.
reduction in manual planning processes.
increase in on-time planning.
Director, Supply Planning (Devices), Microsoft Corporation
Reimagining planning with a sustainable, risk-resilient supply chain
Committed to the mission of empowering every person and every organization on the planet to achieve more, Microsoft Corporation helps create opportunity, growth, and impact around the world. Its software, devices, and tools empower human ingenuity and are known to boost small-business productivity, large-business competitiveness, and public sector efficiency.
A big part of Microsoft’s success story comes from its devices or hardware business. This is served by the company’s complex devices supply chain with more than 42,000 active stock-keeping units and 33 manufacturing and distribution centers carrying out work in 108 countries.
When Microsoft looked to effectively scale up its operations to bring a significant number of new devices to market, the company had to factor in an intensely competitive operating environment and increasing customer service expectations. Amid rising demands for free shipping, free returns, and white-glove services in tandem with other pricing and margin pressures, Microsoft scrutinized its manufacturing, sourcing, and fulfillment processes and after-sales costs. With a heavy reliance on manual processes and spreadsheets, the technology giant resolved to digitally transform its planning processes to avoid significant inventory and supply chain risks.
Principal Group Product Manager, Microsoft Corporation
Developing a predictive supply chain to shorten planning cycles and minimize supply chain risk
With customers’ expectations growing ever higher, Microsoft needed to build resiliency and mitigate supply chain risk. The company set three main goals for its digital transformation. The first goal was to develop a holistic view of the business by connecting the various systems of its technology landscape. At the time, data visibility was limited to just 20% of all required data points, with the remaining 80% of data sets residing on disparate Microsoft Excel files, e-mails, instant messaging apps, and Microsoft PowerPoint slides.
The second goal involved becoming more predictive and less reactive by implementing digital planning and analytics capabilities. Using Big Data and machine learning, Microsoft shortened planning cycles and became more responsive to market shifts.
The third goal was to enable better decision-making by using algorithms to make quicker and faster decisions that reduce manual activities.
To achieve planning transformation success, Microsoft invested in the SAP Integrated Business Planning for Supply Chain solution alongside its own Azure tools. In addition, given the planners’ familiarity and past reliance on Excel, the add-in for Microsoft Excel for SAP Integrated Business Planning was used to smooth the transition. This add-in gives planners a familiar front-end user interface on top of the next-generation planning tools from SAP.
Principal Group Engineering Manager, Microsoft Corporation
Acting on real-time data and insights for more supply chain resilience and agility
Since going live with the solutions, Microsoft has reshaped its planner roles. Prior to the transformation, creating a realistic plan took about five days, requiring planners to capture data from different legacy systems and multiple Excel worksheets. Collaborative work was performed offline with activities between suppliers and customers tracked through manual spreadsheets. Now, using SAP Integrated Business Planning and SAP Business Network for Supply Chain, planners can generate and compare various scenarios as well as create simulations and more-realistic plans. This frees them from the firefighting exercises of old and allows them to adopt a predictive planning approach, creating plans that better fit customers’ expectations.
In terms of planning cycle time, this now takes less than one day, and Microsoft has also seen a substantial increase in on-time planning as measured by the number of purchase orders created, transmitted, and confirmed. As a result, there’s been a reduction in unconfirmed orders and a corresponding improvement in customer satisfaction.
Other significant benefits from transforming its supply chain from reactive and high touch to real time and predictive include a substantial reduction in Microsoft’s finished goods inventory, helping the company avoid more than US$550 million in inventory risks.
Now planning the vast majority of its products through SAP Integrated Business Planning and its own Azure tools, Microsoft gets insights across the business from the factory floor to sales in store and online. Using a suite of self-serve analytics, the company gains insights and actionable intelligence from real-time and near-real-time signals. On a practical level, this has translated into increased customer revenue opportunities, with more than 20% shelf availability and a 4% uptick in sales amounting to around $50 million in increased revenue.
Principal Program Manager, Microsoft Corporation