How S/4 HANA Helps Industrial Machinery and Component Companies Become Intelligent Enterprises
Innovative technologies and digitalization are enabling new business models. Industrial Machinery & Components (IM&C) companies have a unique opportunity to add value as they provide the intelligent machines and equipment that help other companies transform. However, IM&C companies need an intelligent ERP to anchor this transformation.
The world is not the same: customers expect so much more, the competitive landscape is shifting as industry boundaries blur, and globalization allows companies much more flexibility — if you can take advantage of it.
To rise to these challenges, industrial manufacturers need to focus on the right strategic priorities to drive digitalization. In conjunction with our customers, SAP has identified 5 key digital priorities:
Customer centricity: Putting the end customers’ point of view at the centre of every decision
Serving the “segment of one”: Individual customer needs must be met without the overhead of engineer-to-order processes
Digital smart products: Differentiation and specificity in products stem from the digital capabilities and value-added services that are bundled with the physical products
Digital supply chain and smart factory: Building on the existing digital technology on the shop floor and in the supply chain; connected to the rest of the business and external demands on the fly
Servitization and new business models: The shift from selling products to providing complete solutions, charging for outcomes, or even monetizing asset data. The focus on services drives increased customer intimacy & value, resulting in higher profit margins
SAP S/4HANA, the intelligent ERP, helps manufacturers support their goals within each of these digital priorities, by providing the backbone of processes as well as the capability to embed insights and intelligence into processes.
Every user is provided with all of the information they need to effectively carry out their roles. They have the ability to seamlessly move from KPIs to detailed transactional information. So, users can immediately see exceptions, understand the context, analyze additional information and make decisions to meet their customers’ and business needs.
For example:
Focusing on the most important customers: an intelligent ERP automatically prioritizes high value customers during the back-order processing. It considers all capacities and priorities during the different planning runs (demand, production and detailed scheduling). This means that employees can immediately respond to customer queries as real time updates are available across the entire enterprise.
Moving to a lot size of one: Designing, manufacturing, and selling products; so that customers have customization in a consistent, optimized way that it is managed at nearly the same cost as a standard order. The intelligent ERP keeps all product and process information single place and makes it accessible to all business processes — from initial engineering through after-sales service — automating the processes and allowing them to be closely monitored.
Smart Products: Software is a key differentiator of digital smart products. This requires a different way of thinking for design, a more “system focused” approach. Software also increases the complexity of products, as each product can have many pieces of software, each with multiple software versions and compatibility issues. The intelligent ERP allows all software versions to be managed as an integrated part of the BOM, with constraint management along the complete value chain and product/solution lifecycle.
Process simplification: An intelligent ERP needs to automate and streamline processes, so there is no delay waiting for batch processes such as MRP. Real-time inventory information and live MRP runs provide significant improvement, time, and accuracy to sales order confirmation and material shortage identification. Managing processes by exception throughout the manufacturing, warehousing, and delivery processes ensures on-time delivery and shipment tracking.
Automating and streamlining existing processes is just one step, an Intelligent ERP needs to support new business models that are being generated. SAP S/4HANA supports performance-based contracts, where customers use products as a service. Retrieving usage and performance information from connected assets, and making the data available for rating, according to the contract conditions and generating accurate invoices without user interaction is another way that S/4HANA supports digital transformation.
To learn more about the capabilities in the SAP S/4HANA that help IM&C companies digitally transform download: Transform the Intelligent IM&C Enterprise with SAP Solutions: Business Value with Intelligent ERP
