This blog is an introduction to the topic “Sell and Build complex Products and Solutions” and the beginning of a blog series covering which solution approaches SAP has in its portfolio. Further blogs in this series will show best practices along the value chain in more detail.
What challenges do customers face in regard to selling and building complex products and solutions?
First, Iwould like to explain a bit about what complexity could mean and about which kind of complexity I am talking about:
- Complex products and solutions are often characterized by
- complex product or solution structure with or without configuration
- high degree of engineering effort required
- challenging sales, product, and project synchronization and integratio
- Selling and building complex products and solutions are often characterized by
- comprehensive and time consuming quotation processes
- extensive and sophisticated product and project scope
- large and often order- specific supply and delivery networks
- extensive reliance on a change management culture
Secondly, there are often well known weaknesses associated with the selling and building of complex products from both a business and IT point of view, such as:
- excessive thinking in silos
- poor supply chain visibility
- weak coordination and integration of project planning, engineering, and production,
- expensive, short-term corrective actions
- long lead times
All of these challenges can ultimately lead to delivery delays, resulting in high penalty costs, especially in large, asset-intensive infrastructure environments.
What do the building blocks of the selling and building complex products and solutions value chain look like?
I have defined the value chain in six steps, including monitoring. Of course, there is not always one single version of the truth, but the following picture contains the most commonly used building blocks when talking about the selling and building of complex products and solutions. Depending on the particular
scenario being focused upon, different steps could be more or less relevant. For example, when a project is specified with “Ex Works” (EXW) terms, transportation, installation, and handover steps would be skipped, as the seller would only be responsible to deliver goods at their own place of business and all other transportation costs and risks would be assumed by the buyer.
Picture 1: Value Chain Building Blocks for the selling and building complex products and solutions
Step 1: Opportunity, Quote & Contract Management
Opportunities mainly arise from long-term and persistent account management activities. The challenge is to make the transition from unstructured account management related information to a structured quote and contract. This first step is the starting point of intensive pre-work and pre-investment in the potential launch of a complex project.
Step 2: Project Management & Engineering
Depending on the sold product, solution, or project, engineering work must be done and the project must be planned in more detail to accommodate the customer’s requirements.
Step 3: Project Driven Manufacturing, Procurement, and Assembly
This step describes the manufacturing, procurement, and assembly of a product, solution, or project. Project scheduling is triggered by the project network activities, which are tightly integrated with he the related product or solution structure.
Step 4: Transportation
Depending on the product, solution, or project terms, the transportation process must be planned carefully to accommodate all circumstances. For example, large assets like wind turbine blades may require specialty equipment and safety measures. Transportation may also need to be precisely sequenced due to installation schedules, such as elevators needed to be shipped first in a tall building project.
Step 5: Installation and Handover
Selling and building complex products and solutions may also require onsite installation, including a handover to the customer or operator. These activities must also be well planned and executed carefully to insure that service level agreements and payment terms are adhered to appropriately.
Step 6: Monitoring
When many different stakeholders are working on a complex product, solution, or project, various levels of monitoring dimensions help to make sure that fulfillment is on time, on budget, and within scope according to the contracted specifications.
How does the SAP Product and Solution portfolio support the selling and building of complex products and solution?
The question of which SAP applications and application components support the scenario discussed and pictured above is an interesting one indeed.
Of course,there are always a myriad of different possibilities when we are talking about specialty solutions in specific industries, but nevertheless, there are several standard applications which are the foundational building blocks, or backbone, of the entire sell and build complex products and solutions scenario.
The following picture shows the kind of applications required to establish the necessary building blocks. SAP ERP and application components like financials, materials management, production, and project systems all play key roles along the selling and building of complex products and solutions value chain.
Other applications like SAP Product Lifecycle Management (PLM) and the SAP Engineering Control Center enhance the foundational building blocks mentioned above for more engineering and product development related tasks. Additionally, the SAP Configure, Price, and Quote (CPQ) solution can be combined with the SAP CRM Sales solutions for more sales related activities.
Picture 2: Assigning the main SAP applications to the various building blocks
As previously mentioned, there is not just one way for SAP software to support the complex products and solutions value chain. In my next blog, I will provide more insights on how these different SAP applications and application components can be used based on real customer experiences and industry best practices.
Are you ready for the future of Product Innovation? Please check out the “View the future of product innovation in the new digital world” session #20734 at SAPPHIRE NOW in Orlando, FL on Thursday May 07, 2015 at 1pm Eastern tolearn more about SAP’s next generation product innovation platform.
Bernhard Meyer is a Solution Manager for the Industrial Machinery and Components Business Unit at SAP with a special focus on R&D/Engineering solutions.