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Convert Sequential Value Chain Processes into Product Networks


With IoT and other technologies continuously advancing and customer demand increasing, it’s more important than ever to move away from working in silos and into integrated models within a flexible network. In this article, learn how the power of a product network can allow companies to design and create innovative products for a customer-centric marketplace while operating at peak efficiency.

Written collaboratively with Mike Lackey, SAP VP of Manufacturing and Achim Krueger, SAP VP of Operational Excellence

The Internet of Things (IoT) and Industry 4.0 are changing traditional business models by connecting people, products, and assets. Manufacturers are investigating how these new technologies can help their customers get more value and how new business engagements can change established business models.

By adjusting to a changing, dynamic landscape that is asking for better, individualized products faster, and by connecting people, processes, and technology across the organization, companies can adopt extended supply chain processes that can be a strategic advantage over the competition. But to stand out in the market, challenged by an increasingly fast rate of innovation, high-quality products, and perfect service, companies must move away from working in silos to working in integrated models that combine design, production, and service into a flexible network.

SAP has introduced the strategy of the extended supply chain, which addresses all processes from an idea to the delivery of the product to the customer. The extended supply chain is further broken down into a product network and a demand network. The focus on how products are designed, produced, and serviced is called the product network, while demand, plan, and delivery processes are grouped under the demand network.
In this article, we will explain how, by using the power of the product network, companies can design and create innovative products for a customer-centric marketplace while operating at peak efficiency.
Product networks can be seen through three lenses, which all work together in one network:

  1. Connected products that deliver and consume data
  2. Connected manufacturing for seamless top-floor-to-shop-floor integration
  3. Connected assets for highest asset use and better service
1. Connecting Resources in the Design and Creation of Products

Establishing connected research and development (R&D) processes, having a single source of product data, and collaborating across the product network are important steps toward faster innovation. Responding to increasingly demanding consumers who require more innovative, individualized, smarter products at a faster speed, SAP has recently launched the Connected Products strategy to help manufacturers increase profit from new, individualized products (see Figure 1).
Accompanying this strategy is a set of solutions that provide capabilities to handle these trends (see Figure 2). Let’s look at each element of the Connected Products strategy as well as the relevant SAP solutions provided.


Figure 1 — An overview of SAP’s Connected Products strategy


Figure 2 — Trends, business tasks, and solutions that make up the product network

Increasing the Speed of Innovation with Portfolio and Project Management

The ideation phase of creating a product is becoming completely connected with SAP Innovation Management. This application runs on mobile devices and helps collect, evaluate, and exchange ideas across the enterprise with a simple and intuitive user interface (UI). Enterprises can easily integrate information from social networks and other sources, giving the business insight into customer sentiment during ideation. Features such as community voting, ranking, and comments help establish a vivid innovation culture.
SAP Portfolio and Project Management powered by SAP HANA helps project managers make the right investment decisions and enables full transparency into R&D projects anytime and anywhere. Project teams across several design centers and locations can collaborate as if they were sitting in the same office and accessing the same up-to-date project data. Tasks such as managing resource assignments and allocations and overseeing projects become much easier with powerful analytics capabilities and the intuitive SAP Fiori UI.

Managing the Product Model with Connected Formulation and Engineering

SAP solutions for R&D/Engineering enable manufacturers to manage the product model seamlessly along the entire life cycle, from the first idea through engineering, manufacturing, and service. Enterprises can manage bills of material (BOMs), recipes, formulations, and product specifications in the same database, providing a single source of truth for product data.
New product structure synchronization capabilities support a guided handover of engineering BOMs to manufacturing and drastically reduce the time for production ramp-up. With the help of three-dimensional (3D) visualization, companies can share product data easily along the value chain by providing visual assembly instructions for manufacturing or visual service manuals for the maintenance team, for example. This emphasis on visual representation results in fewer errors, less training for manufacturing and service personnel, and faster communication.
In the concept phase, SAP software helps manufacturing companies manage product complexity and an increasing number of variants with integrated variant configuration capabilities and simulation features. Differences between several variants can be displayed visually, which simplifies the work of engineers.

Making Smarter Products with Connected Design

As customers demand more unique and often more complex products, manufacturers must use hardware, electronics, and software with data stored in multiple locations. With the SAP Engineering Control Center integration tool, design and engineering teams can combine diverse product data sources into a holistic overview of product data, and, as a result, work faster and more productively. With better integration into authoring tools, companies are empowered to reduce the total cost of ownership for their authoring landscape and create comprehensive product descriptions across disciplines — a prerequisite for systems engineering.

Effectively Harnessing Real-Time Data with SAP HANA

SAP HANA stands as the foundation for these connected networks, powering systems with real-time data and in-memory analytical speed. SAP also provides functionality to orchestrate necessary resources; capabilities to incorporate data from sources such as IoT devices, regulatory agencies, and computer-aided design (CAD) systems in the design of products; and formulation and engineering capabilities such as recipe development and BOM management.

2. Manufacturing to Specific Customer Needs with Agility and Efficiency

As manufacturers seek to enable mass production to keep up with the changing demand market, they are looking for the agility of a manufacturer with a lot size of one, operational flexibility, traceability, and production documentation. All the while, manufacturers need to leverage seamless, integrated business processes connecting the enterprise’s top floor with the shop floor, as well as grapple with regulatory requirements and shifting demand all over the globe. Production goals of higher productivity, efficiency, transparency, and product individualization at mass costs are critical for business success.
To address these challenges, best-run manufacturing companies are shifting their focus from fixed capacities to automated, agile manufacturing solutions connected via a dynamic production network. SAP’s enterprise solutions built on cloud and SAP HANA technologies enable enhanced manufacturing operations via extended supply chain process integration to assist customers in realizing a truly connected enterprise.  
SAP has rolled out the SAP Connected Manufacturing solutions — including SAP Manufacturing Execution and SAP Manufacturing Integration and Intelligence (SAP MII) — to help companies optimize their manufacturing processes by leveraging data across operations, enterprise systems, and IoT devices (see Figure 3).


Figure 3 — An overview of the SAP Connected Manufacturing strategy and solutions

SAP Manufacturing Execution enables global manufacturers to manage and control manufacturing and shop-floor operations. By connecting business systems to the shop floor, the solution allows workers complete component- and material-level visibility. Access to better data means the product is designed and built right the first time, because the company has a comprehensive record of production history.
SAP MII links manufacturing processes with business operations to enable collaborative manufacturing, giving organizations real-time visibility into asset performance. This enables enterprises to minimize costs, boost shop-floor productivity, and monitor and measure process-improvement initiatives.

Improving Manufacturing Across Industries

With SAP Connected Manufacturing, companies in discrete and process industries can better manage and unlock the vast amount of data generated during manufacturing. Available in the cloud, on premise, or as a hybrid deployment to meet manufacturers’ needs, SAP Connected Manufacturing solutions deliver real-time advanced analytics to identify bottlenecks. Proactively troubleshooting manufacturing and process issues to assess and correct asset interdependencies when required improves delivery performance and quality while reducing costs. 
SAP Connected Manufacturing solutions benefit discrete manufacturers and companies in process-driven industries in different ways. For discrete manufacturers, such as auto makers, SAP Connected Manufacturing solutions enable more efficient processes and operations due to improved data use. By integrating manufacturing automation with machine-to-machine (M2M) and IoT systems, and using SAP HANA Cloud Platform to manage the data in real time, manufacturing processes are streamlined from design to delivery. Customers can gain access to real-time manufacturing data, facilitating continuous control over processes. With these end-to-end solutions, manufacturers can improve product quality, increase throughput, and lower margins through shorter cycle times.
Companies in process-driven industries, such as chemicals and pharmaceuticals, benefit from the SAP Connected Manufacturing strategy and solutions by executing batch-managed materials precisely with continuous, in-process control, while gaining insights into operations and overall business performance. Real-time plant production information is given context by data throughout the organization, so companies can better monitor important business metrics and their own operations. They can assess overall performance to detect abnormal events or trends, and resolve them early on to add immediate value throughout the enterprise. Since this information is available in real time, decision making is improved.
SAP solutions provide manufacturers the ability to execute production and design orchestration seamlessly while using big data to predictively discover production and maintenance service patterns to better enable high-performing assets. Having this ability to sense and respond enables transparency and collaboration across the entire product network, starting with in-house production centers and extending into supporting enterprise organizations. With better data, companies can improve fulfillment and customer satisfaction metrics by becoming aware of production or operational issues before they become bigger problems.

3. Achieving Operational Excellence with Connected Assets

An often overlooked component of the product side of the supply chain is asset management. Companies must aim for operational excellence to raise the performance of production assets, reduce costs, and control risks for workers, assets, and the environment. Businesses can gain a consistent competitive edge by having reliable, best-in-class operations.
Excellent operations require structure. Enterprises need clear, robust policies and management standards to define how processes should be carried out — and then those processes need to be executed correctly every time. With improper technology, management has less effective, less reliable data from which to make decisions and enact policies, and the processes themselves are more siloed and prone to user error or missed execution.
With a commitment to operational excellence, organizations can use modern, real-time, integrated technology to achieve safer, more reliable operations and increase productivity and agility. Let’s briefly look at how SAP solutions can help create business value, provide access to better data, and ensure compliance with global standards and regulations.

Providing Business Value

Operational excellence is not merely a conduit to saving money or reducing risk; improved operations and connected assets can actually contribute to business growth. Better monitoring operations provide better data that can then contribute to value-added business capabilities, such as predictive forecasting and simulation. Predictive forecasting helps enterprises avoid asset failure and convert unplanned breakdown maintenance into planned activities. Through simulation, they can direct efforts in a way that can control asset- or process-related risks.
Another value-add from a business perspective is the use of technologies that help technicians in the field. SAP software connects assets and provides transparency around performance, risk, and expenditures, and links asset performance to business objectives. SAP solutions, such as SAP Predictive Maintenance and Service as well as SAP Work Manager, help companies achieve superior asset performance by using predictive analytics, two-dimensional (2D) and 3D visualization, augmented reality, and enterprise mobility capabilities (see Figure 4). When maintenance technicians in the field use these capabilities on a mobile device, for example, they have access to more information while they are inspecting or repairing assets, leading to faster, better repairs and greater productivity.


Figure 4 — Analytics and dashboards in SAP Predictive Maintenance and Service

Distributing Improved Data and Analytics

Employees across a variety of functions — including environment, health, and safety (EH&S) experts; maintenance technicians or supervisors; quality specialists; and operations managers — can see one unified set of data and better collaborate on the right information to improve decision making. With the emergence of IoT and M2M devices, these gains go beyond what employees do, and can lead to more efficient and effective systems and machines.
The data a company collects, even real-time, reliable data, doesn’t advance the business alone. Companies must link business and operational systems data to use predictive forecasting and simulation. By using network capabilities throughout the various aspects of an organization’s supply chain, the organization can provide a breadth and depth of data that can enhance
the analytical and decision-making capabilities of the entire enterprise.

Achieving Regulatory and Procedural Compliance

Finally, no operational organization can be successful without strictly complying with regulations and standards. SAP fully embraces the ISO 55000:2014 series of standards and helps companies efficiently and sustainably manage the entire asset life cycle, get real-time visibility into asset performance, improve asset usage, and cut costs — while enhancing EH&S performance. The directive of ISO to bridge the silos is supported by SAP’s portfolio for asset management, integrating portfolio and project management, maintenance planning and execution, and EH&S capabilities.

Developing Products with Agile Operations

Using SAP’s strategies and solutions, companies can improve their production processes from design to delivery and back, all while achieving operational excellence.

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