SAP HANA In-Memory Processing and Big Advantages for Manufacturers
Let’s cut to the chase. Why is in-memory processing important for automotive manufacturers as well as for manufacturers in many other industries? For this blog, I am going to write about one very big reason for why in-memory processing is so important for manufacturers – true real-time enterprise processing.
Lacking real-time data
Picture this: It is 1:00pm and the material planner returns from lunch to find a post-it note on her computer that says a particular production part is almost completely gone. She checks the ERP system to find an on-hand balance of -150 (i.e. that is negative 150). There are a few possibilities here: 1) inventory inaccuracy, 2) production of product with missing components (!), or 3) the material receipt has yet to be recorded.
Regardless of the reasons for the possible part shortage or of her negative inventory balance, she needs to determine what to do to keep from interrupting production and the risk of possibly under-shipping to her customer. After a number of emails and a long game of phone-tag with her supplier, it is determined that the needed parts are either in-transit or have been physically received. The material planner beelines to the receiving dock to find the parts or the packing slip that has yet to be entered in the ERP system.
The bottom line is this – The material planner just spent 30-60 minutes investigating a problem that was not a problem at all. But the lack of real-time information was a real problem that kept her from working on other more productive things. Her company is running a real-time manufacturing system in batch mode.
Running in “batch” mode
SAP ERP has been a real-time system for decades. But for various reasons, many companies continue to run ERP in a batch manner. They run their planning process (MRP) during the nighttime hours once in a 24-hour period. They batch input material receipts and production postings at varying times throughout the day when there is a break in the action or when they aren’t putting out fires.
So while ERP is certainly a real-time system, the enterprise operates in batch fashion. This means that the ERP system is out-of-sync with reality most of the time. System users will rarely trust the system data because it lags reality. Daily issues that threaten cost management and on-time delivery need to be handled manually to determine what is actually happening on the shop floor, with corrective action also being executed in a manual manner (expediting and premium freight!).
As stated, there are various reasons for this. One main reason is that the company has always operated this way. Perhaps the ERP system was implemented in order to facilitate financial processing. Inputting receipts and production postings hours after they actually happened had no negative impact on the accounting department. They could live with transactional latency as long as the transactions were entered accurately.
As for the materials and production people, they could continue to operate the way they always have; with a lot of manual activity. The rule is to do whatever it takes to keep production moving, make on-time shipments, and minimize disruptions. This often means running around the plant checking on production status and counting available inventories since the ERP system has not been updated with current data.
Another reason for this, and this is a key point of this blog, is that high volume manufacturing of products with broad or deep product structures requires an ERP system with computing speed far greater than what is possible with a disk-based memory system. Planning runs and backflush transactions can take too long to adequately execute in real-time. For example, a production posting with a large number of associated component issues may not yet be completely processed before the next production posting is triggered. In other words, the disk-based ERP system simply cannot keep up with the volume of transactions. The result is a system that will not be trusted for accurate, timely information. System users will resort to manual means in order to get the job done.
In-memory processing enables true real-time information
SAP customers are currently moving to the newest release of SAP ERP appropriately named S4HANA. This next generation ERP combines the functionally-rich capabilities required to run today’s manufacturing enterprises; reengineered to run on SAP’s in-memory platform. S4HANA provides the functionality and processing speed required for an enterprise to actually run their ERP system in real-time, allowing the system to stay synchronized with reality – with what is actually happening on the shop floor, the receiving dock, the shipping dock, with changing customer requirements, with cycle count results, and many other transactions, events, and circumstances that occur on a daily basis.
As many companies contemplate life in the digital world, operating a real-time enterprise system in a real-time manner is an absolute necessity and mandatory first step. An information platform capable of keeping up with actual operational events is essential for providing the information needed for the minute-by-minute decisions that characterize today’s challenging manufacturing environments. To compete in the quickly-evolving digital business world, manufacturers need to move away from disk-based systems and towards in-memory based systems that can keep up with reality and provide the visibility and decision support needed to efficiently and effectively run a digital manufacturing enterprise.