In this blog post, I will be discussing the benefits that the manufacturing industry gets when they opt for SAP S/4 HANA for aligning their key manufacturing processes.
The manufacturing sector is enormous and the industries present in this sector can be either of the two- labor extensive or knowledge-extensive. The dependency factors vary from industry to industry. Some industries are heavily dependent on transportation, whereas, for some industries, proximity to the customers might be an important consideration. This variation can be of great help when we consider the impact of digital transformation of this industry vertical.
As per secondary research, the Indian Government wishes to increase the manufacturing sector’s share to 25% towards GDP by 2022, from the existing contribution of 16%. The business conditions are quite favorable and optimistic for the Indian manufacturing ecosystem. It is estimated that there would be employment taking place in the industry owing to various Government of India-driven projects like- Make in India. Enhanced employment opportunities directly enhance the spending ability of the customers, which ultimately leads to the accelerated growth of the industry.
Importance of an Intelligent ERP System
There has been an increased need for a smart ERP system in the manufacturing industry. It helps them work on growth opportunities in between digital disruption from data. The top-priority for any manufacturing industry needs to be building their R&D as well as expertise in data analytics that helps them stay ahead in their marketing ecosystem.
The data insights offered by ERP systems can be useful to the manufacturing companies in the following ways-
- providing personalized product offerings to the customers
- offering a great user experience
- designing smarter products
- simplifying key processes and automating tasks
- designing the next-generation processes
- digitizing the supply chain process
SAP S/4 HANA in Manufacturing Sector
SAP S/4 HANA helps the manufacturers by providing a set of solutions that caters to the changing new-age needs. SAP S/4 HANA provides a complete one-stop solution that includes- enterprise planning, manufacturing execution, and service. SAP S/4 HANA helps the manufacturers to overcome various challenges faced by the industry, thereby enhancing the levels of digital transformation in manufacturing.
SAP S/4 HANA Benefits in Manufacturing
- In today’s time, batch runs along with the inability to address real-time needs often lead to inefficient, inaccurate and legacy planning. With the deployment of S/4 HANA, it enables the live monitoring of Manufacturing Resource Planning (MRP). The real-time monitoring of the MRP process helps in reducing the manufacturing cycle time, enhancing the efficiency of manufacturing-related functions and ultimately reducing the inventory levels.
- In the manufacturing industry, it is seen that high volumes of backorder processing give rise to many complexities. The deployment of SAP S/4 HANA cloud helps in automating the backorder processing, thereby, making it easy-to-use with better improvements for releasing large volumes of production orders. It also enhances productivity for catering to the process of order fulfillment with a minimal number of back order items getting canceled.
- An IoT supported connectivity amongst different machines involved in the manufacturing process helps the manufacturers in automating their processes. The enhanced levels of flexibility help in reducing the time taken for completing an order to take up any ad-hoc make-to-order like situations.
- SAP S/4 HANA also helps in enhancing the planning capabilities inside a manufacturing business by aligning the process of creating manufacturing packages, planning as well as shop floor operations. It also lowers the risk of revenue losses in case of shortages of stock-level through enhanced adaptability and prompt-responsive production planning.
- Real-time inventory management promotes transparency across all levels of material flow. The inventory management module in SAP helps the manufacturers with the simultaneous movement of multiple materials. Also, it helps in optimizing the inventory levels by reducing inventory legacy and wastage, which leads to the reduced total cost of ownership. S/4 HANA also holds the potential to lower the cost of support quality management, reducing the revenue loss caused due to quality and compliance issues.
SAP S/4 HANA can be of great significance when it comes to the manufacturing industry. It can help the manufacturers to match up to the changing market demands quickly. It also enhances the manufacturing performance by aligning the key processes and reducing the chances of out-of-stock or low stock levels by regular monitoring of the inventory. Lastly, it strengthens the manufacturers by offering optimal transparency at various levels of manufacturing.