Industrial Manufacturers. The Case for Industry Cloud
I am Patrick Lamm, part of SAP’s global industrial manufacturing team. I have worked in the industry for 21 years, focusing on global supply chain management and how SAP’s solution portfolio can support the business of leading discrete industry companies. Currently I lead the team in Europe and I am responsible for the development and roll out of SAP industry cloud solutions for industrial manufacturers. I am excited to kick off this series of blog posts from the global team on what is happening in the industry and why industry cloud solutions are so important.
The last 18 months has been challenging for many industries, especially the industrial manufacturing industry. I saw that Industrial manufacturers that had already started their digitalization journey have found themselves in a much stronger position. But as the industry continues to face uncertainty, it is important that they continue to leverage what they have learnt and invest in new technologies, processes, and business models. In fact, Gartner predicts that in 2023 $30 billion in revenue will be generated by products and services that did not exist before the pandemic. So, I think it will be critical for industrial manufacturers to embrace innovation and digitalization, so they become resilient and agile, ready to face these ongoing disruptions and opportunities.
Through our many interactions with customers, we have concluded that industrial manufacturers are broadly focusing on five strategic priorities to become an intelligent enterprise and outperform the competition. Customer expectations are changing, industrial manufacturers can’t just deliver just a product, they need to focus on the entire customer experience – customer centricity. Each customer needs to be treated individually, as a segment of one. Industrial manufacturers need to be able to provide personalized, or individualized solutions, to each customer at scale with a holistic omni-channel approach. Providing these personalized solutions requires developing digitally smart products and solutions. Digital capabilities like increased the connectivity, self-awareness, and edge capabilities are the foundation. To be able to manufacture these solutions at scale and at a near standard costs, industrial manufacturers need a much more flexible supply chain and manufacturing process – enabled by digital supply networks and smart factories. Finally, industrial manufacturers need to be able to support new service based and outcome-based business models seamlessly, that use the digital capabilities of the products.
I also see a trend in changing business models. Industrial manufacturers will offer their solutions in a subscription or as-a-service business model. This helps industrial manufacturers better manage risk in this ongoing climate of uncertainty. Their customers appreciate no upfront fees and industrial manufacturers benefit from a more regular revenue stream.
Becoming an Intelligent Enterprise
So how can SAP help industrial manufacturers to become intelligent enterprises. What do I mean by an intelligent enterprise? It is an enterprise that continuously adapts to disruption and changing demands, they learn from past experiences, predict problems, and adapt quickly. Additionally, intelligent companies are data driven, they collect and analyze data in near real-time to gain insights and provide resolution strategies to solve issues in the value chain.
How do industrial manufacturers become intelligent enterprises? Firstly, they need to be able to run their core processes effectively, leveraging standardization and best practices wherever possible. These are the processes that will use automation and digitalization to be as effective as possible. But it is also important for industrial manufacturers to be able to innovate quickly for specific needs and apply these new innovations in a scalable and cost-effective way.
The intelligent suite helps industrial manufacturers run all aspects of their business from Research & Development and Engineering, through Sales, Marketing, Supply Chain and Manufacturing to Installation and Service including support functions of Human Resources, Procurement and Finance. Enhanced with embedded analytics, and other advanced technologies such as machine learning these integrated solutions allow industrial manufacturers to run their core business effectively.
Innovating in the Cloud
To complement the intelligent suite – SAP’s Industry Cloud is an open innovation space, where SAP, SAP Partners and customers can develop modular industry cloud solutions to provide differentiating capabilities for industrial manufacturers. These modular solutions can help industrial manufacturers extend and transform business process. There is already a broad solution portfolio both from SAP and partners available. SAP Industry cloud solutions like integrated equipment configuration, product lifecycle costing, digital manufacturing are already well accepted solutions in the market. . There is also a robust pipeline of industry cloud solutions with more solutions being released from both SAP and our partners including in the areas of outcome-based services, advanced bundling, equipment-centered service, and digital manufacturing. Industry cloud solutions can be implemented quickly as they all use the same business services, data and process models so they can be easily integrated with SAP’s intelligent suite and business network. As native cloud solutions, they can be deployed and implemented quickly. The native integration makes it easy to scale and integrate into existing processes. As the SAP industry cloud solutions for industrial manufacturers solve specific industry problems, they provide the flexibility and agility to respond to unique business challenges. With one Industry Cloud, SAP recognizes that industry boundaries are blurring so companies can use any of the industry cloud solutions that meets their needs. So, with SAP’s Intelligent Enterprise you can both run a stable effective core and innovate quickly for the future.
Our customers are already seeing the benefits of being able to implement modular capabilities quickly
Takashi Suzuki, IT Senior Manager, at NHK Spring Co.,Ltd, a Japan-based automotive supplier stated “We were delighted we could implement our chatbot and ticketing system based on SAP Conversational AI and SAP Service Ticket Intelligence in just two months”
In the following blog posts from the global industrial manufacturing team, we will dive into more detail about some of the trends and opportunities that industrial manufacturers are facing, and then cover the existing and upcoming industry cloud solution portfolio for industrial manufacturers.