Increasing customer expectations means manufacturing complexity – How Can Industry Cloud Solutions Help?

[johannes_papst]

Increasing customer expectations means manufacturing complexity – How Can Industry Cloud Solutions Help? 

I am Johannes Papst, part of SAP’s industrial manufacturing team, I have been working with discrete manufacturing companies, for many years, helping them to improve their business processes with technology.  I am still passionate about business process improvement, particularly manufacturing execution processes and with Industry 4.0, this topic has gained significant traction, as it is easier than ever to leverage technology including machine learning to improve manufacturing processes.  I work closely with my colleague Bernhard Meyer who focuses on the product development processes we focus on the key areas for industry 4.0 for industrial manufacturers.   

Our colleague, Patrick Lamm in his blog post (link) covered how industrial manufacturers are facing ongoing disruption, but are still trying to provide more customer specific solutions that can be delivered as a service.   So, in this 4th blog post of our series on what industry cloud means for industrial manufacturers, we will cover how the need to provide more bespoke solutions to customers is driving increased complexity within the product development and manufacturing processes, and how industry cloud solutions can help.   

Focusing on the Customer – Gustavo Milan shared in his blog post (link) that it is no longer sufficient for industrial manufacturers just provide an efficient, high quality product.  Industrial manufacturers have to offer configurable solutions that meet individual customer needs, but they need to be able to deliver them at near standard cost.   We have found that successful industrial manufacturers are not only listening to their customers in general but also collecting feedback directly from product usage.  This helps designers and engineers understand what the most important features are for their customers.  It also provides direct insight on usage so what other services or offerings are needed and why.  Successful design and engineering teams are considering multiple factors such as configurability, manufacturability, sustainability, and serviceability when designing their solutions.  This means that designs always involve some sort of compromise, so the engineers need to be able to determine the tradeoffs between those different parameters to ensure fit and profitability.     

The ability to deliver individualized solutions at scale, versus being able to engineer to order requires a different approach to design. Engineers need to be able to assess how much flexibility is possible on the manufacturing floor and at what cost, so they can balance flexibility and efficiency during manufacturing.  Therefore, during the design phase it is important to be able to identify where standardization makes sense, to know how many customers are requesting very similar options.  This need to be able to design and manufacture individualized solutions is driving a more modular approach to design, where products are built on a common platform giving designers much more flexibility.  

However, the focus on meeting customer needs isn’t just for the design process, industrial manufacturers must be able to be responsive to customer needs after an order is placed.  They need to be able to react quickly to change requests even when order execution is under way. Industrial manufacturers tell us that they need to be able to quickly assess the cost, feasibility, and the impact on lead times so they can give their customer accurate information on price and delivery of the change and stay profitable. 

The importance of a Digital Thread. Product Developers and Engineers need access to a lot more information, from many different departments to make informed, data - driven decisions.  Having a central digital platform that connects and makes accessible many different types of product data to the engineers, helps remove silos, and increases collaboration, so they can make informed decisions.  Data from the design, sourcing, supply chain, manufacturing, and ongoing operational data are all connected through this digital thread.  Connected products and equipment means that companies receive the data that is needed to support new business models and service models, and can also be used by engineers for product improvement.  As the digital thread provides insight into all stages of the product lifecycle, it is easier to see the impact of change requests at any stage. 

Smart Factories and Digital Supply Chains From a manufacturing perspective, industrial manufacturers have been using Internet of Things to monitor their equipment and automate processes for a long time.   However, focus on Industry 4.0 has meant more standardization and additional interoperability which makes it easier to connect the shop floor to business.  Combined with the rise of digital twins and asset networks, industrial manufacturers can now see manufacturing data in the context of the entire value chain, including what it means from a planning and profitability perspective.   Providing bespoke products, at a reasonable cost requires efficient, flexible, digital processes, which are automated by industry 4.0 capabilities, as there are more options and potential manufacturing configurations and materials needed in the workplace.   Modular manufacturing helps industrial manufacturers address the fact that tact times for different operations are no longer consistent due to the number of configurations. Depending on the individual customer order some production steps take significantly longer than others, even though they are using the same production cell which impacts the overall efficiency of the factory.  Being able to use modular production enables manufacturers to maximize efficiency.  In addition, more manufacturers are taking advantage of edge computing so that more decisions can be taken in real time on the factory line.   This level of autonomy, connectivity, and visibility supported by a digital thread is the only way to manage increasingly product complexity and react quickly to changing customer requirements or unexpected disruptions. 

Balancing the Green Line and The Bottom Line – Another challenge is that industrial manufacturers must factor in how to balance their bottom line and green line into their core operational and business decision-making, as more customers factor sustainability into their purchasing decisions.  Industrial manufacturers are unique in the sense that they must understand both the sustainability impact of how their designs get manufactured and delivered, and how they are going to be operated.  So, it is important that both their products and their factories have the digital capabilities that provide the visibility to help them measure and report carbon emissions and energy consumption.    

No manufacturer is an island – industrial manufacturers have depended on a complex, global, multi-tier ecosystem for many years, suppliers, contract manufacturers, 3rd party logistics but often they still do not have the level of visibility into their entire supply chain to proactively identify and understand supply chain vulnerabilities.  Although the global supply network has reduced costs, it has increased risk and complexity and decreased visibility - this means it is difficult to react quickly to the disruptions that we have been seeing, plant shutdowns, massive swings in demands for certain products, port, and border closures.  Becoming part of a business networks, doesn’t just require technology it also needs a mindset change, and the willingness to increase openness between all parties.  If all stakeholders are providing detailed information, there needs to be trust and a clear framework of rules and responsibilities, covering which information is shared, when and at which granularity and how that information will be used.  Visibility of more detailed information can help industrial manufacturers make better strategic and tactical decisions.  In addition, using a business network can help industrial manufacturers reduce risk by having the ability to identify different sources of supply in different regions and multiple sourcing strategies. However industrial manufacturers will need to focus on their goals and business outcomes  

Shift into the future  

As part of SAP’s Industry Business Unit for Industrial Manufacturers - we are lucky to be able to work with our customers and development teams so SAP develops solutions that help our customers be successful, specifically in the area of manufacturing. We are building many of these new capabilities on SAP’s Industry Cloud. This means they can be easily integrated with SAP’s intelligent suite and business network as they use the same business services, data and process models. Using these cloud-based solutions will help our customers implement innovations and at scale yet still be able to run core their processes in an effective and stable way.  

In future blogs we will be writing more about SAP’s new industry cloud solutions for manufacturing.