How Manufacturing Companies Can Gain a Sharper Edge with SAP S/4HANA
Recent research shows that 86% of manufacturing businesses acknowledge that digital transformation is vital to their growth and staying competitive. Yet, the reality is that many are still dealing with legacy systems and processes that deliver limited visibility and are increasingly costly to maintain. Ultimately, it creates a vicious cycle where business line leaders and managers are forced to put innovation projects on the back burner and focus their time and effort on problem-solving and “keeping the lights on” activities.
How can manufacturers overcome these challenges and accelerate their digital transformation? It’s a question we frequently hear at Navisite, especially among midmarket manufacturers who are struggling with limited resources, staffing shortages and cost constraints. A key part of the solution lies in building a foundation that allows companies to modernize incrementally and cost-efficiently. And when talking about modernization, all roads lead back to your enterprise resource planning (ERP) system—the system running core manufacturing and business processes and touching nearly all other major systems and technologies.
S/4HANA Foundation for Transformation
Moving to a modern ERP is one of the most important decisions in your transformation journey. This is where SAP S/4HANA offers powerful advantages. SAP’s modern ERP is built on decades of SAP’s leadership in manufacturing—and has been specifically designed to serve as a company’s digital core, enabling seamless integration of data, systems and business processes that benefit from the scale, agility and flexibly of the cloud.
How is S/4HANA used in manufacturing? S/4HANA provides a robust solution for manufacturers to streamline workflows across all manufacturing processes—from back-office functions through development, production, inventory management, distribution and more. With multiple deployment options on the private and public cloud, manufacturers can implement a highly robust and scalable solution to support manufacturing automation and drive operational and enterprise-wide analytics.
To give you an idea of what this all means in real terms, here are six of the top S/4HANA manufacturing benefits that will give your business the competitive edge it needs to thrive despite today’s increasingly complex business environment.
Top S/4HANA Manufacturing Benefits That’ll Drive Competitive Differentiation
1. Bring products to market faster.
If you have the resources to innovate, then you can differentiate your business in a variety of ways—and this includes bringing your products to market faster. With S/4HANA, manufacturers can facilitate collaboration among design, engineering and production teams and streamline operations—including product engineering, production operations and manufacturing operations—to manufacture products more efficiently, more quickly and at scale. With so many inventory and supply chain issues affecting the industry today, being able to deliver products on-demand is an invaluable benefit that will help your company stand out from the competition.
2. Gain holistic visibility across the business.
With S/4HANA, manufacturing companies can break down silos between different departments to gain comprehensive visibility across the business—from back-end operations to production and distribution. When working in concert, manufacturing teams can optimize business processes to enhance production output and deliver a better customer experience.
Dave Richardson, vice president of information technology at Sonny’s The CarWash Factory (Sonny’s)—a Navisite customer—succinctly summed up this benefit, saying: “Ultimately, operating our entire business on S/4HANA will give us truly holistic, enterprise-wide views to ensure anything we manufacture on the finished goods side is available on the distribution side.” Using S/4HANA and the visibility it provides, Sonny’s also has improved shipping accuracy to 99.5%—a 20% improvement from its old ERP—and achieved an 89% faster month-end close process—from 28 days down to just three.
3. Power efficiencies and productivity with automation.
Automation tools and capabilities have proliferated in the last few years, and we’ve only just touched the iceberg of use cases in manufacturing. And there’s a lot of interest. According to research, 49% of manufacturing companies surveyed cited automation of business processes as a top priority for digital transformation. For example, by leveraging robotic process automation (RPA) to automate critical business processes running on S/4HANA and other connected applications, manufacturers can significantly lower costs and free workers from many of the manual, mundane administrative tasks that are time- and labor-intensive. Anything scriptable, repeatable and highly manual is ideal for RPA, so whether it’s in finance, order/purchasing or other function, it is easy to create a bot to automate that process.
Automation not only makes operations more efficient, but it takes some pressure off overworked resources, while also freeing up time they can devote to more meaningful tasks. And, when employees feel like they’re making a difference, they’re happier and more productive.
In reference to S/4HANA, Sonny’s Richardson also noted: “It’s also had a positive impact on our employees’ productivity and job satisfaction. The combination of our modern factory with S/4HANA has eliminated many manual processes while making it far easier for all departments to scale for increased customer demand.”
4. Get accurate, timely insights into inventory levels and demand.
With today’s supply chain disruptions, long lead times and shipping delays, getting inventory management right is critical. Inventory extremes—levels that are too low or too high—can negatively impact cash flow, your ability to meet customer demand and, subsequently, customer satisfaction. In today’s market, you need to be able to get real-time data access and insights to make confident decisions on the factory floor—and this is just what S/4HANA provides. Case in point: According to Richardson, after their implementation, Sonny’s now can “produce smarter,” with accurate and timely insights that guide the company on what volume of chemicals they should be stocking based on sales history and projections.
5. Improve prediction and planning of material resources.
S/4HANA also offers a new capability called Material Requirements Planning Live (MRP Live) to help manufacturers optimize the procurement process, and rapidly respond to changes in demand and material supply. According to the same SAP Insights survey, “43% of respondents cited an increase in flexibility and adaptability to change as a leading focus in their process-improvement efforts.”
With S/4HANA, companies can better forecast production needs to ensure material resources are available when they’re needed, while remaining agile to quickly adapt to fluctuating demand and market changes. In fact, “better prediction and planning of material resources, scheduling and forecasting” is one of the main benefits Sonny’s is experiencing following its S/4HANA implementation.
6. Tap into the power of the S/4HANA and SAP BTP together.
Over the last few years, many companies made the leap to S/4HANA on the hyperscaler of their choice, and are now looking to fully leverage SAP’s Business Technology Platform (BTP). BTP brings together data, analytics, artificial intelligence, application development, automation and integration in one unified environment. Essentially, it’s a collection of services combined within an innovation and extension platform that complements S/4HANA.
One of the most compelling benefits of S/4HANA and BTP is how they work together. The standard S/4HANA offering on the cloud remains clean at its core—this means that S/4HANA is decoupled from all the custom code that every company brings to their application. Those customizations or enhancements come through BTP, which enables you to individualize S/4HANA through extensions to access a broad range of cloud-based technologies.
With the core code of the S/4HANA separated, you can easily upgrade, patch and maintain the application. It significantly reduces costs and creates a much more agile, scalable and flexible environment. This architecture makes the S/4HANA and BTP combination incredibly powerful and enables manufacturers to incrementally add customizations or enhancements to create highly personalized experiences or workflows without adding management complexity.
Keep in mind, S/4HANA enables integrations whether on the cloud or not. But it is the openness of S/4HANA with new integration APIs and techniques supported by BTP—and BTP’s ability to accept data from various SAP and non-SAP sources—that make it much easier for companies to fully leverage automation, AI, RPA, IoT and more.
Start Realizing S/4HANA Manufacturing Benefits with Navisite
S/4HANA can help manufacturing companies develop the edge they need to succeed, while setting up a path for future success. With so many benefits waiting to be unlocked, starting your journey to S/4HANA today will set the powerful foundation your business needs.
Navisite is a digital transformation leader and SAP Gold Partner with decades of experience working with manufacturing companies. Whether you’re implementing SAP for the first time or need an upgrade to S/4HANA, our team of certified SAP experts will partner with you to assess, architect, implement and support the right S/4HANA solution for your business. We’ll serve as a trusted advisor every step of the way with technical and functional expertise, managed services and ongoing support. Now that you know how S/4HANA is used in manufacturing, learn more about how we’re empowering businesses to tap into the power of S/4HANA and sharpen their competitive edge, check out our recent case study with Sonny’s The CarWash Factory. And as always, if you’re ready to make digital transformation a reality, contact us today