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S/4HANA

Transform Manufacturing
with SAP S/4HANA
Update 1610
White Paper Background
and Key Definitions
The information outlined below is helpful to understand the contents of
this value proposition white paper. It gives clear details on the objective
and scope of the paper. Key definitions are also provided for select
sections of the paper for further clarification.

DELIVERABLE OBJECTIVE Business Benefits


Provides information on the value in moving from an Key value drivers that are impacted with SAP S/4HANA
ERP on a traditional database to SAPS/4HANA and shipment and cloud and LoB capabilities.
cloud and line-of-business (LoB) solutions
With the value proposition section, all quantified
benefits are conservative, estimated improvement
KEYDEFINITIONS ranges tied to the top value drivers. They are based
Within the process and sub-process deep-dives, there is on early adopters or new developments and
detailed content in table format articulating the following: enhancements of SAP S/4HANA and LoB and cloud
enhancements that can drive value. Keep in mind that
Pain Points these should be used as a guide. We recommend
Major customer business and IT challenges working together to assess your current maturity and
Current State With ERP On Traditional Database the value of moving to SAP S/4HANA in order to develop
ERP capabilities that are available on a traditional a personalized business case.
database
SAP S/4HANA Capabilities Last Update
Capabilities shipped with the latest release of SAP S/4HANA 1610 release. All updates made to the
SAP S/4HANA deep-dive process sections as compared to the SAP
S/4HANA 1511 white paper are italicized
Cloud And LoB Extension Enhancements
All other solutions that can be integrated with
SAP S/4HANA and provide business value. For
example, SAP S/4HANA and the SAP Integrated
Business Planning solution, or SAP S/4HANA *Detailed road map available on SAP.com
and the SAP Manufacturing Integration and (customer login required)
Intelligence (SAP MII) application. These This document and SAPs strategy and possible future
solutions are not embedded in SAP S/4HANA, developments are subject to change and may be changed
but integration scenarios exist for these. by SAP at any time for any reason without notice. This
2017 Planned Innovations* document is provided without a warranty of any kind, either
New functionalities planned for 2017 release of express or implied, included but not limitedto,
SAP S/4HANA or new integration possibilities the implied warranties of merchantability, fitness for a
planned with this release. particular purpose, or non-infringement.

2017 SAP SE or an SAP affiliate company. All rights reserved. 2/18


Agenda

SAP S/4HANA Manufacturing Overview 4

Planning and Scheduling Deep-Dive 8

Production Operations Deep-Dive 9

Quality Management Deep-Dive 12

SAP S/4HANA Manufacturing Value Proposition 15

SAP S/4HANA Customer References 16

2017 SAP SE or an SAP affiliate company. All rights reserved. 3/18


SAP S/4HANA Manufacturing Overview

DIGITAL TRANSFORMATION OF MANUFACTURING WITH SAP S/4HANA Vectus Industries


Vectus deployed the SAP
The market of one is becoming a reality as customers desire highly customized and high-quality products delivered at their choice of time
S/4HANA Enterprise
and place and at competitive prices. This is huge challenge for manufacturing firms. With multiple systems being deployed across multiple
plants and warehouses, organizations are facing more complexity and more touches by employees, leading to a high cost of ownership, an Management solution and started
inability to respond adequately, and poorly informed decision making due to old, incomplete, or inaccurate information. Without an agile experiencing total ease in
manufacturing process, transformed for a dynamic and resource-constrained environment, it becomes more and more difficult to service managing business operations
the demands of todays customer. The best approach today is to implement advanced digital technologies, enabling a superior integrated
system (internal and with the business network), streamlined processes, Big Data analytics, and resource optimization. The core of this "SAP S/4HANA Enterprise
digital technology is SAP S/4HANA and it application program interface (API) framework that drives long-term flexibility. Management has made our
operations more efficient by
SAP S/4HANA enables unprecedented coordination of planning and execution processes by applying advanced machine learning and standardizing controls and reducing
algorithms as well as connectivity to Internet of Things (IoT) devices for an even better operational visibility. SAP S/4HANA provides the risk. Our decisions are better, faster,
most current information on market and customer demand so that manufacturing processes, resources, and capacity can be tightly aligned and information driven, giving us a
to drive optimal production efficiency and profitable and timely delivery of products. definite competitive edge. We look
forward to expanding our SAP
portfolio.

Manish Sinha, Head of IT,


Vectus Industries Limited

Airbus DS Optronics

Airbus DS Optronics achieved


Constraint-Based Planning Manufacturing Execution Quality Management real-time data access and high
Enabling Live MRP Enabling a Lot Size Of One Quality Comes First
performance as some of the
improvements on SAP S/4HANA.
Enable constraint-based SAP S/4HANA, the digital core, SAP S/4HANA enables
planning (capacity and and SAP Manufacturing integrated, simplified quality In our industry, information that is
resource) with SAP S/4HANA Execution application together management utilizing quality two days old is simply outdated
using various heuristics and as an integrated solution help management and quality issue real-time reporting is the name of the
optimizers to generate precise deliver on individual customer management capabilities with a game. SAP S/4HANA gives us the
production plans requirements through real-time new user experience (UX) possibility to do this. Now, all
"lot size of one" production in information, including key figures
Access and customize SAP high-volume production Perform quality inspections, and sales forecasts, is available at
the touch of a button, enabling our
Fiori apps for production scenarios providing inspection results to
controllers to present live data in
scheduling board as a Web- support product compliance
management meetings.
based graphical scheduling tool User interface (UI) simplification and quality requirements
and role-based SAP Fiori apps Jochen Scheuerer,
are available to support Real-time monitoring and Director Information Technology,
production transactions exception management of Airbus DS Optronics GmbH
quality deviations

2017 SAP SE or an SAP affiliate company. All rights reserved. 4/18


SAP S/4HANA Manufacturing Overview

SAP S/4HANA MANUFACTURING VALUE PROPOSITION


SAP S/4HANA enables companies to integrate and embed intelligence in manufacturing processes with one
source of live information. It provides an optimal coordination of planning and execution processes, covering all
aspects of the manufacturing cycle from planning to the shop floor and beyond.

Reduced Operational Cost

Redesigned data structures enable unprecedented data throughput, and embedded solutions create a simplified system
landscape and optimized user interfaces.

Improved Planning Accuracy and Reduced Inventory Cost

Live inventory data and drastically reduced material requirements planning (MRP) processing time improve transparency
and responsiveness.

Faster Business Decisions and Optimal Manufacturing Performance

Immediate insights on planning, execution, prediction, and simulation, with analysis at the finest level of granularity.

A Simplified User Experience

Leverage SAP Fiori user experience to deliver personalized, responsive, and intuitive applications across all facets of the
manufacturing process, on any device, anywhere, anytime.

Individualized Products

Cater to the market of one, delivering customized offerings to meet the unique needs of individual customers, multi-
faceted configurations, and highly variable demands with regional and localized requirements.

2017 SAP SE or an SAP affiliate company. All rights reserved. 5/18


SAP S/4HANA Manufacturing Overview

MANUFACTURING CAPABILITIES
Primary capabilities of manufacturing where value can be achieved through SAP S/4HANA and SAP Cloud and LoB solutions.

Planning and Scheduling Production Operations Quality Management

Accelerated MRP supported by Basic production execution Quality engineering


user-centric UI based on Basic subcontracting Quality inspection
SAP Fiori Quality improvement
Basic external processing
Constraint-based production
Production control
planning and detailed
scheduling (PP/DS) Repetitive manufacturing
Manufacturing execution*
Kanban
Just-in-time (JIT) inbound and outbound
processing

*Requires additional products integrating with SAP S/4HANA

2017 SAP SE or an SAP affiliate company. All rights reserved. 6/18


SAP S/4HANA Manufacturing Overview

SCENARIO: MANUFACTURING EXAMPLE


SAP S/4HANA provides the next generation production planning (MRP live) optimized on the SAP HANA platform for faster planning cycles and
synchronization to demand changes resulting in fewer material shortages, delays and safety stock

SAP S/4HANA for finite planning based on embedded manufacturing planning and scheduling

Traditional
SAP ERP
and SAP
Advanced
Planning and
Optimization
(SAP APO)
Manage List scheduled
master data in Create Run finite planning in Manage Monitor Run MRP in SAP ERP Manage planned orders for
SAP ERP master data SAP APO production conflicts in capacity in for noncritical conflicts in release
in SAP APO planning SAP APO SAP APO components SAP ERP

SAP S/4HANA SAP Fiori launchpad Increase


One MRP run for for material flow user productivity and efficiency
finite and infinite and capacity by harmonized master data
material planning and one process for finite and
infinite material planning
with harmonized
master data and Increase
one SAP Fiori Carry out finite and Maximized capacity utilization order-to-delivery and
launchpad for infinite material Optimally scheduled planned orders production cycle times
material flow planning Real-time inventory management
and capacity Appropriate purchase orders created Reduce
inventory and planning cost

More than smarter and faster . . . a reimagined process

2017 SAP SE or an SAP affiliate company. All rights reserved. 7/18


Planning and Scheduling

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Long and overnight Planning runs at One MRP run Constraint-based Unification of master Reduced manufacturing
batch runs result in predefined times with supports detailed planning (capacity data maintenance cycle time
planning inefficiencies data that first must be scheduling and MRP. and resource) using and integration
consolidated from No coordination of various heuristics simplification Improved
Cumbersome and time- various systems runs required and optimizers to manufacturing planning
consuming analysis of generate a precise Interactive function efficiency
planning situation Separate manufacturing Seamless integration production plan by production planning
planning processes of master data and and simulations Reduced revenue loss
Disparate planning and bringing production due to fulfillment issues
available in planning and transactional data in planning and detailed (SAP Fiori)
transactional systems
ERP systems planning scheduling on SAP Reduced total
lead to data integration Demand-driven
latency and errors Inventory management Optimize material ERP replenishment: stock- manufacturing costs
and planning systems flows by harmonizing Web-based graphical level management Increased on-time
Inflexibility to include
need integration with your requirements to scheduling tool to delivery performance
real-time, changing ERP for MRP your production
demands in the optimize and plan the
schedule together resource schedule,
planning run leads to
with your supplier. order dates, and
outdated and For example, to group
inaccurate planning times as well as plan
PO's to ensure only critical products and
full truckload monitor capacity
shipments utilization

2017 SAP SE or an SAP affiliate company. All rights reserved. 8/18


Production Operations

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

High overhead costs in SAP Business Suite Fundamentally new In combination with SAP Manufacturing Reduce total
managing a disparate set software provides an data models and S/4HANA, SAP engineering cockpit manufacturing costs
of shop-floor systems integrated solution from functions reduce the Manufacturing Execution that uses 3D
Reduce manufacturing
across multiple plants that enterprise planning to number of systems and SAP MII allow for end- information to create
technology cost
are not integrated into shop-floor execution required, for example, to-end process integration manufacturing-
enterprise planning and single material master and enable global and relevant master data Reduce manufacturing
the business Visual manufacturing for ERP- and supply- local deployment options and efficiently overhead cost
planner for leveraging
chain management- handles engineering
Complex and expensive 3D CAD information, SAP Plant Connectivity Reduce manufacturing
relevant materials changes
system landscapes with thereby simplifying the provides seamless direct labor cost
multiple shop-floor handover process 3D visual product connectivity between Fabrication and fab
systems in distributed information in SAP Manufacturing assembly execution Reduce manufacturing
plants, resulting in high production process Execution and shop-floor for complex assembly overtime cost
total cost of ownership devices to enable lot Simplify the IT landscape
(TCO)
SAP Fiori apps for size of one production
production scheduling, and lower TCO
Inefficient or ad hoc order confirmations, SAP Manufacturing
handover of bill-of- and for complex Execution provides
material information and assembly configurable, role- and
design changes from manufacturing place-specific and
engineering to personalized dashboards
manufacturing for operators, available
on touch screen or
Inefficient application mobile devices
proximity often requires
shop-floor workers to go Browser-based
to a central terminal to UI5/HTML5 mobile
make required entries, applications for wireless
resulting in delays and bar-code scanners used
errors on the shop floor

(continued next page)

2017 SAP SE or an SAP affiliate company. All rights reserved. 9/18


Production Operations

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Limited system SAP Business Suite IoT capabilities supporting Reduce revenue loss
flexibility and software provides machine-to-machine due to fulfillment issues
automation available solutions for variant connectivity, allowing for
to cater to the configuration and make- automation and
customization to-order and assemble- unprecedented flexibility of
demands in a cost- to-order scenarios manufacturing processes
effective manner

Complicated ecosystem; Manual effort to Manage the SAP Asset Intelligence The SAP Distributed Reduce manufacturing
collaboration requires collaborate with subcontracting process Network: data about Manufacturing technology cost
every manufacturer, business partners from planning to machine operations, such application offered on
service provider, or execution and as current state, usage the SAP HANA Cloud Reduce unplanned
downtime or outages
equipment operator to monitoring and profile, and utilization, as Platform is a cloud-based
link up with each integrate your business well as about each collaboration solution
business partner network serialized component that between additive
separately to exchange is used in the assembly of manufacturing service
data on equipment and
Integrate external the machine, can be providers and
components workforce into exchanged via the network manufacturing
production execution; companies, for example,
manage time and 3D printing, that enables
material handovers end-to-end business
Supports just-in-time process integration for
production with design and procurement
embedded Kanban as
well as JIT inbound and
outbound material flows

(continued next page)

2017 SAP SE or an SAP affiliate company. All rights reserved. 10/18


Production Operations

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Lack of visibility into Manufacturing insights Real-time alerts based In combination with The SAP Digital Reduce total
production processes, available with support on bottlenecks in SAP S/4HANA, Manufacturing Insights manufacturing costs
status, and performance from IT department production, such as SAP Manufacturing solution offered on the
time or component Execution and SAP MII SAP HANA Cloud Drive manufacturing
in enterprise systems, using analytical
delays, and in resources allow for dashboard Platform is a cloud- performance
leading to inaccurate tools such as
according to
decision making SAP BusinessObjects creation, without coding, based service
Plant performance for real-time insights to encompassing all data organizational goals
business intelligence
analytics with possibility of
solutions all shop-floor operations sources, not just those
intracompany
Shop-floor cockpit for and profitability metrics from SAP, for advanced
analytics benchmarking
live production visibility,
orchestration, and
confirmation
SAP Fiori app which is a
dashboard for the
production supervisor to
manage operations

2017 SAP SE or an SAP affiliate company. All rights reserved. 11/18


Quality Management

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Difficulty getting an end- Quality-management- Integrated and simplified Additional object Reduce revenue loss due
to-end view of quality relevant functions are solution utilizing quality pages in SAP Fiori for to quality and compliance
due to distributed integrated with supply management (QM) and a wide range of quality issues
systems chain, covering the quality issue management objects
areas of quality (QIM) capabilities
Changing a local or
engineering, quality
departmental quality inspection, and quality Simplified user interface
management focus to a and new user setup; core
improvement
company-wide (and later QM processes supported
to a supply chain) focus by new roles in SAP Fiori
user experience for
Preventing non-
quality technician, quality
conformance within all
engineer, quality planner,
stages of design to quality manager, quality
production to delivery
auditor, and calibration
technician
Enhanced and simpler
user experience for the
quality technician to
improve productivity
Run in a mobile
environment with
significant reduction in
the number of clicks
required

(continued next page)

2017 SAP SE or an SAP affiliate company. All rights reserved. 12/18


Quality Management

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Recording quality Generic UIs are Perform quality Point-of-detection Enhanced SAP Fiori app Reduce revenue loss due
inspection results is available for recording inspections, providing recording with SAP Fiori for results recording to quality and compliance
time-consuming and quality inspections inspection results to app (also mobile-enabled) (extended version) issues
inefficient enable timely, informed for faster and more
release decisions and efficient recording by
New SAP Fiori Reduce scrap value
Delay in informing transactional app for
therefore support quality technicians (role- Reduce manufacturing
customers of non- product compliance and based) monitoring inspection
conforming products lots and making usage quality labor cost
quality requirements
decisions
Enhanced efficiency in
quality assurance Collective usage
execution (results decision
recording enabling Simplified inspection
quality technicians to process in EWM within
record inspection results SAP S/4HANA
easily and efficiently); (extended scope)
SAP Fiori apps for results
recording
Simplified inspection
process in extended
warehouse management
(EWM) within
SAP S/4HANA
(first scope)

(continued next page)

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Quality Management

Typical Pain Points Current State With ERP SAP S/4HANA Cloud And LoB Extension 2017 Planned Business
On Traditional Database Enhancements Enhancements Innovations Benefits

Analysis based on past Different systems are Integrated, simplified SAP Fiori apps to Reduce revenue loss due
performance instead of available for quality quality management improve quality control to quality and compliance
proactive measures based management and quality utilizing QM and QIM by monitoring and issues
on asset and production issue management capabilities with built-in IoT adjusting processes
performance processes; integration connectivity and predictive
Analytics for inspection
needs to be done between analytics
Real-time simulations or results
these systems
predictive capability to Improved quality
Newly designed object
detect quality issues are measurement results
pages with charts to
not available through recording of
defects, planning and display results history
and single values in
flexible, harmonized action
graphical form
management
New SAP Fiori apps for
Real-time monitoring and
capturing and
exception management of
monitoring defects
quality deviations

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SAP S/4HANA Manufacturing Value Proposition
The opportunity exists to transform business processes and achieve your digital transformation goals with more automation and better alignment to
your end-customers by delivering products tailored to their specific requirements.

STRATEGYENABLEMENT BUSINESS BENEFITS $

Run Simple (master complexity) Reduction in total manufacturing costs up to 10%


Simplified and efficient production Reduction in manufacturing cycle time up to 10%
planning and execution processes
Reduction in scrap value up to 25%
Run live Decision making with
automated transfer of production results Reduction in order fulfillment lead time (1015%)
and real-time updates on performance Increased material posting throughput from 525x
Automation that enables business Improved labor utilization with live production
processtransformation Strategy Business monitoring (up to 10%)
Enablement Benefits Distinct systems consolidation, reduced by 30%
Improved profitability

Risk Employee
Management Engagement
RISK MANAGEMENT EMPLOYEE ENGAGEMENT

Demand-driven planning model and live Increase in productivity through tailored UX


inventory updates reduce risk of revenue loss Higher throughput
due to stock-outs
Easier to use interface and simplified work flow
Integration of execution and planning
systems reduces risk of revenue loss due
to cancelled orders

*Benefits are based on early adopters of SAP S/4HANA or conservative outside-in benefits due to moving from a traditional ERP to enhanced
SAP S/4HANA and LoB and cloud capabilities. As each enterprise is at a different level of maturity, our recommendation is to work with you
to determine the value proposition for your enterprise.

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Customers Are Achieving Value from SAP S/4HANA

VECTUS INDUSTRIES SWISS PROPERTYAS AIRBUS DS OPTRONICS


Highlights Highlights Highlights
Vectus deployed the SAP S/4HANA Enterprise SWISS PROPERTY worked with INTELSYS, an Hindered by processing times for sales
Management solution and started experiencing SAP partner, to implement SAP S/4HANA forecasts and order processing, Airbus looked
total ease in managing business operations. Enterprise Management by using business to SAP S/4HANA to make information live
It has decreased its days sales outstanding and process content supported by SAP Best Practices to better plan production and eliminate latency in
can deliver accurate, instantaneous customer packages. Focused on the engineering and order visibility.
invoices. Customers now experience excellent construction industry, INTELSYS helps provide All information, including sales forecasts
service and on-time delivery, which will remain an end-to-end solution for design, planning, and and orders, are now available at the touch
unchanged during rapid expansion. construction execution. SWISS PROPERTY sees of a button on any device.
this functionality and these processes
Real-time year-end financial Simplified IT landscape and operations
as a definitive competitive advantage.
close (down from a few months) 75% reduction in data volume
15% reduction in operation costs Solution
Achieved compliance with
SAP S/4HANA Enterprise Management
50% faster access to and parent grouppolicies
visibility of real-time data Industry
Solution
60% increase in operational efficiency Engineering, construction, and operations
SAP S/4HANA Enterprise Management
Solution SWISS PROPERTY sourcereference
Industry
SAP S/4HANA Enterprise Management
Aerospace and defense
Industry
Airbus sourcereference
Industrial machinery and components

Vectus Industries source reference


2017 SAP SE or an SAP affiliate company. All rights reserved. 16/18
Your Path To SAP S/4HANA Additional Manufacturing References

Every enterprise is unique, with different starting points and end SAP Industry 4.0
points. Whether you are starting as a net new implementation or SAP Connected Manufacturing Industry 4.0 in Practice
undergoing digital transformation of an existing SAP landscape,
SAP can help. We have been working with enterprises of all sizes Open Integrated Factory, Industry 4.0 with SAP
and n all industries. Based on the depth of this experience, SAP
has a robust portfolio of services to help you define your road map Digital Production Operations A Roadmap to Industry 4.0
to SAP S/4HANA.
Industry 4.0 Solution Packages (Customers and partners
Customer Engagement Methodology use your S-User for access)

Revolutionize Manufacturing Operations, Responsiveness,


No matter which path applies to your enterprise, SAP has a and Agility
structured four-phased approach to ensure success executive
alignment, value discovery, validation and executive readiness,
and value delivery.

For more details, please see the brochure


Driving Value in a Digital Economy

Value Assurance Packages

Take advantage of SAP Value Assurance service packages for


SAP S/4HANA to quickly and safely harness the power of next-
generation software and in-memory processing.

For all value assurance packages and for the successful and
seamless transition to SAP S/4HANA, please visit the link
Transition to SAP S/4HANA.

SAP S/4HANA Road Map

With a three-year detailed road map, SAP gives customers the


transparency to accelerate their transition to an SAP S/4HANA
landscape SAP S/4HANA Road Map.

Start Today With A Trial SAP S/4HANA Trials

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2017 SAP SE or an SAP affiliate company. All rights reserved.

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In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or
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19/19

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