Manufacturing SAP solutions

A rapidly changing world: the challenges manufacturing companies are facing

The following major trends are reshaping the Industrial Manufacturing industry. 

Customer-driven change

Customers expect products that fit their needs at competitive prices and in a pay-as-you-go and usage-based pricing model. The key is to capture customer requirements effectively and drive new business models and mass customization. 

Digital is the new norm

Technology provides a mechanism to respond to increased customer expectations and changing demands. Still, it poses challenges from organizational setup to having the right talent to operate in a cyber-secure environment. 

A changing playing field

To adapt to an ever-changing world, industrial manufacturers must redefine their core strengths and capabilities and learn to create value in industry value networks. Globalization and right-shoring, industrial manufacturers need to be able to shift resources, production, and financial funds around the globe flexibly to make the best use of regulatory and location advantages. 

Manufacturing value drivers

Based on our knowledge of the industry we have identified strategic KPIs – so-called Value Drivers – that are relevant in the manufacturing industry.

Be customer centric
  • Increase in revenue from new products
  • Increase in customer satisfaction
Serve the segment of one
  • Reduction in total manufacturing costs
  • Reduction in total logistics costs
  • Increase in on-time deliveries
Embrace digital smart products
  • Increase in revenue growth with better product personalization
  • Reduction in R&D costs
  • Reduction in total manufacturing costs
Implement the digital supply chain and smart factory
  • Reduction in asset service and maintenance costs
  • Reduction in asset downtime
Develop service-based business models
  • Improvement in service profit margin
  • Increase in service revenue from new business model

Strategic priorities

The strategic priorities for Manufacturing companies will require new capabilities along the complete value chain.

Serve the segment of one

Manufacturers must be able to capture all customer requirements effectively and drive mass customization to give every customer exactly what they want. The ability to manage the specifics of each individualized order in every aspect of the industrial manufacturing value chain in a consistent way – and similar to the cost of a standard order – is critical. To do this, all product, product customization options, and process information must be kept in a single place, and all business processes – from initial engineering through after-sales service – must be effectively executed and closely monitored.

Implement the digital supply chain and smart factory

For industrial manufacturers to support different manufacturing strategies as needed, supply chains and manufacturing networks need to be modular and flexible, to respond to short-term demand changes or supply fluctuations. They provide shop-floor-to-top-floor connectivity and use machine-to-machine connectivity to enable autonomous decision-making at the edge. In addition, industrial manufacturers need a virtual, real-time representation of their assets – a digital twin. This allows all stakeholders to collaborate in real-time and provide remote monitoring and diagnostics with access to benchmarking behavior. This will result in the optimization of production and reduced downtime.

Develop service-based business models

Innovative Industrial Machinery and Components companies strive to increase service revenue based on or around smart products. To this end, they are looking to provide the machines and equipment bundled with services and consumables and then charge for usage or outcome. With that transformation, they generate new business, increase market share, accelerate new technologies and products, deliver more product-use insights, and create a more sustainable revenue stream. Pay for outcome (PfO) is attractive for customers who intend to shift CAPEX to OPEX, share business risk, or try new technologies with lower risks, adjust production capacity flexibly, and have a more attractive balance sheet.

SAP solution map

Based on the industry priorities we recommend the following solution of SAP:

sap solutions manufacturing

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Manufacturing October 25, 2021

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