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This blog provides you an overview of key highlights in the manufacturing and supply chain functionality of our SAP S/4HANA Cloud 1708 release.
The 1708 release is a rich release for our SAP S/4HANA Cloud customers running manufacturing and supply chain activities. We ship various innovations to help customers transform to new innovative ways of manufacturing, inventory management and logistics execution in supply chain. The vision for manufacturing and supply chain in SAP S/4HANA Cloud 1708 release is:
Demand-driven replenishment in SAP S/4HANA Cloud 1708
Let me start by the introduction of the capabilities to run innovative manufacturing operations.
With this release, we kick off our journey into the demand-driven transformation. Our demand-driven replenishment (DD) helps you plan and manage supply chains efficiently based on customer demand, rather than through traditional MRP procedure. It helps create the basis for a reliable material flow by defining buffers at strategically important points and adjusting these buffers regularly. With this capability, we help our customers achieve the highest service levels at lowest possible inventory along all BOM levels, ensure highest quality data such as stock levels for more accurate planning and provide the ability to produce individualized products while maintaining highest service.
Products along all BOM levels are classified based on average demand, lead time, BOM usage, and variability to identify whether they are relevant for demand-driven replenishment. A well-balanced buffer level is proposed for demand driven relevant products to ensure that they are sufficiently stocked to meet average demand, but in low enough quantities to prevent excessive storage costs or losses due to expiry. A dedicated app helps planners manage safety stock, reorder point and maximum stock through the buffer level proposals. On an operational base, the replenishment of demand driven relevant products is ensured by using a new, demand-driven MRP procedure based on buffer levels resulting in optimal replenishment order.
Hence, customers now have the possibility to achieve the following benefits.
Producing individualized product with Advanced variant configuration
Customer individualized products are the main differentiation in a global competition market to expand their market position. Usage of individualized products by consumers has now become a standard. As such, an efficient and transparent application support throughout the business process (end-to-end) will be key for a company to ensure that consumers can be provided the same level of service even when ordering an individualized product.
With the introduction of the integrated advanced variant configuration in 1708, our customers can now improve your company's sales and manufacturing performance by handling highly individualized products in sales and manufacturing. We provide a state-of-the-art configurator within the sales-order-entry app that uses a performance-optimized rules engine leveraging sophisticated algorithms. With the use of dependencies customers can also prevent combinations of options that are not allowed and can be used to select exactly the right components. The sales pricing happens accordingly to the individual configuration defined by the customer. With this capability, we can now extend our make to stock and make to order production with variant configuration.
Customers can now use material variants of the configurable product in both make to stock and make to order scenarios. The material variant can be created from a customer sales order with the prices proposed based on characteristics of the material variant. When the customer orders an individualized product, the production of this can be handled easily. The sales order is then considered for production planning when doing the Materials-Requirements-Planning (MRP). Later the production execution for the individual product takes place before delivering it to the customer. The process finishes with the billing appropriately for the individualized product.
Extended capabilities provided with our new integrations:
One of the visions of our 1708 release in manufacturing is to enable our customers to extend to solution to processes that handle the physical execution across manufacturing and logistics. With our new integrations, we provide predefined capabilities to reduce implementation effort with delivered sample processes and related communication arrangements.
Third-Party Warehouse Management System Integration
First, we provide capability for our customers to connect to systems that do in depth warehouse management handling physical aspects or running a warehouse. Typically, customers use different external warehouse management systems in different regions. This scope item enables the integration of physical warehouses operated by third-party warehouse management solutions (Warehouse Management Systems, WMS) to SAP S/4HANA Cloud to cover sales and procurement processes.
Within the sales process, SAP S/4HANA Cloud hands over the outbound delivery related information to third party warehouse management systems. Picking / goods issue and the associated warehouse related processes can be done in the external warehouse management system. The information can then be sent back to SAP S/4HANA Cloud to complete the process.
Similarly, in the procurement Process, we trigger the integration with the inbound delivery. The extensive goods receipt at the warehouse can then be tracked in the third party warehouse management system. The related goods receipt information is then passed back to SAP S/4HANA Cloud to complete the end to end process until the invoice is paid.
Integration of Manufacturing Execution System to Production Operation
We also cover a setup of integration from SAP S/4HANA to Manufacturing Execution Systems (MES) to integrate business and manufacturing processes which help to run efficient, high quality production on the shop floor. Here we provide a sample process or template on how to integrate a local Customer Shop Floor System directly into SAP S/4HANA. This gives the manufacturing staff a clear overview of production operations and improving analytical capability for the management team. SAP S/4HANA is the system of record for all master data and a Manufacturing Execution System or a Shop Floor System is the system of record for all WIP (work in process) data.
User experience:
The release also focuses on the user experience for different roles. We bring to you, overview pages for the inventory manager and warehouse clerk that are analytical apps to ensure high throughput of the goods receipts and pickings with an uninterrupted inventory flow that creates for an optimal stock situation.
Additionally, we bring several new user experience applications for outbound and inbound deliveries to automate recurring tasks to be performed at a time and provide easy navigation and access to information
Enhancements in other end to end capabilities:
Linking engineering to manufacturing: Another interesting functionality is the handover to Manufacturing allows the user to create a Manufacturing Bill of Material from an Engineering Bill of Material within one step. With this step the system automatically generates a linkage between both Bill of Materials. As an optional step this newly created Manufacturing Bill of Material can be reworked with Change Management technology. Finally this Bill of Material will be release for productive use.
Make to Stock repetitive manufacturing enhancements: The existing process enables you to perform make-to-stock production based on run schedules. The production is controlled without a direct reference to sales orders. Run schedules determine the dates and quantities. Requirements are created in Demand Management. This enables simplified handling of the production process with full cost control and confirmation of assembly activities without using production or process orders. With the 1708 release, we enhance the planning table.
In Repetitive Manufacturing, the master plan is represented by the planning table. The planning table is a tool for operative planning and is used to plan the production quantities:
To get a summary of all the new innovations in a nutshell, you can also watch this video:
For more information on SAP S/4HANA Cloud, check out the following links:
Follow us via @SAP and #S4HANA, or myself via LinkedIn or Twitter
The 1708 release is a rich release for our SAP S/4HANA Cloud customers running manufacturing and supply chain activities. We ship various innovations to help customers transform to new innovative ways of manufacturing, inventory management and logistics execution in supply chain. The vision for manufacturing and supply chain in SAP S/4HANA Cloud 1708 release is:
- To run innovative manufacturing capabilities such as demand-driven replenishment
- To easily extended to advanced business capabilities such as Manufacturing Execution (MES), 3D Printing collaboration
- User experience for different roles in inventory and logistics execution to provide insights into the different stages of the process before taking decisions
- To provide complete, standardized and pre-configured core business processes
Demand-driven replenishment in SAP S/4HANA Cloud 1708
Let me start by the introduction of the capabilities to run innovative manufacturing operations.
With this release, we kick off our journey into the demand-driven transformation. Our demand-driven replenishment (DD) helps you plan and manage supply chains efficiently based on customer demand, rather than through traditional MRP procedure. It helps create the basis for a reliable material flow by defining buffers at strategically important points and adjusting these buffers regularly. With this capability, we help our customers achieve the highest service levels at lowest possible inventory along all BOM levels, ensure highest quality data such as stock levels for more accurate planning and provide the ability to produce individualized products while maintaining highest service.
Products along all BOM levels are classified based on average demand, lead time, BOM usage, and variability to identify whether they are relevant for demand-driven replenishment. A well-balanced buffer level is proposed for demand driven relevant products to ensure that they are sufficiently stocked to meet average demand, but in low enough quantities to prevent excessive storage costs or losses due to expiry. A dedicated app helps planners manage safety stock, reorder point and maximum stock through the buffer level proposals. On an operational base, the replenishment of demand driven relevant products is ensured by using a new, demand-driven MRP procedure based on buffer levels resulting in optimal replenishment order.
Hence, customers now have the possibility to achieve the following benefits.
- Avoid the “Bull-Whip Effect” in production by providing decoupling points with strategic stock positions
- Enable immediate production of individualized products using adaptive component buffers
- Ensure highest service levels at lowest possible inventory along all BOM levels
- Relieve users of manual supply creation for demand-driven materials
- Improve material requirements planning based on high-quality data that is updated regularly and is used as input, such as for stock levels
- Support user in identifying issues with current stock levels and in prioritizing the issues as a starting point for taking the right action
Producing individualized product with Advanced variant configuration
Customer individualized products are the main differentiation in a global competition market to expand their market position. Usage of individualized products by consumers has now become a standard. As such, an efficient and transparent application support throughout the business process (end-to-end) will be key for a company to ensure that consumers can be provided the same level of service even when ordering an individualized product.
With the introduction of the integrated advanced variant configuration in 1708, our customers can now improve your company's sales and manufacturing performance by handling highly individualized products in sales and manufacturing. We provide a state-of-the-art configurator within the sales-order-entry app that uses a performance-optimized rules engine leveraging sophisticated algorithms. With the use of dependencies customers can also prevent combinations of options that are not allowed and can be used to select exactly the right components. The sales pricing happens accordingly to the individual configuration defined by the customer. With this capability, we can now extend our make to stock and make to order production with variant configuration.
Customers can now use material variants of the configurable product in both make to stock and make to order scenarios. The material variant can be created from a customer sales order with the prices proposed based on characteristics of the material variant. When the customer orders an individualized product, the production of this can be handled easily. The sales order is then considered for production planning when doing the Materials-Requirements-Planning (MRP). Later the production execution for the individual product takes place before delivering it to the customer. The process finishes with the billing appropriately for the individualized product.
Extended capabilities provided with our new integrations:
One of the visions of our 1708 release in manufacturing is to enable our customers to extend to solution to processes that handle the physical execution across manufacturing and logistics. With our new integrations, we provide predefined capabilities to reduce implementation effort with delivered sample processes and related communication arrangements.
Third-Party Warehouse Management System Integration
First, we provide capability for our customers to connect to systems that do in depth warehouse management handling physical aspects or running a warehouse. Typically, customers use different external warehouse management systems in different regions. This scope item enables the integration of physical warehouses operated by third-party warehouse management solutions (Warehouse Management Systems, WMS) to SAP S/4HANA Cloud to cover sales and procurement processes.
Within the sales process, SAP S/4HANA Cloud hands over the outbound delivery related information to third party warehouse management systems. Picking / goods issue and the associated warehouse related processes can be done in the external warehouse management system. The information can then be sent back to SAP S/4HANA Cloud to complete the process.
Similarly, in the procurement Process, we trigger the integration with the inbound delivery. The extensive goods receipt at the warehouse can then be tracked in the third party warehouse management system. The related goods receipt information is then passed back to SAP S/4HANA Cloud to complete the end to end process until the invoice is paid.
Integration of Manufacturing Execution System to Production Operation
We also cover a setup of integration from SAP S/4HANA to Manufacturing Execution Systems (MES) to integrate business and manufacturing processes which help to run efficient, high quality production on the shop floor. Here we provide a sample process or template on how to integrate a local Customer Shop Floor System directly into SAP S/4HANA. This gives the manufacturing staff a clear overview of production operations and improving analytical capability for the management team. SAP S/4HANA is the system of record for all master data and a Manufacturing Execution System or a Shop Floor System is the system of record for all WIP (work in process) data.
User experience:
The release also focuses on the user experience for different roles. We bring to you, overview pages for the inventory manager and warehouse clerk that are analytical apps to ensure high throughput of the goods receipts and pickings with an uninterrupted inventory flow that creates for an optimal stock situation.
Additionally, we bring several new user experience applications for outbound and inbound deliveries to automate recurring tasks to be performed at a time and provide easy navigation and access to information
- Schedule activities for inbound deliveries
- Perform picking for outbound delivery
- Create outbound deliveries from sales orders
- Manage outbound deliveries
- Analyze delivery logs
Enhancements in other end to end capabilities:
Linking engineering to manufacturing: Another interesting functionality is the handover to Manufacturing allows the user to create a Manufacturing Bill of Material from an Engineering Bill of Material within one step. With this step the system automatically generates a linkage between both Bill of Materials. As an optional step this newly created Manufacturing Bill of Material can be reworked with Change Management technology. Finally this Bill of Material will be release for productive use.
Make to Stock repetitive manufacturing enhancements: The existing process enables you to perform make-to-stock production based on run schedules. The production is controlled without a direct reference to sales orders. Run schedules determine the dates and quantities. Requirements are created in Demand Management. This enables simplified handling of the production process with full cost control and confirmation of assembly activities without using production or process orders. With the 1708 release, we enhance the planning table.
In Repetitive Manufacturing, the master plan is represented by the planning table. The planning table is a tool for operative planning and is used to plan the production quantities:
- In a repetitive manufacturing environment, planning and control is usually carried out in a period and quantity basis. The layout of the planning table has been designed to support this requirement and is also based on periods to provide a very clear, easy-to-interpret overview of materials and production lines.
- In a repetitive manufacturing environment, planning and control is usually carried out in a period and quantity basis. The layout of the planning table has been designed to support this requirement and is also based on periods to provide a very clear, easy-to-interpret overview of materials and production lines.
- The planning table is the most important tool used by Production Planners / MRP Controllers to plan the production quantities. At a glance, the planner can check production quantities, monitor the available capacity of the production lines and check up on the availability of the products produced on each line.
- You can directly enter and change production quantities in the planning table. You can assign ‘non-assigned’ production quantities to the production lines or you can reassign production quantities to alternative production lines.
- You can use the planning table for planning with planned orders and production orders. The only prerequisite is that you must create a valid production version in the material master record.
To get a summary of all the new innovations in a nutshell, you can also watch this video:
For more information on SAP S/4HANA Cloud, check out the following links:
- Sven Denecken’s SAP S/4HANA Cloud 1708 Release Blog
- S/4HANA Cloud release info: http://www.sap.com/s4-cloudrelease
- Best practices for SAP S/4HANA Cloud here
- New openSAP course ‘How to Best Leverage SAP S/4HANA Cloud for Your Company’
Follow us via @SAP and #S4HANA, or myself via LinkedIn or Twitter
