Discrete Manufacturing with S/4, Hana and SolMan

For existing SAP customers, industry solutions are an important added value for their own ERP. This applies to all ERP versions, and SAP itself has long recognized this market requirement and has over 25 industry solutions of its own.

But not all tasks can be perfectly covered by the generic industry solutions of an SAP. This is where SAP partners come in, filling many niches excellently with increasingly specific know-how and making a very valuable contribution to the SAP community. MSG Treorbis has focused on the topic of discrete manufacturing.

Digitalization and Industry 4.0 are intensifying competition in the discrete manufacturing industry as well. Where does Managing Director Michael Neuhaus currently see the greatest challenges?

"It is important to ensure that all business processes are integrated as completely as possible"

is his first answer.

"In discrete manufacturing, there are still many companies that have mapped their business processes between divisions and even more frequently with various business partners, whether customers, suppliers or internal company divisions, with many system and process breaks.

Companies have a lot of information, especially in manufacturing, that is not being used. The task is to identify bottlenecks at an early stage, to avoid errors in advance, to anticipate market changes.

Often the commercial key figures are known, but the multitude of information from production and purchasing must be used in real time."

The MSG Treorbis offering is in place and Michael Neuhaus has set the bar high, which also explains why his latest offering is based on SAP's most innovative technology: S/4, Hana and SolMan version 7.2.

This innovative impetus is certainly necessary, because the challenges posed by Industry 4.0 are high. According to the digital association Bitkom: "Industry 4.0 has reached the economy, but companies are still reluctant to invest in innovative digital technologies for networked production and products.

As reality is already showing today, the real revolution of Industry 4.0 is not taking place in production, but in business models. Digital platforms are of particular importance here.

With their data-based value-added services, they are inserting themselves between manufacturers and customers, thus breaking up the well-established relationships between them and posing a serious challenge to the established companies.

Against this backdrop, the Bitkom project group on business models has been working intensively on the effects of digitization. The results are documented in the fact paper "Business Models in Industry 4.0 - Exploiting and Actively Shaping Opportunities and Potential".

Bitkom published the fact paper on the occasion of the Digital Summit. Developing a business model, adapting it or leaving it untouched is a business decision. Bitkom wants to highlight trends in this regard and thus provide decision-making aids.

"The fact paper is a strategic paper and aims to shake things up"

says Wolfgang Dorst, head of the Industrial Internet division at Bitkom.

"It's not the technology that matters in Industrie 4.0, it's the digital business models."

Technically feasible - economically viable?

Consequently, SAP also refers to Hana, S/4 and Leonardo as a platform and not as individual solutions. Michael Neuhaus at MSG Treorbis has taken up this aspect for discrete manufacturing: In addition to technical feasibility, batch size 1 also raises the question of economic efficiency.

How can it be clarified in advance which configurations and implementations make sense? Michael Neuhaus:

"The cost-effectiveness and, of course, the feasibility of the configuration are indeed crucial. Our solutions support here by providing transparency in costing and in checking capacity and availability."

What are the biggest challenges in discrete manufacturing? The high degree of individuality up to batch size 1, says Neuhaus and he emphasizes:

"The number of variants is unlimited, but despite this, or precisely because of it, it is important to implement simple and fast solutions. Sales and production very often still work on different systems and also with different master data.

In addition, the theoretically possible variants are usually mapped in systems with enormous effort. Imagine that you build your system based on requirements and forecasts and not on the basis of the theoretically possible product variants. We support this with simple tools. There is huge potential here."

Success factor master data

Solid master data is the basis for every digitization project. To what extent does MSG Treorbis support its customers in the handling of master data?

"For many years, the focus has been on master data management"

Michael Neuhaus knows from his professional experience.

"Our focus is that the expert for one's own product does not need an expert for the master data in the software. Everyone should be able to map their expertise easily and quickly in the software.

In addition, a decisive competitive advantage for us is that master data is only maintained once. However, these are used in sales, whether in Hybris, CRM or ERP, as well as in production and purchasing. This is where we offer our solutions."

Variant diversity poses major challenges for existing SAP customers: from sales order entry to delivery. The process chain is based on a lot of data and information that has to be brought together at the right time through branched and complex process steps.

And Managing Director Neuhaus is well aware of the challenges: "With configurable products, information from the material master (e.g. weight) cannot be used because it has to be derived depending on specific characteristics.

The availability check of all components of a product and product visualization are also demanding tasks that are only available to a limited extent in the SAP standard.

In this case, specific industry solutions for the SAP inventory customer are absolutely necessary: With Variant Process Optimization, MSG Treorbis offers an SAP-certified tool to optimize the handling and processes of configurable materials and, if necessary, to reduce complexity.

The Variant Process Optimization module provides a range of functions that significantly simplify the handling of configurable materials and thus also make the associated processes easier to control.

Of course, all components of this module are fully integrated into the SAP standard. The Variant Process Optimization module essentially consists of two main areas.

On the one hand, from the area of variant configuration with the segments weight calculation, control of characteristics for output in sales documents, availability check via the purchasing cockpit as well as package formation as an aid for production planning and control.

The second area concerns communication with external systems, e.g. the connection of programs for graphical order entry and for the integration of web store solutions via the SAP tools IPC, Hybris or Fiori.

We asked Managing Director Michael Neuhaus what arguments you use to convince existing SAP customers.

"Based on best practice, the preconfigured solutions offer a solid foundation in the standard with a guaranteed implementation time and a fixed price - thus we combine the biggest challenges of an SAP project."

Of course, future-proofing also counts; for this, MSG Treorbis relies on an S/4-based industry solution with Discrete Manufacturing. This means that Hana and open source are also in play.

To what extent have Hana and S/4 penetrated the SAP community, so that MSG Treorbis already offers an industry solution on this basis - and what are your strategic considerations?

"The topic of S/4 has fully arrived in the market" "All our customers and prospects are dealing with it intensively."

Neuhaus explains.

How stable is S/4?

In the past, there have always been discussions about the operational stability and completeness of S/4. Hana and S/4 are young SAP products - are they stable enough for an industry solution? Michael Neuhaus on this:

"The Realease 1709 on-premise is a stable quality release. For this reason, it is logical to develop new industry solutions on this platform and also deliver them to the market."

Thus, the industry solution Discrete Manufacturing also requires Hana and S/4 Hana Finance (formerly: Simple Finance). What else? Which parts of SAP Business Suite 7 and NetWeaver are used?

"We have focused on S/4 and ECC so far. Supplemented at the base by SAP Analytics solutions."

But for the SAP community, what's important is that "all customers, whether they use ECC or S/4, can use our solutions"

Michael Neuhaus explains.

The right migration path

Starting with S/7 (Business Suite 7) with AnyDB, a passionate topic in the SAP community is whether to move to S/4 using the greenfield or brownfield approach, or through a landscape transformation.

"Installed-base customers need to work out a cost-benefit trade-off between solutions"

emphasizes Managing Director Neuhaus.

"Our MSG Fit method helps to make the right choice here. There are increasing indications from the market that after a long installation life, a greenfield approach with process history disconnection seems to be a promising choice."

The way is the goal: Linux, Hana and S/4 - what are the next technical steps to achieve the industry solution Discrete Manufacturing? Here, MSG Treorbis shows itself to be open and very flexible.

"Any SAP migration path can be used that targets the S/4 platform"

Neuhaus explains his approach.

Cloud computing is currently one of the most discussed topics in the SAP community. The MSG Treorbis industry solution is designed as an on-premise solution - why? Could the solution also be run in the HEC or on AWS, Google Cloud Platform or Microsoft Azure?

"Currently, we offer the on-prem variant. HEC and AWS are definitely another possibility for the future, also with a view to a PMC per seat pricing model. Google and Azure are not currently in the planning."

is how Michael Neuhaus describes his perspective. He sees the new SAP Cloud Platform as a great opportunity.

As with almost every SAP application, the user interface is naturally an important component. Here, SAP has invested a lot in the standard solution in recent years. How important is the user interface (UI) in an industry solution like Discrete Manufacturing? And what solutions are available?

"The UI is exceedingly important to our customers"

Neuhaus knows from discussions with customers.

"Every business partner, whether customer, dealer, the internal order service, the prospective customer or the sister company should be able to use an intuitive UI like SAP Fiori based on their requirements and according to their expertise, and be guided and actively supported through the system. And this on any device, regardless of whether an expert or inexperienced user is working with the solution."

In addition to the revised UI, SAP has started to combine new topics in the Leonardo framework, including AI with machine/deep learning and IoT. Is MSG Treorbis also planning to use parts from Leonardo?

"Not currently," Neuhaus said, "but for 2018, this will be a focus."

Because machine learning and IoT also have great potential for the logistics, manufacturing and retail sectors:

"Today, it is important not to detect production errors only in quality control, but to identify possible deviations in advance during production and, before an error even occurs, to take countermeasures"

explains Michael Neuhaus in an E-3 interview.

"In the same way, this applies to tools and machines: using the multitude of information in real time during manufacturing."

While AI and IoT topics are innovative approaches, SolMan is an established product in the SAP community. Thus, it seems a logical step that the customizing of the industry solution Discrete Manufacturing can also be done via the new SolMan 7.2.

Neuhaus explains that the solution is basically linked to SolMan 7.2 in the delivery.

"We also offer this 'shared' in hosting with us, if the customer does not want to operate another dedicated SolMan for the solution itself. This is how we ensure deployment and maintenance."

SolMan 7.2 is also a relatively new SAP product: From MSG Treorbis' perspective, are SAP's existing customers already sufficiently familiar with the functions and possibilities of version 7.2?

"Certainly not the broad masses," Michael Neuhaus qualifies. "But it is a mature product that allows process definition or documentation in the Hana version without generating further licensing costs - good for our customers."

The success of the partners is always dependent on SAP's roadmap. Due to Hana and Hana 2, HEC, HCP and now SAP Cloud Platform, the annual S/4 releases, the learning curve and innovation in the community are high. MSG Treorbis has developed its own process model here.

Michael Neuhaus at the end of the E-3 conversation: "We are certainly strongly oriented towards SAP and refine SAP's solutions with our experience from many customer projects. I would like to see the user become more and more the focus.

In the future, not the technically savvy SAP expert, but every user should be able to use an intuitive UI that can be adapted to their requirements."