Variant configuration

E-3 Editor-in-Chief Peter Färbinger spoke with Treorbis Managing Director Michael Neuhaus about the broad interest in and strategic components to the topic of variant configuration.

"At Treorbis, we have recognized that the topic of variant configuration is also becoming increasingly important for companies outside the mechanical and plant engineering sector"

Neuhaus begins the conversation and explains:

"Customers of consumer goods are also becoming increasingly demanding and require individual products. For a long time now, no one has bought a kitchen or living room set 'off the rack.

Starting with the different color and surface variations, the various features, and even individual dimensions, consumers want their own ideas implemented."

Many Treorbis consultants have been working in this environment for more than 15 years and have a corresponding amount of know-how from a wide range of industries.

"We use this knowledge in a changing economy and can make it available to our customers"

Neuhaus describes the current situation. At the beginning of this year, the industry association Bitkom commented: "Digitization is leading to fundamental changes in market conditions in the German economy.

In more than one in two companies, the business model is changing as a result of digitization. 70 percent of companies see digitization as a major challenge. This puts digital transformation on a par with the shortage of skilled workers and well ahead of other internal and external challenges such as fierce competition or difficult financing conditions.

"Managing digital transformation is the most important management task of our time"

said Bitkom President Professor Dieter Kempf at the start of this year's CeBIT in Hanover.

"If the business model changes as a result of digitization, the company has to adapt or sooner or later it will disappear from the market."

Variant configuration with experience

The topic of variant solutions is not really new.

"Since 2009, Treorbis has been successfully advising its customers on the topic of variant configuration in SAP. Over the years we have realized many interesting projects, developed new add-ons and solved new challenges again and again."

emphasizes Michael Neuhaus. At that time, the buzzwords digital transformation and Industry 4.0 were not yet around. However, ideas about optimizing production and manufacturing already existed at that time with buzzwords such as Perfect Plant, e-commerce or SCM.

Initially, many Treorbis customers came from the furniture industry, but now the range of industries is very broad.

"This shows how important it is also becoming for other industries to be increasingly responsive to their customers' needs"

Neuhaus knows from his professional experience.

And other aspects have been added in recent years: From a technical perspective, there is an increasingly frequent requirement to map configurable products on mobile devices. Be it for the possibility of order entry via the Internet or the fact that in many companies the field staff is supposed to enter the orders on a mobile basis.

"In all cases, of course, the option of configuring the products individually should not be waived. We gladly and very successfully meet these challenges".

declares the Treorbis managing director with pride.

"Digital transformation is a process of creative destruction"

Kempf said at CeBIT.

"This should spur on those responsible. No one is helplessly at the mercy of development; you can shape it."

Bitkom believes that digitization is a task for society as a whole. In order to actively shape the digital world, Germany must avoid one-sided dependencies and master important key technologies.

"We need more digital sovereignty"

Kempf emphasized. Bitkom locates the concept of digital sovereignty between the opposite poles of foreign control and autarky. Kempf:

"We want neither one nor the other. Digital sovereignty means that we have competencies in key technology fields. In addition, we must be able to make self-determined and expert decisions between the offerings of powerful, trustworthy partners."

In recent years, SAP has consistently built up this digital sovereignty through in-house developments and strategic acquisitions. These include the acquisition of the Swiss e-commerce provider Hybris.

In view of the changed retail environment, new so-called omnichannel solutions are playing an increasingly important role. What has Treorbis' experience been with Hybris in this regard?

"We recognized this trend very early on and have been dealing with it for quite some time"

Neuhaus explains.

"Hybris, as we say, only becomes really exciting with variant configuration. In our projects, we draw on the Hybris expertise of our partners and supplement it with our variant know-how.

This creates solutions that enable our customers to reduce the complexity of their business processes while increasing sales effectiveness."

Digital transformation

Digitization not only changes products and business models, it also leads to profound changes in the organization of companies. In around three quarters of companies, digitization is accelerating communication with customers or internally among their own employees.

Two-thirds find that their organization has become more flexible, and more than one in two companies sees greater efficiency. This is the result of a representative survey of 505 managing directors and board members of companies with 20 or more employees commissioned by the digital association Bitkom.

Where does Treorbis currently locate the Industry 4.0 discussion and thus the biggest construction sites and perhaps also the best solutions of current digitization? "Industry 4.0 and the networking of machines are still in their infancy," says Michael Neuhaus.

"Here, too, it will be the innovative German SMEs that will present the first solutions. The best solutions will be those that approach the topic step by step and take a holistic approach in conjunction with the ERP system. We are happy to contribute our experience here as well."

A good four out of ten companies in the core industrial sectors are already using Industry 4.0 applications today. This is the result of a representative survey presented by the Bitkom association at this year's Hannover Messe.

For this purpose, 100 companies each with at least 100 employees from the automotive, mechanical engineering, chemical and electrical industries were surveyed.

"The digitization of German factories is in full swing, but far from complete"

said Winfried Holz, member of the Bitkom Executive Board, in Hanover.

"In the face of tough international competition, for example from China and the U.S., companies must now invest massively in digitizing their processes and products so that Germany can maintain its leading position in the manufacturing industry."

The term Industry 4.0 refers to the fourth industrial revolution driven by the Internet. It describes the technological transformation of today's production technology into an intelligent factory in which machines and products are networked with one another.

The most widespread applications at present are social machines and predictive maintenance. From the point of view of the companies, the digitization and networking of production results in numerous advantages: Around three quarters of respondents believe that Industry 4.0 solutions can optimize processes in their factory.

72 percent believe that production costs can be reduced because efficiency increases through the use of IT. 71 percent say that capacity utilization will improve with the help of IT, and 70 percent that work can be organized more flexibly.

What do you see as the dominant challenge at Treorbis with regard to Industry 4.0 and especially variant configuration: the mathematical algorithms, logistics, structural and process organization, business process management, etc.?

"We don't see the mathematical algorithms as the big challenge, those are relatively quick to solve"

Neuhaus explains.

"It is important to know the business processes of a variant manufacturer - and essentially the logistics business processes. In this context, the respective industry is also less important.

At Treorbis, we not only advise our customers in the pure customizing of the SAP system, but also support our customers in the development or restructuring of their organization."

"At Treorbis, it is important to us to offer our customers a holistic solution for mapping their business processes in SAP"

Michael Neuhaus emphasizes.

"In this context, we advise our customers not only on the pure implementation in SAP, but already during the set-up or conception phase and on the development of the data structures, which can be very complex.

To map these structures, we have developed a number of add-ons - based on our many years of experience - that enable our customers to implement their individual requirements simply and pragmatically."

The recognized core competence of Treorbis in the field of variant configuration is the understanding of the specifics of the business processes of a variant manufacturer. As with many SAP applications, it is the use and business case that counts.

"We're dealing with mostly customer-only make-to-order manufacturers"

Neuhaus explains,

"but which, for productivity reasons, have to master the balancing act between individual and series production."

It is not so much pure SAP know-how that is required here, says Michael Neuhaus, but rather knowledge of the processes and how they can best be mapped in the SAP system.

With the topic of variant configuration, it is not pure customizing know-how that is required, but rather holistic process and solution consulting.

"The poor solution only replicates the existing requirements 1:1"

Neuhaus knows.

"A good variant solution is future-oriented, easy to maintain, transparent to map, growth-oriented and flexible."

Where will the solution offering go?

"Industry 4.0 and thus the digitalization of manufacturing will also play an important role for companies from the make-to-order sector"

says the Treorbis managing director.

"Perhaps even more important than for companies with pure series production. The networking of production plays a major role, especially when no two parts are alike.

When each part to be produced is different from the next. Even though criticism is being voiced from various quarters on the subject of Industry 4.0, we see great potential in implementing the requirements for the computerization of production technology."

Configure, Price and Quote

SAP is also very involved in the area of Industry 4.0 and offers its own solution configurator with Configure, Price and Quote (CPQ). As a variant expert, what is Treorbis' position on this topic?

"SAP CPQ is designed for mapping complex solution packages and is divided into the two areas of CPQ Products and CPQ Solution"

Neuhaus explains. The familiar SAP product configurator LO-VC (material master variant configuration) is the basis for this. Thus, in interaction with the CPQ, the Treorbis Variant modules continue to be a profitable advantage for the customer.

In contrast to CPQ Products, where the focus is on classic product configuration, CPQ Solution is used to configure complex customer-oriented sales solutions.

The product characteristics flow directly into the solution configuration, e.g. in order to derive necessary contract components such as service and maintenance contracts, financing, etc.

The overall offer is generated directly through the evaluation of characteristics. Particularly for industries such as plant and mechanical engineering, this is a decisive advance in order to be able to use variant configuration even more profitably.

"We support this forward-looking development of SAP and have prepared the Treorbis variant solutions for integrative use in CPQ"

Neuhaus describes the current situation. The collaboration with SAP is thus very productive and intensive.

"We have a very good relationship with SAP".

Neuhaus emphasizes in an interview with E-3 Magazine.

"In particular, the relationship with those responsible for the topic of variant configuration is based on a long-standing and trusting cooperation.

We exchange ideas very constructively in both directions. For SAP and for us, it is always important that we develop new solutions that are entirely in the interest of customer benefit."

Generally speaking, variant configuration is a very complex matter, can SAP Hana be of help here?

"Hana will not reduce complexity here because it is driven by the way the data models are built"

Michael Neuhaus explains.

A data model tailored to customer-specific requirements can be manageable and easy to maintain, even without Hana. And it complements:

"But Hana will bring a significant improvement in day-to-day business, in standard tasks such as the MRP run or the simulation of configurations. We can already say that today."

In the area of variant configuration, the following topics are in focus at Treorbis: setting up our own Hana demo landscape; the add-ons are Hana-ready; training other consultants in the use of Hana databases; GUI adaptation with UI5 and Fiori; and, of course, dealing with S/4 Hana.

"The Treorbis variant solutions are designed in such a way that the clerk can easily maintain his subject-related data in the variant configuration himself without any special expert knowledge"

Michael Neuhaus defines the basic approach in-house. With the help of the Treorbis decision tables, the user can store the rules in tabular form. He no longer needs any special programming knowledge.

"With this focus of easy rule maintenance and optimized runtime through Hana technology, variant configuration will be an attractive way of representing products for many companies, including midsize companies"

Neuhaus says.

What does the future hold?

"As already mentioned, we still see great potential not only in mechanical and plant engineering, even though this industry is perhaps already the most advanced in terms of variant configuration.

In our opinion, the consumer goods industry in particular is an industry where we see great potential. Regardless of the industries, however, it will be the integration of variant configuration into the new technologies that will present us with ever new and exciting challenges in the coming years. We are looking forward to these challenges"

Treorbis Managing Director Michael Neuhaus explains at the end of the E-3 conversation.