Smart Factory needs an optimized ERP heart

Digital technologies and real-time processes are comprehensively networking the value chains in the smart factory or as part of smart logistics. This creates the basis for new business processes, services and business models.

The potential of Industry 4.0 is demonstrated by buzzwords such as "batch size 1" and "predictive maintenance". Batch size 1 means the individual configuration of products at costs similar to those of series production.

Predictive maintenance ensures great flexibility in production because the manufacturing process can be adapted accordingly for the "batch size 1". A smart factory also leads to a significant improvement in product quality, as points in the production process that are prone to errors are identified in advance. This reduces the rework rate and lowers costs.

I am convinced that the domestic economy, whether automotive, manufacturing or electronics industry, can benefit enormously from the opportunities offered by the concept of Industry 4.0 to optimize processes in warehousing, production and transport or to open up new markets and target groups.

In my view, however, there is still a wide gap between vision and reality in German companies when it comes to Industry 4.0; current studies confirm this. The German Electrical and Electronic Manufacturers' Association (VDE), for example, found in a survey of its members that the smart factory is not expected to become a reality until 2025.

A McKinsey survey of 300 decision-makers concludes that 40 percent of German companies do not feel well prepared for Industry 4.0.

ERP landscape often too complex

But preparation is the crux of the matter. If you want to efficiently set up an Industry 4.0 scenario, you first have to lay the foundations for it - in organizational terms, but above all in technological terms.

The technologies for networking things, users, companies and partners in the sense of an "Internet of Things" are available: Sensors, auto-ID systems or an IT platform for real-time processing and analysis of big data.

But as a first step, the basis necessary for an Industry 4.0 project should be created by implementing stable, integrated, efficient and largely automated IT processes in the ERP.

An integrated ERP system such as SAP ERP represents the "heart" of the commercial and logistical core processes in the company. However, in many places the SAP ERP landscape has become very complex and confusing over the years due to in-house programming or hard-coded, non-configurable extensions, which limits flexibility and transparency.

This is due, among other things, to the fact that special processes and legal regulations, special features in the exchange of business data or certain EDI formats often cannot be mapped in a practical way in the SAP standard.

Optimization with add-ons

This is where Abap-based, modular add-on solutions come in. Thanks to their seamless integration into SAP ERP, they have unlimited release capability and contain reusable solution modules like a modular system or "toolbox". In this way, SAP standard processes can be supplemented, extended and adapted without modification.

Companies benefit from this in several ways: Because it is no longer necessary to customize the system, the SAP ERP landscape can be made leaner and more manageable, and thus more cost-efficient.

The agility and flexibility of the operating processes is also increased, because new process requirements or extensions can be implemented quickly - with complete integration into the SAP standard. This is definitely a competitive aspect.

At the same time, the SAP landscape, which has been optimized and simplified with add-ons, forms a solid foundation for building new types of processes based on the concept of Industry 4.0.

This, together with the fact that our group of companies is achieving very positive results in the development and implementation of practical smart factory solutions in cooperation with customers and the scientific community, makes me confident that the potential lying dormant in Industry 4.0 can soon be fully exploited.