SAP S/4HANA Cloud for Manufacturing: Key Use Cases & Practical Benefits

The manufacturing sector in the UK and the EU is experiencing several challenges these days. Delays in supply chains, labour shortages, and quality pressures with profound complexity in the entire sector keep manufacturers on their toes. Whether it is an industrial equipment manufacturer or an FMCG producer, everyone finds this business scenario challenging. This situation demands the adoption of manufacturing ERP cloud solutions.

Enter SAP S/4HANA Cloud. It is not just a modern and cloud-first ERP solution, but a robust tool to generate real-time data for transforming manufacturing operations. It has embedded artificial intelligence to convert reactive enterprises into proactive ones. This blog discusses real manufacturing use cases and best practices of SAP S/4HANA Cloud with their benefits. Let’s start with its overview.

Overview of SAP S/4HANA Cloud for Manufacturing

Modern discrete and process manufacturing operations in the UK are highly complex and diverse in nature. A traditional, on-premise, fragmented system cannot manage this complexity effectively. Here, SAP S/4HANA Cloud emerges as a robust and unified platform to address this challenge. Its inherent cloud-native capabilities offer the necessary agility and efficiency to the manufacturing sector.

The in-memory SAP HANA database enables this solution to process massive volumes of transactional data instantly. It provides real-time visibility into key metrics, including inventory levels, WIP (Work-in-Progress) status, and equipment capacity. This can help manufacturers make real-time decisions. Moreover, SAP S/4HANA Cloud offers excellent scalability. As the right manufacturing ERP cloud solution, it scales easily with a growing business.

Moreover, embedded business intelligence (BI) and built-in analytics eliminate the need to move data to separate platforms for analysis. AI and ML capabilities in these features can automate workflows and deliver predictive insights, like recommending optimal schedules. Features like MRP Live are useful for instant material and capacity planning, shop floor is beneficial to monitor work orders, and inventory management can optimise processes.

Let’s go through some manufacturing challenges before understanding the role of SAP S/4HANA Cloud in this sector.

Key Manufacturing Challenges

The manufacturing sector is thriving, but it brings some major challenges in the way of manufacturers. Many enterprises struggle with complex production planning due to the failure of traditional systems and diverse product configurations. The planning gap and persistent supply chain disruptions lead to inventory and material shortages. This results in halting production lines and delaying customer orders.

Other challenges include dependence on manual workflows and high operational costs. Both these issues hit hard, especially in the areas of waste and energy consumption. Moreover, the lack of real-time data can cause quality control issues. Decision-makers, from plant managers to COOs, have to remain reactive rather than proactive due to the lack of real-time insights. This makes manufacturers less competent in the demanding UK market.

Detailed Manufacturing Use Cases

SAP S/4HANA Cloud for manufacturing offers the intelligent and unified base to mid-size and large enterprise manufacturers in the UK and EU. It assists them in addressing various challenges by integrating advanced capabilities into every critical function. This characteristic makes SAP S/4HANA Cloud the right manufacturing process automation ERP.

Real-Time Production Planning & Scheduling

S/4HANA Cloud features an in-memory database that enables MRP to run in real-time, calculating material and capacity requirements across the entire production line. It also leverages machine learning to automate the conversion of sales orders into production plans. This production planning automation can maintain the balance between supply and demand. As planners gain instant visibility, they can easily identify resource bottlenecks.

2. Smart Supply Chain & Inventory Management

Companies utilise S/4HANA supply chain manufacturing to convert inventory into an optimised, strategic asset with real-time stock visibility and other features. Demand-Driven MRP (DDMRP) positions to decouple buffer stock, using real-time demand signals for predictive replenishment. SAP Business Network integration improves supplier collaboration, and Extended Warehouse Management (EWM) provides real-time data on stocks.

Quality Management & Compliance

Process manufacturing, like FMCG, and highly regulated manufacturing companies find S/4HANA useful for in-process quality checks. This solution’s quality inspection points can trigger at key production stages automatically. Furthermore, if an inspection result falls outside the predefined range, the system generates a Quality Notification immediately. SAP S/4HANA also offers end-to-end traceability and support for ISO and other standards.

Shop Floor Control & MES Integration

This advanced ERP solution can enable true digital manufacturing S/4HANA by connecting with Manufacturing Execution Systems (MES) and IoT sensors. It enables supervisors to track the progress of every work order in real time and facilitates immediate intervention if necessary. Moreover, manufacturing documents, BOMs, and other digital work instructions can reduce errors. Altogether, S4/HANA can reduce downtime significantly.

Predictive Maintenance & Asset Management

Apart from functioning as a manufacturing process automation ERP, S/4HANA offers predictive maintenance. It monitors machine health by continuously measuring KPIs. Its inbuilt ML algorithms can analyse data against historical failure patterns to predict failures accurately. Manufacturers can schedule maintenance proactively to minimise expensive unscheduled downtime and extend the life cycle of key assets.

Costing, Profitability & Financial Visibility

This ERP system provides manufacturing companies with granular, real-time product costing by capturing material and labour costs accurately. It enables financial managers to perform instant margin analysis based on products and plants. Furthermore, a real-time data model is useful for automated financial close. Decision makers can estimate the profitability of new product lines or specific UK distribution channels live to implement pricing strategies.

Cloud-Based Collaboration & Remote Operations

As one of the best manufacturing ERP cloud solutions, SAP S/4HANA can give a unified and consolidated view of performance to COOs. Its SAP Fiori user interface is useful for mobile access to streamline processes on the go. Moreover, personalised cloud-based dashboards show the most relevant KPIs and alerts to different users as per role-based access. Manufacturers can monitor the performance of their production lines remotely using it.

However, it is necessary to follow some best practices to leverage the benefits of S/4HANA Cloud in the manufacturing sector.

Best Practices for Manufacturers Using S/4HANA Cloud

SAP S/4HANA Cloud for manufacturing can drive digital transformation with many benefits. Here are some actionable best practices for UK manufacturers to make the most of S/4HANA-

Maturity Assessment

You need to evaluate the current operational state and data quality to understand your company’s readiness for adopting digital manufacturing S/4HANA.

Standardise Processes

You can streamline and hormonise various business processes across all plants before migrating to S/4HANA Cloud to ensure consistency.

Fit-to-Standard Approach

The pre-configured SAP Best Practices with minimal customisation are useful for accelerating deployment and simplifying future upgrades.

Shop-Floor System

You can establish integration points with Manufacturing Execution Systems (MES) and IoT devices early to ensure seamless data flow.

Train End-Users

This is a crucial step to accelerate adoption and increase proficiency. Targeted and practical user-training should be based on their specific job roles.

Monitor KPIs

You should establish measurable KPIs, including Overall Equipment Effectiveness (OEE), delivery lead times, and inventory turnover.

Phased Approach

It is always better to implement a phased rollout approach for SAP S/4HANA Cloud than a massive launch to avoid risks and ensure business continuity.

A reputable SAP Partner in the UK can assist you in following these best practices successfully.

Industry-Specific Benefits for Manufacturers

Implementing SAP S/4HANA Cloud can enable manufacturing companies to move beyond process improvements. It addresses the challenges of complexity and disruption while offering the benefits, including-

Faster Production Cycles

MRP Live and constraint-based scheduling can reduce material shortages, resulting in faster order execution with shorter production cycles.

Better Supply Chain Visibility

Unified S/4HANA supply chain manufacturing provides manufacturers with a single source of truth for inventory and supplier performance with end-to-end visibility.

Reduced Manufacturing Costs

Accurate and real-time product costing with embedded predictive maintenance enables manufacturers to reduce operational costs significantly.

Improved Quality Compliance

Quality management and lot tracking capabilities offer in-process quality checks and audit-ready documents to improve compliance.

Increased Process Agility

The cloud-native architecture and real-time planning tools enable plant managers to adjust production plans quickly and increase agility during disruptions.

Quicker Decision-making

Real-time analytics on profitability, OEE, and other KPIs can facilitate faster decision-making and strategic resource allocation in the manufacturing company.

Let’s go through some realistic results of SAP S/4HANA implementation in the manufacturing company.

Realistic Results Manufacturers Can Expect

Manufacturers can achieve substantial improvements across their core operations by implementing SAP S/4HANA Cloud. While specific client data varies, manufacturers can expect a 10-30% reduction in inventory costs due to improved planning and demand signals. Also, a noteworthy improvement in production efficiency of around 15-25% and a dramatic increase in the speed of the planning cycle of around 20-40% is visible.

Furthermore, the integration of predictive maintenance and better shop-floor control capability can deliver a 20-60% reduction in unplanned downtime. Altogether, manufacturers can expect a significant increase in ROI over the period after implementing SAP S/4HANA Cloud from a reputed SAP Partner.

Concluding Remarks

SAP S/4HANA Cloud for manufacturing is a game-changer for the UK-based manufacturers seeking to thrive in the current market complexity. Its advanced features offer many benefits to the manufacturing industry, including quality checks, automation, and compliance. However, it is essential to follow the best practices to leverage the benefits of manufacturing process automation ERP capabilities, and other features of SAP S/4HANA Cloud.

Silver Touch Technologies UK is a renowned manufacturing ERP cloud solutions provider. Our in-house team of experienced SAP professionals analyse your business requirements thoroughly and suggests the best solution to drive the growth of your manufacturing company. Contact us to schedule a demo and learn more about the scope of SAP ERP solutions.

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