Solution Overview Executive Responsive Operations
Building a Flexible System Response to Customers Market Alignment Competitive Advantage Best-run manufacturers respond to changing market conditions by shifting operations toward customer-responsive processes. By aligning global manufacturing with these processes, they can accelerate innovation, optimize the manufacturing network, deliver quality products, and comply with regulations. SAP Innovations Consumer demand for innovation. Shorter lifecycles. Increased quality. Changing regulations. These are just some of the challenges manufacturers face in today s competitive global environment. From consumer-oriented batch processing to large asset-intensive energy operations, meeting increased regulatory requirements and tighter margins is tougher than ever. Component requirements for transportation fuels, increasingly tighter processing emission standards, and traceability requirements require continuous adaptation and reduced margins of error. Global changes in demand compound demand volatility. Global demand must be met quickly and efficiently, across the manufacturing network to the shop floor. locations including outsourced capacity must adapt rapidly to change. Changing regulations and brand perception in a socially connected market have direct and intangible effects on cost. Quality issues must be tracked across the value chain and resolved quickly to manage any impact on consumers, employees, and the environment. 2 / 26
Aligning Market Conditions Rapidly Response to Customers Market Alignment Competitive Advantage In a world of volatile markets and shifting global structures, manufacturers must manage resources to increase margins, mitigate risks, and maximize return. Effective outsourcing, efficient use of resources, and alignment of operating and maintenance activities are key to long-term competitiveness. SAP Innovations A successful manufacturing network uses flexible processes and a combination of internal and outsourced locations to respond to changing market conditions with rapid innovation and efficient execution. At the same time, it helps ensure a high level of quality and compliance with regulations. Global demand is aggregated and effectively allocated across the entire manufacturing network especially subcontracted and outsourced manufacturers to effectively utilize all available resources. In addition, manufacturing operations are aligned with production requirements and asset management capabilities to fully employ critical human and machine assets. Customer and consumer feedback, quality improvements, and innovations are rapidly integrated from design to production. As a result, the ramp-up to production is facilitated through common material masters, integrated sourcing, and synchronized engineering and manufacturing bills of material. Performance metrics and key performance indicators (KPIs) are then established and available to the entire value chain to coordinate operations and respond to internal and external events. By integrating data from many disparate systems into an enterprise business system, best-run manufacturers can collect and contextualize the information to make effective business decisions. 3 / 26
Gaining a Competitive Advantage Response to Customers Market Alignment Competitive Advantage Competitive advantage is gained through innovation; quick response to market demand signals; lower manufacturing costs; and consistent, high-quality, and socially responsible operations. Best-run manufacturers accomplish this by coordinating flexible, responsive manufacturing within the value chain. SAP Innovations 45.8% Shorter manufacturing cycles when the quality system allows simplified data sharing with other applications, such as production To compete in today s rapidly changing global environment, best-run manufacturers effectively manage their use of raw materials, labor, and critical energy resources. By aligning resource utilization with production activities, these manufacturers reduce their operating expenses. In addition, they can optimally seize market-price opportunities and increase return on assets through effective coordination of production and maintenance activities. Innovation results from internal brainstorming, market feedback, or a need to improve operations and costs. To quickly integrate innovations into manufacturing processes, close synchronization of engineering and manufacturing bills of material is key. Best-run manufacturers are able to efficiently execute shop-floor processes through clear work-order processing, visual work instructions, and automated data collection. Plus, they plan and execute quality management across the product value chain from suppliers, materials, engineering design, and manufacturing to final delivery and service. Quality and nonconformance issues are then tracked across the enterprise and resolved. Plus, any information obtained from monitoring production and overall manufacturing performance is visible to all personnel and integrated with plant and enterprise business processes. 4 / 26
SAP Innovations Response to Customers Market Alignment Responsive manufacturing operations monitor high-quality, efficient, innovative processes with clear visibility into production. As a result, manufacturers can flexibly respond to changing market conditions and maximize profitability. Competitive Advantage SAP Innovations Breakthrough technologies enable manufacturers to integrate the plant with the overall value chain for faster innovation and flexible manufacturing capabilities. Database and technology solutions, including SAP Business Suite software powered by the SAP HANA platform, increase the speed of planning for very complex materials, components, and production facilities. Plus, manufacturers can analyze large volumes of information. Mobile solutions provide real-time information to users from work instructions to plant performance. Enterprise mobility extends operations to where the workers are and helps them to uncover insights anytime and anywhere. Analytics enable decision makers to evaluate large volumes of real-time operational data quickly in context and with an understanding of any impacts on financials and external stakeholders. 5 / 26
Adapt to the Adapt Anticipate Demand Execute Efficiently Optimize Production Sustain Improvement Best-run manufacturers respond rapidly to market demands. Plus, they increase competitiveness with a flexible manufacturing network that quickly adopts new innovations and delivers quality, compliant products. Anticipate Demand Quickly align manufacturing operations with changing conditions by orchestrating global processes for manufacturing, product innovation, and the supply network. Execute Efficiently Execute sustainable production operations by integrating the enterprise with detailed, local execution of assets and operations. Optimize Production Produce reliable and compliant products by managing quality levels across the entire product lifecycle. Sustain Improvement Implement and maintain continuous improvement by providing visibility and managing manufacturing performance. 6 / 26
Innovate and Respond to Demand Quickly Adapt Anticipate Demand Execute Efficiently Optimize Production Best-run manufacturers innovate in response to customer demands, product modifications, or material requirements and quickly synchronize efforts with manufacturing. By optimizing global demand across the manufacturing network to the shop floor, agility and efficiency of the overall value chain are enhanced. Sustain Improvement 5.2% Higher plant on-time delivery when production personnel can quickly pinpoint root causes of problems and identify possible resolution Best-run manufacturers quickly align global operations with changing conditions by orchestrating global processes for manufacturing, product innovation, and the supply network. To improve on-time delivery through the effective use of all manufacturing capacity, structured information is captured and exchanged between the plant and the enterprise in a timely fashion. A smooth handover and synchronization between product development and manufacturing can help ensure that production always executes in line with current product design. As a result, product cycle time and the need for rework is reduced. Internal and outsourced production operations are optimized to synchronize with customer demand and suppliers and to increase manufacturing flexibility. 7 / 26
Execute Efficiently and Sustainably Adapt Anticipate Demand Execute Efficiently Optimize Production Managing global variations in price and demand and navigating market disruptions require optimized operations that help lower costs, enable product availability, and mitigate operating and brand risks. With improved visibility and performance management, manufacturers can identify and respond to issues rapidly. Sustain Improvement 10.3% Higher labor utilization when production personnel can monitor production and parametric data in real time Best -run manufacturers execute efficient and sustainable production operations by integrating the enterprise with detailed, local execution of assets and operations. Universal and effective insight into demand, work status, work in progress, and production and asset capacity across all manufacturing operations limits redundancy, increases labor and resource efficiency, and optimizes production execution. Providing contextualized production and process data to compliance, engineering, and manufacturing supervisors improves on-time delivery and enables effective use of all enterprise production capacity. And establishing environmental, health, and safety measures that are readily available to everyone in the value chain lowers the number of recordable incidents and provides access to processsafety information. 8 / 26
Sustain High-Quality, Compliant Production Adapt Anticipate Demand Execute Efficiently Optimize Production Best-run manufacturers provide clear traceability of where components are used, implement stringent qualitymanagement processes, and track the location of products within supply distribution networks. With greater insight and rapid assessment of quality issues, they can dramatically reduce recall and compliance costs. Sustain Improvement 48.7% Lower scrap as a percentage of manufacturing cost when quality management functionalities exist, such as root-cause analysis For best-run manufacturers, managing quality and compliance across the entire product lifecycle is becoming an increasingly critical priority in the marketplace. From product design through production to product usage and service, adherence to industry standards, compliant closed-loop inspections, and planning and execution helps manufacturers ensure consistent compliance with regulatory and quality standards. By meeting these mandates, these businesses may see customer satisfaction rates rise as they continue to deliver reliable and safe products. Nonconformance management processes for logging, tracking, and disposing failed or defective parts and assemblies enable manufacturers to efficiently manage every quality issue. They can track and trace all defects to any node of the production chain. Accurate tracking and tracing of material and products across the production and logistics value chain mitigates brand, financial, and compliance risks that may arise due to a low level of product quality. 9 / 26
Continuous Performance Improvement Adapt Anticipate Demand Execute Efficiently Optimize Production Maintaining a dynamic supply chain in a volatile marketplace requires accurate, clear, and globally transparent visibility into operations and asset management. Institutionalizing clear performance expectations, metrics, and operations monitoring enables effective coordination of all resources. Sustain Improvement 11.5% Higher adherence to production plan in organizations that monitor production and parametric data in real time Best-run manufacturers increase competitiveness by gaining clear visibility into operational performance and making it a priority to implement and sustain continuous improvement. To rapidly shift operations, manufacturers create added flexibility by integrating processes and providing access to real-time, relevant data from multiple sources and systems. They enhance employee effectiveness by providing role-specific manufacturing information and analytics. And they prevent quality and safety incidents by formally managing any changes to product design, manufacturing execution, and safety and environmental processes. Proactive management of asset and resource performance can improve return on assets by coordinating production and maintenance activities. These performance improvements are maintained through clearly established KPIs that are available in real time to all employee and management levels. 10 / 26
Responsive Value Map SAP Solutions Planning and Execution Execution Process Performance Lean Outsourced SAP solutions address key requirements of responsive manufacturing operations. Production Planning and Execution Execution for Discrete Industries Enterprise-Level Planning and Control Execution for Discrete Industry Governance for Material Master Data Production Planning and Execution Material Requirements Planning Plant-Level Operations Production Capacity Planning Global Plant Performance Management Process Visibility and Performance Global Plant Performance Management Plant-Level Operations Execution for Process Industry Governance for Material Master Data Lean Lean Production Planning Lean Execution Poka Yoke Processing Lean Six Sigma Analysis Outsourced Subcontracting (Foundation) External Processing Collaborative 11 / 26
Production Planning and Execution SAP Solutions Planning and Execution Execution Process Performance Enable comprehensive manufacturing processes, network planning, real-time visibility. Manage optimized production allocation across the manufacturing network and quickly adjust to changing demand. Track production completion, material usage, and quality metrics during execution. Gain visibility into work in process, real-time quality, and production notifications. Lean Outsourced 10% Higher capacity utilization when managers can align strategic manufacturing objectives and operational activities Enterprise-Level Planning and Control Governance for Material Master Data Material Requirements Planning Production Capacity Planning Adapt to changing customer needs by defining and organizing tasks and resources globally. Improve the consistency of material master data, and increase business process efficiency across the enterprise. Manage material demand and supply to balance production plans and lower cost. Create reliable production plans based on capacity information. 12 / 26
Execution for Discrete Industries SAP Solutions Planning and Execution Execution Process Performance Lean Outsourced Help ensure manufacturing execution is efficient and compliant. Streamline manufacturing processes from design to delivery. Access real-time manufacturing data and enable continuous control over processes. This enables manufacturers to improve product quality, increase throughput, and lower margins through shorter cycle time. Use digital machine-to-machine communication to exchange real-time data across mobile devices and business systems. Execution for Discrete Industries Increase labor utilization and improve data quality with paperless manufacturing systems that provide traceability and genealogy information. 47.4% Lower manufacturing cycle time when equipment is allocated to operations correctly and their usage is tracked in real time Production Planning and Execution Plant-Level Operations Global Plant Performance Management Optimize production allocation across the manufacturing network and rapidly adjust processes to address changes in demand. Improve production plan execution, nonconformance management, and workinstruction effectiveness to enhance production plan adherence and lower costs. Increase responsiveness and help ensure continuous improvement with real-time visibility into operations, production execution, and overall equipment effectiveness. 13 / 26
Process Visibility and Performance SAP Solutions Planning and Execution Execution Process Performance Gain better insights into operations and overall business performance. Translate real-time plant production information into the context of the entire business to monitor operations and business metrics. Assess overall performance to detect abnormal events or trends, and resolve them early on. Lean Outsourced 12.2% Increased adherence to production plans when managers track and align strategic manufacturing objectives and operational activities Global Plant Performance Management Plant-Level Operations Execution for Process Industry Governance for Material Master Data Adapt to changing customer needs by defining and organizing tasks and resources globally. Increase process visibility, labor effectiveness, and efficient utilization of energy, materials, and resources. Increase on-time delivery and reduce cost with greater visibility into production status and confirmation, work in process, and batch traceability and genealogy. Improve the consistency of material master data, and increase business process efficiency across the enterprise. 14 / 26
Lean SAP Solutions Planning and Execution Implement lean processes across the value chain. Deliver the right products and services at the required time and quantity with consistency and predictability. Execution Process Performance Lean Outsourced 32.4% Fewer days in inventory when processes are controlled through pull-based production schedules rather than traditional shop orders Lean Production Planning Lean Execution Poka Yoke Processing Lean Six Sigma Analysis Create predictable manufacturing schedules and facilitate demand and collaborative planning to stabilize material and value flow, improve on-time delivery based on customer demand, and shrink production lead time and inventory. Minimize waste and support continuous improvement by using a demand-based flow for shop-floor manufacturing. Reduce the likelihood of errors by detecting unintended mistakes early on, defining root causes, and taking proper corrective actions. Quickly detect potential waste and opportunities for continuous operational improvement by assessing root-cause variability and managing exceptions better. 15 / 26
Outsourced SAP Solutions Planning and Execution Manage the manufacturing network. Turn linear supply chains into complex supply networks, and coordinate outsourced manufacturing activities. Execution Process Performance Lean Outsourced 40% Lower manufacturing cost as a percentage of revenue for top quartile, versus bottom quartile Subcontracting (Foundation) External Processing Collaborative Manage bids for subcontracting, procurement, and financial information. Integrate planning, financial, and execution steps of external processing into core business processes. Orchestrate outsourced operations by integrating information on work in process, quality, and material use. 16 / 26
SAP Solutions SAP Innovations References SAP Innovations SAP Innovations Applications Mobile Analytics Breakthrough technologies can help manufacturers extend optimization outside the plant and into the value chain. Planning processes can be improved across the entire manufacturing network, and the full business and operational impacts of real-time events can be better understood. 53% Of organizations report a big gap between the availability of Big Data and their ability to analyze it for insights Applications Increase the speed of planning processes that involve very complex materials, components, and production facilities by analyzing large collections of quality data. Mobile Give employees real-time access to work instructions, as-built designs for service, and plant performance data. Extend operations to where the workers are to get insights anytime and anywhere. Analytics Evaluate large volumes of real-time operational data quickly in context and with an understanding of any impacts on financials and external stakeholders. 17 / 26
SAP Solutions SAP Innovations References SAP Business Suite powered by SAP HANA SAP Innovations Applications SAP Business Suite powered by SAP HANA enables manufacturers to plan with greater speed, improve quality monitoring, and optimize material flow. Mobile Analytics Production Planning and Execution Accelerate replanning processes. Make each run for manufacturing-execution planning more frequent with shorter cycles and across more facilities with real-time material planning. 62% Higher production planning adherence when using pullbased production schedules rather than shop orders Execution for Discrete Industries Lean Increase the efficiency of processes that enable production orders to be dispatched and fulfilled. Enable better decision making in production planning and purchasing with real-time, accurate information. 18 / 26
SAP Solutions SAP Innovations References Mobile SAP Innovations Applications Mobile Mobile solutions provide real-time information to workers anytime and anywhere. From plant heads and supervisors to plant workers, everyone can access the information they need, when and where they need it. Analytics Execution for Discrete Industries Provide mobile access to manufacturing processes and information to improve overall utilization of labor and final-product quality. 49% Lower manufacturing cycle time when production personnel can pinpoint root causes of problems and identify possible resolution Process Visibility and Performance Increase process visibility and data quality by enabling field workers to retrieve real-time production information anytime, anywhere, and on any mobile device. 19 / 26
SAP Solutions SAP Innovations References Analytics SAP Innovations Applications Mobile Analytics solutions enhance visibility into plant performance and provide real-time updates on KPIs. As a result, decision makers can evaluate how operational changes impact the entire value chain. Analytics Production Planning and Execution Curb waste by assessing manufacturing and supply chain processes to locate sources of excess inventory, unnecessary labor costs, and poor quality. 53% More employees use analytical information when a BI system provides access to advanced analysis tools that do not require technical expertise Execution for Discrete Industries Process Visibility and Performance Lean Outsourced Find sources of nonconformance and determine overall manufacturing status and performance. Analyze component levels and enable backward traceability. Compare overall plant and operational performance against defined metrics. Monitor asset utilization aligned with production. Increase visibility into manufacturing and supply chain processes to remove waste. Pinpoint sources of excess inventory, unnecessary labor costs, and poor quality. Monitor outsourced capacity performance in quality, production schedule, and work-inprocess. Assess profitability and supplier performance against contracted terms. 20 / 26
Best-Run Customers Best-Run Customers Klabin Novellini Why SAP? SAP customers produce more than 66% of the world s medical devices. SAP customers manufacture more than 77,000 automobiles per day. SAP customers produce more than 65% of the world s televisions. SAP customers produce more than 60% of the world s toys and games. 33% Lower finished goods inventory when manufacturing execution systems are integrated with enterprise applications 21 / 26
Best-Run Customers Klabin Novellini Why SAP? Klabin raises plant productivity and operational and financial efficiency with SAP MII. The company s top objectives Accelerate continuous improvement and total productive maintenance (TPM) processes Maximize asset use Standardize production plant processes to implement best practices The resolution Redesign of all processes for adoption of the SAP Integration and Intelligence (SAP MII) application Integration of the SAP ERP application, SAP BusinessObjects business intelligence solutions, and manufacturing execution systems Web access to SAP MII established Internal staff trained to execute rollouts at other plants The key benefits Maximization of asset use, along with significant waste reduction TPM Award won Reduction in development and maintenance time needed for applications IT cost savings -20% Production breakdown in paper plants +30% Improvement cases studied by the company +6.5% Improvement in final product quality The benefits of intelligent control throughout our manufacturing system using SAP MII exceeded our expectations and placed us at a whole new level to compete in the global market. Lorival Verillo, IT Manager, Klabin S.A. 22 / 26
Best-Run Customers Klabin Novellini Why SAP? Novellini maintains control throughout the manufacturing process with SAP MII rapid-deployment solutions. Objectives Gain a single, current, comprehensive view of operations Ease the burden on IT, which was saddled with supporting the many software packages Cut inventory carrying costs, reduce lead times, increase report accuracy, improve control, and be more responsive to market demand fluctuations Increase customer satisfaction by providing more reliable delivery schedules and assists like tracking numbers Why SAP The SAP MII rapid-deployment solution for batch manufacturing addressed every one of Novellini s challenges with its combination of functionality, integration, and ease of deployment Preconfigured solution, less costly, and faster to implement with fewer risks, which aligned with Novellini s objective to cut IT expenses Benefits Single, consistent, and automated information source, which bolsters efficiency and has increased the accuracy of management reports Streamlined operations throughout manufacturing, leading to a decrease in the need for inventories of semifinished goods Reduced lead times, due to better production scheduling We completely recovered our investment in SAP MII in its very first year through savings in manufacturing and IT, and that doesn t count the revenue increases we are seeing because of improved customer satisfaction. Fabrizio Lorenzini, CFO, Novellini SpA 4 Month implementation that was on schedule and within budget with implementation partner IT-Link S.r.l. Reduced IT costs, now that the legacy software licenses, maintenance contracts, and specialty skills are no longer required Increased Customer satisfaction through better information 23 / 26
Why SAP? Best-Run Customers Klabin SAP solutions help manufacturers closely align operations with corporate objectives and synchronize manufacturing processes with business processes. As a result, they can achieve continuous improvement and optimize IT investments. Novellini Why SAP? A comprehensive portfolio of closed-loop processes across planning, execution, and asset management Low total cost of ownership with native integration that reduces integration costs over both the short term and the long term Innovative platform that is adaptable and configurable to leverage existing plant investments Comprehensive solutions that support any manufacturing style Fast time to value that is proven through a strong network of SAP customers 24 / 26
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Solution Overview Executive CMP 28926 (14/01) Visit us online at www.sap.com/manufacturing. Also, visit our community pages to learn more: www.facebook.com/#!/pages/lean- Operations/76156926556 http://twitter.com/sapmfg www.youtube.com/user/sapvideomom http://scn.sap.com/community/manufacturing
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