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Why Manufacturers Are Flocking to SAP Business ByDesign

by Greg Chase | SAPinsider

July 1, 2012

Midsize manufacturing companies are finding value in several of the features of SAP Business ByDesign, such as the software-as-a-service format, end-to-end business processes, and configurable business models. Showcasing customer successes, this article looks at how SAP Business ByDesign puts advanced functionality into the hands of business users without requiring midsize companies to build out large IT operations.
 

An analysis of the more than 1,000 SAP Business ByDesign customers has yielded an amazing fact: Midsize manufacturing companies are flocking to this solution. These companies hail from many different industry niches and wield a wide variety of business models. In fact, the most common similarity among these customers is that they own their customer relationships and brand designs.

These midsize manufacturers are finding value in several features of SAP Business ByDesign:

  • Software-as-a-service (SaaS): Management in the cloud by SAP, so customers don’t need specialized IT talent
  • Integrated processes: End-to-end business processes across the entire value chain; from sales, to logistics, to finance, to human resources (see Figure 1)
  • Configurable business models: Flexible and sophisticated setup of supply chain management and production capabilities
SAP Business ByDesign’s comprehensive, integrated processes for manufacturers
Figure 1
SAP Business ByDesign’s comprehensive, integrated processes for manufacturers

Enterprise-Class Functionality for Midsize Manufacturers

Midsize manufacturing companies may have sophisticated business models that bring complex products to their customers, but powerful on-premise ERP systems have traditionally been out of their reach. SaaS offerings like SAP Business ByDesign turn that around, putting advanced functionality into the hands of business users without requiring midsize companies to build out large IT operations. This allows midsize manufacturers to run quality business operations based on industry best practices, enabling them to maximize margins just like their large enterprise cousins, while using their nimbler size to a competitive advantage. The typical manufacturing company running SAP Business ByDesign has between 100 and 1,000 employees, 50 or more users, and US$10 to US$250 million in annual revenue.

Accessing your ERP system through SaaS provides several benefits. Delivery is highly simplified and standardized, allowing your company to get started as fast as it can be ready. Also, because it’s in the cloud, functionality can be accessed from different locations and devices, allowing you to easily support a field sales force, satellite plants, and even contract users located anywhere in the world. In addition, the software is managed in secure tier III and IV data centers, providing a much higher level of security and availability than many midsize companies could achieve if they managed the server infrastructure on their own.

The Power of One Integrated System

When discussing requirements for manufacturing industries, it is instinctive to focus on the manufacturing part of the business first. However, these companies have other concerns and competencies, such as developing distribution channels, creating brand awareness, and designing engaging products. In fact, if your company’s differentiating, competitive advantage is among any of these business processes, it may make more sense for your company to outsource its manufacturing function.

Such is the case for SAP Business ByDesign customer Skullcandy, the edgy producer of sporty ear buds and headphones, clothing, and smartphone accessories. For Skullcandy, their competitive focus is on the design of their products, making those products accessible to their consumers in the right venues, and driving a unique brand. Manufacturing consumer devices such as headphones can be cost-effectively achieved in China by leveraging the same huge electronics supply chain ecosystem that brings us our smartphones and laptops from companies such as Apple and HP. In fact, one can argue that manufacturing outside of China might actually be a competitive disadvantage considering the clear success of this business strategy.

SAP Business ByDesign provides Skullcandy with a system that lets them link their inventory, demand forecasting, sales, fulfillment, and financials into a single view. This way, their sales team can know what inventory is available before they make promises for delivery, managers can see what product lines are selling, planners can send accurate demand forecasts to outsourced suppliers, and executives can have an accurate picture of the entire business and its cash flow.

Manage Your Supply Chain the Way You Want

Some SAP Business ByDesign customers choose to take a much more hands-on approach with their supply chain operations. Take Sambazon, a maker of organic, environmentally friendly beverages. Sambazon’s brand is exemplified in its sourcing of ingredients, such as açaí from family farmers in Brazil, and the way it ensures organic practices and fair-trade partnerships. This makes the company’s supply chain processes unique; although the processes are outsourced to different contractors, managing them closely allows Sambazon to control costs more effectively.

The integrated supply chain management, supplier relationship management, and financials processes provided by SAP Business ByDesign helps Sambazon run an adaptive outsourced, yet tightly managed, supply chain strategy. Sambazon’s adaptive supply chain offers another advantage: When the company wants to create a new line of beverages, it can easily configure its sources and contract warehouses and factories to optimally begin production and distribution of the new flavors to distribution outlets.

Run to the Cloud

With SAP Business ByDesign, midsize manufacturers are benefitting from the advantages that cloud technology offers, such as the ability to access enterprise-class ERP functionality through a SaaS model. What’s more, they can enjoy integrated business processes made possible through a single system, and configure their business models to better orchestrate their supply chains. For more information, visit www.sap.com/include/business-by-design/highlights/industries.epx.

Greg Chase (greg.chase@sap.com; Twitter: @GregChase) is Senior Director of SAP Business ByDesign Solution Marketing at SAP. He joined SAP in 2006 and has nearly 20 years of experience in the software industry, holding roles in product marketing, sales, product management, and engineering. Greg is a frequent blogger on topics such as IT cloud strategy, software tools and development, software-as-a-service, hybrid cloud/on-premise IT architectures, platform-as-a-service, and business process management methodology.

 

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