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An Inside Look at SAP’s Role in Turning Ideas into Value

by Thomas Ohnemus | SAPinsider, Volume 15, Issue 3

July 1, 2014

Empowered consumers are not just changing manufacturing processes, but also changing the overall market for manufacturers. Learn how these changes are transforming traditional business models, and how SAP is helping manufactures adapt with integrated solutions that enable them to bring innovative ideas to market faster and at the highest value.


A year ago, SAP’s Thomas Ohnemus described the dramatic changes taking place in manufacturing as a “new Industrial Revolution” driving manufacturers to reinvent themselves to meet the needs of a more empowered customer that has access to a wealth of product data.1 That trend continues today, and is not just affecting manufacturing processes, but is also reinventing some of the most long-held business models in our economy.
SAPinsider recently spoke with Ohnemus to learn more about how SAP is helping manufacturers face this changing world.

1 See “Manufacturing in a Changing World: Why Manufacturers Need to Run Smarter, Faster, and Simpler” by Thomas Ohnemus and Scott Bolick in the July-September 2013 issue of SAPinsider.

Q: How do you see the overall market changing for manufacturers today?

A: End consumers now are much more empowered with their buying decisions. In the past, you went to a few stores, compared products, and bought the one you liked best. Today, buyers at every level can compare products online with alternative products and solutions, and look to social communities to see what their friends or colleagues think. In this way, both B2B and B2C buyers can base their decisions on a much broader set of factors, including delivery and availability time, quality and reliability ratings, and certainly price.
In addition, there are new technologies that have empowered buyers even further. One is clearly mobility, which lets buyers access data wherever and whenever, and then communicate and collaborate with other members of the value chain globally. Sensor technology has also changed these processes as it has become more affordable. Today, there are sensors in a variety of products and parts, resulting in significantly more data being available to buyers and manufacturers about how that new product is performing. This has opened up a number of different business models.
All of this has created the “me” economy, in which individualized products are expected both in B2B and B2C markets. Buyers know what is out there and what features they want, and expect a product that fits those needs at the highest quality and lowest cost possible. Their decisions are made more quickly, on more available facts. Manufacturers must compete globally to fend off competitors and stay relevant with customers.

Q: How has the empowerment of buyers — the “me” economy — affected business models for manufacturers?

A: At a broad level, today’s manufacturing organizations have begun to manage the process from design to manufacture to service in a much more integrated fashion because the current end-consumer market has much more specific demands. Even if your organization has the best idea, if you are too slow to bring this idea to market, the idea loses value and competitiveness. It’s the combination of all these different components that can differentiate a company in today’s market, not any one in particular.
But the various parts of the manufacturing process have also changed due to these trends. Manufacturers must design more complex and customized products to meet buyers’ needs. A common example is the automotive industry. Today, a car is loaded with electronics and software options that enrich the product’s functionality. As a result, the design and development of a car is also more complex because you have to combine mechanical parts with electronics and software in a wider variety of configurations and across increasing levels of sensor and data interactions.
The manufacturing process has also become “smarter” and more flexible to build the products that are being designed. We have intelligent machines that can talk to each other being used on the production lines and shop floors. Processes have become more automated and require less manual effort to produce custom configurations.
Q: So it’s almost a manufacturing-on-demand model?

A: It’s certainly moving that way. Think about 3D printing. You can envision a day when you order a customized version of a pair of sneakers, and they are printed locally and shipped to you only hours after you order them. To accomplish this, you need a product that is designed to be configurable, an intelligent machine like a 3D printer, and the interconnected data to ensure the machine always has the right parts to produce these customized products. All of that is available today.
Another example of how these trends have changed a traditional business model is printing equipment manufacturer Heidelberg. Heidelberg used to sell printing machinery to its customers. Today, it invoices customers based on the printed page — not delivery of a machine. But to do that, it must have extremely reliable equipment in the field. If the machine isn’t running, Heidelberg isn’t getting paid. To ensure dependability, the company services machines proactively based on sensor data that the machines are sending. Heidelberg has reinvented itself from an equipment maker to a service provider by using smart machines that can share data and increase uptime.

Q: How is SAP supporting customers in these areas?

A: From SAP’s perspective, now that we have all the solution sets in place to help customers speed time to market, we are focusing on the integration components of this strategy. We are ensuring that the solutions required to support these areas are working together, allowing data to flow seamlessly and enabling our customers to bring innovative ideas to the market much faster and at the highest value. The integration allows customers to bridge the traditional gaps between different organizations such as engineering, manufacturing, service, and operations. In the past, different units worked in isolation and then threw their information over the wall to the next team. The overarching concept of idea to performance is to better manage and integrate all the data associated with today’s products.
We have learned from our customers that products being designed, manufactured, and serviced need to be represented digitally throughout their life cycles. The products themselves are very complex and need to be managed continuously. More intelligent products create more data about their performance, which then has to be managed throughout the product life cycle.
SAP’s idea-to-performance approach supports manufacturers’ efforts to create high-performing products and services and bring them to market faster. This aims to avoid breaks in the flow of information across the value chain, so in the end, you have a digital representation of the product at every stage of the life cycle. Think of it like an avatar — it is a single place where all the information about a machine can be housed. We do that by integrating SAP Product Lifecycle Management (SAP PLM), for instance, with SAP Manufacturing solutions (such as SAP Manufacturing Integration and Intelligence) and the various service components from SAP ERP and SAP Customer Relationship Management (SAP CRM) as well.
Whatever you design in engineering will be synched with the data that manufacturing uses, so when the design is handed to manufacturing, the data stays connected. If you make a change in the manufacturing stage, it will be reflected in the design data and will be accessible to the service organization. Even after they are sold and out in the field, these smart products — cars, printers, production machines, for instance — can send information about how they are performing back to the manufacturer and the customer, and that data is linked back to the original data for that product.
Q: How is this information in the manufacturing chain being made more consumable to SAP customers?
SAP 3D Visual Enterprise is a great example of how we are accomplishing this. Companies still maintain master data, which holds the most important details of products. This starts in engineering, where teams design products with computer-aided design (CAD) tools using all of the necessary parts data. SAP 3D Visual Enterprise helps transform all kinds of proprietary CAD files into neutral, content-rich formats that require very low memory space. This neutral 3D representation is much easier to consume and use all the way down the value chain.
The 3D representation can be used in manufacturing for assembly instructions or for better communication across the change process, which can expedite time to market and help service the product. Owners can navigate through all the details, such as service levels, spare parts, prices, and suppliers. This format provides a spatial context to the data so the parts aren’t just listed — they are shown in relation to one another. All the information that is managed in SAP Business Suite can be linked to a 3D representation from SAP 3D Visual Enterprise, and is viewable on an iPad that a service worker might use in the field. The service worker no longer has to dig into a manual or sift through papers to get details — everything is digitized and at his or her fingertips (see Figure 1).

Customers now can digitally review details about their products' status, performance, and maintenance needs

Figure 1 — Customers now can digitally review details about their products’ status, performance, and maintenance needs

We’ve also embedded sustainability functionality into all solutions, so during the design process you have automatic sustainability checks of the components you selected for the design to ensure they comply with requirements. More sustainability checks can be done later in the manufacturing and service processes, including measuring energy consumption during manufacturing and complying with worker safety standards — these are all embedded in the process. 
SAP understands that there is an evolution happening in how people consume and buy products, and that it has a significant impact on manufacturing business models. The question for manufacturers today is how to adapt to these changes — how flexible can they be to the new markets and demands? We want to provide manufacturers with the solutions they need to support these integrated processes and transfer their data effortlessly. If we can do that for them, then manufacturers can concentrate on what they do best — bringing innovative products to market in a cost-efficient way.
We have empowered end consumers and informed buyers who require more individualized products. Machines are more intelligent, and as a result manufacturers can get more, and better, data from them. Today’s winning manufacturers will leverage this data and transform their business models and processes to speed time to market and serve customer needs.

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Thomas Ohnemus
Thomas Ohnemus

Vice President of Solution Marketing, IoT and Digital Supply Chain

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