The Five Keys to Manufacturing Success


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These are challenging times for discrete manufacturing,
especially for small to midsize companies. To stay
competitive and meet rising expectations, manufacturers
must seize every opportunity to grow – but do so wisely
and profitably.There are clear strategies that can help
these manufacturers achieve competitive advantage while
giving clients the innovative,
competitively priced products
they demand.

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The Five Keys to Manufacturing Success

  1. 1. SAP Thought Leadership PaperManufacturingThe Five Keys to Manufacturing SuccessEncouraging Profitable Growth
  2. 2. These are challenging times for discrete manufacturing,especially for small to midsize companies. To staycompetitive and meet rising expectations, manu­ acturers fmust seize every opportunity to grow – but do so wiselyand profitably.There are clear strategies that can helpthese manufacturers achieve competitive advantage whilegiving clients the inno­ ative, competitively priced products vthey demand.
  3. 3. Key StrategiesSucceeding in the Discrete ManufacturingMarketplaceToday’s discrete manufacturing market- Position the Organization for tions affect growth, manufacturers haveplace is both dynamic and, at times, un- Profitable Growth little chance to resolve problems,forgiving. Rivals are quick to duplicate in- leverage opportunities, and actuallynovative products and features and offer In an uncertain economy, manufacturers grow the business.them at lower cost – driving down mar- must deal with fluctuations in both sup- If a merger or acquisition is on thegins. Globalization has created the need ply and demand. Raw material prices horizon, a manufacturer needs an espe-for new distribution channels to reach spike, forcing manufacturers to find new cially clear view of the bottom line toexpanded markets. Geographically di- supply routes. Contingency plans are present itself as an attractive partner.verse sources of raw materials, parts, needed for materials and services And if companies do combine forces,and supplies have made supply chains sourced from smaller suppliers to avoid an open standards-based IT platformlonger and more complex. And despite costly supply disruptions. On the de- makes it possible to assimilate acquiredhigh manufacturing productivity, cus- mand side, customers may hold off on operations quickly so people, processes,tomers continue to demand faster and large-dollar purchases or nonessential and information can work in unison tomore flexible product configuration, items. Finally, the competitive landscape deliver benefits as soon as possible.not to mention always accurate order evolves through mergers, joint ventures,fulfillment. and divestitures. Manufacturers can find Strive for Manufacturing In addition to these conditions, many it challenging to chart a path for growth Excellencemanufacturers must often rely on out- – and even more difficult to rally thedated, nonintegrated applications and financial and operational commitment Many manufacturers have applied leanlimited IT resources to manage critical to stay on that path. philosophies – which call for eliminatingengineering, sales, marketing, supply To grow wisely and profitably regard- waste and continuously improvingchain, manufacturing, service, HR, and less of the economic climate, manufac- business processes throughout the man-financial systems. These infrastructure turers need an integrated business man- ufacturing cycle. Whether operating alimitations can make it more difficult agement solution that provides clear make-to-stock, make-to-order, configure-for companies to operate efficiently and visibility into all activities across the or- to-order, or engineer-to-order productioncompetitively. ganization – from product development environment, a manufacturer needs an Given these realities, how can small- and purchasing to production and sales. integrated system that can optimizeto-midsize manufacturers grow profit- With greater insight, manufacturers can daily operations and help systematicallyably while giving clients the innovative, increase the accuracy of quotes and or- attack waste, simplify processes, andcompetitively priced products they ders, grow existing accounts, and deliver improve manufacturing flexibility. Thedemand? superior customer service. For example, benefits of improved operational efficien- To stay competitive and meet rising real-time visibility into production sched- cy are convincing: improved manufactur-expectations, manufacturers must seize ules can help sales teams develop realis- ing throughput, reduced material inven-every opportunity to grow both wisely tic promise dates based on material and tory, and working capital costs that resultand profitably. Competitive advantage is capacity constraints. in savings for customers.tied to five key strategies: An integrated solution with built-in an- As a foundation for excellence, an•• Position the organization for profitable alytics can identify areas of opportunity. enterprise resource planning (ERP) sys- growth For example, evaluating customer profit- tem provides integrated, streamlined,•• Strive for manufacturing excellence ability and providing top-notch service to and automated processes – from avail-•• Enhance visibility to improve decision targeted customers help manufacturers ability checking and automated pricing making cement loyalty and drive repeat busi- to exception processing and demand•• Capture first-to-market advantage ness. Other analytic tools can generate planning. A solution with built-in support•• Streamline the supply chain insight into sales data and help manufac- for Six Sigma and lean manufacturing turers accelerate sales cycles to boost initiatives makes it possible to simultane- revenue. Yet without insight into how ac- ously increase efficiency and cut costs.SAP Thought Leadership Paper – The Five Keys to Manufacturing Success 3
  4. 4. Built-in manufacturing and financial sce- hensive, multidimensional profit analysis designs and regulatory requirements tonarios can help minimize waste and or boost profitability via spend analysis. engineering logistics and sourcing re-maximize productivity. And visibility A single analytical platform across the quests – should reside in a singleacross the supply chain allows for real- business lets manufacturers develop a system, improving data accuracy andtime forecasts and lean planning, includ- realistic business plan that ties strategic product production leveling (heijunka) and plans to operational performance. Ana- Savvy manufacturers analyze custom-kanban loop sizing. With support for just- lytic tools help companies further define er requirements, market projections, andin-time and theory-of-constraints manu- financial targets, control profit drivers, competitive intelligence from a singlefacturing techniques, manufacturers can and monitor costs and revenue during system, so they can accurately assessget materials precisely when assembly execution. From a single source, financial project risk versus opportunity. The out-lines need them, resulting in shorter lead and operational analysts can identify come: superior, customer-driven, andtimes, superior asset utilization, and which products, technologies, custom- profitable products, delivered well aheadoptimized inventory levels. ers, and processes will drive both top-line of the competition. growth and bottom-line earnings.Enhance Visibility to Improve Streamline the Supply ChainDecision Making Capture First-to-Market Advantage Globalization has increased the complex-In today’s accelerated, competitive, and ity and risk of traditional supply marketplace, manufacturers need Thanks in part to mobile technologies Manufacturers adopting global, lower-all employees, from the boardroom to that offer immediate access to product cost sourcing and manufacturing strate-the factory floor, to make decisions that information, customers clamor for the gies know that unforeseen administra-align with corporate objectives. But indi- latest products, expecting more choices tive, infrastructure, inventory, andvidual departments using different – and and higher quality – all at a competitive transportation issues can derail a prod-often outdated – data systems can pre- price. As a result, manufacturers must uct even before it becomes profitable.vent information sharing across the or- use both product development and the The complicated nature of global supplyganization and delay timely decisions. extended supply chain to launch innova- routes drives the need for the final key to By integrating organizational and geo- tive products quickly and cost-effectively manufacturing success: a streamlinedgraphically distributed activities and – or risk losing the revenue and margin supply, manufacturers can consistently ex- premium that comes with first-mover To stay profitable, manufacturers mustecute decisions that support corporate advantage. purchase quality materials and servicesstrategy across geographies and line-of- To stay ahead of the competition, inno- efficiently and cost-effectively. They needbusiness (LOB) boundaries. Teams can vative manufacturers use a structured full visibility across even the most com-monitor key performance indicators and methodology for predictable, repeatable, plex supply network, plus the ability toget real-time insight into trends, events, and cost-efficient product development automate operational tasks and stream-and opportunities. LOB managers, mean- and launch. Integrated marketing, manu- line buying, delivery, and invoicing prac-while, have in-depth visibility into finan- facturing, and design tools make it easy tices, whether procuring materials di-cials that cut across department lines. for multifunctional teams to collaborate. rectly or indirectly. For example, byThey can calculate value with compre- Mission-critical information – from initial improving the accuracy of inventory To grow wisely and profitably regardless of the eco- nomic climate, manufacturers need an integrated busi- ness management solution that provides clear visibility into all activities across the organization.
  5. 5. counts and automating key warehouse ers achieve manufacturing excellence Learn Moreactivities, manufacturers can reduce and fulfill orders more consistently andpicking errors, decrease order lead accurately, strengthening customer rela- To learn more about how SAP can helptimes, and quickly and accurately tionships and securing repeat business. leading manufacturers execute onrespond to customer demands. SAP Business All-in-One solutions sup- these five key strategies for success, To streamline procurement and port detailed financial and operational visit us online at logistics processes, leading analysis that helps manufacturers identi-manufacturers rely on software that inte- fy the most profitable product lines andgrates manufacturing, planning, sales, customers while expanding revenueand financial information. With it, they models and product portfolios. Robustcan manage materials sourcing – includ- product development and managementing evaluating vendors, verifying invoices, tools help accelerate design, engineer-and processing payments. Access to ing, and production cycles, so manufac-centralized information gives a clear view turers can be the first to market withof procurement, leading to better deci- innovative new products. Finally, SAPsions about both internal and out- solutions help automate procurementsourced activities. and logistics, streamlining even the most Finally, many of the lean principles and complex supply chains.quality improvement tools used on the SAP Business All-in-One solutionsproduction floor can be applied to re- provide midsize or quickly growingmoving waste and inefficiencies in the small companies with a powerful,supply chain. The result? Lower invento- manufacturing-specific ERP application.ry levels and reduced order-to-delivery They give manufacturers an integratedtimes. view of the business and support: •• Enhanced agility to respond to chang-How SAP Can Help ing market conditions and customer demandsImplementing strategies for manufactur- •• Greater efficiency and effectivenessing success can be daunting. But SAP thanks to streamlined business pro-can help. SAP® Business All-in-One solu- cesses, automated tasks, and fewertions connect the top floor to the shop errorsfloor, giving teams across the organiza- •• Improved financial management duetion a single foundation on which to ac- to more accurate financial reporting,cess data, analyze outcomes, collaborate better record maintenance, andwith partners, and speed production. deeper insight into organizational SAP software lets manufacturers performancecentrally manage engineering, sales, •• Increased visibility from integratedmarketing, supply chain, manufacturing, analytics that help uncover businessservice, financials, HR, and IT, so organi- risks and opportunitieszations can consolidate processes withinplants and across locations, suppliers, The software is designed to provide in-and partners. Insight into production depth manufacturing functionality at anschedules, supply chain operations, and affordable price, with a predictable timeinventory levels helps smart manufactur- to value.SAP Thought Leadership Paper – The Five Keys to Manufacturing Success 5
  6. 6. 108 312 (11/10) Printed in USA. ©2011 SAP AG. All rights reserved.SAP R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, ,SAP BusinessObjects Explorer, StreamWork, SAP HANA, and otherSAP products and services mentioned herein as well as their respectivelogos are trademarks or registered trademarks of SAP AG in Germanyand other countries.Business Objects and the Business Objects logo, BusinessObjects,Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and otherBusiness Objects products and services mentioned herein as well as theirrespective logos are trademarks or registered trade­ arks of Business mObjects Software Ltd. Business Objects is an SAP company.Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, andother Sybase products and services mentioned herein as well as theirrespective logos are trademarks or registered trademarks of Sybase, Inc.Sybase is an SAP company.All other product and service names mentioned are the trademarks oftheir respective companies. Data contained in this document servesinformational purposes only. National product specifications may vary.These materials are subject to change without notice. These materialsare provided by SAP AG and its affiliated companies (“SAP Group”)for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions withrespect to the materials. The only warranties for SAP Group products andservices are those that are set forth in the express warranty statementsaccompanying such products and services, if any. Nothing herein shouldbe construed as constituting an additional warranty.