Industry 4.0 Is your ERP system ready for the digital era?

1. Industry
4.0
Is your ERP system
ready for the digital
era?
N. N. Ahangamage-
IM/2014/001
W. P. T. D. Weerasinghe-
IM/2014/026

2. 1
4
5
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3
AGENDA
Our understanding of Industry 4.0
Demands on ERP Systems made by Industry 4.0
Assessment of existing SAP technologies
Use cases: successful examples in the area of ERP
Conclusion

3. Understanding of
Industry 4.0

4. Concepts and Tools
 Companies are coming under pressure to make their production and
logistics processes more flexible using,
 IOT
o Machines, tools, work pieces, and work piece carriers and their equipment in
the digital world, with the ability to communicate with other objects
 Cyber physical system
o Computational logic in physical processes

5. Goals of Industry 4.0
 Strategy
o New business models and services through digitalized products
o Shorter time-to-market for a fast reaction to new customer demands
o Higher robustness to volatile customer demand
 Organization
o Increased quality of work through an improved work-life-balance
o Diversified tasks through the automation of routine jobs
o User-centric work environment through innovative man-machine-
interaction

6. Goals of Industry 4.0
 Processes
o Saving of time through more efficient and more transparent
production processes
o Higher flexibility through dynamic planning, control, and execution
o Higher productivity and resource efficiency for individualized
products
o Shorter lead times through the application of intelligent analyses
o Different work organization through mobile process control and
execution
o Increased quality through predictive error avoidance

7. Demands on ERP
Systems made by
Industry 4.0

8. Technical Requirement for ERP systems

9. TR1- Data Storage
 Two perspectives on data storage,
 Logical
o Data model and hence the structure of the database
o Number of tables which store fundamental data as single entries,
aggregated intermediate results, and condensed data
 Physical
o The physical perspective of data storage is the physical place
where data is stored and managed

10. Opposing Ways of Storing Data
 Centralized Approach
o All important company data are stored in one place to avoid redundancies and
inconsistencies
o Increases the size of the centralized database which requires novel technologies
for efficient data processing
 Decentralized Approach
o The work piece has to be identified dynamically
o This theoretically achieves the desired flexibility

11. TR2- Data Exchange
 Vertical Integration:
o Exchange of data between the ERP system,
the MES, and the shop floor
 Horizontal Integration:
o Exchange of data along the supply chain
through the integration of customers and
suppliers

12. TR2- Data Use-Intuitively displayed,
integrated & automated
 Visualization:
o The user interface of the ERP systems should display on different
understandingly und intuitively
o Goal: improvement of human-machine interaction
 Integration and Intelligence:
o ERP system should connect data from different sources and hence create new
information
o Goal: generation of new information
 Automation:
o ERP system should use the data to trigger automated processes

13. Characteristics of user- friendly interfaces

14. New Role of ERP System
 It will still be the central part of this entire system but for example not all
data will be stored in the ERP system’s database any longer
 Connection to IT system

15. Process-Related Requirements
 PR1 - Suitability for dynamic planning, control, and execution
Technical connection of ERP Systems to MES and PLC:
o Vertical integration to make the production planning and execution more
dynamic
o Bi-directional exchange and usage of decentralized stored data
o Goal: cost-efficient production of a higher variety of variants
 PR2 - Support for an integrated end-to-end process
Technical connection of supply chain partners:
o Horizontal integration e.g. with suppliers and customers
o Goal: integrated information and process flow along the supply chain

16. Process-Related Requirements
 PR3 - Progressiveness of the human-machine interaction in the process
Modern user experience:
o User-friendly, personalized and intuitive human-machine interaction
o Role-based and graphical data input and output
o Goal: fewer errors and more efficiency in the process execution
 PR4 - Location-independent control and execution of processes
Use of innovative mobile applications:
o Horizontal integration e.g. with suppliers and customers
o Goal: integrated information and process flow along the supply chain

17. Process-Related Requirements
 PR5 - Efficiency of process steps supported by the system
Performance of processes supported by the system:
o Faster data processing based on current data
o Goal: ad-hoc processing of requirements which changed on short notice
 PR6 - Process improvement through intelligent data analyses
Effective usage of connected data:
o Use of all existing data from different data sources
o Generation of intelligent reports
o Goal: decision support for predictive planning and control of processes and/or the
trigger of automated, subsequent processes

18. Assessment of existing
SAP technologies

19. Process related requirements for ERP
system
“SAP SE supports the increase
of flexibility in production by
offering different technologies in
the area of data storage, data
exchange, and data use”

20. ERP System Classes
 SAP S/4HANA is mainly characterized by
three key technical innovations:
o modern architecture,
o a modern design facilitating mobile
use of SAP software and
o the technical integration of embedded
intelligence.

21. Simplified Table Structure

22. From transactional to role-based user
interfaces

23. ERP systems to shop-floor
PLANNING - ERP
EXECUTION -
MES
MACHINE - PLC

24. ERP systems introduced in INDUSTRY
4.0
 SAP ME (Manufacturing Execution) :
o Separate MES from ERP to track production. Assure the smooth
manufacturing process. No matter if ERP downtime happened.
 SAP VEMP (Visual Enterprise Manufacturing Planner) :
o To improve the process between EBOM and MBOM data exchange between
product engineering and product manufacturing
 SAP MII (Manufacturing Integration & Intelligent) :
o Integrates ERP systems for production, Quality Management, Plant
maintenance, Material Management. Visualize KPIs calculated from data
extracted. Monitor threshold values create preventive maintenance

25. Vertical Data Exchange

26. Conclusion
“Assessment regarding technical requirements”

27. Conclusion
“Assessment regarding process-related requirements”

28. Use cases: successful
examples in the area of
ERP

29. Deloitte-M4.0-Cube: integration of use
cases
“The Deloitte-M4.0-Cube is a conceptual model which is used to plot
use cases with regard to performance layers, business functions, and
enablers”
 Companies can :
• Get an overview of their feasible solutions
• Draw a conclusion about how to achieve their individual goals

30. Dimensions of Deloitte-M4.0-Cube
 Business Functions
o Define the context in which the enabler is applied in the company
o Represent the traditional business functions along the supply chain
 Enabler
o Selection of technologies that facilitate the connection of the physical & digital
worlds
o Digital Vision & Culture : Readiness of a company to invest in digitalization &
visualization of processes,
willingness to implement necessary changes in organization
o Types of enabler
o physical to digital
o digital to digital
o digital to physical

31. Dimensions of Deloitte-M4.0-Cube
“The performance layers describe the levels of perspective from
planning, control & execution points of view plus organizational &
IT infrastructure.”
 Performance layers
o Categories of performance layers
o Digital Strategy - support long-term competitiveness and growth
o Strategic Target
o Organizational Structures
o People
o Digital Operations - support long-term competitiveness and growth
o Strategic Target
o Organizational Structures
o People

32. Use Case #1: Mobile Inventory
Management
 Description
o Application that provides mobile inventory management
functionalities to the user
o Enables the mobile & easy entry of stock information in the
supply area which ensures that all stock data are always
reflected correctly in the system
 Benefits
o Enables the real-time entry of stock
information
o Availability of transparency for
improvement in production and
logistics processes

33. Use Case #2: GPS-based vehicle
management
 Description
o Transmitted data is visualized in real-time on a PC (e.g.
Google Maps)
o Transfer the collected data to an upstream ERP system
interfaces (e.g. Idocs)
o Data is then available for production planning and
execution.
 Benefits
o Efficient planning & control of intra -company
inbound & outbound logistics through the
localization of trailers in the production ground
o Increases the transparency of the trailer park

34. Use Case #3: Shop floor integration
with MES
 Description
o Data exchange from the ERP system to the PLC through an
additional interconnection of MES fosters customer
individualization & flexibility in production
o Customer orders may change at short notice and the changes
will still be taken into account during production.
 Benefits
o Time & cost savings through greater
flexibility in production
o Parametrizing machines based on
customer requirements
o Production efficiency from digital work
instructions

35. Use Case #4: Online platform-procurement indirect
materials
 Description
“SAP Ariba® is an online platform that increases the efficiency of
the procurement of indirect materials”
o Transactions will be (semi-)automated which leads to more
time available for strategic procurement
 Benefits
o Increase efficiency of procuring indirect
materials by automating frequently repeated
procurement transactions

36. Conclusion

37. Result & Possible Improvements
“Revolutionary ERP systems such as S/4HANA are an initial but very
essential step towards Industry 4.0”
 Classic ERP systems only partially meet technical & process-related requirements
 Revolutionary systems are an initial but very essential step towards Industry 4.0.
 Decentralized data management needed to increase overall flexibility & to produce
individualized products with a cost-efficient way
 Improvements required in analytics for ERP systems to better utilization of data collected
& generated
 Necessity of change processes in entire supply chain for supporting technologies
qualified workers (achieve flexibility & higher quality)

38. Different ways to approach Industry 4.0
 Possible ways to SAP S/4HANA to include greenfield implementation
o Companies that already work with SAP ERP ECC 6.0 - The system conversion is done in
one step by doing both a software upgrade and a change of the database
o The system conversion done directly or by splitting it into the migration to the HANA
database and afterwards the system conversion to SAP S/4HANA or with another
intermediate step to S/4HANA Finance
o Existing SAP ERP clients - SAP SE recommends a system conversion since it is easier,
less cost-intensive & less disruptive than a greenfield implementation of SAP S/4HANA.

39. Transition to SAP S/4HANA
 Assesses the client’s IT landscape, identifies gaps
& improvement potential & provides advice on
suitable information technologies for the client’s
business
 Define use cases for the differentbusiness
functions & realize them one after the other
 Potential of the technical enablers is not used to a
full extent until use cases are applied along the
entire supply chain

40. THANK
YOU