Manufacturing-X was launched as part of the Industry 4.0 platform, with the aim of promoting digital ecosystems and establishing an international standard for data exchange. It is an industry-wide initiative of the German government with various projects for different industrial sectors.

“The realization that the digitalization of industry is inevitable has become the norm over the past few years,” says Georg Kube, head of Industry Data Ecosystems at 51ˇçÁ÷SE. “A variety of use cases for different industries and new business models have been developed. They are successful – but only as long as companies work with other companies with which they already have a close partnership.”

“The most well-known of the [Manufacturing-X] projects is certainly Catena-X for the automotive sector,” Kube says. “The common aim of all these projects is to establish a new form of data exchange.”

For example, an automaker that wants to digitally integrate its direct suppliers typically requests all the data about the supplied parts from its partners, and the suppliers usually feel comfortable providing this data because of the trust that has grown over the years between the partners.

But it’s different when data is needed from companies without a direct business relationship. “A typical example is the determination of a vehicle’s CO2 footprint,” Kube says. “Suddenly, information about the CO2 footprint of the smallest plastic parts is needed, which may come from companies in the supply chain with which a company has never had direct contact. It’s not easy to access that data.”

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Trust Is the Catalyst

Companies are often very hesitant to share data freely. And for good reason: potential inferences about their cost structure or the nature of their production can be drawn from the data.

“On the one hand, as companies, we hesitate to give out our data. But on the other hand, we rely on the data of others in order for digitalization scenarios to be successfully implemented,” Kube explains. “We want to address this problem within the framework of Manufacturing-X through a new [approach to] industrial data sharing.”

“The promise,” Kube continues, “is that the digitalization, which we can currently complete up to 70%, can be fully implemented.”

Information Transfer – But Secure

“What companies lack the most today is knowledge,” Kube says. “We constantly hear from 51ˇçÁ÷customers that they would pay to find out what their own customers are doing with the products they have sold to them.”

For example, a manufacturer of robot grippers receives few insights after selling its product about where the grippers are located and what they are used for. If this were not the case, the manufacturer could make much more informed decisions about which generation of products the market needs, or whether a completely new model needs to be developed.

However, customers have concerns that this information could lead to inferences about the nature of their production and the finished product, or that this type of application might be prohibited.

With Manufacturing-X, a scenario has been created in which data sovereignty remains with the owner of the data, but the data can be provided within a narrow framework with a legal and technical structure that prevents abuse. This is the essence of a whole range of use cases in areas such as manufacturing-as-a-service, sustainability, and others.

“These use cases basically exist independently of Manufacturing-X,” Kube explains. “Most of them are neither new nor original. They just could never be fully implemented because trust in data exchange was lacking – and Manufacturing-X finally creates the conditions for this.”

SAP’s Role

As an enterprise software company, 51ˇçÁ÷has a strong interest in completing the digitization of its customers.

“The digitalization of industry works very well with 51ˇçÁ÷products,” says Heiko Flohr, head of Product Management, 51ˇçÁ÷for Discrete Industries & Industry Networks, at 51ˇçÁ÷SE. “Most of the world’s leading companies use 51ˇçÁ÷in some way to digitize its next-generation processes. Therefore, it is clear from our perspective that we must support and drive this emerging industry standard for data exchange.”

Kube notes that medium-sized companies in particular often suffer from the unavailability of data. “For this customer group, we offer a comprehensive, easily consumable application portfolio with ,” he says. “The goal is to establish industrial data sharing according to Manufacturing-X standards as a solid part of this portfolio and enable our customers to collaborate more effectively and trustfully with their supply chains.”

Within Manufacturing-X, new sovereign data exchange formats are to be created for the industry, based on European Union values such as transparency, controllability, portability, and interoperability. “We work very collaboratively and with a focus on implementation in various industry-specific initiatives to make this vision a reality,” says Mirko Paul, head of Industry Cloud Architecture at SAP. “Based on state-of-the-art, cloud-based architectures and the scalable technology standard of 51ˇçÁ÷Business Technology Platform, we ensure that these new standards are compatible with 51ˇçÁ÷applications from the outset and pre-integrated for relevant business processes.”

At the same time, 51ˇçÁ÷opens its own products and applications that are already on the market. Products and solutions such as and products in the areas of supply chain and sustainability are to be equipped with connectors that will allow them to work with this new standard.

Speaking on the opening day of the trade show, Saueressig said, “Exceptions are now the rule. Today’s globally networked supply chains are especially prone to disruptions – with far-reaching consequences for the manufacturing industry. Flexibility and agility are needed to react quickly to changes.” Adding her impressions of SAP’s presence at the event, White said, “It’s an amazing collection of both 51ˇçÁ÷technologies and our broad partner ecosystem, and it is us working with our ecosystem that’s solving our customers’ challenges.”

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51ˇçÁ÷Solutions in Action

There was certainly plenty for visitors to take in at SAP’s booth, from showcases and guided tours to live sessions and partner stands.

51ˇçÁ÷is striving to help shape digital transformation in manufacturing. And one of the most pressing questions for that industry today is how to make production and supply chain processes resilient and sustainable.

To answer that question, 51ˇçÁ÷gave visitors ample opportunities to try out 51ˇçÁ÷solutions and experience them live in action in a “demonstration factory” it had at the trade show. The show booth “factory” was a partial sample of SAP’s recently opened Industry 4.0 Pop-Up Factory innovation center at the company’s headquarters in Walldorf, Germany. Attendees were able to view the rest of the factory remotely from SAP’s booth or through virtual reality glasses in its “Industrial Metaverse” showcase.

On Display: How 51ˇçÁ÷Solutions Manage Supply Chains and Manufacturing

51ˇçÁ÷also demonstrated systems that support production operators in a part of multi-stage production in which a component is assembled for the end product. In a scenario focusing on in-process quality control, 51ˇçÁ÷showed how operators receive precise visual instructions during the assembly of an electronic control head, guiding them through the process and reducing errors. It also explored the value of embedded artificial intelligence (AI) in quality assurance, showing how image recognition technology can be used to check how likely it is that parts have been assembled correctly and whether they have any defects. A highlight here is a kind of digital birth record, which can be thought of as a finely structured documentation of the production process. All relevant data from machines, as well as input from users, is recorded there and assigned to an individual product.

Also in the spotlight were applications for digital twin solutions, not just for virtual models and real-time simulations but also for human-machine interaction. Visitors were able to learn more about this from the example of autonomous mobile robots that independently pick up parts from a warehouse and – rather than placing them on a conventional conveyor belt – take them straight to a modular station.

51ˇçÁ÷also showcased an augmented reality solution for production operators. Here, personnel wearing smart glasses receive instructions and feedback on whether they have carried out a work step correctly directly in their field of vision.

Digitally Mapping and Managing the Entire Production Process

Hannover Messe attendees could also try their hand at remotely controlling and monitoring the Industry 4.0 Pop-Up Factory in Walldorf, viewing a live, end-to-end production line for mixing and filling liquids as used by the process industry in the manufacturing of chemicals, pharmaceuticals, and consumer goods.

The demonstration showed that one central control room is all that is required to control and monitor production across locations. 51ˇçÁ÷calls this control room a “production control center.” Commenting on this live factory session, Matthias Deindl, head of SAP’s Industry 4.0 Center EMEA & India, said, “This scenario shows companies how 51ˇçÁ÷can help them have a full overview of everything that is happening on the factory floor – not just planning, but managing the entire production process for batch manufacturing.” In the future, it might even be possible to create a purely digital version of the control room in the metaverse. Companies could then design and operate it exactly as they wanted. And they would no longer need to house it in a brick-and-mortar space.

In the scenario shown in Hannover, the production line is connected to 51ˇçÁ÷Digital Manufacturing. All the information needed to fulfill the production order – including the customer’s specifications – is sent seamlessly to the machine. The process is paperless and can incorporate customer requirements without manual intervention. Another function of the production control center is to monitor the production line and key performance indicators, such as process efficiency, scrap rates, and good parts produced, as well as the current condition of the machines and equipment.

Cloud Solutions Enable Vertical and Horizontal Integration

One of the highlights at SAP’s booth was the electric CNC injection molding machine that let visitors track the production of their own customized cup – from top floor to shop floor in the production hall. This pop-up production station, staged in cooperation with 51ˇçÁ÷partners Fanuc and Syntax, demonstrated how 51ˇçÁ÷Digital Manufacturing can integrate a highly automated machine and control manufacturing.

Starting with order planning, visitors chose from various configuration options on a monitor. They could select a color or color combination for their cup and specify which logo it should have. The 51ˇçÁ÷software then dispatched the order to the machine electronically and production of the cup began using recycled and recyclable plastic. Visitors could take the cups they made home with them.

While visitors were creating their cups, sensors were capturing a range of key information about the machine’s condition and how many good and defective parts had come off the line. This shows how in a real-life setting, the seamless flow of information also works in reverse, meaning from the machine level back to the office level. Data like this can be analyzed in 51ˇçÁ÷Analytics Cloud, giving customers valuable insights to help them optimize the production process.

Resilient, Efficient, Sustainable – and Profitable

Visitors to SAP’s booth could experience the full product life cycle – from design and planning, manufacturing, logistics, and installation to operations and maintenance. They learned how the processes at each of these stages can be optimized by, for example, embedding AI to integrate them horizontally.

Vertical integration can also connect all levels inside the company. Linking manufacturing and business processes in this way eliminates data and knowledge silos. “Here at Hannover Messe, we’ve brought everything together under one roof to demonstrate realistic end-to-end scenarios,” said Ralf Lehmann, Solutions Management Digital Manufacturing & Industry 4.0 at SAP.

Businesses want to ensure that their manufacturing and logistics operations are efficient, cost-effective, and reliable. Yet they must also meet profit and sustainability targets. “Manufacturers are facing two major challenges right now. One is the ongoing disruption to supply chains. The other is sustainability, which has become a top priority for CEOs. If you consider that only 7% of global economic output today is circular, then the opportunities are huge,” says Saueressig.

At its booth, 51ˇçÁ÷showed how it is one of the world’s leaders not only in enterprise resource planning (ERP) but also in digital supply chain. Industry 4.0 can transform business processes from manufacturing through to supply chain. As an ecosystem that enables companies to connect, 51ˇçÁ÷Business Network also helps improve transparency. These capabilities can be used in a circular economy to foster sustainability and capture carbon emissions data. As White points out, “One of the most important things we see here is the focus on sustainability. Creating a true network around that is how we’re going to change the game.”

Building on the network theme, 51ˇçÁ÷partners had booths nearby showing Catena-X and , the latest initiative to emerge from an alliance between industry and the German government. Here, too, 51ˇçÁ÷will play a leading role in driving digital transformation in manufacturing supply chains. Like Catena-X, Manufacturing-X will be an open and collaborative data ecosystem. Shared standards will enable data to be exchanged worldwide in compliance with European practices and data protection laws.

The aerospace and defense (A&D) industry is battling similar woes, with 70% of companies in the sector experiencing an turnover. The loss of skilled workers notwithstanding, delays in hiring, training, securing worker clearances, and rising costs translate to challenges in keeping production up to match demand. Much like the civil aviation workforce that moved on, 75% of the labor pool in A&D left for career advancement, while 31% departed for a better work location or for a remote-working opportunity.

While enticing the reluctant workforce to return with higher pay and perks remains an option, the industries are fast realizing that amid the labor and cost-surge crisis, innovations in production planning and creating efficiencies in throughput processes are now paramount.

Bridging Silos with Automation

Manufacturing efficiency isn’t always achieved until the production of the 100^th unit. To overcome this, intelligent software can be used to run recreations on simulation capability tools. Everything from the projected manufacturing assembly process, field capability and configuration process, flight operations, and maintenance performance can be simulated in a virtual world via a , even before the first cutting or bending of sheet metal. This way, any aircraft or engine part that is virtually simulated is manufactured efficiently right from the first unit produced.

Similarly, with robotic process automation (RPA), a digital thread can be created to bring information from the upstream engineering departments and auto-generate work instructions to provide seamless information routing to the downstream manufacturing departments. With , organizations have the power to design, simulate, and monitor processes to help ensure that transformation value is part of the company’s DNA. This intelligent enterprise philosophy helps in minimizing the handover time between processes. As a result, hitherto system silos can be negated to reduce the overall throughput time. Also, short-term planning involving supply chain, parts, and tools can be better optimized to match resource availability.

While RPA can create process efficiencies, robotic interventions are already improving the manufacturing process.

Replacing Skilled Labor with Technology Augmentation

With Industry 4.0, facilities across the industrial landscape are introducing a digital, end-to-end workflow with additive manufacturing. In Q2 last year, the Association for Advancing Automation the ordering of over US$580 million worth of robots, up 25% from 2021. In the aerospace industry, robots are mastering the drilling and fastening function with a higher degree of accuracy than a real person and saving time along the way.

Likewise, robotic systems applying sealant to aircraft structures is resulting in 20% time-savings. Robots are also being used for quality assurance during manufacturing, inspection of active-duty aircraft, welding, painting, and polishing. While robots have 95% time-savings in aircraft washing, welding automation is expected to fill the nearly 400,000 welding vacancies anticipated in the U.S. by 2024.

With organizations ready to embrace automation, the need of the hour is to simplify adoption. The solution can make integrating robots as easy as plug and play. So, whether it is cross-docking items on trolleys at goods receipt, put-away trolley activities, or even robot-enabled pick-pack-and-pass functions, 51ˇçÁ÷Warehouse Robotics hands warehouse operators a shot in the arm by supporting an array of scenarios. Quick to implement and with no additional licensing required, the solution can give customers running warehouse management operations an easy, low-risk entry into agile warehouse robotics.

But with time- and cost-savings featuring prominently on the aviation industry’s agenda, how can customer experience stay optimum?

Boosting Customer Satisfaction with Technology Aids

For an industry where small margins contribute to survival, reliance on customer loyalty is huge. Variables like speed and convenience, therefore, play a major role in building customer loyalty. But with labor shortages wreaking havoc, digital transformation is emerging as a viable solution.

For instance, every manufacturer or supplier has their own portal to document their parts or assets, and this causes A&D companies to deploy a manual workforce to track every part coming from hundreds of manufacturer portals. can help overcome this challenge by provisioning for every asset to reside on a single platform. Now, A&D companies can simply connect their back-end systems to the network, fetch data directly into their systems, gain insight into the transactional data of an asset, and execute maintenance activities. This way, 51ˇçÁ÷Business Network for Asset Intelligence – a cloud-based network – can limit the use of the workforce and create efficiencies by facilitating secured information exchange between various roles in asset-intensive industries comprising of equipment manufacturers, operators, maintenance providers, and others.

Also, A&D aftermarket providers process invoices from hundreds of airlines or aircraft operators. Their receival, approval, and logging could be automated to better utilize scare resources. Similarly, bots can read customer complaints, assess the degree of importance, categorize them, and automatically forward them to designated departments for speedy resolution.

If the pandemic taught us the importance of supply chain resilience, its aftermath and the evolving geopolitical crisis drives home the significance of innovation in manufacturing to combat sudden spikes in demand amid rising costs and a depleting workforce.

There will always be unpredicted situations. That said, the goal is to achieve a planning stability for all companies in the industry. Reducing risks through additional information and better planning will allow companies to establish a more stable environment with fewer uncertainties. And now, the industries can take heart from the fact that in automation, they have an ally that can turn organizations and the sector at large into intelligent and resilient enterprises.

Learn how automation can drive resilience in the aerospace and defense sector at .

Torsten Welte is global VP and head of Industrial Business Unit for Aerospace & Defense at SAP.

“This new generation of workers, whose entire lives are on their mobile devices, have completely different expectations from the employees who are walking out the door with 35 years of experience,” said Mike Lackey, global vice president of Solution Management for Digital Manufacturing at SAP. “Manufacturers must attract new workers by bringing data to the point of work with intelligent mobile experiences and intuitive machine interfaces. This improves workplace safety and the worker experience, as it creates greater business efficiencies.”

Connected Data Helps Meet Production Schedules

Unlike historical shop floor responsibilities, workers in Industry 4.0 factories won’t be limited to rote tasks on a single machine. They’ll be cross trained to manage multiple machines, using instantaneous and integrated information from their mobile device. They’ll collaborate much more across teams and departments.

“Industry 4.0 delivers what’s called ‘worker guidance,’ bringing information directly to the individual on the shop floor for faster and more efficient decisions,” said Lackey. “Manufacturing is all about throughput, quality, and managing costs. With the right information, the operator can make sure that the equipment and the processes are running optimally, reducing machine downtime, rework, and scrap. This is the purpose of , which brings business and operational data together for informed company-wide decisions while delivering process enforcement, complete traceability, and a record of the product genealogy.”

analysts predicted that in response to the reality of digital disruption, 60% of businesses will embrace a decision-making model that combines the power of artificial intelligence (AI) and human judgment for more informed decision-making by next year. Connected data between the shop floor and other parts of the business, including sales, supply chain, and finance, also has company-wide implications in meeting customer commitments.

“You can’t promise an order if you don’t have the parts to make or finish the product,” said Lackey. “Similarly, in an automated line, you might have 200 pieces of equipment from 24 different vendors. If there’s a quality issue with a material or machine malfunction, integrated data with embedded machine learning can alert shop floor workers to correctly adjust equipment to the specified parameters, minimizing production slowdowns and keeping quality high. Connected data helps workers understand the impact of their decisions on the business while increasing their ability to make a valuable contribution in a more motivated and engaged way.”

Digital Improves Workplace Safety

Technology can make the workplace safer for employees, which is equally important for the worker experience and company compliance. While automation can increase the number of potential hazards, it can also keep people safe. Sensors can alert people when they’re entering a potentially dangerous area or in the moment if they get too close to a piece of equipment, preventing accidents.

Upskilled Workers Lead to Greater Employer Loyalty

Lackey expected manufacturers to invest more in training and development to reskill and upskill workers as Industry 4.0 transformation continues. A recent survey reflected that trend: researchers found that 84% of manufacturing professionals were upgrading their learning and development programs. It’s an ideal way to expand the pool of qualified employees who can make a valuable contribution to company growth. It’s also an opportunity for workers to gain skills in some of the coolest innovations.

“Factories are a hotbed of innovation, offering workers a potentially faster, more cost-effective route to a satisfying career, one that might not otherwise be in reach, given the rising costs of higher education,” said Lackey.

Done right, Industry 4.0 is poised to rejuvenate the manufacturing sector with a refreshing blast of innovation. Trained workers can point the camera on their digital device at a piece of equipment with embedded machine learning and make immediate adjustments using virtual 3D visualizations right in front of them on the shop floor. They can instantly connect with design engineers to quickly diagnose and fix problems or reach an external supplier to locate the correct replacement part. Manufacturers are hoping this next generation of workers come for the cool factor and stay for the career-building innovations.

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CEO and Member of the Executive Board of 51ˇçÁ÷SE Christian Klein told media representatives, customers, and 51ˇçÁ÷employees how much this particular endeavor means to him. As one of the world’s largest business software vendors with customers generating 87% of total global commerce, Klein emphasized that 51ˇçÁ÷software is used to run highly complex business processes. The two exhibits illustrate how 51ˇçÁ÷works closely with customers and partners to find solutions to the challenges they face.

Now, in its very own exhibition space covering more than 500 square meters, 51ˇçÁ÷can demonstrate exactly what its digital supply chain and Industry 4.0 solutions can do. “It is important that customers can come and see all this for themselves,” Klein stated.

Inside the Industry 4.0 Pop-Up Factory

The Industry 4.0 Pop-Up Factory is built like an actual factory and features, among other things, robots for component production that support the worker during manufacturing. The exhibit has an entire production line for mixing and filling liquids, as used in the process industry, and even driverless transport systems. The focus is on Industry 4.0 for customers in the process manufacturing sector – chemicals, pharmaceuticals, and consumer goods, for example. The setup also addresses the needs of discrete manufacturing like machinery, vehicles, and electronics. SAP’s smart factory showcases have evolved – and grown – over the years and can now all be seen in action together under one roof as a pop-up installation in rented premises.

The idea is to allow customers to experience the digital supply chain for themselves through showcases. By seeing the software in operation, they gain a better understanding of its capabilities. All stages of the product life cycle are demonstrated in a real-life setting, from product design, planning, and manufacturing through to logistics and maintenance. At the pop-up factory, 51ˇçÁ÷wants to show how it has a broad portfolio of solutions for end-to-end processes and is a leader in digital supply chain and integrated supply chain.

The pop-up factory presents different lines of business, incorporates real equipment and machinery, and runs the same 51ˇçÁ÷products as those that are shipped to customers. Not all the showcases are new, but, as Ralf Lehmann from Solution Management for Digital Manufacturing and Industry 4.0 says: “The new factory allows us to bring everything together under one roof and to demonstrate realistic end-to-end scenarios.”

Seeing Industry 4.0 In Action

The Industry 4.0 Pop-Up Factory is unique: “It demonstrates the benefits of 51ˇçÁ÷solutions in a realistic setting and allows customers and partners to see how they work in the real world and in a setup that is very similar to their own shop floor,” says Matthias Deindl, head of Industry 4.0 Center EMEA & India.

The idea of a demonstration factory was born in the conference halls of Germany’s Hannover Messe trade show. Each year, 51ˇçÁ÷presented showcases and product lines to demonstrate the capabilities of its solutions and technology. Customers would come to SAP’s stand and ask how they could recreate the scenarios at their companies. They wanted to know how it all worked and where they could see the solutions in action in the real world. In response, the existing showcases have been continuously developed over the years and now find their own home in the new Industry 4.0 Pop-Up Factory.

51ˇçÁ÷has worked closely with its hardware partners for many years. Setting up the demonstration factory provided a great opportunity for a joint project with companies in the automation technology field. Among them are Arkite, asentics, Beckhoff, Endress+Hauser, Evoguard, Gebhardt, Google, intranav, item, Kuka, Krones, Kinemic, Mettler Toledo, Navvis, Neoception, OPC UA, Proglove, Rocketfarm, Sartorius, Schunk, SICK, TRUMPF, Universal Robot, and VMT.

Though the pandemic put a temporary end to in-person events, it did not end the plans for a demonstration factory. The team’s brief was: “How can we take our showcases to the people if they cannot come to us?” recalls Lehmann. In the course of this, a TV studio was built specifically to stream digital customer demos.

The Industry 4.0 Pop-Up Factory is designed to be a source of information and inspiration for customers and partners. It offers deep-dive sessions with experts, either in person at the factory or online. 51ˇçÁ÷has invested in the latest video technology and equipped the entire venue with cameras – not just to give live-stream audiences the best possible experience but also with sustainability in mind.

Positive Feedback: The New Industry 4.0 Pop-Up Factory Delivers

Even before the factory’s doors officially opened, its showcases had been used in more than 400 live sessions with customers and prospects, both in person onsite and remotely via Web meeting. The feedback from customers has been very positive. The remote sessions have been equally well-received. “They have many advantages: you can hear everything, you can see everything, and anywhere from 80 to 100 people can all attend at the same time,” Deindl says. “By offering virtual sessions, we give our customers a way of reducing their carbon footprint.”

Many of the inquiries the factory team receives are from managers overseeing manufacturing processes at our customers. They want their leaders to experience the 51ˇçÁ÷solutions featured in the Industry 4.0 Pop-Up Factory sessions and see the benefits for themselves.

Besides being able to see the software in action, experts who come to the factory also appreciate the chance to get into conversation with other visitors there. It has created communities in which people regularly share their thoughts and ideas. This not only gives customers confidence but provides the Industry 4.0 Pop-Up Factory’s organizers with valuable feedback. Especially in the critical phase leading up to the buying decision, visiting the factory and talking to others there can give a customer a fuller understanding of the solutions so that they can be sure the decision they are making is the right one.

Do you have questions about the Industry 4.0 Pop-up Factory? Contact us.

Photos by Ingo Cordes

As this industry grew, the city attracted entrepreneurs, investors, and engineers to become the “.” Wichita now nationally at No. 1 in manufacturing jobs as a percentage of all jobs and No. 3 in percentage of jobs classified as “very high-tech.”

The recent launch of The Smart Factory @ Wichita, a new, immersive across a variety of use cases, is the latest milestone in the city’s proud history of innovation. The project, led by Deloitte, aims to accelerate digital transformation in manufacturing and address the challenges organizations are facing, including a volatile global economy, supply chain issues, labor shortages, and more, to help navigate today and build competitive advantage for the future. For visitors, it’s an opportunity to see first-hand how Industry 4.0 solutions bring connectivity, intelligence, and transparency to the supply chain within a fully operational, smart manufacturing environment.

The Smart Factory @ Wichita is expected to host more than 5,000 visitors over the next year. The 60,000 square-foot facility is housed on the Innovation Campus at Wichita State University, where it is connected to the university-managed smart grid and has renewable energy generation on-site. As a showcase for the future of manufacturing, The Smart Factory @ Wichita operates sustainably at net-zero energy consumption and is outfitted with wind trees, solar assets, and smart lighting.

The Smart Factory @ Wichita recently celebrated its opening with a summit in June. 51ˇçÁ÷is proud to be a founding sponsor – along with Deloitte, Dragos, Infor, Siemens, and Wichita State University – within an extended ecosystem that includes stakeholders from software, hardware, robotics, consulting, academia, and others.

Darcy MacClaren, senior vice president of Digital Supply Chain and Industry 4.0 for 51ˇçÁ÷North America, . She believes the facility is a must-see experience for customers.

“The Smart Factory @ Wichita is a truly unique experience for visitors to envision how Industry 4.0 can drive value for their business,” she says. “I cannot emphasize the value of the real-life experience strongly enough. The immersion in the live production environment allows visitors to experience smart manufacturing concepts in a way that’s not possible through standard conversations or presentations.”

De-Globalization Opens the Way for Innovation

The launch of The Smart Factory @ Wichita comes at a critical time as businesses search for solutions to overcome manufacturing challenges. As a result of the pandemic and supply chain pressures, deglobalization is leading businesses to diversify their supply chains away from dependence on one supplier or region. As recently reported in , many businesses are looking for ways to move their manufacturing capabilities closer to home and improve automation.

“While there’s recognition in the industry that the evolution to true end-to-end smart manufacturing is a must-have in today’s ever-shifting environment, at the same time, it is challenging for an organization to put the necessary complex architecture in place on its own,” says Stephen Laaper, principal and smart factory leader, Deloitte Consulting LLP. “In response, we saw a huge opportunity to convene an ecosystem of world-class solution and technology providers and bring together the Internet of Things, cloud, artificial intelligence, computer vision, and more under one roof at The Smart Factory @ Wichita.”

Showcasing 51ˇçÁ÷Solutions for Industry 4.0

The Smart Factory @ Wichita brings the to life, providing organizations an under-the-hood view of how 51ˇçÁ÷solutions support digital transformation and intelligent automation, the underlying concepts of Industry 4.0. More than 50 use cases for smart manufacturing are available on-site, ensuring that both supply chain experts and newcomers will find the content accessible and informative.

“The Smart Factory @ Wichita is a terrific showcase of the digital supply chain technology that helps our customers unlock the value of Industry 4.0,” says MacClaren. Visitors will see an impressive array of advanced robotics and automation that power everything from the shop floor to the robot coffee baristas. At the core is 51ˇçÁ÷S/4HANA, the intelligent enterprise cloud solution that runs mission-critical operations with integrated supply chain solutions for manufacturing and asset management. These and other digital solutions enable the physical production line on the shop floor.

The next step, according to MacClaren, is to enable the full end-to-end supply chain scenario, including 51ˇçÁ÷technology supporting product innovation for R&D and engineering, logistics for warehousing and transportation, and supply chain planning.

For customers during their innovation journey, the solution offers business transformation-as-a-service to smooth the evolution to a cloud-based, intelligent enterprise that runs smart manufacturing solutions. Find out about .

STEM Education Kits to Empower Students

Core to the purpose of The Smart Factory @ Wichita is its mission as a factory that helps produce and distribute a product with a purpose. In partnership with , The Smart Factory @ Wichita turns out components for Smart Rover Kits, all of which use 100% recycled polyethylene terephthalate (rPET) collected from the local recycling stream as the primary raw material, bringing the circular economy to life.

The kits are then assembled and shipped to schools with initial donations impacting 1,000 middle school students in Metro Detroit, Philadelphia, and Wichita. The program aims to reach 800,000 students in the U.S. over the next four years. The mission of Deloitte’s Smart Factory Believers Program is to empower the traditionally underrepresented students of today to become the diverse STEM innovators of tomorrow.

Closing the Skills Gap in Partnership with Industry

The Smart Factory @ Wichita also serves Wichita State University students as an applied learning environment for smart manufacturing and its impact on sustainability outcomes. The need is critical, according to a from Deloitte: “The manufacturing industry is facing a skills and talent gap that will leave 2 million of nearly 3.5 million manufacturing jobs unfilled.”

“We’re building traction as an emerging leader in the field of digital transformation; and trailblazers — like Deloitte — are taking notice that Wichita State’s research and expertise give them a competitive edge,” said Dr. Rick Muma, president of Wichita State University. “And our students benefit from the applied learning opportunities that they’ll gain at The Smart Factory @ Wichita. As Deloitte professionals educate the workforce of tomorrow, Shocker students train side-by-side with experts in the fields of smart manufacturing, artificial intelligence, Internet of Things, and robotics.”

For more information, visit . And to learn about 51ˇçÁ÷solutions for smart manufacturing, industry 4.0, or supply chain, visit .

Top image Š 2022 Deloitte Development LLC.

“Manufacturers can no longer create one product for one set of customers,” said Mike Lackey, global vice president of Solution Management for Digital Manufacturing at SAP. “They have to be agile enough to deliver mass-produced and individualized products at scale. The intelligent factory delivers on highly changeable customer expectations by connecting business data directly with the shop floor for agility based on unexpected events as they arise. Leading manufacturers are digitally transforming to infuse intelligence into every aspect of the business and the factory while controlling costs and quality for a stronger future.”

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Connected Data across Ecosystems Boosts Business Agility

Automating processes on the factory floor was just the first step in modern manufacturing. The next step is gaining intelligence by connecting data from business systems like finance and planning and demand to factories, warehouse distribution, and logistics providers. Information needs to flow securely between customers, suppliers, and other partners. analysts said that due to increased competition for wallet share, 65% of G2000 original equipment manufacturers (OEMs) will integrate customer insights with service work orders to better personalize engagements, increasing satisfaction by 15% by 2025. By next year, analysts expected 30% of manufacturers will share applications with industry ecosystem partners to improve visibility and operational efficiency and ensure safety, security, and quality.

“Intelligence means that you can’t look at a single factor or a single factory,” said Lackey. “The intelligent factory links together your entire global operation as one entity to become the Intelligent Enterprise. As a manufacturer, your intelligent factory drives your intelligent supply chain that’s able to adapt quickly moving production lines between facilities when disruptions happen, sourcing alternate materials if supply chains are disrupted, or even switching out production for completely new products should consumer demand suddenly spike.”

Bringing Intelligence Supply Chain-Wide

Technology advances are making yesterday’s impossibilities everyday realities. By next year, analysts expected 50% of all supply chain forecasts will be automated using artificial intelligence (AI), improving accuracy by five percentage points. By 2025, researchers predicted 30% of G2000 manufacturers will embed connected technologies to increase product reliability using operational insights that ensure uptime and support an optimized maintenance supply chain.

“The intelligent factory is self-correcting and self-learning,” said Lackey. “For example, machine learning builds intelligence into your processes for more robust and continuous improvements in quality control. When you combine business information like market demand drivers, cost structures, inventory, suppliers, and delivery dates with shop floor data, you have the intelligence to reduce inefficiencies and focus on benefits for the greatest competitive advantage. This is how our customers are digitally transforming using .”

Technology Advances Energize Business Transformation

With greater intelligence from digital innovations like AI, machine learning, and the Internet of Things (IoT), manufacturers are using previously unused data to adapt operations and cross industry boundaries for expanded business opportunities. analysts predicted that by 2025, 65% of global manufacturers will invest in edge AI as a part of their IoT-enabled hyper-automation strategy, up from less than 10% today. In just a few years, analysts expected 40% of G2000 organizations will use AI, data governance, and a transformed organization to develop a resilient and distributed operational decision-making framework that drives 25% faster change execution. Products-as-a-service is among the biggest market growth areas. analysts predicted that by 2026, 30% of software development teams will focus on turning traditional products into outcomes-as-a-service.

“The intelligent factory supports new cloud-based services models as they emerge from board-level strategies,” said Lackey. “Intelligence from connected data across factory operations and the business is crucial to deliver on the contract for usage-based services where the manufacturer owns the product throughout its entire life cycle.”

Delivering products against the plan is all well and good, but we live in a world of disruptions. It could be floods and wildfire shutdowns impacting the flow of materials, spiking consumer demands after an influencer’s social media post goes viral, or ongoing pandemic lockdowns anywhere in the world. In this kind of market, manufacturers have discovered that factory automation alone won’t build business resilience. As lot sizes decrease and customer expectations rise, Industry 4.0 initiatives are making factories more intelligent for agile business that builds customer loyalty.

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“Digital transformation is just the newest term we’re using to describe the next stage of continuous improvement, bringing connected data from a really cool toolkit of Industry 4.0 innovations directly to people on the factory floor, helping them solve problems easily,” she said. “The people in the plant understand where the biggest problems are and where the biggest value comes from. It’s no different than the problem-solving we’ve always done. What are you waiting for? You have to start today; find your problems and solve them.”

Best known for its plumbing products, operates over 50 manufacturing plants worldwide and is a .

Intelligent, Connected Data Delivers Business Agility

When Gulick joined Kohler last year, she identified culture, infrastructure, and a strong foundational Ěýsystem as three critical ingredients to digital transformation. At the same time, fast-changing customer demands and interconnected geopolitical events have shifted how companies do business. As ecosystems expand, security threats mount, workforce shortages continue, and industry boundaries blur, connected personalized data has become the common denominator for digital transformation.

“This is a fun job because we’re going into plants and augmenting humans, hyperconnecting them with data that allows them to continuously improve. Our goal is to help every one of our valued associates work smarter and not harder,” she said. “There is not a perfect time to digitally transform. Consumerism has changed, with even greater expectations for customization and expediency. Manufacturers require intelligent, connected data to drive the automation for performance at that level, or they just won’t make it.”

Gulick rattled off a slew of business results possible from intelligently connected data. Employees on the factory floor can ramp up faster, getting the personalized training they need at the right moment. This helps companies increase productivity and morale while meeting quality and safety standards. Machine learning algorithms can perform mundane, repetitive tasks with greater ease and accuracy, freeing up people for more strategic tasks, like new careers managing robots. Predictive maintenance from Internet of Things (IoT)-based sensors that monitor equipment helps prevent unexpected production line stoppages. Gulick said that one of Kohler’s transformative plants in Alabama achieved significant realized cost savings because they were alerted to replace a failing part before it broke down.

“It’s the bidirectional information that really boosts business agility,” she said. “You’re sending the information from tools and equipment to people when they need it, and they’re able to take the right action or escalate the problem seamlessly.”

Practical Digital Innovation from the Factory Floor

Unlike past eras of innovation, digital transformation these days is impressively practical while requiring upskilling of employees to create the greatest impact. People can use technology in new ways and, over time, drive repeatable value throughout the company. At Kohler, leaders continue to gauge what training is needed to allow an agnostic culture of associates, partnered with advanced technology like robots and cobots. The foundation, including architecture, infrastructure, and culture, are factors for success. Their watchword is standardization.

“We strive to be the employer of choice in addition to the brand of choice,” said Gulick. “Part of our road map is having a single source of data from our core 51ˇçÁ÷systems run in a standard way across all of our plants. Intelligent data will provide executives with a strategic view that tells them where to focus today and how to make smarter decisions for tomorrow. For associates across our plants who know what their problems are, we want to drive autonomy with consistent guard rails so they can innovate faster.”

Inducted into the last year, Gulick is looking ahead to her eventual obsolescence as she helps lead Kohler’s digital transformation.

“I’ve been doing disruptive thinking for almost a decade, and no matter what plant I walk into, I have realized that no person goes to work to do their job poorly,” she said. “Given the right tools, workers of all generations will get the job done, with quality and efficiency. Once we have connected intelligence, we can reimagine everything at our plants worldwide, including supply chain, operations, customer experience, and even profit and revenue streams. All companies need to begin transformation from where they were yesterday.”

What are you waiting for indeed!

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“Organizations have embraced Industry 4.0 to build resiliency against constant supply chain disruptions,” said Mike Lackey, global vice president of Solution Management for Digital Manufacturing at SAP. “Extracting insights from operators, systems, and equipment in near real-time instantly brings business context to shop floor data. This helps everyone, from plant management and operations to the entire C-suite, turbocharge new as-a-service business models and customer personalization, as well as more agile, sustainable production for greater employee productivity and sustainable growth.”

Connected Data Sparks Business Results

analysts predicted that by 2023, 50% of all supply chain forecasts will be automated through the use of artificial intelligence (AI), improving accuracy by five percentage points. Two years after that, saw 40% of G2000 organizations using AI, data governance, and a transformed organization to develop a resilient and distributed operational decision-making framework, driving 25% faster change execution.

Lackey said that leading-edge industrial manufacturers in many sectors have achieved impressive real-world results with connected data intelligence from . Challenged by 24/7 production imperatives to meet high demand, a car battery manufacturer increased average production volume by 25% while boosting product quality and reducing “idea to production” cycle time by integrating data from production design with manufacturing processes. After digitizing design and manufacturing, a medical device manufacturer reduced design change times from months to days, achieving 99% uptime for machines in the field and decreasing time to market and costs ─ a life and death issue with oncology equipment. An electronics manufacturer in the mobile phone industry increased factory productivity by 32%, decreased costs by 33%, and shortened the cycle from R&D to production by 41%.

“ factories don’t operate in a vacuum,” he said. “If the process temperature drops below a certain degree, what’s the impact on quality, costs, and promised delivery dates for customers? How fast can we replenish materials from suppliers? When brought together with information from all critical business processes, one single data point on the shop floor can trigger decisions and actions that will help organizations meet and exceed customer expectations – despite unexpected challenges.”

Intelligence Deciphers Production and Demand Signals Fast

Machine intelligence drives innovation with far-reaching business consequences. For example, the typical factory has hundreds of machines from different vendors. With Internet of Things (IoT)-based sensor data from various machines that’s integrated with manufacturing software applications and supply chain management, procurement, and finance, companies can automatically increase operational efficiency while reducing waste and unplanned downtime. According to , 30% of G2000 manufacturers will embed connected technologies to increase product reliability using operational insights that ensure uptime and support an optimized maintenance supply chain by 2025. analysts predicted 60% of G2000 OEMs will use AI and real-time asset data to service equipment pre-failure, avoiding 50% of unplanned downtime hours by 2026.

Equally important, intelligence helps manufacturers read and act on customer demand signals much faster. Driven by increased competition for wallet share, analysts expected 65% of G2000 OEMs will integrate customer insights with service work orders to better personalize engagements, increasing satisfaction by 15% by 2025. analysts predicted that by 2027, 70% of the top 20 global consumer goods companies will design digital twins of their consumers as part of their customer experience (CX) strategy.

“Companies need both the capacity and agility to respond whether demand fluctuates due to market forces like pandemic lockdowns and natural disasters, or downstream social media promotions,” said Lackey. “Manufacturers are much closer to customers, expected to deliver the same quality products at accelerated innovation cycles. They may need to shift production quickly, retrofit existing operations, or ramp up new facilities so they don’t miss out on opportunities. Insight from connected data is the only way to design, produce, and deliver the products customers want on time.”

Intelligence Meets Sustainable Business Commitments

For manufacturers, intelligence has revolutionized their responsibilities for building a sustainable business. analysts said that by 2024, to improve long-term supply chain profitability, 70% of manufacturers in global supply chains will invest in software tools to support sustainability and circular economy business models. By the following year, researchers predicted 40% of all manufacturing IT will own the responsibility of data modeling for sustainability and net-zero carbon targets. Clearly, the digitalized supply chain advantage goes to manufacturers that make the most of Industry 4.0.

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Logistics Problems Are a Drag

As such, many exhibitors traveled to Lower Saxony’s capital city with mixed feelings this year. Would industry professionals return in droves? And how would business develop?

The industry association VDMA says Germany’s machine manufacturers are enjoying a “very large order backlog.” But in an interview with the German Press Agency (DPA), Gunther Kegel, president of the German electro and digital industry association ZVEI, warned of the impacts of COVID-19-related shutdowns in China. The weeks-long break will “send a shock through global supply chains whose consequences will only be seen in six to eight weeks’ time. There’s still quite a bit in store for us,” he said.

Currently, experts cannot predict how long the worldwide logistics problems will last, making it all the more important to make supply chains as robust as possible and prepared to mitigate risks in the long term. Resilience and sustainability were among the most-discussed themes at Hannover Messe and were a particular focus of the technology companies that had a presence at the show.

Vertical and Horizontal Integration

At the Hanover show, 51ˇçÁ÷concentrated on showcases and product presentations for the discrete and process industriesĚý– and on showing how Industry 4.0 processes pave the way toward becoming customer-centric, robust, sustainable enterprises.

“Industry 4.0 empowers sustainable business processes and robust supply chains by connecting the dots,” said Thomas Saueressig, member of the Executive Board of 51ˇçÁ÷SE, 51ˇçÁ÷Product Engineering. At the vertical level, for example, machine data is being linked with business processes. Horizontal integration along “design to operate” supports improvements in the production of goods, for example, helping to avoid waste, he said.

Using the example of producing bottled milkshakes, 51ˇçÁ÷demonstrated what this can look like in a specific use case at its Live Forum. In the presentation, the company showed how the 51ˇçÁ÷system examines the sustainability of the various product components, including packaging, and points out the potential consequences based on the current product features.

A plastic cap, for example, can incur additional fees in product distribution in many countries. Insights like this are very helpful for companies that want to make their manufacturing processes more sustainable and implement more responsible product designs.

The Live Forum also served as the stage for a number of customer presentations from industrial practiceĚý– for example, to illustrate how digitalization and business transformation are virtually two sides of the same coin in times of Industry 4.0.

Sascha Rowohl, head of IT at Schwarz Production, showed how the Schwarz Group of retailers (Lidl, Kaufland) implemented its digital coffee roasting facility in just 18 months with SAP’s help. The fully automated factory was designed as a greenfield project and is slated to expand its production capacity to around 50,000 tons of coffee by the end of this year. That accounts for around 10% of all coffee produced in GermanyĚý– all of which is sold in the group’s own stores.

Among other solutions, Schwarz Group implemented , , 51ˇçÁ÷Intelligent Asset Management, and 51ˇçÁ÷Analytics Cloud as part of this project. Connectors link the solutions with the group’s 51ˇçÁ÷ERP system. According to Rowohl, the Schwarz Group intends to digitalize more factories for other product groups step by step. An interesting aspect of these plans: the group has established a new business unit with Prezero, a disposal company, which gives the group the ability to extend its value chain from production all the way to waste recovery.

Art and a Big Show

Tangible examples like the presentation of the digital coffee roasting facility attracted considerable interest among the trade show audience. After a halting start in the morning of the first day of the show, the exhibition halls slowly began to fill up. The Meta Cube at the entrance to SAP’s booth was a real eye-catcher: a cube filled with colors and artificial light, in which a robotic arm from KUKA wrote IT terms – such as “Business Transformation” – on a transparent mirror. This installation was certainly the most photographed motif in hall 4.

Another big audience draw was the theater area (“Gate to Walldorf”), where visitors could observe the interaction between machine processes and software controls in a live stream. The scenarios were set up in Building 21 of SAP’s headquarters and were transmitted virtually to SAP’s booth at the Hanover trade show. 51ˇçÁ÷employees in Walldorf explained the presented sequences step by step, while hosts at the 51ˇçÁ÷stand took questions from the audience after the presentation.

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Selected partners complemented SAP’s exhibition with their presence at the company’s booth in hall 4. One of them was Catena-X, an open ecosystem where business partners from all areas of the automotive industryĚý– including smaller suppliersĚý– will be able to contribute in the future. The goal of this project is to seize the opportunities of digital transformation with the help of a standardized, connected data infrastructure along future value chains. According to Dr. Florian Patzer from Fraunhofer – like SAP, one of the driving forces in the networkĚý– 11 application areas have already been defined, including maintenance, quality management, and sustainability.

A shortage of some brands of baby formula in the U.S. has alarmed parents and forced some to drive hundreds of miles looking for supplies or spend hours searching online. It doesn’t have to be that way.

SAP’s Take

When a manufacturing plant goes down, companies equipped with new technology, such machine learning and predictive planning, can avoid crises by quickly divert operations to other facilities ahead of catastrophes, according to Mike Lackey, 51ˇçÁ÷global vice president of Digital Solution Management for .

“We’re all in a world of disruptions,” Lackey said. “How you respond to it is going to be determine who people want to partner with in the future. I think this is a prime example of why Industry 4.0 and smart factory initiatives are so prevalent right now.”

Industry 4.0 involves automating systems and data exchange technology — such as machine learning and sensor detection — within manufacturing industries. This technology can transform manufacturing into a flexible, intelligent operation that can predict, fix and quickly pivot to spot and address problems before they happen.

COVID-19 supply chain disruptions already had been pressuring baby formula manufacturing before the possibility of contamination of cronobacter, a bateria, was detected at Abbot Laboratories’ Sturgis, Michigan, plant where Similac, Alimentum and EleCare brands are made. That forced a recall and the plant shut down in February. By the end of April, 40% of the most popular brand-name formulas were out of stock nationwide. The Sturgis plant is Abbot’s only facility producing Alimentum and EleCare, formulas for babies with sensitive digestive systems. Abbot is the largest maker of baby formula.

Although U.S. Food and Drug Administration on Monday gave Abbott to resume production, the manufacturer said it would take eight weeks before parents found the products on store shelves.

But it didn’t have to be this way, Lackey said. “What’s happening in manufacturing has to be connected to planning. I don’t mean just your demand planning.”

By now, there is no shortage of risk scenarios that can happen and that already have happened. Disease, war, falling bridges, fire, floods and other biblical-sounding plagues have underscored the need for technology that can help companies continue operating under any scenario a person can think of and input. With machine learning and the joining of business and operational data, enterprises can adjust materials, production, suppliers and deliveries for every scenario.

And like many car manufacturers, machine learning can help detect facility problems before they become critical and lead to shutdowns.

“With planning, you could say, ‘We had a bacterial contamination. It’s under control. We’re going to have to shut down this production. But we will have formulas on the shelves in 48 hours because we’ll have moved it to another plant.’”

Those that can be nimble, that can automate processes and respond to disruptions, move production from one plant to the next based on market conditions and shift suppliers to adjust to any calamity will be the businesses that thrive, Lackey said.

Such crises also open the door to competitors, Lackey noted Monday. By Tuesday, Switzerland-based Nestle, No. 3 formula producer, said it would fly in formula to help restock U.S. shelves.

“Those are the companies that are going to be the leaders in the future, not the ones that continued to do business the way they have,” he said.Ěý “It’s going to be a wake-up call for a lot of companies. When we talk about industry-forward, it’s about resilience — planning resilience, supply chain resilience and manufacturing resilience — and the ability to move production from one plant to the next based on market conditions.”

Contact:
Ilaina Jonas, Senior Director of Global Media Relations, SAP
+1 (646) 923-2834, ilaina.jonas@sap.com
51ˇçÁ÷Press Room

The Industrial Internet of Things (IIoT) is among the key technologies that drive Industry 4.0 transformations and we have come to recognize the importance of driving IIoT or Industry 4.0 projects with quick time to value.

51ˇçÁ÷offers IIoT-embedded solutions for the end-to-end supply chain and operations process in order to enable intelligent products, intelligent factories and logistics, and intelligent assets while empowering people.

51ˇçÁ÷and partners are now offering the 51ˇçÁ÷IoT starter package, which consists of rapid proof of concept and turnkey IIoT-embedded offerings to significantly speed up IIoT projects and reduce the risks associated with the .

Three common scenarios are:

Delivery Insights

51ˇçÁ÷S/4HANA and 51ˇçÁ÷Internet of Things (51ˇçÁ÷IoT) enable customers to trigger automated responses (business processes) and alerts, from IoT sensor input, of critical inbound and outbound delivery conditions. For example, a sales manager receives a notification on their mobile device that a shipment of temperature-sensitive food items on route to a customer is compromised because the permitted temperature threshold has been exceeded. The sales manager can then proactively respond with measures, such as initiating another delivery to safeguard customer satisfaction.

Logistics and Manufacturing Automation

Businesses can automate warehouse processes using 51ˇçÁ÷S/4HANA and 51ˇçÁ÷IoT. For example, “goods receipt” and “goods issue” of deliveries can be automatically triggered based on scanning events or to automate their Kanban process. Automating these processes has shown to have significant impact on productivity and working capital optimization. Manufacturers can improve stock levels and reduce manual efforts, thereby helping avoid human errors. Furthermore, businesses can react faster and more effectively when issues occur.

Intelligent Assets

Customers can leverage IIoT technology, through 51ˇçÁ÷Intelligent Asset Management solutions, to monitor the condition of assets by visualizing and analyzing sensor data. With this, customers can increase asset availability by empowering asset operators and service providers to predict failures early and take corrective actions. At the same time, customers can lower maintenance costs by planning maintenance schedules dynamically to improve resource utilization and reduce asset downtime.

Defining a clear scope helps 51ˇçÁ÷and partners to shorten the implementation time of a proof of concept. This means that businesses can significantly accelerate their Industry 4.0 transformation while having better control of their costs and timelines. Another advantage of the offering is that customers can choose from technology partners that have already tested and gained extensive knowledge on IIoT scenarios offered by 51ˇçÁ÷using the 51ˇçÁ÷IoT solution. Partners, including and , specialize in implementation, hardware, and connectivity.

Learn more about . To inquire about the 51ˇçÁ÷IoT starter package, contact 51ˇçÁ÷IoT Enablement here.

Anubhuti Shah is vice president and head of Design to Operate Solution Management at SAP.

Bechtle, one of Europe’s most well-known offering more than 40,000 hardware and software products to the industrial and public sector, is a prime example of how Industry 4.0 works in the real world.

When Bechtle set a goal to boost its e-commerce business by 250%, it required handling approximately two times as many packages. And when COVID-19 forced people to spend more time at home, the demand for home office equipment boomed.

To meet high this high demand, Bechtle needed to employ more warehouse workers to increase its delivery capacity. However, due to low unemployment in the region, finding workers was difficult. This led the innovative company to think out of the box.

Knowing that current manual warehouse processes could not support the goal, Bechtle searched for a new solution. The answer was to transform Ěýservices with Industry 4.0. by deploying Ěýin its warehouse to transform supply chain operations.

The integration of robotics within its warehouse was seen as an important first step in the company’sĚýĚýÂá´ÇłÜ°ů˛Ôąđ˛â.

Bridging the Gap Between Manual Processes and Automation

Bechtle recently co-innovated with 51ˇçÁ÷integrating autonomous mobile robots with 51ˇçÁ÷Extended Warehouse Management (51ˇçÁ÷EWM).

delivers predefined scenarios that integrate autonomous mobile robots of virtually any vendor very easily. Robots navigate through the warehouse using LIDAR, laser scanners, or 3D cameras to enable simultaneous localization and mapping in a warehouse to operate safely, side by side with humans.

“With 51ˇçÁ÷Warehouse Robotics, we have found a way to manage our warehouse even more effectively and flexibly, and provide better support to our employees,” said Klaus Kratz, director of Logistics at Bechtle Logistik & Service GmbH. “Our customer promise is ‘each order should be shipped on the same day.’”

Enhancing the Customer Experience

Bechtle retains 25,000 square meters of storage area to manage, the equivalent of more than three football fields.

As a first step, the company looked at automating cross-docking operations, where goods arrive at the receiving dock and are issued directly to a customer order instead of being put away into storage. The robot moves a cart and drops it at the shipping dock. A planned second step will be the automation of put-away operations. As a result, Bechtle calculatesĚýof costs in these operations.

Automated logistics does not only shape supply chains to be leaner but also helps keep deliveries on time.

“We proved that Industry 4.0 efforts, such as adding robotics to warehouse operations, can directly enhance the customer experience as well,” said Christian Deppisch, head of Innovation Management at Bechtle Logistik & Service GmbH. “Imagine a customer orders the product at 4:00 p.m. and the product will be handed over to the carrier on the same day, despite the high level of order volumes.”

This process integration was complete in about four weeks — quite a time savings compared to traditional integration projects that can typically take up to 18 months.

Rise of Human Empowerment

Automating flexibleĚýĚýmakes operations much easier to maintain. The new process will help free up human employees from repetitive tasks, redeploying them to other value-added tasks, and ease their workload.

“As we were considering the logistics problem, we needed to carefully manage organizational change,” said Kratz. “We had to communicate clearly to our staff that flexible automation was the only way to meet our goals and that we would continue to value their contribution by expanding their qualification toward more demanding and customer-individual tasks, and relieving them from monotonous activities.”

Operators enjoy the freedom of leveraging robots from different suppliers, throughĚý, which makes it easy to cover spikes in demand.

In the near future, the innovative IT provider is also planning to expand the use of robotics — such as using robotic arms in operations — within its warehouse operations. By socializing robots with human employees in an integrated unified ecosystem, the company is on its way to double the revenue in the next 10 years, from €5 billion in 2020 to €10 billion in 2030.

These were the words of Pepijn Timmermans, vice president of Digitalization at VDL Nedcar,Ěýwho I recently had the chance to speak to about how the company modernized and digitalized its yard operations.

What Is VDL Nedcar?

is not just the only independent contract manufacturer in the Netherlands but also one of the most advanced vehicle manufacturers in Europe. The 50-year-old company builds high-quality cars for major brands such as BMW, as well as a plug-in hybrid electric vehicle (PHEV) variant of the MINI Countryman. And as a company that banks on strong partnerships and innovation, VDL will also build electric vehicles for their newest customer, the U.S. company Canoo.

How to Manage a Yard Full of Moving Products

VDL Nedcar faced the challenge of managing the movement of vehicles, parts, and materials. “We have 1,000 parts suppliers, 12,000 parts numbers, and seven carriers who bring all these parts by truck to our plant, which results in an inbound of 270 full trucks per day coming in and going out,” Timmermans explained.

“The automotive industry has a closed loop where packaging material is brought back to the supplier. This means transport can arrive at any moment and within only one hour the driver drops a trailer, picks up another with packaging materials, and leaves the yard,” he added. “We have to manage 350 trailers in our yard. Basically, it’s a warehouse management system for trailers.”

The process to do this was very manual. When a carrier came in, they picked an empty spot in the yard, filled out papers, and took them to the office where the information was put into the system. This was a very labor-intensive and error-prone process, and, as Timmermans explained, “If we missed only one trailer, the impact could be dramatic and costly.” A missed trailer of a vital part could harm the production processes and even lead to major stoppages of the plant for a full day, which relies on a just-in-time approach.

The Answer? Warehouses on Wheels

The answer was to analyze business processes. “We have a very unique inbound logistics supply chain concept. I think we are the only one of the OEMs in Europe who has control of inbound transport fully in our own hands,” Timmermans said. “In our material requirement system, we also integrate the whole of inbound logistics transport planning as part of the , which makes us unique and enables us to have very efficient inbound logistics.”

“We established a ‘warehouse on wheels’ concept, which optimizes our transport efficiency,” he said. “Instead of booking a time slot days ahead with the risk of long waiting times at the gate and manual management of documents in the past, carriers can arrive at our plant 24/7, sign in at the gate, get a parking location assigned for the trailer, and receive a note where to pick up an empty trailer with packaging materials.”

Managing the Logistics of the Yard

To get full control and transparency of this warehouse on wheels, VDL Nedcar implemented .

“Based onĚýĚý˛š˛ÔťĺĚý, we developed a solution where our six dock master trucks that drive the trailers from the yard to the loading dock and empty back to the yard can be steered fully automatically,” Timmermans explained. “The trucks are equipped with industrial flat screens and connected to the solution. All movement triggers are visualized for the dock masters and they get automated priorities for which trailer to transport where, including an optimization algorithm to indicate which truck is close to the trailer to be picked up. Getting this process automated and optimized saved one employee per shift.”

“Previously, we also did a manual weekly inventory of all trailers on the yard for which we needed one man day per week. That has all gone,” he added.

“51ˇçÁ÷Yard Logistics helps us cooperate with our suppliers much better. We have an easier, digitalized, and transparent process at the gate for our carriers, which boosts efficiency, reduces waiting time, and eases administration,” he said.

Tangible benefitsĚýžą˛ÔłŚąôłÜťĺąđ:

• Increased process transparency
• Reduced administrative effort of one day per week
• Time savings thanks to inventory automation
• Efficiency gains due to automated and digitalized processes on the yard saving one employee per shift
• Reduced waiting time for carriers and enabling them to plan better
• Streamlined and transparent processes at the gate
• Almost no incidents or administrative mistakes
• Standard solution that is integrated withĚý

“In the future, we plan to connect our yard logistics processes withĚý to provide a self-service portal for the carriers, automate gate processes with cameras, and leverageĚýĚýto get full transparency across the entire supply chain,” Timmermans concluded.

To learn more about how to achieve efficient and sustainable processes with 51ˇçÁ÷Yard Logistics, .

Karin Fent is senior director of Global Customer Success Digital Supply Chain at SAP.

In 2008, two leading players in the commercial vehicle business – Volvo Group and Eicher Motors – joined forces with a common vision of driving modernization in the commercial transport business in India. Volvo Group brought in global expertise, leadership in product technology, well-defined processes, and a brand respected all over the world. Eicher Motors, a leader in the light and medium vehicle segment, contributed with frugal engineering, considerable after-sales infrastructure, and cost-effective operations.

VE Commercial Vehicles Ltd. (VECV) is comprised of six business verticals: Eicher Trucks and Buses, Volvo Trucks India, Eicher Engineering Components, VE Powertrain, VECV Engine Business, and Volvo Bus India. The company includes the exclusive distribution of Volvo Trucks in India, engine manufacturing and exports for Volvo Group, non-automotive engines, and the Eicher component business. A multi-brand, multi-division company backed by innovative products and services, VECV is recognized as a leader its industry today.

Mastering Highly Complex Assembly Processes at Minimum Cost

Commercial truck manufacturing involves highly complex assembly operations due to the large number of variants, the thousands of parts being assembled, and the many types of tools and machines that are required.

On top of this, VECV faced several challenges:

• Shortage of skilled manpower that made it extremely difficult to maintain quality and high productivity at minimum cost
• Inability to track and trace its assembly operations
• Considerable training effort was required for new operators as there was no system to guide operators on assembly processes while performing operations
• Suboptimal line efficiency, machine utilization, and operator productivity resulted in lower quality and higher rework due to lack of process controls and error-proofing
• Lack of data connection on the assembly line which did not allow any meaningful insights to improve process quality

Paving the Way to Industry 4.0 and Smart Manufacturing

VECV needed a solution that would enable real-time monitoring of its entire manufacturing supply chain processes to:

• Gain meaningful insights to increase overall line efficiency, productivity, and quality
• Achieve cost savings by standardizing operational processes and equipment
• Create standard operating procedures to guide new operators and reduce time for operator deployment on assembly lines
• Reduce operator errors and drive efficiency by making assembly operations 100% traceable
• Decrease costly downtime by implementing predictive maintenance for critical machinery

Embracing Industry 4.0 principles, the vehicles company decided to adopt smart manufacturing processes by implementing Industrial Internet of Things (IIoT)-based solutions from 51ˇçÁ÷to bring shop-floor visibility to the top floor. This enables faster decision-making and provides meaningful insights to improve overall line efficiency, productivity, and quality.

Fostering Smarter and Leaner Operations with Impressive Results

VECV introduced , which is comprised of a number of digital manufacturing solutions that helped meet its objectives. The solution was deployed on all 10 assembly lines, each comprised of about 150 assembly stations, where over 200 machines are used to assemble about 3,000 parts.

This means that:

• Assembly operations’ standard operating procedures are now displayed in real time. Assembly machines are connected to capture more than 400 critical process parameters, ensuring tight process controls and error-proofing.
• Automated part selection guarantees correct selection and traceability for all 3,000 parts. The RFID integration through 51ˇçÁ÷Plant Connectivity eliminates manual interventions and screens on assembly stations optimize efficiency.
• A defect capturing and feedback system improves product quality and reduces errors.
• A 100% labor tracking improves operator efficiency.
• Overall equipment efficiency calculations enable predictive maintenance of critical machines. Real-time reports provide meaningful insights and enable faster decision-making. Vibration sensors installed on six key critical machines capture data into Ěývia 51ˇçÁ÷Plant Connectivity software. Data is analyzed to create an algorithm in 51ˇçÁ÷MII to predict machine failure.

51ˇçÁ÷Manufacturing Suite enabled the company to standardize operational processes, equipment, and activities, leading to cost savings in operations and faster gains in productivity and quality. With 100% tracking and traceability of all assembly operations, troubleshooting time was significantly reduced. Tight process controls and error-proofing increased overall product quality, reduced mistakes, and improved productivity.

As Sumit Goyal, senior manager IT, Digital Manufacturing, explained, “51ˇçÁ÷Manufacturing Suite has brought many tactical and strategic benefits to VECV. It has helped improve productivity, lower operating costs, and increase quality and compliance. By gaining real-time visibility into the entire manufacturing supply chain, we are able to accelerate root-cause analysis by making fact-based decisions.”

And the numbers speak for themselves. VECV has seen:

• 15% productivity improvement
• 30% process quality improvement
• Reduction in field failures
• 20% improvement in manpower utilization
• Significant reduction in non-value-add activities through automation
• 40% error reduction
• 100% tracking and traceability of critical process parameters and assembled parts
• Zero compliance issues

And from an IT perspective, VECV now has:

• A single platform capturing data from different sources to ease system maintenance
• Reduced infrastructure and operational costs by removing standalone, third-party solutions used to capture data from different systems
• 95% of machines connected with line controls and improved process quality by 20%
• 30% reduction in unplanned downtime
• 15% improvement in OEE (overall equipment effectiveness) management and OLE (overhead line equipment)

Want to learn more about how innovative organizations utilize Industry 4.0 to improve manufacturing processes? Check out the “” report and read the .

Karin Fent is senior director of Global Customer Success Digital Supply Chain at SAP.

In this document, we offer an updated perspective on how can help drive digital transformation for customers. In the light of global disruptions and challenges, companies need to find a path to leverage digital technology for nurturing growth and profitability. A shows that Industry 4.0 shows has significantly impacted productivity and profitability, with 63% of manufacturing companies reporting profitability increase of more than 5% compared to the year before.

Companies successfully deploying Industry 4.0 focus on business value not technology, mobilize and train their workforce on new technologies and processes, and move toward an integrated IT infrastructure and automation technology stack. And they manage the company by data-driven processes rather than transactional processes.

I want to share a quote from Accenture CEO Julie Sweet, who at the Fortune in October said, “I predicted in March of 2020 that those who, pre-pandemic, had really invested at scale into technology and enabled digital transformation really had their competitive gap widened, literally overnight. And 18 months in, that’s exactly what we’ve seen. In fact, the gap between those who really are leaders in technology and its adoption and the culture around it [and those who aren’t] has gotten even bigger. The top 10% are performing at five times the rate of the bottom 25%. It’s a huge gap.”

While Industry 4.0 is largely associated with factory-focused initiatives, with SAP’s portfolio companies can expand the digitalization beyond to a company-wide, competitive business strategy combining manufacturing automation with enterprise business information and execution.

To figure out what opportunities for improvement your organization can benefit from, we offer a free , designed to help you accelerate your transformation journey.

Franz Hero is head of 51ˇçÁ÷Digital Supply Chain Development.

“The 51ˇçÁ÷customers we interviewed revealed the trust they place in SAP’s security and data privacy model — a critical aspect for OEMs who select IIoT vendors,” said IDC Research Director Reid Paquin. “SAP’s customer references also emphasized the benefit of getting readily integrated, IoT applications for engineering, manufacturing, operations and logistics — all from one vendor to drive their Industry 4.0 transformation.”

The IDC MarketScape criteria for evaluation include the comprehensiveness of business applications built on the Industrial Internet of Things (IIoT) platforms and the ability to integrate IoT data with enterprise or third-party systems and services. 51ˇçÁ÷ expected by most businesses from an IIoT platform, such as analytics, machine learning and edge deployment capabilities, were among further product characteristics that IDC analyzed in detail.

According to the IDC MarketScape, “IIoT/Industry 4.0 deployments generally require multiple vendors, so being able to gain a wide variety of functionality from any one single vendor can help simplify the deployment and time to value. Customers appreciate that 51ˇçÁ÷offers them choice on where to run their workloads, including a variety of cloud options.”

Businesses in nearly every industry learned in the past year that any disruption — big or small — can create a huge impact on their ability to serve the market. Supply chain resilience has become a boardroom conversation. While supply chain disruption may at first appear to be a challenge solely associated with process and discrete manufacturing industries, many sectors are dependent on manufacturers to deliver their products as services. This is where business leaders look to leverage technologies such as the IoT effectively to drive greater productivity and agility.

51ˇçÁ÷offers one of the largest portfolio solutions to manage a connected supply chain in what it calls “design to operate.” Processes within the design-to-operate spectrum are driven by a set of integrated applications that can be further enhanced to be real-world aware, automated and adaptive with the IoT. 51ˇçÁ÷is uniquely positioned to deliver Industry 4.0 transformations almost single-handedly due to its large portfolio of IoT-enabled solutions.

“Being named as a Leader by the IDC MarketScape is validation of the value and flexibility we are providing to our customers,”Ěýsaid Mike Lackey, global VP of Digital Manufacturing at SAP. “Our and the embedded IoT capabilities in our applications for manufacturing industries are driving productivity, resilience and sustainability across the entire supply chain.”

Visit the . Follow 51ˇçÁ÷on Twitter at .

About IDC MarketScape
IDC MarketScape vendor assessment model is designed to provide an overview of the competitive fitness of ICT (information and communications technology) suppliers in a given market. The research methodology utilizes a rigorous scoring methodology based on both qualitative and quantitative criteria that results in a single graphical illustration of each vendor’s position within a given market. IDC MarketScape provides a clear framework in which the product and service offerings, capabilities and strategies, and current and future market success factors of IT and telecommunications vendors can be meaningfully compared. The framework also provides technology buyers with a 360-degree assessment of the strengths and weaknesses of current and prospective vendors.

Media Contact:
Stacy Ries, +1 (484) 619-0411, stacy.ries@sap.com, ET
51ˇçÁ÷Press Room; press@sap.com

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to 51ˇçÁ÷are intended to identify such forward-looking statements. 51ˇçÁ÷undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Š 2021 51ˇçÁ÷SE. All rights reserved.
51ˇçÁ÷and other 51ˇçÁ÷products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of 51ˇçÁ÷SE in Germany and other countries. Please see for additional trademark information and notices.

Add real-time connectivity over the Internet of Things (IoT) and we reach the current stage of Industry 4.0, which enables completely new business processes and business models that go beyond the classical paradigm of designing, making, and delivering products and include the operations through decommissioning, closing the cycle in the spirit of a circular economy.

is a set of technologies used with a new mindset to drive the automation of manufacturing and operations processes with smart technology. It starts with analyzing where and how business value is generated and then designing, making, delivering, and operating solutions that drive the right business outcomes.

Every industry success story starts with a new way of thinking. Maybe a customer doesn’t need a machine, but something the machine does or produces, such as powering an aircraft, making car parts from sheet metal, pumping concrete, compressing air.

That’s why digitalization is first about a mindset, and then about technology. Digital leaders think about how they do things today and reimagine doing them better using digital technologies. They don’t only challenge how they do things; they challenge what they are doing.

A true digital leader, for example, doesn’t just train service technicians to improve service quality and reduce costs. They might redesign their products and connect them with , enabling the machine to call the service with a list of its symptoms, so that the technician arrives with all the right spare parts on the first visit.

An Intelligent Strategy

We have always managed business processes in real time with their material flows and their value flows — that’s standard textbook stuff today. What is new now is the way we model supply chains, products, and the manufacturing processes with digital twins through a holistic process we call .

The goes well beyond smart manufacturing in factories and plants. It connects production with end-to-end process execution across the supply chain so companies can reach a new level of connectivity and adapt to change on the fly.

It starts with intelligent products that are designed to deliver outcomes. For example, in Brazil, tractor manufacturer is equipping its agricultural machinery to collect real-time data about what happens in the fields. The data is used to optimize irrigation and minimize the use of fertilizers, resulting in higher yields and more sustainable farming practices.

Next, it requires intelligent factories and logistics that are digitally integrated from the top floor to the shop floor, enabling faster, better decision-making on the business end whenever there are disruptions or new opportunities. For example, Porsche and press manufacturer Schuler have set up a that allows the company to make automotive body parts in small numbers using a highly automated, flexible process.

The third element in the design-to-operate process is intelligent assets such as digitalized machines that collect and combine data through sensors and from 51ˇçÁ÷solutions. is a global leader in measurement instrumentation, using Industry 4.0 technology to extract and process sensor data used for predictive analytics to reduce the unplanned downtime of machines.

And finally, the design-to-operate process relies on intelligent people who understand complex scenarios and are empowered to make smart decisions with the right tools. Automotive supplier has equipped its digital assistants with 51ˇçÁ÷technology that supports its employees with context-sensitive information, intuitive user interfaces, and natural language processing.

Intelligent Decisions

We all know intelligence sits in the brain, but the brain is useless without a nervous system, sensors, and muscles to interact with the world around it. 51ˇçÁ÷solutions can be the intelligent tools that enable the brain of the enterprise to collect and interpret all the data they can get from their ERP systems, their shop floor systems, and their ecosystem of customers, suppliers, and service providers. This enables them to make smarter decisions — in real time.

Enterprises that are truly intelligent use Industry 4.0 technologies such as machine learning and artificial intelligence (AI) to learn from good and bad decisions. That’s how they can make better, more intelligent decisions in a manufacturing environment that is constantly changing due to varying customer demand. These are the next practices that will help manufacturing companies increase productivity while producing high quality, individualized products in a sustainable, efficient manner.

.

Peter Maier is president of 51ˇçÁ÷Industries and Customer Advisory.

The OMP brings together business leaders and technologists from manufacturing companies, technology-solution providers and systems integrators to drive innovation across the manufacturing community and value chain. With this collaboration, 51ˇçÁ÷seeks to help drive innovation along the digital supply chain using open standards and open source.

Open Standards for Internet of Things (IoT) Connectivity

The future of supply chain management is networked, sustainable and agile. As a result, production must become more modular, flexible and transparent. Shop floor machines and manufacturing systems from multiple suppliers must therefore work in perfect synchronization. Traditional assembly lines migrate to assembly networks that cross organizational boundaries. A major goal of the SAP-supported Plattform Industrie 4.0 initiative is to bring manufacturing closer to the customer. Together 51ˇçÁ÷and the OMP will tackle this challenge by:

• Creating solutions based on open standards that overcome the complexity of proprietary systems and vendor lock-in
• Safely connecting operational technology to the cloud to enable better data-backed decisions and predictions
• Contributing to solutions and standards that drive automation and autonomy into production and logistics systems

Resilient and Sustainable Manufacturing with Plattform Industrie 4.0

“51ˇçÁ÷wants to accelerate supply chain innovations at scale through the power of open collaboration,” said Nils Herzberg, SVP and global head of Strategic Partnerships for Digital Supply Chain and Industry 4.0 at SAP. “Not only do we live in the century of shared economies, but we also live in the time of collaborative development.ĚýThe focus for the future will be stronger, more resilient supply chains coupled with agile production facilities. 51ˇçÁ÷has the supply chain applications to achieve this. As a member of the OMP, we will work with our customers and partners to create access to these future oriented applications.“

“With 51ˇçÁ÷joining the OMP, we gain even more industry perspective for our work,” said Christoph Berlin, Partner Group Program Manager for Azure Industrial IoT & Manufacturing at Microsoft. “The goal of the consortium is to bring together technology and applications to enable the next frontier of business value in manufacturing. This requires all levels of the stack to embrace open principles, open source and open standards. We also welcome the extensive knowledge that 51ˇçÁ÷brings to the table from a supply chain and manufacturing reference architectures perspective. This will further strengthen OMP’s technology partnerships and collaboration across the manufacturing ecosystem.”

This collaboration will allow for the design of agile manufacturing processes, specification of cloud architecture and development of tools for the future guided by the principles of sustainability, smart energy and green supply chain management. 51ˇçÁ÷will actively participate in all working groups, including Manufacturing Reference Architecture, IoT Connectivity, Semantic Data Structuring and ATS Core Services.

Visit the . Follow 51ˇçÁ÷on Twitter at .

Media Contacts:
Angela Feher, +1 (347) 882-1689, angela.feher@sap.com, ET
Kathrin Eiermann, +49 151 53858768, simone.kathrin.eiermann@sap.com, CET
51ˇçÁ÷Press Room; press@sap.com

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to 51ˇçÁ÷are intended to identify such forward-looking statements. 51ˇçÁ÷undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Š 2021 51ˇçÁ÷SE. All rights reserved.
51ˇçÁ÷and other 51ˇçÁ÷products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of 51ˇçÁ÷SE in Germany and other countries. Please see for additional trademark information and notices.

Based on current research, servitization appears to be an effective antidote against the ease of product switching. McKinsey & Company that while margins on new product sales are typically 10%, aftermarket service margins average 25%.

What Is Servitization?

Servitization is a strategy that product-oriented companies use to enhance and differentiate their competitiveness by integrating services into their overall business model. This shift can be seen on a continuum in which producing and selling products is coupled with a focus on adding services to the offering and ultimately integrating them. Very quickly, customer value moves from owning and using the product to capturing value with the product while services are perceived as a cost factor.

While this concept is not new, widespread – such as , , and – is fueling this approach to break into new markets and fulfill underserved customer needs. More recent product-service may include bundled support services, consumption or pay-for-use, and outcome-based services.

An earlier form of servitization emerged in 1962 when pioneered its famous “Power by the Hour” engine maintenance service concept. This model allowed airlines to pay for the time spent maintaining and replacing their aircraft engine. As technology advanced, sensors were incorporated for engine-condition monitoring and predictive maintenance services.

A few decades later, tire manufacturer Michelin redefined the service-oriented model to help trucking companies reduce fuel consumption. Payment for the service is based on achieving predefined fuel consumption targets, tracked through telematics and IoT, and assessed in real time with data analytics.

Many more companies have followed Rolls-Royce’s and Michelin’s example, including , , and . It is noted that in all cases, IT – specifically IoT and – in enabling product-service servitization.

Over time, this approach has become a critical component of manufacturers’ growth strategies. In fact, a of 60 European industrial manufacturing firms reported that servitization increases average growth margin from services delivered ranging between 15% and 35%. Another found that the 10% total returns to shareholders (TRS) achieved by servitization champions significantly exceeded the -1% median TRS of their peers. And in the spirit of these findings, Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, servitization as one of the megatrends that will shape the future of business and society.

How to Turn Servitization Into a Revenue Generator

Regardless of the advantages servitization offers, many businesses still question how to best recognize and adopt appropriate service options that deliver the best value to the customer. Some of the challenges encountered include culture change, competency adoption, process, system creation, and commercialization.

In many ways, a transformation journey toward servitization includes four fundamental maturity stages:

• Splintered: The organization struggles under a myriad of silos that lead to disjointed, manual processes. Legacy, fragmented enterprise resource planning (ERP) environments provide little or no visibility on operational performance. The business model is on pure product, with challenges to profitability.
• Side car: The organization has standardized the two chunks of the value chain – back and front desk – but keeps them separated. Since efficiency is critical at this stage, few add-on services are delivered, field services are based on basic mobile capabilities, and IoT stacks are only proofs of concept.
• Joined up: Front- and back-office flows are integrated bidirectionally and leverage advanced technologies, such as IoT, to feed core systems with real-time data. In some cases, edge capabilities bring coordinated autonomy to local sites, a suite of digital services are made fully available, and business model enhancements including pay-as-you-use and outcome-based contracts are actively explored.
• Borderless: Processes start and end outside the organization and operations, while technology enables different elements of the value chain to connect. Co-creation, data-sharing, and collaboration with customers, suppliers, partners from other sectors, and even competitors are part of the business model.

After demonstrating the importance of servitization during existing economic conditions and business performance, appropriate servitization concepts steadily replace the status quo, closing the gap between strategic intent and realized goals.

A critical part of progressing servitization maturity is transforming the business culture to encourage leaders and employees to of services from add-ons or giveaways to a valued part of the business model.

According to Guido Schlief, senior vice president and head of Services in Middle and Eastern Europe at SAP, “Our observation is that customers increasingly expect business outcomes from their suppliers – outcome-based services are a clear industry trend.”

Successfully embracing this shift can have a significant effect on the of a servitized business. Deep insights into customer needs are required to design value-added services that are valuable from the market perspective, not from the supplier side. For example, although monitoring of equipment condition has limited value to the customer, equipment availability directly impacts the customer experience.

Product companies must also consider a servitization model that shifts upfront transactional sales and payments to long-term contracts with perpetual payments, enabling customer-centric relationship building. demands an effective services organization, resembling a professional services firm containing the right processes, tools, and personnel who possess specialized skills. Although service personnel typically more than manufacturing personnel, the investment can help , such as lack of knowledge in systematic transformation and the ability to make required changes, in gaining the full benefit of servitization.

Over time, the transformation into a servitization model can be assessed to help ensure it satisfies the core needs of the business: financial, internal, customers, innovation, and learning. For example, pure financial measures – such as service revenue growth or services market share – can be evaluated alongside a proposed a balanced scorecard to provide a comprehensive view on servitization performance^Ěý(See Figure 1).

Get Ready: Servitization Is Here to Stay

As customers gain less interest in the shiny new functionalities of new products and pay more attention to the outcomes they achieve, all signs point to the growing importance of services as a competitive differentiator.

But remember, servitization is more than a pure vertical integration of the business model and goes far beyond add-on or giveaway services. In essence, it is a strategic transformation that spans across most business silos, requiring alignment between the business and IT and between the front and back office of the supplier.

And if approached appropriately, the new business model can open new sources of revenue and bring a fundamental shift from a reactive break-fix mentality to proactive outcome-based services.

Frits Verhoef is head of Business Transformation Services CXO Advisory, Middle and Eastern Europe, at SAP.

By 2025, 5G will enable connections and bring a contribution of to the global economy between 2024 and 2034, according to , the research arm of the global trade organization for the mobile industry.

Enterprises Unlock the Value of 5G with SAP

Since the launch of SAP’s 5G Innovation Council in 2018, 51ˇçÁ÷has been leveraging its unique cross-industry expertise, rich partner ecosystem, and global coverage to unlock value from 5G projects for its customers. In collaboration with a network of strategic partners, 51ˇçÁ÷is engaging customers in innovation sessions to identify and prioritize use cases that tap new revenue models and monetization strategies.

Some of these projects include augmented reality (AR)-enabled immersive consumer experiences, guaranteed payments in a stadium using 5G , omnichannel retail with frictionless payments, and robotic surgeries in healthcare, as well as autonomous forklifts and robotic service drones for .

“Where we’ve really seen the power of 5G is around private network deployments for enterprise customers,” says Frank Wilde, vice president, Global Center of Excellence, 51ˇçÁ÷Labs in Palo Alto, who has been working with 51ˇçÁ÷customers to integrate 5G technology into their digital strategy. 51ˇçÁ÷is positioned to work with customers to maximize the potential of their custom use cases or any of the more than 30 industry use cases that 51ˇçÁ÷has available for retail, healthcare, manufacturing, and oil and gas. The offering and digital transformation as a service means even greater possibilities for customers to take control of their digital journey when implementing new innovations.

5G Ultra-Wideband Networks Enable the Intelligent Enterprise

The over the current standard 4G arguably include: greater bandwidth for faster data processing; lower latency for greater responsiveness, which produces even greater benefits when combined with edge computing; and the ability to have more devices connected to the network simultaneously, which has huge implications for IoT-enabled sensors and smart devices. For the enterprise, among the greatest benefits come from 5G’s capacity for , , and .

5G technology is a game changer for the ; however, the 5G opportunity can still be something of a black box for decision-makers. Some may question why 4G isn’t good enough. Wilde responds by emphasizing the case for greater automation and simplification that is possible within a 5G network. “When you compare a 5G environment to a 4G environment, it’s like an eight-lane highway to a two-lane highway,” says Wilde. “You have additional bandwidth to work with and software-defined networking capabilities to be able to charge for services and create network slices. It’s a much more tightly coupled network.”

51ˇçÁ÷as a Global Partner for 5G Projects

Strategic partnerships are the backbone of SAP’s strategy in the 5G space, allowing it to capitalize on its enterprise business strengths while drawing on the multi-varied strengths of a vast ecosystem of technology partners. As a global company, 51ˇçÁ÷has built deep partnerships with the telecommunications industry across all regions. That approach brings big benefits for customers in the form of global coverage for their 5G projects using an established reference architecture to globally deploy a 5G edge platform or set of services.

“51ˇçÁ÷is uniquely positioned so that we can sit down with each telco globally and deploy a merchant 5G service that a small-to-medium business can leverage anywhere around the world,” says Wilde, who supports the need for partnerships to successfully deploy 5G solutions. “We’re streamlining the value chain around telcos, hardware manufacturers, software providers, and service integrators. We do the heavy lifting for our customers, which is one of the core value-adds that 51ˇçÁ÷is able to bring. We have both the customer network and the partner network to bring these solutions to life, unlike our competition.”

MWC21: Inspire the Future with 5G

51ˇçÁ÷will participate virtually in , scheduled for June 28-July 1 in Barcelona, Spain. Billed as the world’s biggest technology show, the event typically draws 100,000 attendees from around the world. In 2020, the show was canceled due to the pandemic. The MWC21 agenda will offer a hybrid mix of in-person and virtual content. The theme for the 51ˇçÁ÷presence at MWC21 is Inspire the Future with 5G. Find out how you can register for SAP’s live webinar series, tour SAP’s virtual showcases, and meet with 51ˇçÁ÷Telco experts and executives at .

To explore New York’s tourist sights, there is a mobile app that shows you the live visitor streams in one of the impressive skyscrapers. This allows you to decide the best time for a tour and to enjoy a view from the visitor terrace. The app also allowed registered users to change the colors of the illuminated antenna at night time, which was a great trick to impress any visitors I hosted in the city.

While this use case was certainly a great party trick, it is no comparison to the business value we see when equipping machines, equipment, transport boxes, containers, or devices with (IIoT) capabilities.

In the past year, manufacturers all over the world experienced significant disruptions that can impact globally optimized supply chains. Running resilient operations — highly productive and interconnected with a network of suppliers, contract manufacturers, logistics service providers, and customers — is key to weathering the storms of disruption.

Resiliency allows companies to withstand disruptions and, more importantly, to drive business process transformations of entire operating models. Thereby, technologies, such as IIoT and , have proven significant enablers. Optimized production, improved decision making based on higher visibility, and supply chain transparency are just a few examples of the many opportunities that IIoT provides.

At SAP, we see even more in it; we see the opportunity for companies to better understand their businesses, redefine business models, and meet new customer demands — all while achieving sustainability goals.

By embedding IIoT capabilities and making industrial data available to line-of-business and industry applications such as and , we enable new business processes, empowering customers to connect entire industry value chains.

Enabling Industry 4.Now with Smart Sensing

To help customers move more swiftly with their , we recently released “smart sensing” capabilities. The reason? Industry 4.0 requires the digital identification and localization of people, assets, machines, deliveries, and other business objects. Smart sensing technology helps to not just exchange this information between physical objects and enterprise applications, but also to track the associated business objects to automatically steer process steps and actions. Cloud technology enables not only the possibility to process large numbers of scanning events in parallel, but also provides a powerful decision and rules engine to “translate” insights to actions, allowing customers to leverage intelligence at almost every business process they can imagine.

The smart sensing capabilities are offered as part of 51ˇçÁ÷IoT and enable customers to automatically correlate the movement of physical objects to specific process steps by scanning ID-tags such as RFID, barcode, QR code, or image recognition.

Let’s have a look at a few examples:

1. Smart Sensing Technology in a Logistics Scenario
Think about a manufacturer of high voltage batteries that sends the products out for delivery to an automobile manufacturer. Each movement of a physical item — for example, product, pallet, container, etc. — has an implicit meaning for the progress of the business process execution. Sending a battery out for delivery to a customer means “goods issue,” receiving a delivery means “goods receipt.” By equipping these batteries with RFID tags, a “goods issue” or “goods receipt” can be created automatically in 51ˇçÁ÷S/4HANA as soon as it passes an RFID gate at the warehouse dock, for example. Based on the scan event, it can be detected if the correct handling units and the correct number of handling units have been shipped. In this way, the battery manufacturer can reduce manual efforts and thereby also avoid human mistakes.

2. Smart Sensing Technology in a Handling-Unit Tracking Scenario:
Being part of one solution, we can now also combine the power of smart sensing tags with sensors for IoT. An example: By equipping the transport boxes of our batteries with IoT sensors, we can now automatically create a digital twin of these handling units based on an ID scan with smart sensing. As a consequence, conditions of the batteries — such as temperature, humidity, or shocks to the unit — are tracked during the transport and warehouse processes in real time. In case an issue occurs with the delivery, the sales or logistics manager will be notified in 51ˇçÁ÷S/4HANA immediately and receives proposals on how to solve the issue. Such proposals can be to create a customer return, send an express replacement order, or to inform the affected customer about the situation. This increase of supply chain transparency enables the battery manufacturer to react faster and more effectively when issues occur and to ultimately extend the average lifespan of the batteries.

3. Smart Sensing Technology in a Production Scenario:
Another example taken from production is . During the production of our high voltage batteries, the manufacturer leverages Kanban, a scheduling system for lean manufacturing to improve manufacturing efficiency and to avoid excess inventory at any point in production. By equipping kanban containers or shelves with RFID tags, status changes — for example, empty, full, in use, etc. — are triggered in 51ˇçÁ÷S/4HANA. This status update automatically triggers replenishment at the warehouse or at the supplier. The real-time analytics of location and retention time of raw material enables the manufacturer to optimize stock level as well as line runners’ routes.

Extending Smart Sensing Technology to the Edge

In order to provide reliable connectivity among machines, people, processes, and assets, the scenarios described above will soon be . In latency-sensitive scenarios, relevant business data from 51ˇçÁ÷S/4 HANA business objects is synchronized from cloud to the edge nod such as a gateway in a factory or at a warehouse. Scanning events through auto-ID devices can now be enhanced with relevant business data locally. In this way, configurable business rules and actions can be instantly processed and analyzed at the edge. The consequence for the business is that no pallet, truck, or Kanban box will ever stand still, as even during intermittent Internet connectivity, the show will go on based on the edge compute right at the site.

The physical proximity of applications and devices make it easier to achieve low-latency responses and to optimize bandwidth consumption by sending only relevant data to the cloud. Compounded with various benefits in terms of data privacy and cost savings, it helps ensure business continuity and offline operations even for the most mission-critical processes when connectivity is not available or unstable.

Edge Containerization

Bringing software from the cloud to the edge happens via so called containers. A container consists of an entire runtime environment: an application plus all its dependencies and configuration files needed to run it, bundled into a single package. Containers provide the answer to the question of how software can run reliably when moved from one computing environment (cloud) to another (edge). Such containers may be only a few megabytes in size, which makes them ideal for running on edge devices with limited hardware resources.

Kubernetes is the de-facto standard for container orchestration in the cloud or edge. By embracing Kubernetes at the edge, 51ˇçÁ÷moves toward a uniform approach in service management across cloud and edge. 51ˇçÁ÷Edge Services provides a centralized fully fledged edge lifecycle management using Kubernetes for services and applications, including the possibility to deploy extensions, while enabling consistent execution across cloud and edge.

Bring Your Own Data Lake

IIoT and edge computing are critical enablers for connecting industry value chains, running businesses in real time, and driving a step-change in productivity. Yet our vision is to go one step further and empower customers to leverage more data than ever before. “Real world thing-data,” coming from machines, devices, industrial cameras, or sensors by themselves are useless. Only by combining IoT data, such as a detected shock of a sensor, with business data, such as deliveries, materials, or production orders, can we truly generate business value.

Our strategy of “bring your own data lake” will enable customers to integrate data from their own Big Data stores into 51ˇçÁ÷applications. With this, customers can leverage and integrate different kind of data formats, allowing them to contextualize their “thing” data with application business data to transform from insights and analysis to action.

The potential of IIoT is not just in connecting millions of devices, or the antenna of a skyscraper with users, but to really turn the data they generate into intelligent insights and derive action. As the COVID-19 crisis amplified the need for business and supply chain resilience, IIoT will be embedded into more business processes than ever before — enabling entirely new business models. Through this, businesses can rapidly scale their productivity, product quality, sustainability, and even customer experience goals, leading to happy and engaged end customers.

For more information about IIoT, read:

• Delivering Speed, Agility, and Resilience with IIoT
• Business Resilience with IoT-Enabled Cloud ERP

Dominik Metzger is head of Product Management for Manufacturing and Industrial IoT at SAP.

The difference is that as adults, we know it’s not spells and charms, but a whole web-like community of devices called the Internet of Things (IoT) that connects us to engage with each other and with the devices. And nothing makes this more relevant than now — a time when collaboration across virtual locations is being constantly redefined by an ongoing pandemic that has managed to turn the world on its head.

COVID-19 has become a classic case study in what happens when businesses undergo an unprecedented crisis and recognize the need to respond with agility and speed to ensure business continuity. In order to build resilience and accelerate the return to normal operations, companies have accelerated their automation strategies, which include the Industrial Internet of Things (IIoT) and Industry 4.0. This strengthens the need for plant automation and deeper integration with their manufacturing execution systems, maintenance systems, quality management systems, and field service management, as well as logistics, warehousing, and transportation. In addition, companies need to increase transparency relating to key parts of their businesses in order to optimize production, save costs, and improve product quality while at the same time detecting new customer requirements.

To empower our customers to benefit from Industry 4.0, 51ˇçÁ÷has a dedicated strategy, , that combines business expertise, software solutions, enablement technology, and a partner ecosystem to make data-driven applications, decision-making, and operational excellence available to the entire enterprise.

IIoT and Edge Computing

At the edge of the landscape are business-critical processes, applications, and services that need to be delivered with reliability and low latency. and enable our customers to collect, store, transform, enrich, analyze, and act upon IoT sensor data at the edge and in the cloud.

51ˇçÁ÷IoT offers an end-to-end, managed cloud solution for Industry 4.0. This solution generates business outcomes by combining real-world usage data from sensors and devices with business semantics such as master and transactional data. 51ˇçÁ÷IoT enriches applications with real-world IIoT context to respond to critical events and assist decision-making proactively and intelligently. 51ˇçÁ÷IoT business services are consumed by 51ˇçÁ÷applications as well as by customer and partner applications and complemented by other services on . For instance, 51ˇçÁ÷Digital Supply Chain solutions such as provide customers with integrated capabilities for advanced analytics and machine learning — enabling, for example, anomaly detection, failure prediction, and predictive maintenance.

Power-generation leader manages complex projects around the world. But sub-optimal, siloed processes were limiting operational visibility — making project planning and delivery more difficult. To address these issues, the company is rolling out . At the same time, it is enabling predictive asset service with 51ˇçÁ÷Business Technology Platform, resulting in a dual digital transformation that will also help Ansaldo streamline manufacturing and improve its offering.

Today the company has a 75% reduction in paper-based quality controls, greater process integration across lines of business and group companies, and 80% less time and effort to onboard new customers on the services portal. 51ˇçÁ÷S/4HANA connects back-end systems for manufacturing, product life-cycle management, and warehousing, while 51ˇçÁ÷Internet of Things and 51ˇçÁ÷Edge Services enable predictive plant maintenance and service.

SAP’s strategy for IIoT for cloud and edge stands on three pillars while providing customers with choice via interoperability options and avoiding lock-in with cloud providers:

• Embed IIoT insights into line-of-business and industry business applications
• Extend line-of-business and industry business applications with IIoT
• Enable critical business processes to run at the edge for low latency execution and business continuity

Let’s look at a few of the most recent examples of innovation in these three core areas.

Embed IoT Insights into Handling Unit Management

The handling units (HUs) are an approach in 51ˇçÁ÷S/4HANA to model physical units of packaging material and the goods that are contained in it.

Imagine you are a warehouse manager who needs to monitor if sensor-equipped HUs were exposed to sudden shocks, drops, or other critical conditions. A classic example here would be the high-voltage battery, which is the most expensive and sensitive part of an electric vehicle. Sub-optimal state of charge during material storage decreases its energy capacity and the expected lifespan.​ In addition, incorrect charging cycles or storage temperatures can damage the battery cells and increase the risk of explosion and fires.

It is a tall ask made easy with the IoT-enabled handling unit management, which embeds IoT insights into 51ˇçÁ÷S/4HANA and allows shipping specialists or warehouse clerks to act proactively in case the state of charge reaches a critical level. In this way, we can help businesses prevent their customers from receiving and using products in sub-optimal conditions, resulting in superior customer experience.

Extend Replenishment with IoT Sensors

Many 51ˇçÁ÷customers in the food processing, chemical, pharmaceutical, and other industries produce material and store them in either silos or containers, which are then shipped to their customers. They often face challenges in stock keeping and stock tracking, where manual observation of the fill-level in a silo can lead to outdated stock accuracy in enterprise resource planning (ERP), low stock availability, and production down times. This is where 51ˇçÁ÷IoT can step in to leverage real-world data from fill-level sensors attached to receptacles to turn replenishment into an automated data-driven process. 51ˇçÁ÷IoT enables monitoring the fill level of receptacles in real time.

When customers embed IoT insights into 51ˇçÁ÷S/4HANA, it allows them to trigger a purchase order automatically, as soon as the fill level falls below a predefined value. This approach leads to just-in-time replenishment, higher stock availability, and process efficiency due to the increased automation of process steps, thereby proving how intelligent enterprises using the latest technologies can turn insight into action across their business in real time.

Run It at the Edge but Orchestrate It in the Cloud

Manufacturers in the era of IIoT and Industry 4.0 require solutions that are intelligent, networked, and predictive. The advantage of edge computing lies in executing the business processes locally in real time, eliminating latency. SAP’s offering for the edge includes IoT data processing but it goes far beyond that. For many years, provided services to ingest, persist, and analyze IoT data as well as locally execute predictive analytical models and run mainly ERP business processes at the edge.

With for edge computing, customers can deploy business-critical application components in manufacturing execution to edge appliances running in manufacturing plants. At the same time, they keep in sync with their companion applications in the cloud. This helps ensure resilience, low latency execution, and business continuity where production would otherwise be exposed to the risk of disrupted operations due to connectivity issues in the cloud. At the same time, software life-cycle management for edge and the required business configuration is orchestrated centrally from cloud, thereby supporting low total cost of ownership.

To become an intelligent enterprise, manufacturing companies need to re-think their business models and start their Industry 4.Now journey now. Intelligent technologies such as IIoT and edge computing are no longer just nice-to-haves, they are fundamental to the continued success of a business; the more data a company can collect, store, and analyze, the better it can compete.

At the end of the day, we need to continue to play our role in empowering our customers in their decision-making processes and enabling them in dynamic self-management and continual adoption of innovation. The link between imagination and innovation isn’t just an invisible creature hiding within your smart device — it’s proving how amazing things can happen when we connect the unconnected.

Jan Gilg is president of 51ˇçÁ÷S/4HANA
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In the industrial sector, IIoT has emerged as a significant value driver in the manufacturing industry. It has changed the way goods are produced and delivered by connecting all phases of the design-to-operate product life cycle, including ideation and conceptualizing, manufacturing, delivery, and operations.

A Need That Is Here to Stay: Building Resilience Beyond the Crisis

The strong uptake of IIoT reflects an increasing need for business resilience. Even before the pandemic, manufacturing companies operated in an increasingly volatile environment, requiring them to adapt quickly to shifting priorities. COVID-19 accelerated this trend. As consumer demands changed dramatically and manufacturing capacities were constrained, supply chains broke, forcing businesses to cope with the disruption of their daily operations.

While the world will hopefully overcome COVID-19 at some point, new health, societal, geopolitical, or economic crises are likely to occur. That is why an increased need for business and supply chain resilience is here to stay — and IIoT and will help take us there.

When we look at which companies were able to overcome these challenges, it is clear that it was highly digitalized businesses capable of taking informed decisions based on real-time data. IIoT technologies played a major role in helping them to repurpose production, provide help where needed, and find alternative routes to maintain .

Take INDEX-Werke as an example: the traditional supplier for the automotive industry kept its own business and that of its customers running throughout the crisis. Based on 51ˇçÁ÷Commerce Cloud, .

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The opportunities are enormous, but many companies that I speak with are wondering where and when to start. Given the disruption we see among our customers in almost every industry, I believe that companies can start small, but should start now.

Introducing New Business Models: From Product to Outcome

IIoT enables new business models and the shift from selling products to delivering services and solutions. The underlying idea of outcome-based models is that customers pay for what they get out of a product rather than for the product itself. In addition, IIoT opens the door to a fully personalized customer experience. Data exchange between a customer and a smart factory makes it possible to produce a highly customized product within just a few days — from receiving an order to shipping the goods.

For example, when , a leading manufacturer of electronic motors, was looking for a way to differentiate its products, the company identified a growing demand for remote monitoring. Together with SAP, the company created a custom app with monitoring and alerting capabilities. VEM’s sensor-equipped motors not only reduced operational downtime and extended product lifetime, they also helped achieve a 25% revenue increase. Most importantly, the company was able to reinvent its business model completely.

Operating in Industry Networks: If the Ecosystem Wins, Everyone Wins

Just recently, I , CEO Digital Industries at Siemens, about the importance of partnerships to accelerate the industrial transformation. We spoke about moving from enterprise resource planning (ERP) to network resource planning, and from “ego-systems” to ecosystems where the players strive for added value together.

At SAP, we envision that enterprises will exchange data via an industry network of suppliers, machine manufacturers, and customers. We are addressing this with and thereby enabling a shift from a seller/buyer paradigm to collaborative models. When, for example, data from production quality records is shared between suppliers and manufacturers, they can collaboratively resolve warranty claims and recalls.

51ˇçÁ÷actively uses and contributes to various industry standards that build the foundation for industry networks. 51ˇçÁ÷helped incubate the in 2019, with the goal of creating guidelines for compatible and interoperable IIoT solutions and services. Joint standards between the systems of different players in our ecosystem help drive digitalization in factories, plants, and warehouses in a collaborative manner.

Sharing data beyond a company’s borders adds even more value for all the players, from original equipment manufacturers (OEMs) to suppliers and consumers. Strong networks rely on cooperation among companies within and across industries. 51ˇçÁ÷is a founding partner of the Automotive Alliance, , which aims to create a unified business network for the automotive industry. The alliance’s goal is to create a consistent information exchange through the entire automotive value chain.

From Concept to Execution

Today, we have all the technology and applications at hand to connect devices, people, and processes. Making use of data across the entire product and service life cycle is the foundation of managing business processes end to end.

To sustain long-term success, it is imperative for companies to move from concept to execution. This also requires a shift in our mindset. We need to rethink how data is used and set common standards. We need to rethink how businesses run and be open to new business models. And we need to rethink how markets work and move from the buyer/supplier relational paradigm to a collaborative model.

If we see IIoT and Industry 4.0 as both an urgent need and an opportunity, we will not only achieve continuous optimization but we will also generate added value — both for the ecosystem we operate in and for our customers.

Thomas Saueressig is a member of the Executive Board of 51ˇçÁ÷SE, 51ˇçÁ÷Product Engineering.
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The partnership, which includes a collaborative approach to standards, consortia, and open source, will shape the future of supply chain and manufacturing.

51ˇçÁ÷Digital Supply Chain and Industry 4.0 Solutions Run on Microsoft Azure

As a result of this partnership, organizations will be able to use a comprehensive set of 51ˇçÁ÷Digital Supply Chain solutions on Microsoft Azure, including , solutions, , and 51ˇçÁ÷Logistics Business Network.

51ˇçÁ÷will use Microsoft Azure to run these solutions in a software-as-a-service (SaaS) model that can help reduce the customer’s need to manage the software and underlying infrastructure while accelerating time to value of supply chain applications. Customers will be able to scale globally by leveraging Azure which offers enterprise-grade compute, storage, and network services to support mission-critical performance and business continuity to run 51ˇçÁ÷Digital Supply Chain solutions.

51ˇçÁ÷Manufacturing Suite, 51ˇçÁ÷Intelligent Asset Management, supply chain networks solutions from SAP, and the 51ˇçÁ÷Internet of Things (51ˇçÁ÷IoT) solution are already available on Microsoft Azure in Europe and the United States today.

51ˇçÁ÷and Microsoft Collaborating to Bring Business Processes to the Edge

When managing a global, distributed supply chain and manufacturing environment, companies face challenges with constrained bandwidth, latency, and massive volumes of data that can adversely affect execution and quality scenarios. Here, the solution lies in edge computing.

Think of edge computing as a form of distributed computing where data, applications, and business processes are run near the source of generated data. The ability to extend and run business processes at the edge enables organizations with factories, plants, warehouses or remote operations, to fully automate and run their operations independently – enabling faster processing and support for data residency requirements. Customers have the choice to only send data to the cloud that is relevant for additional analysis or an aggregated view across many edges to save costs.

51ˇçÁ÷and Microsoft are also collaborating to make 51ˇçÁ÷solutions available on Microsoft Azure Stack Edge, starting with 51ˇçÁ÷Digital Manufacturing Cloud. This helps manufacturers process data locally across machines and control systems to address latency or connectivity restraints.

Customers are empowered to choose what business process to run in the cloud or at the edge based on business need; they can deploy specific business processes and relevant business data to specific edge nodes using 51ˇçÁ÷Edge Services. According to , “70% of IoT deployments by 2023 will include edge-based decision-making to support organizations’ operational and strategic agendas.” The report also states that by “2023, 70% of enterprises will run varying levels of data processing at the IoT edge. In tandem, organizations will spend over $16 billion on IoT edge infrastructure in that time.”

Customers have a choice to use either Microsoft Azure IoT or 51ˇçÁ÷IoT to bring their time series data to the cloud. Time series data collected from machines or devices at the edge and sent to the cloud is of little value on its own. Companies need to put time series data into business context by augmenting it with information stored in business applications for materials, products, customers, inventory, assets, and more. Combining business semantics and time series data using the 51ˇçÁ÷IoT solution creates business relevance, leading organizations to improved business outcomes and better decision-making.

“The expansion of the partnership between 51ˇçÁ÷and Microsoft provides our mutual customers with the ability to leverage 51ˇçÁ÷Digital Supply Chain and manufacturing solutions in the cloud to gain better business insights and accelerate the time-to-value as they roll out their applications on a global scale. By extending 51ˇçÁ÷Digital Supply Chain solutions and the Azure cloud capabilities to the edge with Azure Stack Edge, businesses will also be able to manage 51ˇçÁ÷solutions locally across their factories and warehouses to drive immediate decision-making and actions where they are needed,” said Ulrich Homann, corporate vice president of Cloud + AI at Microsoft.

Companies Will Provide Reference Architecture as Guidance to Their Customers

The partnership in supply chain and manufacturing will be further enhanced with reference architectures to provide customers guidance on deploying 51ˇçÁ÷Digital Supply Chain on Azure and the integration of 51ˇçÁ÷and Microsoft products and services, building on previously developed .

For example, customers have a choice to use either Microsoft Azure IoT or 51ˇçÁ÷IoT to bring their time series data to the cloud. Time series data collected from machines or devices at the edge, and sent to the cloud, may be of little value on its own. Companies need to put time series data into business context by augmenting it with information stored in business applications for materials, products, customers, inventory, assets, and more. Combining business semantics and time series data using the 51ˇçÁ÷IoT solution creates business relevance, leading organizations to improved business outcomes and better decision-making.

51ˇçÁ÷and Microsoft Shape the Future of Industry 4.0 with Open Standards

With software development and standards, the benefits of aligned reference architectures and common semantics are obvious. Adopting industrial standards and creating shared asset models in industrial IT are as significant to digital supply chain as a dictionary is to literacy. Business partners who wish to succeed in this space need to endorse open standards, open consortia, and open source.

As part of this partnership, 51ˇçÁ÷and Microsoft will work together to drive compatibility and interoperability across industrial machines, software, and services as members of consortia like the Open Manufacturing Platform and the Open Industry 4.0 Alliance – to aid in the accelerated path to value of supply chain and Industry 4.0-related solutions based on open standards.

Companies that want to learn more about this exciting partnership and the benefits it brings should contact their 51ˇçÁ÷account team for further details.

Franz Hero is senior vice president for Digital Supply Chain Solutions at SAP.

What theĚý has shown us is that to optimize for both speed and accuracy, interdependencies among companies are ever more critical. Interconnected digital supply chains are more relevant than ever before, demand prediction is critical to drive commerce, and procurement must become ever more intelligent and sustainable as we look to source goods and services.

The current situation also underlines the strategy that 51ˇçÁ÷defined years ago: that we are moving from an era of siloed functions to an agile, intelligent, and responsive age. In some ways, we are moving back to basics, as we bring back core business process to the forefront, albeit the next-generation versions that will help power operational efficiency and growth for our customers for decades to come. The next generation intelligent suite is integrated but composable, modular, and infrastructure-agnostic, thereby simplifying adoption, increasing flexibility, and offering choice for companies.

A leading customer example for reimagining business processes by transforming the IT landscape is Orica’s 4S program, which stands for Simple, Standard, Single SAP. Over the past few years, the company has undergone a significant transformation, which covers eight end-to-end business standard processes. Orica redefined all its business processes by consolidating systems on 51ˇçÁ÷S/4HANA, complemented by other 51ˇçÁ÷solutions and extensions. All these business models were redefined based on the prerequisite to not customize any solutions so Orica can benefit from faster innovation delivery and a new level of transparency and efficiency across the enterprise.

If we take a closer look at where we are right now, we are investing in key processes that run every enterprise in any industry and are summarized inĚý: Lead to Cash, Recruit to Retire, Source to Pay, and Design to Operate.

We have made significant progress with our integration journey with a cloud-first, but not cloud-only, approach by also enabling . We use key services from , such as master data integration in the cloud, and end-to-end business process blueprints for hybrid scenarios as well.

Lead to Cash

Today, it is increasingly important for organizations to engage with their customers in the most effective way to better understand their needs and meet their expectations. Moreover, customers expect personalized experiences and want to choose when and how they interact with businesses.

But providing flexibility for customers can come at the cost of complexity on the business side.

The Lead to Cash process brings togetherĚýĚý˛š˛ÔťĺĚýĚýto deal with this complexity. For businesses that use other solutions for customer journeys, APIs offer the flexibility to integrate those solutions as well. Creating a seamless experience from a customer perspective requires seamless collaboration between marketing and sales teams. This in turn is supported by business capabilities that allow for automated, consistent handovers of leads, choice between e-commerce or direct sales, and flexible pricing configuration.

Enabling new business models with one set of solutions is at the core of the Lead to Cash process. It becomes increasingly important to sell physical products, service products, and subscription products in a unified way and allow customers to choose their own specific combinations. Integration scenarios among ,Ěý,Ěý, and 51ˇçÁ÷S/4HANA Cloud and on premise enable a variety of scenarios and allow a flexible business process design to achieve this goal. Furthermore, the process does not stop in the sales domain, but seamlessly integrates with Ěýfor service scheduling and execution.

• Find more information in this

Recruit to Retire

With today’s business dynamics, organizations are faced with the need to quickly adapt to changing environments. The global pandemic, for example, required companies to re-evaluate and redefine business continuity plans. Companies have seen both sides of the coin: the need to increase workforce and unfortunately, the need to redeploy or furlough employees too. In those moments that matter, transparent communication and trustful collaboration are a must.

This is where Recruit to Retire comes into play, an end-to-end process that enables human resources (HR) leaders to understand, manage, and optimize all aspects of the engagement with their workforce, including external workers. A combined solution portfolio of , , and solutions, along with 51ˇçÁ÷S/4HANA Cloud and helps customers manage their workforce in line with business objectives, while putting the individual human experience at the center.

Think of Return to Work scenarios that are currently top of mind due to COVID-19. Many customers are looking for tools to revitalize and re-energize their workforce. By combining these solutions with , customers can reopen facilities to their employees, reskill their workforce, keep them healthy and engaged, and help them secure new external opportunities if needed — in a human and very interactive way.

AtĚý, we will show anĚý that highlights how Recruit to Retire is being supported by three sub processes. These include Hire to Retire, the life cycle of an internal employee; Travel to Reimburse, or travel and expense management; and External Workforce Management, or engaging with contingent workforce. We will show how 51ˇçÁ÷SuccessFactors and 51ˇçÁ÷Fieldglass solutions and 51ˇçÁ÷S/4HANA cover an end-to-end process for hiring and engaging temporary external workers from a supplier – all connected through one aligned domain model.

• Find more information in detailed posts on Ěý˛š˛ÔťĺĚý
• Experience it at
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Source to Pay

Procurement departments seek transparency across their trading partners; for example, when it comes to topics such as sustainability or risk and compliance. They also require data-driven business insights at every step of the process. This level of transparency and insight for end-to-end processes can only be achieved in networks on a unified platform. This is the foundation for more effective spend management, better engagement with contingent labor, and sustainable practices across the value chain.

The Source to Pay process involves 51ˇçÁ÷S/4HANA and and 51ˇçÁ÷Fieldglass solutions. Their integration enables organizations to gain a 360-degree view of their processes across the category. This covers a variety of aspects related to Source to Pay building on Ariba Network from supplier management and risk, persona-based guided sourcing, contract management, and buying and invoicing functions tailored to specific industry needs. Capabilities with centralized sourcing, contract, requisitioning, purchasing, and invoice monitoring span across multiple backend systems and drive visibility and efficiency in shared services organizations.

One of our recent innovations in that space is the centralized requisitioning capability released withĚý, as well as invoicing delivered as part of 51ˇçÁ÷S/4HANA and 51ˇçÁ÷S/4HANA Cloud. Enabled by the guided buying capability, this process addresses the employee self-service procurement flow with the ability to control a global, distributed, and diverse procurement landscape. Based on the integration to 51ˇçÁ÷S/4HANA for central procurement, it is possible for organizations to scale the purchasing processes to support end-to-end business processes across finance and logistics. This helps enterprises create a path to harmonize system landscapes and centralize processes without disruption. Additionally, central buying reduces process costs and total cost of ownership, while at the same time helping ensure compliance and control.

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Design to Operate

Until recently, supply chains were often considered a back-office function. However, recent events have catapulted supply chains into the spotlight as critical to a business’ differentiation and success. No one knew that 2020 would be defined by a pandemic that would bring the global economy to a virtual standstill. Within weeks, the demand for goods and services became highly unpredictable. In such an environment, resilient supply chains become essential. Such resilience allows companies to respond and recover from unanticipated events.

To achieve greater resilience in supply chains, companies need to become more agile in order to sense, predict, and respond to disruption. Building on that, Ěýallows them to increase productivity and furthermore, by adoptingĚýbusiness networks, they can also enable better collaboration with business partners. Finally, strong supply chains not only require, but can also actively support, sustainable business practices.

We deliver capabilities as part of the Design to Operate framework that help customers run such resilient and sustainable supply chains. Our customers can orchestrate an end-to-end life cycle of a product or asset from the design phase to its operation. 51ˇçÁ÷enables customers to leverage our interoperable solution portfolio to realize seamless business processes based on specific sub-processes, including idea to market, plan to fulfill, and acquire to decommission.

I’d like to highlight a few recent integration examples: We strengthened the business integration between warehouse management and manufacturing, supporting the Supply to Line process and covering just-in-time Supply to Production including internal replenishment. Warehouse workers can now transfer stock from storage locations to production supply areas inĚýĚý– to accurately and timely supply the production line, thus eliminating waste.

With advanced shipping and receiving within 51ˇçÁ÷S/4HANA, we significantly improved the Order to Delivery process. Customers can gain higher visibility for combined in- and outbound processes as well as for internal shipments, such as when parts are produced in one factory and then shipped to another for final assembly.

Another innovation that stands out is the integration between Qualtrics and Enterprise Product Design; our customers can now factor in product innovation ideas and feedback in real time by incorporating experience data.

One of the outcomes of the Design to Operate framework is the Digital Thread, which covers the lifecycle of products or assets as represented in a digital twin. Here we partner with industry leaders. One example is SAP’s partnership with Siemens, which aims to bring together the Siemens Team Center with SAP’s product life-cycle management portfolio.

• Find more information in this .

51ˇçÁ÷is keeping its promise to customers and integrating its portfolio across functions and capabilities to reimagine business processes for the digital age. Integration ultimately enables business innovation, and this is what the vision of the Intelligent Enterprise is all about.

Thomas Saueressig is a member of the Executive Board of 51ˇçÁ÷SE.
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In an interview, Peter Flohrer, global vice president of 51ˇçÁ÷Services Manufacturing discusses Industry 4.Now, SAP’s Industry 4.0 strategy, and how its accompanying service package is designed to support the entire Industry 4.0 transformation journey.

Q: Why is it so important for customers to take on Industry 4.0?

A: All industries are facing increased volatility resulting from the lasting impacts of COVID-19, such as the reordering of trade relationships, climate variability, technology advancements, and other forms of economic, environmental, and social disruptions. By prioritizing end-to-end processes rather than siloed thinking, companies are better positioned to achieve objectives specific to their business needs and footprints.

When companies are connected from end to end and shop floor to top floor, they can capture, process, and analyze more critical data to stay ahead of the pack. A highlights how the current global pandemic has also underscored this need to coordinate and optimize production beyond the shop floors and plants, ultimately helping ensure more resilient manufacturing and supply chain operations.

It’s clear that now is the time for Industry 4.0.

Can you tell us about the 51ˇçÁ÷Industry 4.Now initiative?

Industry 4.Now is SAP’s strategic initiative for helping companies thrive in volatile times through Industry 4.0 intelligent processes. This means helping them bring their manufacturing and full product experience process to a new level by combining manufacturing automation with enterprise business execution.

While Industry 4.0 is a broad topic that has been around for some time – and we often consider the concept more of a philosophy than a concrete solution –we created this enhanced Industry 4.Now strategy to guide customers in achieving their specific Industry 4.0 transformation goals.

With every customer’s situation looking entirely different, there is no cookie-cutter solution, which is why the consultative approach is so key and why we draw on our cross-industry expertise to counsel customers in how to integrate all these processes.

How is the new Industry 4.Now service package positioned to meet the needs of today’s users?

To support the customer’s overall journey to Industry 4.0 processes, 51ˇçÁ÷created an accompanying innovation service package for Industry 4.Now – and the included advisory and implementation services. The four key pillars of Industry 4.Now – intelligent factory, intelligent asset, intelligent product, and empowered people – are the foundation of these services. As I mentioned, Industry 4.0 is an expansive concept, so this service package helps users to home in on specific opportunities where they can improve and excel. They provide actionable road maps for customers to reinvent production and connect their entire company across multiple business areas and shop floors.

For example, the intelligent factory service uncovers intelligent automation opportunities; the intelligent asset service identifies ways to extend the useful life and safety of assets through connected devices; the intelligent product service links to the circular economy; and the empowered people service advances a motivated and engaged workforce that, in turn, drives innovation, growth, and resilience.

In addition, these services help leaders quantify the improvement and benefits resulting from their Industry 4.0 initiatives to show how they contribute to overall customer success.

When leveraged together, this service package allows customers to effectively explore their business vision and personalize a road map to success. We start with a free maturity assessment to evaluate where a customer is in their Industry 4.0 transformation. Once an entry point is identified, the advisory services package offers a big-picture view of opportunities and agile approaches for reimagining processes and realizing business goals. For example, this helps customers determine which area they should prioritize, whether it be management or product design.

The implementation service package then assists with the necessary steps for each customer’s road map to success, including identifying the optimal partners and tools required. What is unique about this package is that it is tailored to specific business scenarios, providing key insights into how businesses can drive time to value as they automate processes and improve the resiliency of their operations and supply chains along their journeys to Industry 4.0.

The innovation service package for Industry 4.Now and the advisory and implementation services included are designed to help customers transform their manufacturing business and full product experience. They support customers in horizontal and vertical process integration, such as product design, customer-specific order processing and integration of shop floor monitoring as well as business networks.

Using the four core themes of intelligent factory, intelligent asset, intelligent product and empowered people, Industry 4.Now can help a company to achieve manufacturing excellence and its overarching business objectives.

The services provide customers a tailored transformation journey to help them adopt Industry 4.0 scenarios by identifying and prioritizing the right use cases as well as resources to reduce costs.

“With Industry 4.0 being such a broad concept, the situation looks different for every customer and requires an individualized approach, which is why these added advisory and implementation services are so important,” said Shane Paladin, president, Services, SAP. “With our innovative, outcome-based services, customers gain a clear, actionable road map to design, plan and execute their specific transformation goals.”

Starting with a free Industry 4.0 maturity assessment and gap analysis to determine the opportunities for improvement, the advisory services provide personalized, comprehensive support for customers’ individual Industry 4.0 journeys. This enables customers to effectively:

• Explore and evaluate new business scenarios and define a strategic business vision
• Identify weaknesses and ways to improve current business scenarios
• Update current business processes and IT landscapes to develop a transformation road map
• Enable innovative business processes, accelerate implementation and acquire expert guidance to safeguard project success

Additionally, based on lessons learned from the advisory services, various implementation services for the Industry 4.Now strategy are available and tailored to each customer’s specific business needs. Within the implementation services there is an emphasis on essential processes, integration, technology adoption and scalability. This provides key business outcomes through real-time insights to drive critical decision-making, improved reliability and automated processes.

For more information on Industry 4.Now and the accompanying service package, please visit .

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Media Contact:
Martin Gwisdalla, SAP, +49 (6227) 7-67275, martin.gwisdalla@sap.com, CET
51ˇçÁ÷Press Room; press@sap.com
Jennifer Kohanim, FleishmanHillard, +1 (617) 692-0535, jennifer.kohanim@fleishman.com, ET

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to 51ˇçÁ÷are intended to identify such forward-looking statements. 51ˇçÁ÷undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Š 2020 51ˇçÁ÷SE. All rights reserved.
51ˇçÁ÷and other 51ˇçÁ÷products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of 51ˇçÁ÷SE in Germany and other countries. Please see for additional trademark information and notices.

GA-EMS launched an initiative aimed at digitally transforming its manufacturing processes to expand capabilities to meet the growing demand for the design and manufacture of its specialized and highly complex components and systems. This required an end-to-end enterprise operations system that could bring its engineering and manufacturing teams together with its business systems to improve communication, collaboration and quality in a paperless manufacturing environment.

“Industry 4.0 and the digitalization and automation it brings have shown significant productivity improvements across all industries,” said Franz Hero, 51ˇçÁ÷head of digital supply chain development. “This is particularly true in complex manufacturing environments such as GA-EMS, where the need for collaboration between production and engineering, and the move to digitalization of manufacturing operations across the enterprise, are essential.”

Extending 51ˇçÁ÷S/4HANA to support digital collaboration and processes bridged the gap between production engineering and operations manufacturing. Providing detailed production process modeling capabilities andĚýin-depth instructions for production operators helps ensure that processes are executed properly.

“We created a step-by-step plan to to improve how we operate, reduce costs and ensure timely delivery of the highest-quality, most reliable products to our customers,” GA-EMS President Scott Forney said. “SAP’s support of Industry 4.0 has significantly improved quality and efficiency by providing greater visibility throughout the manufacturing and production processes when engineering changes occur. This gives us the flexibility to pivot faster when changes are required, utilize the right resources where they are needed most, and provide a higher degree of traceability as products progress across the floor.”

GA-EMS’ Manufacturing Center of Excellence is dedicated to the manufacturing, assembly and testing of critical, cutting-edge technologies. The company delivers a broad range of systems and components supporting the aerospace, defense and space industries, including electromagnetic aircraft launch and recovery systems for the U.S. Navy’s Ford-class carriers, satellites and space systems, multimission railgun weapon systems, high energy lasers, hypervelocity projectiles and power conversion systems.

.

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Media Contacts:
Angela Feher, +1 (347) 882-1689, angela.feher@sap.com, ET
Mallory Kuno, +1 (425) 239-9362, mallory.kuno@sap.com, ET

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to 51ˇçÁ÷are intended to identify such forward-looking statements. 51ˇçÁ÷undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Š 2020 51ˇçÁ÷SE. All rights reserved.
51ˇçÁ÷and other 51ˇçÁ÷products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of 51ˇçÁ÷SE in Germany and other countries. Please see for additional trademark information and notices.

Industry 4.Now focuses on using digital technology to gather and analyze data across machines and business systems by enabling faster, more efficient processes. This brings together manufacturing, logistics, sales, and services to achieve value in a short period of time. Now is the time for chemical companies to start refining their Industry 4.0 strategies. A study by the World Economic Forum found that 87% percent of chemical executives say companies that do not embrace digital will lose their competitive edge and may face extinction.

51ˇçÁ÷has been engaged in the Industry 4.0 discussion and its strategy since 2011, when it first became an academic discussion. During this time, 51ˇçÁ÷was an integral part of the definition of Industry 4.0 as the future high-tech strategy for 2020.

Earlier this year, 51ˇçÁ÷announced the company initiative Industry 4.Now to provide applications and advanced technologies that bring to life Industry 4.0 and the Intelligent Enterprise.

Two industry trends show how Industry 4.0 will play a part in the future of chemicals:

• Improving sustainability: Resource scarcity, government regulations, and changing consumer expectations call for innovative business models ​and platforms in support of more sustainable practices. With governments and other organizations starting to enforce sustainability measures, such as bans on single-use plastics, as well as emissions regulations, chemical companies will need to adapt to these new regulations and lead the way to a sustainable future.
• Delivering new customer experiences: With ongoing commoditization and margin erosion, chemical companies are required to focus on co-innovation and the selling of business value and outcomes instead of just products. The ultimate goal is to deliver entirely new customer and consumer experiences by putting data at the core of everything companies do.

ALBISĚýPlastic GmbH, for example, is a leadingĚýglobalĚýoperatingĚýcompanies ofĚýthermoplastics. The company wanted to introduce predictive quality analytics across its compounding operations. However, silos of locally stored information meant that conducting predictive quality analysis across all manufacturing locations would be a challenge.

By using 51ˇçÁ÷Cloud Platform and Internet of Things (IoT) technologies, ALBIS now uses advanced analytics to review historical production and process data. Based on this, the solution analyzes patterns associated with previous quality issues and uses these to identify key quality risk areas within the processes. These results are then communicated to quality management teams using reports and dashboards.

Since implementing this solution, ALBIS has seen improved visibility and analysis of production line performance. The company now had an architecture blueprint that can be used for Big Data analytics use cases and has minimal system maintenance required thanks to the cloud-based software as a service.

For chemical companies, the 51ˇçÁ÷strategy around Industry 4.Now can be broken into four different areas.

Intelligent Products

Intelligent products for the chemical industry are not necessarily focused on making the existing products more intelligent, but instead on offering new products or offering new value adding services business models. This is done by leveraging data and new intelligent technologies from across the entire product life cycle. Companies can then streamline the research and development process or rely on digital services to deliver outcome-based business models­­­ to their customers. This requires an environment that welcomes collaboration and open co-innovation.

Intelligent Factories

Intelligent factories — or, from a chemical perspective, intelligent plants — focus on a company’s need to make efficient use of materials and energy while still producing at a high quality. They are also forced to react quickly to changing demands and unforeseen events. COVID-19 is an example of this; many chemical companies quickly adapted their factories to produce more products such as hand sanitizers or PPE gear.

Chemical companies are doing this by using intelligent data analytics for optimizing their production and horizontally integrating production with supply and demand chains.

Intelligent Assets

Companies are looking for ways to avoid downtime of equipment and increase their asset performance. They are doing this by shifting from a reactive asset management plan to predictive and proactive data-driven plans.

Empowered People

The Industry 4.0 strategy takes the people component a step further by not just making the people working in plants more intelligent, but offering resources and training to empower employees to do their job more efficiently and safely. Companies are always looking for ways to reduce risk of manual errors while increasing people performance. Providing real-time data-driven decision support helps to ensure safety, increase performance, and further drive innovation.

Now more than ever, chemical companies need to be able to rely on their digital strategies to help companies evolve and adapt to changing customer expectations. For more information, .

Jenna O’Toole is a solution specialist at SAP.