Business Requirements
The business requires the ability to coordinate the ramp-up to production across design and manufacturing. It includes defining bills of material, equipment, resources, and processes for production. According to SAP Reference Business Architecture the Manufacturing Engineering business area comprises the following capabilities (Figure 1 - available to view in SAP Signavio Process Explorer
Figure 1 – Manufacturing Engineering Business Capabilities
Business Capabilities and Process Alignment
From the “Plan to Fulfill” end-to-end business process you can drill down to the activities enabled by the business capabilities (Figure 2):
Figure 2 – Business Process Module – Activities - Capabilities
The Solution Value Flow Diagram (Figure 3) shows the implementation of a Solution Process Module by depicting an implementable combination of Solution Components and their corresponding Solution Capabilities for hybrid deployment.
Figure 3 – Solution Value flow
Solution Options
SAP’s product portfolio offers the following manufacturing solutions which provide the above-mentioned basic Manufacturing Engineering capabilities (Figure 2) mostly focusing on manufacturing master data.
- SAP S/4HANA
- Manufacturing core
- Manufacturing for production engineering and operations - SAP Digital Manufacturing
Note: SAP Manufacturing Execution (ME) and SAP Manufacturing Integration and Intelligence (MII) are still available, however, the latest release (SAP ME 15.5, SAP MII 15.5) will reach the end of mainstream maintenance in 2027 (extended in 2030), and there are no plans for further releases of SAP ME/MII. Therefore, SAP ME+MII are not considered as potential solutions in this article. For further details please refer to (SAP Maintenance Strategy: Maintenance 2040, Product Availability Matrix (PAM)).
Moving forward, the platform of innovation is SAP Digital Manufacturing (aka SAP Digital Manufacturing Cloud) as a key component of SAP’s strategic manufacturing solution portfolio.
In the context of the manufacturing engineering capabilities, SAP S/4HANA provides core manufacturing master data functionality. SAP Digital Manufacturing solution is a cloud-based manufacturing execution system (MES).
In a typical manufacturing environment, the core ERP solution is complemented and integrated with an MES/MOM system. In the overall application architecture SAP Digital Manufacturing is not an alternative to S/4HANA, but the MES required to enhance and complement the core ERP manufacturing capabilities.
Characterization of the Solution Options
The brief description below focuses on the Manufacturing Engineering (master data) context only and is not intended to provide the full scope of the capabilities of the products. For additional details please visit Manufacturing Software | MES & IIoT Solutions | SAP.
SAP S/4HANA
SAP S/4HANA has all the standard core capabilities to support basic manufacturing engineering (Figure 4).
Figure 4: SAP S/4HANA Manufacturing - Production Engineering Capabilities
The SAP S/4HANA Manufacturing core Production Engineering functionalities enables you to design products and resources, managing the change throughout the life cycle, manage master data such as materials, routings, BoMs, recipes, work centers, etc. It provides the ability to coordinate the ramp-up to production across design and manufacturing.
Production Engineering and Operations (PEO)
SAP S/4HANA Manufacturing for production engineering and operations (PEO) is an SAP S/4HANA product extension expanding S/4 Enterprise Management core discrete manufacturing capabilities with enhanced 3D visualization, production process planning, manufacturing change management, shop floor production order and operations management supporting complex manufacturing scenarios.
SAP PEO is suitable solution for Discrete Manufacturers for complex ETO and CTO+, CTO assembly processes, especially those making highly engineered products in low volume, large items. Long lead times, ongoing and high frequency of engineering changes to be incorporated during production. Relevant industries include IM&C and A&D whereby final assembly of a large final product is comprised of many complex subassemblies & components (Figure 5).
Figure 5 – SAP PEO: Key Production Engineering capabilities
S/4HANA includes the embedded PEO and we won’t address alternative deployment options in this article.
Production Engineering and Operations for Complex Assembly (PEO) | SAP Mfg Solutions
Production Engineering and Operations for Complex Assembly (PEO) | SAP Help Portal
SAP Digital Manufacturing
SAP Digital Manufacturing is a cloud-based manufacturing execution system (MES) supporting shop floor control, resource orchestration, intelligent factory operations and insights. SAP Digital Manufacturing allows manufacturing master data management on its own, however for the basic master data it is recommended to have SAP ERP as the leading system (system of records). Out of the box integration content between S/4HANA and Digital Manufacturing ensures the synchronization of manufacturing master data, like material, BOM, Work Center, Routing/Recipe, Production versions, QM Defect codes and groups, Tools/Equipment.
SAP Digital Manufacturing provides additional capabilities:
- Model production processes and create shop floor layout (Production Process Designer)
- Dynamic routing (decision tree)
- Manage Process Parameter Definitions (Set Points) to support equipment integration
- Operational data collection
- Enrich routings / recipes (transferred from S/4HANA) with work instructions and data collections
- Update master routings / recipes transferred from SAP S/4HANA)
- Define master data that is not transferred from or synchronized with SAP S/4HANA)
The picture below depicts the solution options based on the manufacturing operating models (manufacturing options):
Figure 6: SAP PEO vs. SAP Digital Manufacturing
Criteria to determine the most suitable target solution
Based on the characterization of the solution options this is mainly a buying decision where budget and costs must be compared with the benefits of adding SAP Digital Manufacturing to the target architecture. We assume that SAP S/4HANA is part of the target application architecture - the customer already running SAP S/4HANA or planning the transformation to S/4HANA.
Questions that can provide some orientation from Manufacturing Engineering perspective:
- Is cloud deployment an option for a manufacturing execution system?
SAP Digital Manufacturing may not be an option due to regulatory restrictions. SAP DM is deployed on SAP BTP and operated as a software-as-a-service. For data center availability please refer to Supported Data Centers | SAP Help Portal - Does customer have any MES/MOM system?
If a non-SAP MES system is already in place to support manufacturing operations, and customer intends to keep the solution, then the architecture design needs to focus on the integration between the existing MES and S/4HANA.
Customer should consider SAP Digital Manufacturing in case they don’t have an MES and recognize the need of a digital solution to support manufacturing operations.
- Does customer run SAP ME?
The maintenance of SAP ME will expire and there are no plans for further releases, future innovations are focusing on SAP Digital Manufacturing as a key component of SAP’s strategic manufacturing solution portfolio. Customers running SAP ME are encouraged to plan the transformation to DM. - Does the customer require capabilities and features S/4HANA doesn’t have?
SAP Digital Manufacturing offers specific capabilities like manufacturing automation, data collection and Production Operator Dashboard (POD) to name a few. In general, SAP DM is best equipped to integrate with the shop floor control (SFC) systems and devices. - Is Edge computing required?
SAP S/4HANA doesn’t provide edge computing component. Using SAP Digital Manufacturing for edge computing, you can process machine data, and thereby support production processes, closer to the source of data and on the shop floor, to enable faster decision-making and to operate with latent connectivity to the cloud. SAP Digital Manufacturing for edge computing enables you to deploy a defined set of functions provided by SAP Digital Manufacturing on the edge.
SAP Digital Manufacturing for edge computing enables the synchronization of configuration and business data between edge and cloud. The solution also provides a graphical user interface that allows you to access functions on the edge. - What is the manufacturing environment?
For complex ETO and CTO+, CTO assembly processes, particularly in industries like Industrial Manufacturing, Machinery, and Components (IM&C) or Aerospace and Defense (A&D), the SAP PEO is a suitable alternative compared to SAP Digital Manufacturing.
Decision Tree
A simple decision tree to determine the target application architecture is illustrated below:
Conclusion
Companies using SAP have been running Manufacturing in their ERP solution and moving to S/4HANA they can continue to do so. While SAP S/4HANA has the standard core Manufacturing/Production Engineering and extended POE capabilities, customers recognize the need for more robust digital solution to manage manufacturing operations close to the SFC.
According to the characteristics and capabilities of the solutions SAP S/4HANA with SAP Digital Manufacturing is a recommended target application landscape while S/4HANA with PEO is more suitable for specific industries with complex manufacturing environment.
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