Revolutionize Manufacturing and Production Planning processes through SAP S/4HANA 2021 | HCLTech

Revolutionize manufacturing and production planning processes through SAP S/4HANA 2021

November 30, 2021
Tandeep Sandhu


Tandeep Sandhu
SAP A&D Industry Solution Director
November 30, 2021

The 2021 release in manufacturing and production planning includes new features that allow companies to easily adopt Industry 4.0 concepts and Digital Twin technology. This blog focuses on some of these new features, focusing on the very real business benefits they will enable.  

Easily adopt Industry 4.0 and Digital Twin technology

The manufacturing industry has been steadily moving toward the adoption of Industry 4.0, which focuses on leveraging automation, machine learning, and robotics. For companies eager to adopt these concepts, the SAP S/4HANA 2021 release in manufacturing and production planning provides welcome features.

SAP S/4HANA manufacturing helps businesses realize their Industry 4.0 visions.

SAP’s approach to manufacturing and production planning is designed to enable companies to easily adopt the concepts around Industry 4.0, accelerating the move toward becoming an intelligent and data-driven enterprise. SAP provides the core component S/4HANA Manufacturing along with various others, such as Production Engineering and Operations (PEO), Manufacturing Intelligence and Integration (MII), Manufacturing Execution (ME), and Digital Manufacturing Cloud (DMC) to help businesses realize their Industry 4.0 visions. How companies will use these components also depends on whether their approach is to go on-premise or cloud.

But perhaps, most exciting is how SAP is enabling manufacturers to expand their use of Digital Twins. Here, the physical and virtual worlds can be fully aligned with IoT integrated to the core SAP S/4HANA ERP. This is a key need for the manufacturing industry and having the ability to integrate the machines to the ERP core easily helps businesses have a better view of what’s happening on the shop floor. One such example is shown in Figure 1.


Achieve a single source of truth with the side-by-side deployment of SAP PEO

As all SAP users are aware, SAP’s focus has been on getting organizations to move to SAP S/4HANA. But for many complex manufacturing industries (who have a plethora of SAP ECC systems), this is a difficult target. However, with the release of SAP S/4HANA 2021, SAP has provided the ability to deploy side-by-side the Production Engineering and Operations component along with an ERP system such as SAP ECC.

This is quite a strong feature for complex industries, such as aerospace, which run multiple SAP systems due to the nature of the business. Most aerospace companies work on various aircraft programs, and each aircraft program is an individual profit center with systems built around it. While new aircraft programs will deploy the latest ERP systems, it is rare that the same will be applied to older programs. It results in a very complex architecture. However, having central side-by-side production engineering and operations component available in this context will help companies provide a single source of truth for the manufacturing and engineering datasets, such as the manufacturing bill of material and engineering bill of material.

These data objects are the backbone of engineering-driven complex manufacturing. If these can have a single source of truth and a single record system, the companies can reduce the cost of producing aircraft or other major components. As we can see in figure 2 below, PEO comprises two main business areas. One is to manage the production engineering business processes, and the other is the production operations areas.

production eng

Figure 2 - Production Engineering and Operations component. Adapted from SAP public documents for the article (SAP 2021).

Revolutionizing production engineering processes: An example from aerospace

The benefit of the side-by-side Production Engineering and Operations component with multiple SAP ECC systems or even a single SAP ECC system will be tremendous in Production Engineering business processes.

One of the major issues faced in aerospace or other complex manufacturing industries is that manufacturing operators usually work with Bills of Material, which is outdated because of engineering changes. This results in unplanned work and reworks on the assembly lines of major component manufacturing. In aerospace, for example, this adds directly to the cost of the aircraft, and it can be a substantial cost factor to the overall viability of the aircraft program (Materna, Mansfield & Deck 2013).

There are normally three major ways to reduce cost in the aircraft manufacturing industry: 1) Redesigning the aircraft with low-cost components and simple installation processes. 2) Optimize the cost of the product through a learning curve and capacity utilization. 3) Reduce unplanned work and rework.

The initial investment required to get the benefits from point 1 and 2 is very high. For point 1, redesigning an aircraft requires new components, re-certification of the aircraft, and changes to the assembly line, amongst others. These are high-investment items. The same is also true for point 2, as optimizing capacity and the learning curve take time. Point 3, however, is easier to enable through technology and gives a high return for a lower investment.

Bringing the process to a standard system of records can significantly impact the downstream manufacturing business processes such as production execution, procurement, and tools manufacturing (as shown in figure 3).


Figure 3 – Manufacturing engineering process flow. Adapted from SAP public documents for the article (SAP 2021).

Visibility and proactivity: The main benefits of SAP PEO

This is the major benefit of the Production Engineering part of PEO. Bringing visibility of the manufacturing engineering process early on to the downstream functions helps these functions to be more proactive than reactive. We can deploy these proactive concepts using other technologies such as Machine Learning or Artificial Intelligence, but a simple approach based on SAP PEO can meet this in a more optimized and faster way.

Want to know more? Contact us, and we can share the other exciting learnings emerging from our HCLTech labs.

Reference List

Materna, R, Mansfield, RE & Deck, FW 2013, Aerospace Industry Report: Facts, Figures & Outlook for the Aviation and Aerospace Manufacturing Industry, 3rd Edition, Aerospace Industries Association (AIA) and the Center for Aviation & Aerospace Leadership (CAAL), Embry-Riddle Aeronautical University

SAP 2021, ‘SAP S/4HANA Manufacturing’,

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