Operational ERP
In addition to the core processes covered in Administrative ERP, do we sell products to our customers? If we sell products, how much of the design, production, and delivery of the products are handled in-house? This brings in several other LoBs to handle the operational tasks necessary when a business produces products to sell.
We could produce pharmaceuticals or pre-made baking mixes through process manufacturing, or we could produce cars or mobile devices through discrete manufacturing. Process manufacturing is where ingredients are combined in a mixture, and once combined, cannot be separated back to the original parts. Discrete manufacturing is where materials are assembled into semi-finished or finished goods, and once assembled, can be separated back to the original parts. The example below is based on discrete manufacturing.
Idea to market
When developing a new product, a business starts with processes in the R&D Engineering LoB to forecast the demand for a potential product, and design the product itself. This creates the materials list needed to begin production, which is handed over to the Manufacturing LoB. We run material requirements planning to identify what we have or can make in-house, and what we have to order (procure) from third-party suppliers.
Procure to pay
In the Sourcing and Procurement LoB, we source materials from third-party suppliers, order and pay for the materials, and receive them into our warehouse.
Plan to fulfill
Now we can move forward in the Manufacturing LoB with scheduling and running the production process. We need to pick the materials from our warehouse necessary to make different parts of the final product (sub-assemblies), then run the final assembly to put all the pieces together into the finished good. We're likely using some expensive machinery to assemble our product, and those machines need to be maintained - maintaining our assets is covered by processes in the Asset Management LoB. The finished goods should go through a quality check, then be stored in our warehouse. The logistics of moving materials between our warehouses, locations, and plants is covered with warehouse management processes, which are under the umbrella of the Supply Chain LoB.
Order to cash
In the Sales LoB, we receive sales orders, whether we're selling direct to the consumer, through a third-party platform or both. We then move into the Supply Chain LoB to get the final product delivered to the customer by planning the transport of the outbound delivery from our warehouse to the final destination. The transportation of goods between warehouses or orchestrating deliveries to customers is called transportation management, which is under the Supply Chain umbrella. We receive payment from the customer and handle any follow-up sales-related tasks, such as the customer returning the purchased good, completing a quality inspection, and ideally returning the good to stock in our warehouse so we can sell the product to a future customer. If the product is defective, we need to identify the cause - was it a faulty component we made in-house, or was it a component purchased from one of our suppliers? This initiates follow-up actions to handle the defect and then salvage as much as we can from the product before disposing of the remaining components in a responsible way. If the product has a warranty, we move into the Service LoB to respond to claims and deliver the service guaranteed in the warranty.
Note
Because customers who choose SAP S/4HANA Cloud Private Edition often have a large degree of customization requirements and have a footprint in an industry sector, only the core business processes in each line of business are predelivered through SAP Signavio Process Navigator. Customers will likely need additional solutions to handle their detailed requirements across the different industries. Learn more here.
