Manufacturing in SAP S/4HANA Cloud

In this blog post, we’ll discuss the key functionalities for manufacturing that are covered by SAP S/4HANA Cloud.


SAP S/4HANA Cloud is available as a software as a service (SaaS) solution and designed for businesses to provide an instant insight by using a single source of truth and real-time processes.


The manufacturing function within SAP S/4HANA Cloud can be divided into the following key areas.


Manufacturing Engineering and Process Planning

We’ll mainly discuss the following key features that are required during the engineering phase of a product, where you design and develop the product and continuously improve manufacturing equipment and production facilities: production BOM management and master recipe/routing management.


In SAP S/4HANA Cloud, standard capabilities are provided to manage the BOM process. You create a complete, formally structured list of the components that make a product or assembly. Users can assign BOMs to a plant and use the monitoring and reporting capabilities within SAP S/4HANA to monitor multilevel BOM assignments and find BOMs for the components required to produce a material.


For the management of master recipe and routing, features are offered to manage the objects and persons involved, model the production process using recipe/routing, and manage the production versions.


Production Planning

In production planning, the key features provided in SAP S/4HANA Cloud are centered around MRP and demand-driven replenishment. MRP includes all necessary functionalities that an MRP controller needs to ensure that sufficient supplies have been planned to cover requirements, monitor material shortage situations, and issue resolutions. Users can change and create planned individual requirements, perform MRP, monitor and manage supply and demand, and convert planned orders into production, planned, or purchase orders.


Manufacturing for the Discrete Industry

Discrete manufacturing provides standard production control and execution functionalities. We’ll also highlight some of the key functionalities delivered for repetitive manufacturing and Kanban (JIT manufacturing/lean manufacturing, where scheduling is regulated through a board to track production).


The standard production control and execution functionalities for discrete manufacturing include those required, for example, for a production supervisor to manage and regulate the production process and the shop floor specialist to prepare and execute the production progress. Some of the key capabilities offered in SAP S/4HANA Cloud are as follows:

  • Monitoring capabilities for the worklist and production orders
  • Releasing production orders/process orders
  • Executing production completion by setting the status of the production to Complete and completing the order settlement
  • Picking and confirming the production order

Some additional features provided to accommodate the repetitive manufacturing and Kanban requirements are as follows:

  • Planning table: This is the main operative planning tool that users can use to plan production quantities.
  • Repetitive manufacturing operations: Examples include staging materials using the pull list, production confirmation, evaluations, and production reporting.
  • Kanban functionalities: Examples include control cycle maintenance for Kanban production, status change (production confirmation), monitoring using the Kanban board, and the availability of various options for controlling cost accounting for Kanban.
  • Manufacturing for the process industry: SAP S/4HANA Cloud provides some standard functionality for the manufacturing control and execution process. Some of these functionalities are very similar to the functionalities mentioned previously and provide companies with capabilities to monitor and adjust the worklist, release production orders/process orders, and monitor and execute production completion. For the production execution process, SAP S/4HANA Cloud offers monitoring capabilities for released production/process orders, performing picking, and confirming production.
  • Outsourced manufacturing: In outsourced manufacturing, the key features provided are mainly for basic subcontracting and basic external processing:
    • Basic subcontracting capabilities: Enables companies to plan materials that are produced by a subcontractor. During a planning run, subcontracting purchase requisitions or schedule lines for the material will be created, and subcontracting requirements will be created.
    • Basic external processing capabilities: Enables companies to instruct a supplier or a subcontractor to process individual production. The system will check, during conversion of a planned order into a production order, if it requires external processing. During scheduling, external processing can be taken into account to give you an overview of all information regarding the subcontracting process. It offers the capabilities to users to valuate externally processed operations and to determine a cost element.
  • Demand-driven buffer level management: This business process influences the supply chain by managing the customer demand efficiently and is more effective than the traditional MRP process. Several strategic buffers are defined in the material flow, and these buffers can be adjusted regularly. The products can be classified depending on attributes to identify if they are relevant for demand-driven replenishments. If relevant, then a right buffer level is proposed for such products to ensure that the correct level of inventory is maintained to meet the average demand. Additionally, it also helps in inventory optimization. pMRP can be deployed to support the calculation and management of buffer levels.
  • Process manufacturing execution: This functionality facilitates process manufacturing with complex manufacturing sequence such as batch-managed materials and other relevant attributes. Further, this process synergizes with the digital manufacturing capabilities on the cloud, thus bringing visibility to the end-to-end business processes. Additionally, this functionality can also be integrated with third-party manufacturing execution systems using the relevant application programming interfaces (APIs).

SAP S/4HANA Cloud has a short release cycle, so this list is always changing and not exhaustive.


Editor’s note: This post has been adapted from a section of the book SAP S/4HANA: An Introduction by Devraj Bardhan, Axel Baumgartl, Nga-Sze Choi, Mark Dudgeon, Piotr Górecki, Asidhara Lahiri, Bert Meijerink, and Andrew Worsley-Tonks.


Logistics with SAP S/4HANA
Logistics with SAP S/4HANA

Discover how SAP S/4HANA transforms your supply chain! Explore functionalities for sourcing and procurement, production execution, plant maintenance, sales order management, transportation management, warehouse management, and more. See how intelligent technologies elevate your logistics operations with SAP Business Technology Platform and learn about complementary cloud solutions like SAP Ariba and SAP IBP. This is your starting point for logistics with SAP S/4HANA!

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