Joao Karg, Solution Manager, Industrial Manufacturing Industry, SAP

In this turbulent business environment, industrial manufacturing companies face considerable challenges. From handling supply constraints due to geopolitical tensions to dealing with the impacts of rising costs, running resilient, sustainable, and profitable operations can be a struggle.

However, leading companies in the sector are increasingly turning to multi-enterprise business networks to connect their supplier ecosystems and gain in-depth insights across the value chain. As a result, these manufacturers are not only meeting the challenges of volatile markets, but are also taking advantage of new business opportunities.

Business networks such as SAP Business Network are helping industrial manufacturers be more competitive in five key ways:

1. Optimizing efficiency through digitalized collaboration

While many industrial manufacturing companies have well-established, digitalized internal workflows, processes involving external partners are often still conducted manually. In fact, a recent IDC survey[1] found that 63% of documents shared with suppliers or customers are shared manually. This inefficient approach of communicating with external partners using e-mail and phone calls is time-consuming, prone to human error, and difficult to adapt to changing circumstances. A business network enables you to collaborate closely with companies across your value chain, with digitalized, real-time updates that help you automate and optimize day-to-day operations.

2. Supporting more resilient value chains

Prior to the COVID-19 pandemic, we saw a trend towards the simplification and streamlining of supply chains. Many industrial manufacturers attempted to consolidate supply bases and focus on just a few key supply partners. However, the impact of supply chain disruption during the pandemic led to many companies adjusting their approach.

Now, many industrial manufacturers are diversifying their supply ecosystems with a growing number of players in order to improve supply chain resilience and avoid supply constraints in the future. To support this, business networks help you identify potential alternative sources of supply and more effectively communicate with them digitally. This helps manufacturers manage and scale increasingly complex value chains.

3. Improving supply chain visibility and decision-making agility

With a business network that provides digital connections to your supply partners, you can improve transparency across your supply chain and logistics operations. You can manage supply chain planning and inventory more efficiently, providing suppliers with demand forecasts and enabling them to commit to delivery dates and quantities.

The network also lets you track order execution and delivery status, and with real-time updates, you can quickly identify supply issues or constraints. This means you can make decisions faster to find alternative sources of supply when necessary, helping ensure supply chain resiliency.

4. Supporting services-based business models

Increasingly, businesses are creating new revenue streams from offering ongoing maintenance and support of the equipment they produce. And, according to a recent IDC Info Snapshot, more than 50%[2] of industrial manufacturing companies use data to inform value-added services that they offer to customers.

Business networks can help support these service-based models by enabling safer collaboration with service providers. By sharing data, such as status of equipment at customer sites, information sheets, and work orders, everyone has a more-complete view of the asset lifecycle. Meanwhile, risk scoring and alerts make you aware of potential issues. This approach improves the efficiency and accuracy of work planning and execution, minimizing planned downtime and mitigating the risk of unplanned downtime and error.

5. Supporting sustainability and circular manufacturing

With growing scrutiny into sustainability and ethical aspects of the operations of industrial manufacturers, it’s now crucial to be able to track metrics related to carbon footprint or sourcing origin across your value chain. Using a business network, your suppliers and their subcontractors can provide you with digitalized sustainability information. This means you can get reports not just on direct scope 1 and 2 emissions, but also on indirect scope 3 emissions, giving you a more-complete picture of the environmental impact of your products.

Using the SAP Sustainability Data Exchange application, you can also enable suppliers to share digitalized metrics related to circular manufacturing. This enables you to record data on recycling and remanufacturing activities and share this information with customers or industry regulators.

How could a business network help you?

Visit us online to learn more about how SAP Business Network can help you create a more agile, resilient, and sustainable supply chain.

[1] “Driving Best-in-Class Supply Chain Collaboration with a Business Network,” IDC e-book , 2023, https://www.sap.com/documents/2023/07/ec54f354-847e-0010-bca6-c68f7e60039b.html

[2] “Business Networks Fuel Better Collaboration and Operational Efficiency in Industrial Manufacturing,” IDC Info Snapshot, 2023, https://www.sap.com/documents/2022/03/0e39476f-1f7e-0010-bca6-c68f7e60039b.html