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Innovations for Digital ManufacturingMike Lackey, VP of Solution Management, Digital Manufacturing, SAPPUBLIC

Why IoT and digital manufacturing are important SAP Leonardodigital innovation system Reimagining new business processes to simplify process variability Rapid introduction of innovation and creating new business models Higher level of automation and changes in how people will work Enabling the “market of one” delivering individualized productsBusiness value benchmarksProductivity improvementssuch as lower maintenancecosts (up to 60%), or lowercapital appropriations (25%)New operational processesresulting in lower labor cost (30%)with improved OEE (5%–10%) andreduced scrap levels (30%–50%)Source: IDC white paper, sponsored by SAP, “The Future Services Sector:Continuous Delivery for Competitive Advantage,” 2017People process optimizationleading to 10% to 30% higherproductivity in the form ofhigher outputs and lower costsLower risks, such as reducedwarranty cost by (10%) andimproved compliance through 100%component and process traceability2 2017 SAP Leonardo Live. All rights reserved. I PUBLIC2

SAP Leonardo IoT – innovation portfolioLine-of-business (LoB) digital supply chainSAP Leonardo IoT(Business process view)(“Things” view) Digital business planning Connected products Digital response and supply Connected assets Digital logistics Connected fleet Digital product innovationIndustryview Digital manufacturing Digital operations Connected infrastructure Connected markets Connected peopleSAP Leonardo IoTEfficiency-led models 2017 SAP Leonardo Live. All rights reserved. I PUBLICLoBviewTechnologyviewNew business models3

Digital transformation impactBusiness processesBusiness models 2017 SAP Leonardo Live. All rights reserved. I PUBLICWork environment4

Business model, changeCustomer satisfactionCompetitive advantageHigher profitSmart manufacturingReal-time insights on machine andenvironmentImproved efficiencyLowering risk, through 3D visualization ofwork instructions and change ordersReimagined productsExtending the solution portfolio to enableconfiguration for precision manufacturing 2017 SAP Leonardo Live. All rights reserved. I PUBLIC5

Three machining lines, one engine assembly line 37-second takt time per engine 5 plant connectivity / Kepware OPC server platforms / 20,000 tags 6,000 transactions per minute at full rate 2017 SAP Leonardo Live. All rights reserved. I PUBLIC6

Integrated enterprise 2017 SAP Leonardo Live. All rights reserved. I PUBLIC7

Information on projectFacility health reports scopeProcess and product quality reports scope Bottleneck analysis by line and by constraintoperation By unit Downtime by state by operation and by machine By process State trend by operation and by machine By engine type MTBF and MTTR showing downtime in minutes andscheduled time minus downtime By adaptor plate/platen Top X fault trend by machine and operation Top fault by occurrence and time Run at rate (JPH capability) Over cycle analysis (engine assembly line only) By operation station By on/nok/all Parameter requirement Linked to facility health analysis (complete enginebirth certificate) OEE (including bottleneck station) Linked to tightening server – tightening spindleselectable (all/multi-selectable) Quality rate Linked to cold test Hour counts by station and by process Linked to hot test Part through station, including cycle time Linked to leak test Right first time – without rectification First time through after rectification 2017 SAP Leonardo Live. All rights reserved. I PUBLIC8

Integrated mining and steelReal-time visibility across operations 2017 SAP Leonardo Live. All rights reserved. I PUBLIC9

Manufacturing intelligenceIncreases productivity65% to 80%Improved overallequipment effectiveness 2017 SAP Leonardo Live. All rights reserved. I PUBLIC10

Work environment, changeReduced costsImproved productivityHigher qualityRole expansionWorking across disciplines to designand manufacture smart productsProcess changeCollaboration, networkingBusiness modelCustomer centricity 2017 SAP Leonardo Live. All rights reserved. I PUBLIC11

Industry 4.0Building blocksEnd-to-end integration, IT–OT convergenceUser experience – wearables – augmented realityDistributed manufacturing –additive manufacturingEnd-to-end transparency – intelligent analytics –Big Data 2017 SAP Leonardo Live. All rights reserved. I PUBLIC12

Digital manufacturingLinking the physical world to the digital worldBusiness worldDigital worldDigital twinGeneral ledgerProcure to payOrder to cashEngineer to orderConfigure to orderMake to stockInventory controlsCostingCRMSRM Materials SAP LeonardoPhysical S/inspection/equipment testingRobotsCNCs“As designed”1 111 “As built”0 1 000110“As maintained” 11 0 000“Performance”10 10Pumps 2017 SAP Leonardo Live. All rights reserved. I ission13

Accelerate the enterprise successHigher productivity due to simplificationHow to accelerate and grow productivity and profitability in complex business environment?How to run business and production seamlessly integrated?Consumer/customerNeed for smart simplification(1) Top floor to shop floor(2) Customer to operations SimplifyHarmonizeReduce 2017 SAP Leonardo Live. All rights reserved. I PUBLICBusiness networksSAP ERPSAP IntegratedBusiness PlanningSAPManufacturingExecutionSAP PlantConnectivity toautomation14

Digital manufacturing with SAP for industrial IoTSAP Digital ManufacturingInsightsSAP S/4HANAEnterprise ManagementSAP Asset IntelligenceNetworkOEM cloud(MindSphere)Digital manufacturingConnectedManufacturing» Business context» OEE, energy managementSAPSAPManufacturingExecution SAP QIMMESAP MIICAMS andSAP ManufacturingSAPIntegrationSAP PCoIntelligenceSAP OEE» Multiple vendors» Multiple machinesSAP Plant ConnectivityShop-floor automation systems 2017 SAP Leonardo Live. All rights reserved. I PUBLIC15

Digital manufacturing with SAPFive scenarios of “connectedness”Business iceprovider5 scenariosE-commerceMachine cloudOperations cloud1Shop floor to top floor2Machine to machine3E-commerce integration4Machine/operations cloud5Direct replenishmentConsumer41ERP (PLM, PP)MES5SCADA / HMISupplierSmart industrialOperations layerThings and devices 2017 SAP Leonardo Live. All rights reserved. I PUBLIC216

SAP LeonardoSAP Leonardo and digitalizing business: The big picturedigital innovation systemPeopleUI layer (SAP Leonardo IoT Bridge)Enterprise Management – the digital iceFrom processesto networksLogisticsSupply chainplanningNew business modelsApplications powered by SAP LeonardoNetwork log. hubSAP Leonardo IoTEdgeConnected goodsTrack & traceDigital manufacturingVehicle insightsPredictive maint.Asset intelligence networkSAP Leonardo IoT FoundationSAP Cloud Platform / SAP HANA platformThings/Physical layerProducts 2017 SAP Leonardo Live. All rights reserved. I PUBLIC17

Digital manufacturing with SAPDESIGNSOURCEMAKEDELIVERSERVICEDigital manufacturing wires theworld of machines with businessprocesses Shop floor to top floor (vertical) Machine-to-machine (horizontal) End-to-end anning Business partnersDistributedmanufacturingDigital manufacturing insightsManufacturing nect top floor and shop floor Easy connectivityBuild on an open IoT-ready platformsupporting Industry 4.0 tomerconnectivityMachineorchestration Following the OPC UA standards Enabling a manufacturing network Connecting partners along the supply chain With flexible deployment options 2017 SAP Leonardo Live. All rights reserved. I PUBLIC18

SAP for Manufacturing solution portfolioInnovation strategySAP Digital ManufacturingInsights**(cloud)Rapid innovation throughside-by-side extensionsin the cloudManufacturing execution suitefrom SAP*SAP MIISAP MEManufacturing execution suitefrom SAP* Continuous innovation (On-premise)SAP PCo*Includes SAP Manufacturing Execution,SAP Manufacturing Intelligence andIntegration, and SAP Plant ConnectivitySAP DistributedManufacturing**(cloud)(On-premise)SAP MIISide-by-side withSAP S/4HANA innovationsSAP MESAP PCoSAP S/4HANA(on-premise)Manufacturing engineering**Manufacturing planning**Planned innovation not yet available, subject to change 2017 SAP Leonardo Live. All rights reserved. I PUBLIC19

SAP Manufacturing ExecutionMain differentiatorsSAP Manufacturing Execution – what is it? Shop-floor execution system for the discrete industriesMain differentiators ERP integration built in Ability to control production of every single unit (lot size 1) Easy interaction with shop-floor automation layer Unit-level tracking and tracing/genealogyWhat operation, tool, or machine was used, where parts came fro, Comprehensive nonconformance management including in-line samplingand ability for visual test and repair Process interlocking High flexibility and extensibility; pure SOA-based architecture High usability with browser-based user interface Role-specific access and personalized dashboards for operators Flexible production process modeling without additional programming Active community of partners and customers 2017 SAP Leonardo Live. All rights reserved. I PUBLIC20

SAP Connected Manufacturing – architectureThe connected plant in the extended supply gExecution andSAP MII)PlantConnectivityPLC(machine) 2017 SAP Leonardo Live. All rights reserved. I al numbers»»»Log parametric dataMapping of ME production detailsto PLC control parameters (recipe)»Mapping of ME production details to PLC controlparameters (recipe)Sensor detects material carrier»Machine reports completion and requests next operation»»»»Production plan»»»»Production details management»»»Bill of materials (BoM)Variant managementProduction stepsDetailed and flexibleProduction step routingQuality results per lotOrder confirmationInventory update, equipment usageTolerance checksReturn “conformance” or “nonconformance“ decisionsShop-floor controls for each stepRequests control parameters from ME21

SAP Manufacturing Integration and Intelligence (SAP MII)Main differentiatorsSAP Manufacturing Integration and Intelligence – what is it? Extensible manufacturing platform allowing rapid adaption to anymanufacturing processMain differentiators Integration: Provide interoperability between shop-floor solutions andenterprise ERP (production planning, plant maintenance, materialsmanagement, quality management functionality) Intelligence: Visualize data and include KPIs from any of the abovesources– Provide simple and efficient local user interface and dashboards Innovation: Powerful SOA-enabled business logic to enable customerspecific processes for planning, execution, maintenance and quality– Fast prototyping to achieve fast ROI– Broad and extensive partner network– Applicable to all manufacturing industries and utilities 2017 SAP Leonardo Live. All rights reserved. I PUBLIC22

SAP Overall Equipment Effectiveness Management with SAP MIIKPI management with prebuilt business process executionSolution highlights Single, common frameworkfor all plants Enterprise-wide repositoryof operational dataReal-time dashboard – orders view Cross-plant performancecomparison Combined with businesscontext Broader business implicationsof performance loss Framework for performancecapability and productionimprovement 2017 SAP Leonardo Live. All rights reserved. I PUBLIC23

Energy monitoring and analytics with SAP MIIEnterprise operations managementProvide real-time visibility to energy consumption across the enterprise – insight to action – energy, fuel,steam, and water use is optimized in line with production schedules and energy contracts.PerformanceSAPERPSAP MIIon SAP HANATopfloorShopfloorTraditional DBPlant A 2017 SAP Leonardo Live. All rights reserved. I PUBLICPlant BPlant C24

SAP Digital Manufacturing InsightsUnlocking the benefits with insights into digital manufacturing