Of the leaders among SAP’s supply chain customers — companies achieving significantly better supply chain business results than the competition — 35% already run SAP S/4HANA with an additional 12% currently implementing the software, according to a recent SAPinsider research report “Transforming the Intelligent Supply Chain.” Some of those leaders, such as Stemcell Technologies, have integrated SAP S/4HANA with a validated labeling system, such as NiceLabel, to digitize labeling quality assurance (QA) to eliminate opportunities for human errors and automate labeling. At the SAPinsider SCM event in Orlando, Florida, November 6-8, 2019, Stemcell Technologies and NiceLabel co-presented a session on how the two companies worked together to automate labeling and reduce the number of label templates used by 80%. This research brief shares how integrating SAP S/4HANA with a label management system can lead to similar improvements in other SAP customers’ supply chains.

Paper-Based QA Creates Bottlenecks, Inefficiencies, and Errors

With the acceleration of Industry 4.0 in the manufacturing sector, 73% of SAP customers that have integrated their information technology (IT) and operational technology (OT) have seen increased productivity, and 60% have seen increases in efficiency, according to the SAPinsider research. To realize this increase in efficiency, these organizations must ensure that their other processes keep pace with their increased production. In the case of Stemcell Technologies, the organization has invested in updating its supply chain and manufacturing processes and systems ahead of its planned move to a new advanced manufacturing facility, but its paper-based labeling processes relied heavily on manual oversight for QA. Stemcell Technologies’ legacy labeling system also led to an unnecessarily large number of label templates and frequent adjustments to those templates at the time of printing to fit pre-printed label stock. This labor-intensive process exposed the labels to a high degree of human errors resulting in quarantined batches. Michael Kennedy, Project Manager at Stemcell Technologies, shared, “We implemented SAP S/4HANA as a greenfield new implementation. Recognizing that a lot was going to change, SAP S/4HANA became a catalyst to reengineer many processes, including labeling. Also, as we grow our clinical product lines, we needed a more robust labeling application to meet standards such as ISO 13485. Before implementing SAP S/4HANA, we were using an internal database to manage label content, pulling from the ERP and facilitated sign-offs with manual processes.”

Integrating SAP S/4HANA with a Label Management Solution Eliminates Errors and Increases Efficiency

  Unfortunately for Stemcell Technologies, it has not fully realized the anticipated efficiencies of its revamped manufacturing and labeling processes due to errors in stock keeping unit (SKU) variant data in its on-premise instance of SAP S/4HANA. Stemcell Technologies has commenced activities to address these data issues and expects significant process improvements as a result. The SAPinsider research shows that 64% of SAP customers with consolidated SCM data in their enterprise resource planning (ERP) systems and harmonized data across systems have seen reduced supply chain costs with their SCM and planning solutions. Stemcell Technologies chose to integrate label variant approval workflows in SAP S/4HANA with NiceLabel’s label management and document management systems for template approval workflows via NiceLabel’s ABAP package. It validated the solution using the NiceLabel Validation Acceleration Pack (VAP). Even with 50 potential fields to manage product data in the SAP system for each product with a combination of text fields, reference numbers, and batch-specific fields, the introduction of the NiceLabel solution still empowered Stemcell Technologies to reduce the number of label templates. For the Stemcell Technologies Finished Goods team, the NiceLabel solution provides the reference to the approved template for each product. The users only enter the batch or product and can then choose to print or preview the correct corresponding label, using the preview function as a QA mechanism to sign off on labels. Before implementing the solution, users would manually adjust labels to align pre-printed labels with the information, which created concerns about data integrity. Now, the Finished Goods team accesses printer settings from within the label management system to make necessary adjustments to label positioning. For new products, the Research & Development team provides a knowledge transfer package to the Packaging team, which determines if the new product needs a new label template. If so, it creates the template according to the label content and style guide, and it handles the approval flow in NiceLabel. If not, the Packaging team creates information for an inspection plan, selects an existing template, and manages the entire approval workflow in SAP S/4HANA. As a result of this solution, Stemcell Technologies eliminated many opportunities for human error, and reduced the number of label templates by 80%, despite introducing over 400 new products. It also improved the efficiency of its processes while adding several layers of quality review. “Rather than catching errors at the last minute, we’re using the system to pre-emptively catch them earlier on in the process with previews of the labels. Any errors we have now are due to bad data, not the labeling system,” concluded Kennedy.

What Does This Mean for SAPinsiders?

  Based on our research and the presentation from NiceLabel and Stemcell Technologies, the following considerations can help SAP customers reduce labeling errors while improving efficiency:

• Clean and harmonize product data in your ERP system before investing in other technologies. The labeling solution fixed Stemcell Technologies labeling process, but it still has some errors due to bad data. Once it has cleaned and harmonized data, the processes will accelerate with much fewer errors.
• In highly regulated industries, such as pharmaceuticals, digitize QA with multiple layers. Label management systems can automate chunks of label compliance with document control. Role-based access can help preserve data integrity. The label preview function adds a quick extra QA mechanism. Stemcell Technologies has shown how all of this can help eliminate opportunities for human error.
• End users must own and govern label contents and templates. IT should not own the solution but instead support it. The groups accountable for execution should own the solution. In Stemcell Technologies’ case, the Packaging team owned the templates, and the Finished Goods team owned the label contents.
• Identify your bottlenecks and leverage technology to address them. Stemcell Technologies will fix many of its manufacturing bottlenecks by building an entirely new advanced manufacturing facility. With these plans, labeling emerged not only as a compliance issue but as a production bottleneck. The use of labeling technology helped fix both the quality and efficiency issues.

Following this strategic guidance should help SAP customers get the most out of a label management system in a way that leverages product data in an SAP ERP system to improve performance and accelerate growth. Make sure to download and read the our full report, “Transforming the Intelligent Supply chain,” available for free for SAP customers and the general population. Also, please contribute to the upcoming report, “When to Move Supply Chain Planning to the Cloud” by filling out our latest survey.