In the context of growing environmental awareness and social responsibility, it is becoming increasingly important for companies to consider their carbon footprint. One way to minimize environmental impact is to optimize internal business processes. The Sales and Distribution module in SAP includes integrated Material variant configuration. This is a tool in Enterprise Resource Planning (ERP) systems like SAP that allows for the configuration of complex products based on customer requirements. This tool allows for the definition of various product options and components, along with their compatibility conditions and interdependencies.

In an ERP system, a specialized material variant configuration allows for the creation of customized product variants based on predefined parameters and conditions. Within the system, there is a designated category for ‘base materials,’ which serve as the foundation for configuring future products. Each of these base materials has a specific set of characteristics that describe the properties and parameters of both the components used and the final product.

When a customer places an order for a customized product, the variant configuration automatically takes into account the characteristics specified by the customer. It subsequently selects the appropriate materials or components needed to produce the customized product. Subsequently, the information from the material variant configuration is used to generate a specific production order, which references the original sales order. This production order inherits both the product’s characteristics and the quantity specified in the customer’s original order.

There are some additional benefits of using the material variant configuration for an enterprise:

• Production optimization. In contrast to traditional ‘make-to-stock’ methods, where products are pre-manufactured, ‘make-to-order’ production commences only upon receipt of a customer order. Greater scope for product customization allows businesses to cater to niche markets, potentially commanding higher margins. Additionally, the production is tailored to meet the precise requirements of the clients, ensuring that the resulting products meet their long-term durability and quality expectations. Optimizing inventory levels and production schedules can reduce the need for frequent and long-term transportation, thereby decreasing carbon emissions from vehicles.
• Inventory cost reduction. The make-to-order approach eliminates the holding costs of finished goods, freeing up capital otherwise tied up in stock. The material variant configuration allows businesses to meet customer needs precisely while reducing the necessity to maintain large inventory levels. This approach not only streamlines logistical costs but also lowers energy consumption in storage facilities, thereby reducing carbon emissions. Reduced storage space requirements also lead to savings on service costs associated with warehouse maintenance.
• Efficient resource utilization. Because production is initiated by customer orders, resources can be allocated more efficiently, thereby reducing waste. This means not just resource savings but also a reduction in emissions related to waste disposal. The precise configuration of products also enables the optimized procurement of raw materials and semi-finished goods. Each new customer order clearly indicates the specific components required for product manufacturing. Scheduling production based on pre-configured products allows the company to forecast its long-term raw material needs, further saving on inventory storage costs. Accurate product specifications may lead to more precise forecasting of material needs, which can also reduce excessive resource usage.
• Seasonal factors consideration for production optimization. In the default setup of SAP S/4HANA, there is no specialized feature that directly assimilates meteorological data. However, the system can be customized to integrate with external weather services to import relevant climate and seasonal data. This integration enables more accurate planning and adaptation of production processes based on real-time weather conditions and seasonal variations. The material variant configuration in sales orders supports the activation of custom-developed functional modules that can execute tailored logic. These modules can either use data already integrated into the SAP system or make real-time requests to external services, such as weather forecasting applications, to fetch current information. Looking forward, this imported meteorological data could be used for both fine-tuning production and optimizing logistical aspects, like route selection and transportation vehicle choice.
• Packaging selection for finished products. Customers have the option to specify the type of packaging for material delivery when placing an order. Depending on the selected packaging, the system will perform a recalculation of the delivered product’s carbon footprint. The system can also log packaging as a separate inventory item, complete with a description of its characteristics. As a distinct inventory item, it can be quantitatively tracked and procured either from third parties or through in-house production, depending on the type of production.
• Encouraging the selection of low carbon footprint products through pricing. The cost of the final product can be automatically calculated based on the selected options. Depending on the configuration of the ordered product, the system can flexibly set the base price. It can also apply additional discounts or surcharges based on the environmental impact of the selected characteristics. This approach to pricing can encourage customers to choose more eco-friendly choices.
• Preference for eco-friendly options of the production. The system can store information about the environmental characteristics of both the finished product and its components and accessories, the ERP system can automatically suggest or select eco-friendly materials or components, provided that this does not affect the product’s functional characteristics. This contributes directly to a reduction in production’s carbon footprint.
• Promoting environmental responsibility through technology. The variant configuration can be further customized or integrated with other systems to monitor and account for environmental indicators throughout the product’s lifecycle. This can include tracking emissions during transportation, production, and even the disposal of the product.
• Reduction of returns and errors. Improved order accuracy can lead to fewer returns and, consequently, lower reprocessing and transportation costs.

Although not specifically designed to manage environmental indicators, the material variant configuration in the SAP Sales and Distribution module significantly optimizes production and logistical processes. These optimizations, in turn, can lead to a reduction in the company’s carbon footprint. Integration with other systems and modules can further extend this potential, making the tracking and reduction of carbon emissions more systematic and effective. Therefore, the material variant configuration in sales orders enhances business process efficiency and can be integrated into the company’s comprehensive environmental strategy.