Dairy Presentation 4e566y

SAP™ ERP packaged solution for the dairy industry Midmarket Dairy Industry Version: 11.01.2005

© SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 1

1. Challenges, Strategies and Benefits 2. The Solution 3. SAP™ ERP packaged solution for the dairy industry

4. Value and Proof Points 5. Summary





The Dairy Industry Ecosystem

Farmer

Supplier

Collect Raw Milk

Tank Truck

Dairy Production

Raw Material, Packaging, Service Add. Purchase of Raw Material / Raw Milk

Retailer Distr. Centers Wholesaler Broker

Dairy Sell Raw Material and Ingredients

Cooperatives

Authorities

External Laboratories


Dairy Companies Often Have the Right Focus and the Right Strategies…

„ Protect and enhance revenue „ Improve margins YOUR FOCUS „ Drive for lower costs

Business STRATEGY

„ Get closer to the consumer Increase Shareholder Value Increase Revenue and Profit Margins „ Improve time-to-market „ Enhance operational efficiency Operational Excellence Product Leadership Improve Customer Satisfaction

YOUR FOCUS Increase Shareholder Value Increase Revenue and Profit Margins Cost Leadership Product Leadership Improve Customer Satisfaction


…But Mostly They Lack the Ability to Execute Often employees cannot execute the company’s business strategy because the business platform is … COMPLICATED TO OPERATE „ Complex and broken process flows „ Incomplete or hidden information

Business STRATEGY

DIFFICULT TO CONTROL „ Lack of visibility „ Lack of traceability

Business Enabler

CHALLENGING TO CHANGE „ Multiple costly integration points „ Redundant and inconsistent data

Ability to EXECUTE

A business enabler is required to help the organization refocus on business strategies! © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 6

Market Forces and Business Needs Market Forces „ Retailer power (Wal-Mart effect) „ Consumer concerns about food safety; media attention „ Increased legislation and regulations around food safety by FDA and other authorities (e.g., EU Dir. 178/2002, the U.S. Bioterrorism Act of 2002) „ Changing consumer demands due to demographics and trends „ Shorter product life cycles „ Extreme price pressure and margin erosion „ Restrictive consumer spending pattern „ Market consolidation (globalization, M&As) „ Increasing competition „ Emerging private labels „ New technologies reshaping the industry

Resulting Key Challenges „ Develop new products faster and more effectively „ Optimize supply chain „ Increase efficiency in procurement „ Optimize manufacturing „ Ensure food safety and regulatory compliance „ Improve sales efficiency


Develop New Products Faster and More Effectively Challenges

Strategies „ Adapt to ever-changing

„ Enable collaborative

engineering

consumer tastes and requirements

„ Consolidate product

„ Develop product efficiently „ Address increased demands

development data and documents „ Reduce development effort

for new products

and time-to-market

SAP® can help you

Benefits

„ Integrate all product-related

information „ Reduce data redundancy and

creating reusable product specifications „ Reduced time-to-market

inconsistency „ Integrate into manufacturing

process

„ Faster development by

„ Ensured competitive

advantage


Optimize Supply Chain Challenges

Strategies „ Decrease process costs

„ Reduce costs

„ Create operational efficiencies

„ Streamline supply chain

processes

and supply chain transparency

„ Improve supply chain control

„ Manage shelf-life-based

picking and distribution

„ Gain more supply chain

visibility

„ Ensure accurate and timely

shipments „ Avoid out-of-stocks

SAP® can help you

Benefits

„ Optimize distribution

„ Improved operations

processes

excellence

„ Optimize end-to-end planning

„ Lower capital commitment

„ Improve asset utilization

„ Reduced operating costs

„ Fully integrate logistics

„ Higher customer satisfaction

management, including transportation and warehouse and inventory management „ Shorten order-to-delivery

cycles © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 9

Increase Efficiency in Procurement Challenges

Strategies „ Cope with ever-changing

quantity and quality of the raw milk „ Manage complex payment

conditions

„ Reduce costs „ Streamline processes „ Gain more visibility and

transparency „ Improve relationship with

„ Cope with seasonal

producers

fluctuation „ Create operational efficiencies

and transparency

SAP® can help you

Benefits

„ Set up integrated and flexible

processes for procurement „ Streamline raw milk collection

and reception „ Ensure integrated quality

management

„ Increased demand planning

accuracy „ Consistent internal and

external procurement reporting „ Integrated processes

„ Track batches


Optimize Manufacturing Challenges

Strategies „ Maximize raw material

„ Base plans on a non-

standardized raw material „ Define optimal product mix „ Create operational efficiencies

utilization „ Increase demand planning

accuracy „ Streamline processes

and transparency

„ Gain more visibility and

„ Optimize production

transparency

SAP® can help you

Benefits

„ Set up integrated and flexible

processes for manufacturing „ Monitor raw material

„ Increased profitability of

produced product mix

utilization and losses

„ Consistent cross-stages

„ Ensure integrated quality

management

„ Improved asset utilization

monitoring „ Integrated processes

„ Track batches


Ensure Food Safety and Regulatory Compliance Challenges

Strategies „ Align with governmental

regulations (EU 178/2002, the U.S. Bioterrorism Act of 2002, import/export) „ Enable fast, effective product

„ mid- and long-term

company success by ensuring regulatory compliance „ Set efficient processes in

place to enable traceability

recalls „ Track and trace from “cow to

„ Allow targeted product recalls

to minimize costs

consumer”

SAP® can help you

Benefits

„ Track, monitor, and trace

batches and inventory „ Streamline procurement,

production, and sales

„ Reduced penalty risk „ Decreased risk of food-safety

compensation payments „ Reduced risk of bad

„ Manage sales returns

reputation

„ Enable targeted product

„ Lower operating costs

recalls


Improve Sales Efficiency Challenges

Strategies „ Obtain first-hand information

„ Protect market share „ Meet increased service level

expectations of customer „ Get visibility in the sales

about the market „ Optimize process settlement

in sales „ Increase customer service

process „ Manage quality-based price

determination for raw material sales

SAP® can help you

offerings „ Increase customer

satisfaction

Benefits

„ Plan, track, control, and

optimize sales performance „ Expand service processes „ Strengthen collaboration with

partners and key customers „ Track indirect sales and

customers

„ Higher sales volume „ Better retention „ Closer customer relationship „ Optimal sales force

operation „ Higher customer satisfaction

„ Ensure correct handling of

rebates


1. Challenges, Strategies, and Benefits 2. The Solution 3. SAP™ ERP packaged solution for the dairy industry



SAP™ ERP packaged solution for the dairy industry Description … Focuses on key business processes that create a baseline for future growth … Delivers immediate benefits by solving the need for system heterogeneity … Enables significant business process automation

Business Objectives

Analyze, Plan, and Develop

Procure

Manufacture

Define business strategy and goals

Realize savings in aggregate purchasing

Improve manufacturing efficiency

Understand company performance and profitability

Improve purchasing efficiency

Ensure tracking and traceability

Ensure quality management in manufacturing process

Market and Sell

Improve marketing effectiveness

Increase sales effectiveness

Deliver and Service

Establish closer with customer

Enhance control over delivery process

Complete logistical and financial integration

Key Performance Indicators Gross Profit/Total Net Sales

Purchased Raw Materials Volume – Value

Sales Volume Growth

Warehousing/Distribution Costs

Inventory Turns

Route Settlement Time © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 15

SAP™ ERP packaged solution for the dairy industry Suppliers & Partners

Analyze, Plan & Develop

Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procurement Milk Procurement from Producer Additional Raw Material Procurement Procure to Stock Internal Procurement Product Development Recipe Management

Manufacturing

Dairy Production Planning Dairy Process Control Sell & Deliver Sales Order Processing Raw Material Sales Returns Operational End-to-End Scenarios Traceability & Food Safety Inventory Management Quality Management Enterprise Management & Financials Financial ing

Cash Management

Asset Management

Controlling Standard Cost & Profit Center ing

Product Cost Planning

CO-PA for Consumer Products


Cost Object Controlling

Customers (e.g. Retailers) & Channel Partners

Generic Food Scenarios Suppliers & Partners


Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procurement Procure to Stock Internal Procurement

Sell & Deliver Sales Order Processing Returns Operational End-to-End Scenarios Traceability & Food Safety Inventory Management Quality Management Enterprise Management & Financials Financial ing

Cash Management

Asset Management







Procure to Stock Suppliers & Partners

„ s price comparison of vendors’ offers


Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procurement Procure to Stock Third Party Plan & Manufacture Production Planning Production

„ Provides tools to gain greater spend visibility in procurement „ Helps to manage quotations, contracts, batch handling and quality

Industry Pain Points

Sell & Deliver Sales Order Processing Direct Store Delivery (DSD) Rebate & Bonus Management Commissions Indirect Sales Returns Empties Processing Operational End-to-End Scenarios Inventory Management Quality Management Traceability & Food Safety Cross Company Transactions Enterprise Management & Financials & Controlling Excise Duty (Beverage) G65

Solution

„

Improving purchasing activities efficiency

„

Realizing savings in purchased value

„

Allowing visibility on vendors’ conditions and services

„

Ensuring tracking and traceability

Business Benefits „

Automate operational tasks

„

Improve vendors’ selection and prices comparison through quotation handling

„

Formalize agreements by contract management

„

Guarantee quality check through goods receipt inspections

Procurement of Stock materials

Procurement – Contracts

Request for quotation Prices Comparison Purchase requisition Purchase order processing Goods receipt Inspect goods Batch number assignment Stock update Invoice verification

Create contract: Quantity contracts; Value contracts; Delivery schedule Create purchase requisition Assign vendor to contract


Customers, Consumers, Channel Partners

Internal Procurement „ Encomes cross-plant internal procurement of products including creation of all required documents for both with or without delivery „ Provide functions to monitor stock in transit

Suppliers & Partners


Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procurement Procure to Stock Third Party Plan & Manufacture Production Planning Production Sell & Deliver Sales Order Processing Direct Store Delivery (DSD) Rebate & Bonus Management Commissions Indirect Sales Returns Empties Processing Operational End-to-End Scenarios Inventory Management Quality Management Traceability & Food Safety Cross Company Transactions Enterprise Management & Financials & Controlling Excise Duty (Beverage) G65


Solution

„

Improving internal purchasing activities

„

Ensuring tracking and traceability

Stock transfer with delivery Create stock transport order Process delivery Post goods issue


Automate operational tasks

„

Increased visibility of stock and stock transfers


Stock transfer without delivery Create stock transport order Post goods issue


Sales Order Processing „ Manage the entire customer order process — variable pricing, delivery, invoicing, and payment.


„

„

Meeting customers’ requests for improved services

„

Managing sales returns cost effectively

Market & Sell

Deliver & Service


Plan & Manufacture


Solution Sales

Long order cycle times

Manufacture

Production Planning Production

Managing variable pricing conditions

„

Procure

Sourcing & Procurement Procure to Stock Third Party

„ Includes Electronic Data Interchange (EDI), handling of consignment sales, and foreign trade



Process sales order Billing Payment


Improve sales execution timeline

„

Improve order fulfillment rate

„

Provide the customer with alternative services and methods for invoicing and payments

Distribution Picking & distribution based on shelf life expiration date Freight settlement Handling unit mgt.


Inbound/Outbound EDI Processing Inbound sales order via EDI Outbound billing document via EDI

Returns „ Focuses on the processing of credit memos if no goods are sent back.


„

Efficient handling & document complaints.

„

Managing sales returns cost efficiently.

Enable corporate compliance strategy

„

Effective batch-specific returns processing

Manufacture

Market & Sell

Deliver & Service

Plan & Manufacture Production Planning Production Sell & Deliver Sales Order Processing Direct Store Delivery (DSD) Rebate & Bonus Management Commissions Indirect Sales Returns Empties Processing Operational End-to-End Scenarios Inventory Management Quality Management Traceability & Food Safety Cross Company Transactions Enterprise Management & Financials & Controlling Excise Duty (Beverage) G65

Solution Returns and Complains Process credit memos Quality evaluation Goods movement to blocked or unrestricted stock.


Procure


„ Includes quality evaluation for returned goods and appropriate stock movement.




Returns Processing Ship pallets Return pallets


Traceability & Food Safety „ Capability to track and trace products at all stages of production, processing, and distribution



Procure

Manufacture

Market & Sell

Plan & Manufacture Production Planning Production Sell & Deliver Sales Order Processing Direct Store Delivery (DSD) Rebate & Bonus Management Commissions Indirect Sales Returns Empties Processing

„ Allow fast and efficient recall of a defective product batch

Operational End-to-End Scenarios Inventory Management Quality Management Traceability & Food Safety Cross Company Transactions Enterprise Management & Financials & Controlling Excise Duty (Beverage) G65

Industry Pain Points „

„

Complying with food regulations „

HAC (Hazard Analysis & Critical Control Points)

„

EU (Article 18 of Regulation 178)

„

US (the US Bio-terrorism Act 2002)

Addressing growing food-safety concerns from consumers

Solution Quality Management Quality planning Quality inspection Recording of laboratory analysis Quality reporting Quality improvement


Professionally managing a possible product recall

„

Minimize risk of non-compliance with food & beverage regulations

„

Effective batch-specific returns processing

Deliver & Service



Batch Management Batch creation and determination Batch-where-use lists Recall batches and create follow-up activities Manage batchspecific return processing Manage batches based on shelf life expiration


Inventory Management „ Consists of the whole procurement and delivery cycle with warehouse for the storage management, including quality inspection



„

Maintaining low inventory levels

„

Avoiding out-of-stock situations at retailers

„

Establishing visibility to inventory levels throughout the entire supply chain


Reduce working capital by keeping inventory levels low

„

Increase sales by reducing out-of-stock situations

„

Improve consumer retention due to product availability

Manufacture

Market & Sell

Deliver & Service


Plan & Manufacture Production Planning Production Sell & Deliver Sales Order Processing Direct Store Delivery (DSD) Rebate & Bonus Management Commissions Indirect Sales Returns Empties Processing Operational End-to-End Scenarios Inventory Management Quality Management Traceability & Food Safety Cross Company Transactions Enterprise Management & Financials & Controlling Excise Duty (Beverage) G65

„ Return rejected goods to the vendor


Procure


Solution Inventory Management Integration with supply chain ing Goods receipt Goods issues Managing different stock categories Inventory valuation

Warehouse Management Storage Management Quality Management Quality Inspection Return of goods


Transportation Management

Plan transports Monitor execution Calculate costs Manage transportation settlement

Financials & Controlling „ Helps to get an insight into all aspects related to ing and controlling


„

Meeting local legal and fiscal requirements

„

Improving istrative activities efficiency

„

Maintaining focus on most profitable customers and brands


Implement an ERP solution fully compliant and continuously updated with local legal and fiscal requirements

„

Improve efficiency in ing activities due to a seamless process integration

„

Enhance company profitability analysis through profit and loss calculation

Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procurement Procure to Stock Third Party Plan & Manufacture Production Planning Production

„ Provides streamlined functionalities that allows visibility, increases productivity and regain control of their business processes




Solution Financials General Ledger ing s payable ing s receivable ing Bank ing Closing activities Cash management Assets management


Controlling Standard cost and profit center ing Profitability analysis Product costs planning Product cost controlling


Our specific Solution Offering for the Dairy Industry Suppliers & Partners


Procure

Manufacture

Market & Sell

Sourcing & Procurement Procure to Stock Internal Procurement Milk Procurement from Producer Additional Raw Material Procurement

Product Development Recipe Management

Deliver & Service

Dairy Food Manufacturing Dairy Production Planning & Process Control Sell & Deliver Sales Order Processing Returns Raw Material Sales

Operational End-to-End Scenarios Traceability & Food Safety Inventory Management Quality Management

Enterprise Management & Financials Financial ing

Cash Management

Asset Management







Product Development with Recipe Management „ Managing the fast and efficient product development by structured re-usable product specifications



Procure

Manufacture

Market & Sell

Deliver & Service

Sourcing & Procuremen t Milk Procurement from Producer Additional Raw Material Procurement Procure to Stock Produc t Development Recipe Management

„ Seamless integration into the production planning and execution process

Manufactu ri ng Dairy Production Planning Dairy Proce ss Control Sell & Deliver Sales Order Processing Raw Material Sales Indirect Sales Di rect Store Delivery (DSD) Opera tional End-to-End Scena rios Traceability & Food Safety Inventory Management Quality Management Cro ss Company Transactions Ente rprise Management & Financials Controlling


Slow and inefficient product development

„

Changing consumer tastes and requirements

„

Increasing demand for new products

Business Benefit „

Reduce development cycle time & costs

„

Ensure company-wide consistent product information

„

Reduce time-to-market to gain competitive advantage

Solution Product Data Management Maintain product specifications Label Management Multilevel recipe mgt. Define Batch Management


Product Lifecycle Management Document Management Change Management Integrate Recipe into production process Create master recipe Create process order


Milk Procurement from the Producer „ Encomes the efficient procurement and collection of raw milk



Procure

Manufacture

Market & Sell

Deliver & Service


Sourcing & Procuremen t Milk Procurement from Producer

„ Ensure compliance with high quality standards and traceability requirements

Additional Raw Material Procurement Procure to Stock Produc t Development Recipe Management

Manufactu ri ng Dairy Production Planning Dairy Proce ss Control Sell & Deliver Sales Order Processing

„ Calculate payments based on quantity and quality characteristics

Raw Material Sales Indirect Sales Di rect Store Delivery (DSD) Opera tional End-to-End Scena rios Traceability & Food Safety Inventory Management Quality Management Cro ss Company Transactions Ente rprise Management & Financials

„ Monitor procurement and payment process


Managing the complex payment conditions

„

Coping with seasonal fluctuation and changing demands

„

Complying with the high quality standards and traceability requirements


Enable accurate payment both for producer and transport service provider

„

Provide payment reporting to the producer

„

Streamline raw milk collection & reception process

Controlling

Solution Milk Collection

Milk Reception

Maintain standard Dairy reception routes cockpit Provide route list to Process purchase truck driver Order Automatic creation of inspection lot and batch number Batch management

Milk Payment

Reporting & Analysis

Calculate payment Monitor raw milk quantity & quality for producer characteristics Calculate payment for transport service Payment reporting provider Settle payment Maintain payment calculation scheme


Milk Analysis Gather results of inspection lots from producer samples Gather results of inspection lots from tank truck samples Create usage decision for inspection lots

Additional Raw Material Procurement „ s the additional purchase of raw materials from other companies on the determined shortage in the demand planning process



„

„

Determining demand for additional required raw material due to everchanging quantity and quality of collected raw milk Managing the vendor payment based on raw material quality characteristics

Business Benefits Increase demand planning accuracy

„

Handle the quality-based payment for the vendor

Market & Sell

Deliver & Service



Solution Raw Material Demand Planning

Raw Material Reception

Determine required Post goods receipt additional raw Automatic creation materials of inspection lot Create purchase and batch number order Batch management

Raw Material Payment

„

Manufacture

Produc t Development Recipe Management

„ Calculate vendor payment based on the raw material quantity and quality characteristics.


Procure

Sourcing & Procuremen t Milk Procurement from Producer Additional Raw Material Procurement Procure to Stock

Calculate vendor payment for additional purchased raw material Settle payment Maintain payment calculation scheme

Reporting & Analysis Monitor raw material quantity & quality characteristics Payment reporting


Raw Material Analysis Gather results of inspection lots Create usage decision for inspection lots

Dairy Production Planning & Process Control „ Manage the multilevel manufacturing processes including seamless batch and quality management



Procure

Manufacture

Market & Sell

Deliver & Service


Sourcing & Procuremen t Milk Procurement from Producer Additional Raw Material Procurement Procure to Stock Produc t Development Recipe Management

Manufactu ri ng Dairy Production Planning Dairy Proce ss Control Sell & Deliver

„ Incorporates the ever-changing quantity and quality of the raw material

Sales Order Processing Raw Material Sales Indirect Sales Di rect Store Delivery (DSD) Opera tional End-to-End Scena rios Traceability & Food Safety Inventory Management Quality Management Cro ss Company Transactions

„ Provide powerful tools to gain a cross-stages raw material controlling

„

„

Production Planning based on a nonstandardized raw material High cost of the raw material comparing to the total production costs Defining optimal product mix in order to maximize utilization & profitablity

Business Benefits „ „

„

Financials Controlling

Solution


Ente rprise Management &

Optimize and streamline production process Increase profitability by improved visibility to raw material utilization and losses Comply with the high quality standards and traceability requirements

Production Planning Demand planning based on historical data Production planning synchronous to sales Material resource planning (without shelf-life) Simulate planning Graphical capacity planning

Process Control Maintain product master data & recipes for multilevel production Batch management across all stages Separate raw milk into components Material valuation Manage shelf-life expiration date for final products

Controlling & Analysis Cross-stages raw material controlling Product costing Batch information cockpit Production information system


Quality Management Create inspection lots for semifinished and finished goods Gather results of inspection lots Create usage decision for inspection lots

Raw Material Sales „ s the sales of raw materials between dairies based on the raw material requirements and the available surpluses


„

Managing variable pricing conditions based on quality characteristics

„

Improve sales execution timeline

Market & Sell

Deliver & Service


Produc t Development Recipe Management


Production

Sales Process sales document

Business Benefits Simplify price determination by using the integrated batch and quality management system

Manufacture

Solution

Manage process order Create inspection lot

„

Procure

Sourcing & Procuremen t Milk Procurement from Producer Additional Raw Material Procurement Procure to Stock

„ Pricing and distribution are based on the raw material quality characteristics



Billing Invoice processing Price determination based on quality characteristics


Distribution Picking based on quality characteristics Create inspection lot for picked raw material Usage decision and goods issue

SAP ERP for the Dairy Industry Provides Increased Shareholder Value for Your Business Business Objectives

Business Areas

Business Opportunities

SAP Scenarios (SAP ERP for the Dairy Industry)

Revenue Growth

Improve customer satisfaction

Improve order fulfillment Improve sales execution timeline Improve customer understanding

Increase sales

Shareholder Value

Sales and Customer Order Indirect Sales

Distribution

Improve order fill rate Reduce operating costs and increase efficiency

Recipe Management

Finance

Enable detailed profitability analysis

Financials and Controlling

Raw Material Sales

Improve efficiencies in ing activities

Reduce Cost

Customer service Procurement

Increase efficiency for sales returns Improve transparency in dairy procurement

Milk Procurement

Lower raw materials costs

Procure to Stock

Realtime access to production cost information

Production Reduce Working Capital Reduce Risk

Returns

Product Cost Controlling

Improve yield and reduce waste Calculate and monitor production costs seamlessly

Manufacturing

Inventory

Optimize inventory usage

Inventory Management

Comply with food regulations

Utilize full track-and-trace capability

Food Safety

* For further details, please refer to the SAP ERP for the Dairy Industry Brief. © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 31




Why SAP™ ERP Packaged Solutions?

I know that SAP® software can be tailored in a very flexible way, but I really want to see proof that SAP understands the dairy business.

What does SAP have to offer that will spare me starting from scratch?

Sure, SAP can me in my daily business, but I’ve heard it takes a lot of work to implement the software. I need to execute today!

I am already working with SAP software. How do the SAP solutions fit together?

I’m not a large dairy company. The classical implementation is not the right thing for me. I need software that works immediately, ideally via a hosting or outsourcing partner. What can you offer me in this way?

The processes demonstrated here were just right for me. Can I use them to leverage my global implementation in order to save time and money?


Reviewing the Packaged Solution Approach SAP™ ERP packaged solution for the dairy industry mySAP ERP 2004 • SAP’s next generation Enterprise Resource Planning solution • Powered by SAP NetWeaver TM • Designed for all industries • Fully integrated within the mySAP Business Suite

mySAP ERP

++

•

Fast ROI

SAP ERP packaged solution Implementation

SAPSAP Best® Practices Best Best-in-class industry expertise built into SAP Practices ERP

• Predefined end-to-end processes for the dairy industry • Industry-specific documentation • Preconfigured System •Preconfiguration settings •Master Data •Configuration documentation •Test catalogs

Low Risk

Fixed Scope

+

Services

+

Services • Deep dairy industry knowledge • Focus on value creation and risk reduction • Delivery excellence

Fast Proven Reliable


Composition of mySAP™ ERP „ The next generation SAP® enterprise resource planning solution

mySAP ERP Analytics Financials Human Capital Management Operations Corporate Services

„ Powered by SAP NetWeaver „ Designed for all industries „ Fully integrated within the mySAP Business Suite „ Insight to business processes and corporate compliance

PEOPLE INTEGRATION Multi-channel access Portal

Collaboration

INFORMATION INTEGRATION Bus. Intelligence Knowledge Mgmt Master Data Management PROCESS INTEGRATION Integration Broker

Business Process Mgmt

APPLICATION PLATFORM J2EE ABAP

Life Cycle Management

Composite Application Framework

SAP NetWeaver™

„ Adaptable business processes from end to end „ Flexible deployment of business processes „ Enhanced productivity

DB and OS Abstraction


Basic Approach of SAP™ ERP Packaged Solutions Traditional strategy for an implementation project

Conception and implementation of customer processes

Implementation using best practices for SAP ERP packaged solution

Conception and implementation of customer processes

Best practices using mySAP ERP packaged solution

„ Effective evaluation „ Rapid implementation „ Explicit business expertise „ Implementation instrument

Get a living and fully documented prototype within days that you can rapidly turn into a productive solution.

Target

We know your concerns, risks, and business needs – and we know how to them perfectly based on identifying and anticipating reusable business processes and project activities. © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 36

SAP™ ERP Packaged Solution: The Components Engineering


Procurement

Manufacturing

Sales & Distribution

Customer Service

Customer & Channels

OEM Relationship Management Collaborative Engineering Key Management Time-to-Market New Product Development & Introduction Life-Cycle Data Management Supplier Collaboration Strategic Sourcing Operational Procurement & Inbound Logistics Make-to-Order/Make-to-Stock Supply to Line Manufacturing Execution Outbound Logistics Enterprise Asset Management Sales Order Management Demand & Order Scheduling Order Execution & Receipt Settlement Customer Service Warranty Management Service Parts Planning Service Parts Fulfillment Enterprise Management & Analytics Financials Human Capital Management Corporate Services Operations

Best-in-class industry expertise built into

Preconfigured System

SAP ERP „ Preconfiguration settings

„ Predefined end-to-end processes „ Use of customer language „ Industry-specific documentation „ Documented business know-how

Subset

„ Master data „ Configuration documentation „ Test catalogs „ Workshop content

Definition and documentation of integrated, supplier specific business processes.

Development of supplier specific Preconfigured Systems based on defined and documented business processes.


Key ERP Processes for – Service Offering Consulting Deliverables In basic scope*

Options

„ Project management

„ End- training

„ Delta requirements workshops

„ Automated data migration

„ Implementation of defined scope

„ Custom forms, reports, and interfaces

„ Technical installation of system

„ Custom authorizations

„ Key- training on the job

„ Hosting

„ End- documentation

„ Financing

„ Predefined sheets for data migration

„ Change management

„ Predefined test catalogs

„ Post-implementation

„ Predefined forms and printouts

„ Off-shore components (e.g., data migration, custom reports)

„ Go-live

„ Data archiving „ Operational concept * Deliverables in English © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 38

Benefits „ Clearly defined scope and time frame „ Preconfigured end-to-end business scenarios „ Predefined implementation ⇒ Reduces implementation time and costs

Fast

Proven

SAP® ERP Packaged Solution

„ SAP® Best Practices deliver proven business expertise to enhance competitiveness „ Implementation methodology and accelerators „ More than 15,000 midmarket organizations have chosen SAP to enhance performance and efficiency

⇒ Optimizes business processes and ensures ROI

Reliable

„ World-class enterprise resource planning solution „ State-of-the-art technology and scalability „ Over 30 years’ industry experience, financial viability, and strong R&D

⇒ A safe investment


What the Statistics Say Implementation

> 9 months < 9 months

More than 60% of all mySAP™ ERP implementations are accomplished in less than nine months.

Food customers by no. of employees Range of Employees X-Large Large

40%

40

35% 30

25%

20 10

Recent implementations of SAP® solutions at midsize companies have averaged only 13 weeks.

Local Small

> 25,000 469 5,000-25,000 1,000-4,999 < 1,000

Total

592 338

1.399

0 10-11 weeks

12-13 weeks

14-16 weeks

Average implementations for midsize companies are measured in weeks.

SAP is already successful in the food midmarket.


1. Challenges, Strategies, and Benefits 2. The Solution 3. SAP™ ERP packaged solution for the dairy industry



SAP®: The Smart Choice for Your Global Business

12 million s. 69,700 installations. 1,500 partners. 28,900 people in more than 50 countries. 27 industry solutions. $7 billion in revenue and more than $1 billion annually in R&D. „SAP is the recognized leader in providing collaborative business solutions for all types of industries and for every major market. „SAP is the world’s largest interenterprise software company and the world’s third-largest independent software supplier overall. „SAP will continue to provide you with solutions for all future trends to protect your investment.


Fast, Predictable Payback Cash Flow

Implement what you need, when you need it, with SAP.

Shorter Payback Time

Accelerate Time-to-Benefit

Time

Reduce Initial Investments

SAP’s phased implementation approach provides the following benefits: „ Addresses key business issues from an industryspecific perspective „ Limits business disruption through predefined services focused on industry best practices

„ s future growth „ Delivers business value through the service providers that best fit customer needs:

„ Provides real ROI within budget and timeline

‹

„ Enables customers to buy only the modular functionality they need

‹

Customers can choose familiar industry partners Customers can choose SAP if needs dictate

„ Leverages and extends existing investments; customer decides what to add or replace


SAP® R&D Investment R&D Investment (€ Millions) “Importantly, the stronger margin does not appear to be coming at the expense of future growth – R&D head count is up Q/Q and Y/Y, and S&M head count is down marginally quarteron-quarter and up year-onyear – both indicating that capacity and product investment are not being curtailed.” Solomon Smith Barney


SAP® – The Right Short-, Mid-, and Long-Term Choice Total License Revenue: Relative Market Shares (Rolling four quarters, based on license revenues) 60% 51%

50% 40%

40%

41%

21%

22%

21%

43%

44%

54%

56%

58%

15%

14%

59%

48%

46%

40%

30%

20%

19%

17%

18%

20% 17%

16%

16%

16%

16%

4%

5%

4%

4%

20% 17% 16%

18%

18% 18% 15%

17% 15%

10% 3%

3%

2%

17%

17%

16% 14% 14% 13% 2%

2%

15% 12% 2%

14% 12%

15% 13% 11%

2% 2%

0%

Q2 2000Q1 2001

Q3 2000Q2 2001

I2*

Q4 2000Q3 2001

Q1 2001Q4 2001

Q2 2001Q1 2002

PSFT&JDEC*

Q3 2001Q2 2002

Q4 2001Q3 2002

Q1 2002Q4 2002

Oracle **

Q2 2002Q1 2003

Siebel*

* Forecast by financial analysts (I2, PSFT&JDEC, SEBL) ** Fiscal year is not calendar year; comparison based on most recent quarter (e.g., SAP Q1 vs. Oracle Q3) Source: CMI analysis based on company data and financial analysts estimates as of January 20, 2004 © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 45

Q3 2002Q2 2003

Q4 2002- Q1 2003Q3 2003 Q4 2003E

SAP AG

SAP® in the Dairy Industry

„ The SAP solution for the dairy industry is based on 20 years of industry experience. „ The SAP solution for the dairy industry is proven by over 100 dairy customers worldwide. „ SAP is working with the best in the food industry. 6 of the top 10 dairy companies are SAP customers.


What the Customer Community Is Saying

“

When you produce food, there is a holding time before you get the lab results that authorize release of goods. This is very easy to track in the SAP® solution – everything is stored by a batch date, so we can quickly access how much product we have on board, where it is, the date we produced it, and when it is ready for release. Ryan Peralto, General Manager

“

Instead of having data with significant delays, as it happened before, we can now have them at our disposal with the desired speed and quality.

Robert Schlingensiepen, Managing Director

“

Morgan Foods looked at many software packages, and as we continued looking and continued learning, we were very amazed at SAP’s breadth of technology and capabilities to control.

Dan Slattery, Vice President and Chief Financial Officer, Morgan Foods


SAP® Customer Examples in the Dairy Industry


Deloitte Is Your Partner for Success

37,000 business consultants. 5,000+ dedicated SAP practitioners in +35 countries, 1,600+ clients, more than 50% of our SAP consultants have 10+ years of experience, 1,200+ live installations worldwide „ Deloitte is the recognized leader in providing quality SAP implementation services for all industries. „ Deloitte is dedicated to the development of true partnerships with food and beverage companies – we work with our customers not just for our customers. „ Deloitte will measure its success by the value created for food and beverage companies – our approach is value-driven and focused on creating immediate results for the organizations we work with.


The Overall Objective for the Deloitte/SAP Alliance Is to Create More Value for Your Dairy Company

Solution Package

Service Package

+

Customer Value

☺

=

The world’s leading provider of business solutions

The market’s leading business advisors and system integrators

Effective response to changing market conditions

„ World-class integrated

„ Deep industry

„ Maximizing operational

solutions „ Preconfigured

processes „ Food-specific

prepackaged solutions „ Fast installation

knowledge „ CXO relationships

effectiveness „ Shorter implementation

projects

„ Delivery excellence „ Defined scope

„ Minimizing risk

„ Predefined effort

„ Lower TCO

„ Global project

„ Decreasing project costs

experiences

„ Higher shareholder value


Extensive Experience with SAP® Implementations

Implement SAP packaged solutions in time, within budget, and with full benefit realization! Working with Deloitte is the first step toward a successful SAP implementation for your organization: „ As a leading SAP partner, Deloitte offers a complete range of implementation services: ‹ ‹ ‹ ‹ ‹

Business case development System design Configuration Testing Deployment

„ Complementary services in tax, finance, HR, assurance, and risk „ Vast experience in delivery of solutions and services to the middle market

„ Successfully implementing SAP solutions – and extracting full value from an implementation – isn’t just about technology. It’s about focusing in on business value drivers. „ Deloitte has a reputation for delivering successful, business-driven implementations with low risk. „ Deloitte provides a robust set of tools, solutions, and methodologies to complement SAP’s business solutions .


SAP® Consulting: Your Partner for Success SAP Consulting More than 10,000 consultants around the world, 32 years of SAP implementation experience „ SAP Consulting delivers value to your business based on measurable results … „ SAP Consulting is well-known for its excellent competence and experience in implementing SAP solutions within the core areas of the food and beverage industry (“SAP knows SAP best”). „ Decades of SAP Consultants’ project experience have been merged into the SAP ERP packaged solution for the beverage and food industry. „ Pragmatic project approach tailored to the needs of the midmarket: ‹ ‹ ‹ ‹

Short project durations due to experienced consultants Customer enablement instead of dependency from consultants Efficient remote consulting model SAP’s offering also includes financial and/or hosting services


SAP® Solutions and SAP Consulting Create More Value for Your Dairy Company

Solution Package

Service Package

+ The world’s leading provider of business solutions „ World-class integrated

solutions „ Preconfigured

processes „ Beverage-specific

prepackaged solutions „ Fast installation

SAP Consulting The industry’s leading provider of SAP implementations „ Deep industry and

Customer Value

☺

=

Effective response to changing market conditions „ Maximizing operational

effectiveness

solution experience „ Implementation

approach tailored to needs of the midmarket „ SAP solution out of

“one hand” (end-to-end solution provider) „ Highest quality and

„ Shorter implementation

projects „ Minimizing risk „ Lower TCO „ Decreasing project costs „ Higher shareholder value

commitment due to our product responsibility


Customer Value Proposition of SAP® Consulting

SAP Consulting Is a valued business partner to SAP’s customers, ensuring the fast and enduring success of their SAP investment. Expertise and capability to create and realize business value

Commitment to reduce customer risk

Capability to leverage entire SAP ecosystem

ƒ First-hand knowledge of SAP business and technology innovations ƒ Best practice methodologies and project management to leverage the value of software investments ƒ Global presence and 30 years’ experience with 69,000 installations in 27 industries

ƒ Every SAP Consulting customer must be a reference for short time to value, low TCO, and realization of business benefits ƒ Constant engagement throughout entire customer life cycle ƒ SAP has never let a customer down in 30 years ƒ Committed to customer’s push for selfsufficiency

ƒ Direct access to development ƒ Leverage SAP Customer Services Network knowledge and resources ƒ and commitment to our partner ecosystem

Skills and Competencies

+

Unparalleled Motivation

+

Leverage Potential

= Customer Success © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 54




Our Initiative for the Dairy Industry A full solution with low total cost of ownership, scalable to your needs! Low-cost implementations with deep industry skills, best practices, and preconfigured SAP components! „ Accelerated Time to Value ‹ Flexible components ‹ Rapid success: Implementation

in less than 6 months

„ Industry Best Practice ‹ More than 20 years in business, with over 400 beverage customers ‹ Number one enterprise software vendor in the world with

more than $1B annual R&D

„ Preconfigured SAP Solutions ‹A

combination of SAP’s core solution and our preconfigured market industry solution

„ Financing Options ‹ No upfront investment ‹ A 5- to 7-year financing

deal © SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 56

In Summary SAP is flexible to grow with your business „ Allows for increasing market share „ Is scalable to your needs „ Gives you operational visibility „ Helps shorten time to market „ Helps improve customer loyalty

SAP is quick to implement, with fast, predictable payback „ Fixed-price, 16-week average implementation time „ Phased approach and best practices

SAP is the smart choice for your investment „ Over 20 years in business, with over 400 beverage customers „ Number one enterprise software vendor in the world, with over $1B annual R&D


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