delivering real-time business value for chemicals

July 2013

Delivering Real-Time Business Value

for Chemicals SAP Business Suite Powered by SAP HANA

Public

2 © 2013 SAP AG or an SAP affiliate company. All rights reserved.

Uncertainty, complexity, and regulatory oversight

are increasing in today’s market. To help ensure

sustainable growth and performance, chemical

companies must constantly innovate and adapt

their products, processes, and business models.

Safely optimize asset performance

Meet demand at maximum profitability

Position for globalization and growth

The real-time opportunity

© 2013 SAP AG or an SAP affiliate company. All rights reserved. 3 Public

Optimize

manufacturing

performance and

asset utilization

Optimize asset performance and use by synchronizing

processes, enabling data-driven decisions, and

proactively managing risk and safety

Orchestrate

complex and

volatile supply

chains

Help ensure reliable order fulfillment at maximized

profitability by managing supply and delivery to

consistently meet demand at minimum cost

Increase

returns on

product

innovation

Get visibility into sales performance and pipeline for

profitable decisions based on management of prices

and margins

Align product development with portfolio strategy,

market delivery, and global compliance

Driving profitable business globally Drive agility and growth in chemicals


SAP Business Suite powered by SAP HANA The next-generation business platform

Real-time business

In-memory

Business

transactions

Digital

connections

Collaborative

business

Cloud Social

Big Data Mobile

One platform bringing it all together

Advanced

analytics


Industry value map for chemicals Sustaining profitable growth

Customer-Centric Sales

and Marketing

Price and Margin

Management

Order and Contract

Management

Customer Service and

Support

Product Innovation and Integrity

Integrated Product Development

Product Safety and Stewardship

Integrated Quality Assurance

Information Risk Management

Manufacturing Performance and

Asset Utilization

Efficient Manufacturing Execution

Sustainable Operations

Manufacturing Visibility and

Performance

Asset Operations and Maintenance

Complex and Volatile

Supply Chains

Integrated Sales and

Operations Planning

Manufacturing Network

Planning and Execution

Logistics Fulfillment

People and

Talent

Core Human Resources

and Payroll Talent Management

Time and Attendance

Management

Workforce Planning and

Analytics

Finance Financial Performance

Management

Accounting and Financial

Close

Treasury and Financial

Risk Management

Collaborative Finance

Operations

Enterprise Risk and

Compliance Management

Procurement Supplier Discovery and

Lifecycle Management

Strategic Sourcing and

Contracting

Procurement and Order

Collaboration

Collaborative Invoice to

Pay Commodity Management

IT Management Application Lifecycle

Management

IT Infrastructure

Management

IT Portfolio and Project

Management IT Service Management

IT Strategy and

Governance

Technology

Solutions

Analytics Consumer Experience Data Management Enterprise Mobility

SAP HANA Platform

Application Development

and Integration


Industry value map for chemicals Real-time value for key end-to-end processes

Highest real-time

business value

for chemicals

Customer-Centric Sales

and Marketing

Price and Margin

Management

Order and Contract

Management

Customer Service and

Support

Product Innovation and Integrity

Integrated Product Development

Product Safety and Stewardship

Integrated Quality Assurance

Information Risk Management

Manufacturing Performance

and Asset Utilization

Efficient Manufacturing Execution

Sustainable Operations

Manufacturing Visibility and

Performance

Asset Operations and Maintenance

Complex and Volatile

Supply Chains

Integrated Sales and

Operations Planning

Manufacturing Network

Planning and Execution

Logistics Fulfillment

People and

Talent

Core Human Resources

and Payroll Talent Management

Time and Attendance

Management

Workforce Planning and

Analytics

Finance Financial Performance

Management

Accounting and

Financial Close

Treasury and Financial

Risk Management

Collaborative Finance

Operations

Enterprise Risk and

Compliance Management

Procurement Supplier Discovery and

Lifecycle Management

Strategic Sourcing and

Contracting

Procurement and Order

Collaboration

Collaborative Invoice to

Pay Commodity Management

IT Management Application Lifecycle

Management

IT Infrastructure

Management

IT Portfolio and Project

Management IT Service Management

IT Strategy and

Governance

Technology

Solutions

Analytics Consumer Experience Data Management Enterprise Mobility

SAP HANA Platform

Application Development

and Integration

10 3 2

6 1

4

5

7 8 9


Today

KPI improvements are high-level estimates and will have to be validated for each customer situation.

With SAP Business Suite on SAP HANA

Manufacturing visibility and performance Business value for global plant performance management

Inability to gather and visualize data

from production in real time to

improve the status of manufacturing

performance both within and across

multiple sites

Inability to understand where

machine maintenance issues and

bottlenecks exist in production

Need to capture the root causes for

downtime, efficiency loss, and poor

quality.

Unplanned downtime, suboptimal

performance, and poor product

quality all contributing to decreased

asset utilization, poor product yields,

increased costs, and reduced

customer responsiveness

Combines quantitative performance

measures with qualitative context and

reasons for performance issues

Combines plant performance with

business context

Facilitates corrective action at the

plant level and across plants

Enables broader supply chain,

sustainability, financial, and

enterprise performance

improvements

Enterprise-level overall equipment

effectiveness (OEE) that rolls up

plant-level OEE for enterprise

analytics and comparing assets and

performance across multiple sites

Improve return on assets,

costs of goods sold,

and product quality

Increase

Reduce

resource utilization

and asset uptime

unplanned downtime,

changeover, and

waste by

5–10%


Today


Integrated sales and operations planning Business value for demand-driven supply chain

Increasingly difficult to access and

effectively use timely demand

information from the supply network

Decisions often based on incomplete,

inaccurate, and often outdated

information

Hardware and system landscapes

challenging to administrate

Increase business/expert user

productivity with faster planning

processes and improved user

experience and by driving rapid

consensus across the supply chain

network

Near real-time reporting with

increased speed of information

analysis leading to better supply

chain visibility and decision

making

Improved production and cost

efficiency by simplified system setup

and administration and by providing a

more robust planning foundation

Reduce planning cycle

times

35%

Increase

Reduce

supply chain

performance

20%

total cost of

ownership (TCO)

25%



Today


Integrated sales and operations planning Business value for supply chain monitoring

Lack of near real-time information

Batch jobs to extract data from

planning system to central reporting

typically on weekly basis

No ad hoc operational reporting

Reporting, queries, and dashboards

that must be created by customers

on their own

Not possible to run sub-daily planning jobs and analyze the results because of the long data preparation times in SAP NetWeaver Business Warehouse application

Prevents fast response to ad hoc queries from customer, which may result in lost sales

Decision support based on near real-

time information

Information able to be updated via

delta capabilities

Built-in analytical reporting scenarios

provided with streamlined data load

Planned ability for customers to add

their own key performance indicators

(KPIs) and dashboards

Advanced data retrieving and

computing functionality in SAP HANA

used to optimize the reporting of

supply chain planning data

Reduce time spent compiling,

generating, and

waiting for reports by

40% Increase

Optimize

visibility into key

supply chain data

in an easily

consumable way

analysis functionality

with multiple levels

of aggregation and

drill-down

techniques



Today


Asset operations and maintenance Business value for asset planning and scheduling

Maintenance scheduling that

consumes a great deal of time

High amount of master data

influencing performance of data

maintenance

Manual and error-prone process of

preselection of maintenance plans

Potentially missing necessary

objects for maintenance calls

High number of maintenance plans

that need to be scheduled, frequently

leading to a weekly scheduling

scheme

Accelerated mass transactions

Instant analysis on top of

transactions

Preselection of due plans that speeds

up the process significantly

Real-time analytics on all data

including machine sensor information

Ability to schedule all maintenance

plans within a specific time frame

Planning several times a day (instead of once a week), resulting in up-to-date scheduling information in maintenance operations

Faster response times leading to more accurate maintenance scheduling

Increase asset utilization and

reduce unplanned

asset downtime by

5–10% Maximize

Increase

asset uptime

schedule

adherence by

20%



Today


Order and contract management Business value for sales

Difficulty distinguishing profitable

customers from customer pool

Inability to identify gaps in sales

pipeline leading to missed targets

Extracting actionable information from the enterprise-wide customer data (Big Data) to maximize the chance of a sale

Minimal insight into buying preferences of customers in social data context

Easier identification of profitable

customers with account intelligence

analytics

Faster transaction search

functionality

Complete transparency into sales

pipeline based on real-time

information with unlimited drill-down

functionality

Real-time analysis of Big Data to

better understand buying patterns

Real-time access and assembly of

all data including social/sales data

Increase profitability by

0.5–2%

Decrease

Improve

cost of sales

through balanced

territories by

5%

offer win rate by

2–5%



Today


Logistics fulfillment Business value for inventory management

No up-to-date view of the inventory

situation

Need for accurate display of actual

stock to react quickly to stock

shortfall

Time-consuming inventory

management reporting

Real-time access to complex

inventory management data

Real-time stock insight and

inventory monitoring

High-performance inventory

management with large volumes of

documents

Higher process efficiency in adjacent

procurement processes

Reduce inventory levels by

2–5%

Improve

Optimize

service-level

agreements with

real-time product

allocation

working capital



Today


Financial performance management Business value for profitability and cost analysis

Data latencies and processes

delays impacting the ability to react

to issues and opportunities

Lack of data depth and user self-

service affecting internal decision

making

Long-running processes

Time-intensive data queries

Mostly manual data analysis

Substantial amount of effort (time

spent) not directly adding value

Suboptimal resource efficiency

and effectiveness

Timely execution of critical business

processes that supports decision

making and increases the ability to

swiftly act (insight-to-action) in

dynamic market environments

Critical transactions and calculations

that run quickly

Instant response times on queries

Prebuilt analytics automating the data

analysis process

Leaner processes from data capture

through data analysis

Increased productivity through

process-optimized analytics and

mobile support

Improve service-level

performance

Reduce

Minimize

cycle times and

manual effort by

40%

operating costs



Today


Accounting and financial close Business value for entity close

Long running processes

Time-intensive reconciliations

Limited time for analysis

Inefficiencies due to manual

processes and low automation

Missing financial excellence

results in higher cost of equity

at the capital markets

Difficulties in supporting parallel

financial reporting standards on a

global basis and in simulation of

scenarios

More time for analysis, less overtime,

or earlier publishing of financial

results through faster

period-end processes and better

reconciliations

Increased efficiency through smarter

reconciliations and reporting,

reducing operating costs, and

improving stakeholder satisfaction

Real-time analytics down to the

lowest level of detail – delivering

quality at source, transparency, and

process efficiencies

Minimize time to close the

entities’ books by

50%

Reduce

Enhance

cost of financial

reporting by

40%

compliance and

accuracy



Today


Collaborative financial operations Business value for receivables management

More time spent preparing data; less

time for analysis

Collaboration beyond finance team

hindered by perceived system

complexity

Limitations in analysis capabilities

and dimensions because of reliance

on finance aggregates

Large data volumes that lead to

batch processing and reporting

latency

Difficulty in identifying exceptions in

thousands of pages of reports

Instant portfolio overview that lets managers focus team efforts on tactical wins

Ability to involve sales executives and other business partners to accelerate collections and dispute resolution

More accurate document-level

calculation of days sales outstanding

(DSO) that allows identification of

root causes of changes to DSO

Real-time reporting on all accounts

receivables data including credit,

collections, and disputes

Anywhere, anytime access to key

receivables status

Increase cash collections

and accelerate

dispute resolution

Reduce

Reduce

days sales

outsatnding by

2–5 days

uncollectable write-

off by

5–10%



Today

KPI improvements are high-level estimates and will have to be validated for each customer situation

Integrated product development Business value for portfolio management (SAP Portfolio and Project

Management)

Fact-based go/no-go decisions

require real-time information on the

status of the running projects and the

project proposals. Analysis for large

portfolios in the portfolio dashboards

is time-consuming, leading to lack of

transparency.

Faster access to decision-making

information in dashboards, such as

status, timeline, and financials

Accelerated comparison of running

projects and proposal in the

dashboards

Increase transparency for

decision making

Improve speed of

aggregating

financial information

Aggregation of financials, such as actual or planned cost, commitments along the investment hierarchy takes a long time for large portfolios. Outdated information on the investment increases review efforts.

Manual editing of standard financial KPIs such as net present value, internal rate of return adds additional tools and manual effort for portfolio managers.

Speeding up aggregation of

financials along the investment area

hierarchy

Calculation of most important KPIs

based on values from financial

planning, removing manual

calculation

With SAP Portfolio and Project

Management on SAP HANA


Customer cases

Indian paint

manufacturer

Support sales decision making and

corrective actions

Improve effectiveness of trade

promotion spend

Proactively track and manage

customer service level

European

petrochemical firm

Financial performance management:

accelerated financial reporting

measured by increased employee

productivity

Leading U.S.

chemical

manufacturer

One SAP NetWeaver Business

Warehouse on SAP HANA reporting for

supply chain management (SCM) real-

time planning analytics: ability to

modify customer service-level

agreement (SLA) based on profitability

to reduce inventory

Annual benefit

US$10.7 million

Annual benefit

US$2.4 million

Annual benefit

US$15 million


Next step Business scenario recommendation and value discovery workshop

SAP offers a proven methodology and approach to

discover the customer-specific business

improvement areas and quantify value potential.

We suggest such a workshop with your

line-of-business and IT experts.

As starting point, we recommend a performance

and usage analysis of your current system.


Painting manufacturer/chemicals Summary of validated scenarios

Feasibility

Bu

sin

ess v

alu

e

Legend

Lo

w

Hig

h

Low High

Pricing sensibility

analysis

SAP Business

Suite on

SAP HANA

SAP HANA

products

SAP HANA

Platform

Working capital

management

Inventory

optimization

Gross margin

analysis

Trade promotion

effectiveness

Sales visibility

Loyalty program

Order fill rate

Phase – deployment road map

Scenario

(business value)

1 Short term

CRM: Real-time sales visibility: sensitivity analysis

for margins and getting the margin visibility per

SKU for better and informed pricing and rebates

decisions; dealer profiling, geographical profiling

for driving marketing initiatives.

SCM: Real-time planning analytics (cut down the

days in inventory – one-time benefit)

FIN: Role analytics for efficiency

2 Medium term

FIN: Financial performance management

SCM: Real-time inventory management

3 In evaluation

Other functions – to be determined in future

discovery workshops

Annual revenue: US$1.8 billion

SAP HANA Platform: customer-specific SAP HANA products: SAP NetWeaver BW on SAP HANA, high-performance applications (HPAs), apps powered by SAP HANA SAP Business Suite on SAP HANA

SAP HANA use cases mapped to industry value map end-to-end solutions


Customer case: A very large chemicals company Summary of validated scenarios

Feasibility

Bu

sin

ess v

alu

e

Legend

Lo

w

Hig

h

Low High

Real-time planning

analytics

(US$15 million)

Phase – deployment road map

1 Phase 1

Real-time planning analytics (Real-time

customer profitability reporting.; ability to modify

customer SLA based on profitability – reduce

inventory finished goods)

Annual revenue: US$38.7 billion

SAP Business

Suite on

SAP HANA

SAP HANA

products

SAP HANA

Platform

SAP HANA use cases mapped to industry value map end-to-end solutions


Customer case: A very large chemicals company SAP HANA Platform

15000

0

2000

4000

6000

8000

10000

12000

14000

16000

2013 Phase 1

Costs SoH Applications Platform

$

Actual SAP customer

business case

Annual benefits, SAP HANA

Platform

Annual benefits, applications

powered by SAP HANA:

US$15 million

Annual benefits, SAP Business

Suite on SAP HANA

Estimated deployment costs

Total transition cost

SAP HANA Platform: Anything built on the platform that is customer-specific – new business processes and business models

SAP HANA products: SAP NetWeaver BW powered by SAP HANA; high-performance apps (HPAs); applications – mapped to

IVM E2E solutions

Currently available functionality (SP0, 1, 2) – 23 scenarios mapped to IVM E2E solutions, and planned functionality(all of the

E2E solutions on the IVM are in scope)

SAP HANA Platform

SAP HANA products

SAP Business Suite on

SAP HANA

SoH = SAP Business Suite on SAP HANA


Note: Use cases in the global use case repository are captured directly from customers and internal SAP innovation

sessions and may not be completely validated.

Chemical manufacturer – sales visibility Chemicals

Innovation scope

SAP HANA products (HPAs, applications)

End-to-end (E2E) solution

Chemicals – integrated sales and

operations planning

Value potential 5

Feasibility 3

Low High

1 5

Low High

1 5

Business context and goals

Support sales strategy and decision making (such as loose tin vs. carton sales), dealer profile

(such as critical retailer) growth rate, Privilege Club contribution, critical retailer contribution,

network expansion planning, clustering, sales planning

Business challenges

Not able to take informed decisions and corrective actions; currently downloading and

massaging data, a very long manual process

Process innovations

• Real-time sales visibility

Contribution of SAP HANA

SAP HANA will tie together multiple data sets and enable full granularity of insights

Value drivers/KPIs

Revenue


Note: Use cases in the global use case repository are captured directly from customers and internal SAP innovation

sessions and may not be completely validated.

Chemical manufacturer – SAP NetWeaver BW on SAP HANA Chemicals

Business context and goals

Ability to report globally in real time; current reporting infrastructure provides inventory positions

lagging ERP by 1 day

Business challenges

Inability to effect planning changes, transfer orders, and see effects in real-time inventory

position reports

Process innovations

• Access real-time supply chain and sales with better visibility into planned and actual demand

information across product, channel, and geography dimensions at the most granular level. Use

what-if scenario modeling and analysis

Contribution of SAP HANA

Real-time demand supply matching at multiple levels of supply chain; ability to report multiple

data feeds for supply and demand in real time

Value drivers/KPIs

Real-time customer profitability reporting; ability to modify customer SLA based on profitability –

reduce inventory finished goods

Innovation scope

SAP HANA Platform (customer-specific)

E2E solution

Chemicals – integrated sales and

operations planning

Value potential 3

Feasibility 5

Low High

1 5

Low High

1 5


Innovating our business with real-time information

After a successful proof of concept, we have quickly made the decision to implement SAP CRM

powered by SAP HANA. We believe this is the right move for Bayer as it will allow us to innovate

the way products are being developed by focusing more on the individuals requirements rather than

generic markets. We will also create a better user experience by providing our users with real-time

information while reducing our overall operating cost in IT. The next logical step for Bayer will be to

move the whole SAP Business Suite to SAP HANA.

Kurt De Ruwe, CIO, Bayer MaterialScience

AT A GLANCE

Objective

Proof of concept

Solution

SAP Customer Relationship Management (SAP CRM) application

powered by SAP HANA

Benefits

Innovate the business and empower users with real-time information