improving efficiency and controls at suzano · 6/30/2015 · improving efficiency and controls at...

SAP for Forestry Business

Improving Efficiency and

Controls at Suzano

01 | Corporate Overview

02 | Strategy and Industry

03 | Suzano IT

04 | Forestry BU Control

Corporate Overview

Suzano is a forestry-based company, publicly traded, controlled by

Suzano Holding. Suzano operates in the pulp and paper businesses.

Controlling Group

Treasury

56%

2%

Free Float42%

4

Mucuri

Portocel

Vitória

Santos

Market Value: R$ 18.3 billion

Competitive Advantages

Forestry

Biotechnology

Eucalyptus cycle: 7 years

Pulp

Low production costs

Certified products

Energy self-sufficient

Diversified markets

Commercial strategy

Paper

Regional leader

Vertically integrated operations

Distribution

Maranhão

Limeira

SuzanoEmbu

Rio Verde

Forests

Ports

Mills

Itaqui Port

Capital Structure (June/15)

Diversified and Complementing Product Portfolio

Suzano’s products portfolio consists of market pulp, paperboard, uncoated paper and coated paper.

Note: Figures of last 12 months ending on 6/30/2015.

Other paper represented 1% of net revenue on the period.

6

Uncoated Coated

Net Revenues

64% Exports / 36% Domestic Market

R$ 8.7 billion

Market Pulp2nd eucalyptus market pulp producer

60%

Paper

40%

Printing and WritingPaperboard

Positioning on Pulp Segment

Pulp Production Capacity – Top 20¹

(million ton)

In 2015, the market pulp capacity¹ totalizes 63 million tons. The top 20 biggest producers represent 74% of the market.

Eucalyptus Pulp Production Capacity

(million ton)

Total: 46 million

tons¹

Total: 22 million

tons

1Includes Sotfwood, Hardwood, Unbleached and Sulphite; excludes mechanical pulp / ² Guaiba 2 total capacity

Source: Hawkins Wright (Jul/15) and Suzano

7

1,11,31,31,41,51,61,71,71,81,81,82,0

2,32,42,5

3,53,63,63,9

5,6

Canfor

Cenibra

Resolute FP

Sodra

Domtar

Mercer

Eldorado

Paper Excelence

IP

Weyerhaeuser

Metsa Group

Ilim

Georgia Pacific

Stora Enso

UPM-Kymmene

Suzano

APRIL

CMPC²

Arauco

Fibria

0,1

0,2

0,3

0,3

0,3

0,9

1,0

1,2

1,2

1,3

1,5

1,7

2,9

3,5

5,6

Grupo Orsa

IP

Lwarcel

Portucel

Mondi

Ence

Altri

UPM-Kymmene

Stora Enso

Cenibra

Arauco

Eldorado

CMPC ²

Suzano

Fibria



03 | Suzano IT


Suzano’s strategy

Structural Competitiveness

Maximize the return of our assets and cash flow generation

Benchmark in operational efficiency

Adjacent Business

Increase profitability through innovative businesses that innovate

and break paradigms

Reshaping of the Industry

Reduce the variability of the industry’s returns

11

Structural Competitiveness

Forestry

Logistics

Industrial

Commercial

Average distance reduction

Wood swap

Standardization and insourcing harvesting

Precision Forestry

Productivity increase

Retrofitting investments

Energy efficiency

Operational efficiency

Remove structural bottlenecks

Integrated logistics with synergy gains

New logistics modes

Customer focus

Price discipline

Expansion of client base

Service level improvement

12

Adjacent Businesses

13

FuturaGene Fluff

Lignin

First genetically modified clone

approved by CTNBio for

commercial purposes

Potential to increase

productivity by nearly 20%

First company in the world to use

hardwood to produce fluff

Capacity to replace up to 70% of

fluff to produce sanitary pads

and up to 30% for diapers

Replacement of petrochemicals with

renewable source

Can be used in several high value-

added applications

innovation

World Market Pulp Supply and Demand

Market Pulp Global Demand

(million tons)

Market Pulp Global Supply

(million tons)

Expectations of a scenario marked by supply and demand in balance. The growth in market pulp demand is driven by pulp

consumption in Asia, which has invested in non-integrated paper mills. Supply growth is driven by Latin America, the most

competitive region for pulp production

CAGR Supply 2009 – 2013 2014 - 2019e

North America +1.0% +0.1%

Europe +1.7% +1.2%

Asia +4.2% +4.7%

Latin America +5.7% +3.4%

Others* +1.5% +0.3%

Total +3.0% +2.2%

19

2 3 3 4

2027 29

353

4 4

5

18

18 18

187

6 6

6

50

58 60

67

2010 2014 2015e 2020e

CAGR Demand 2009 – 2014 2015e – 2020e

North America -2.6% -1.8%

Europe +0.2% +0.0%

Asia +8.2% +4.1%

Latin America +4.4% +2.7%

Others* +5.8% +2.9%

Total +3.8% +2.2%

1 1 1 18 9 9 12

1518 19

2314

14 15

1515

16 16

165259 60

67

2010 2014 2015e 2020e

North America

Europe

Latin America

Asia

Others*

Note: *Others includes Middle East, Oceania and Africa

Source: Poyry (2013)

11

Cash Cost in Pulp Production

New pulp projects are located in low-cost regions, most of them in South America

Cash Cost CIF / Europa

(US$/ton)

22

Low Cost High Cost High CostLow Cost

*Others includes New Zeland, Argentina, China and South Africa

Source: Hawkins Wright (Jul/15)

800

400

0

Chile

Japan

Fin

land

Easte

rn E

uro

pe

Oth

er

Euro

pe

West C

anada

Oth

er

World

Oth

er

Asia

Bel/F

raU

SA

Canada

Chin

a

Sw

eden

Fin

land

Chile

/Uru

guay

Iberia

Indonesia

Afr

ica

Russia

Bra

zil

Japan

Sw

eden

BC

Coast

East C

anada

US

A

13.8 Mt 12.4 Mt

Hardwood Softwood

18.9 Mt 13.7 Mt

Forestry Competitiveness in Brazil

Brazil presents competitive advantages to support continuous increase of its global forestry standing

Competitive Advantages - Brazil

• Availability of productive land

• Excellent soil and climate conditions

• Short harvesting cycle for planted forests

• Opportunity to recover degraded areas

• Low establishments and maintenance costs

Source: ABRAF – 2014.

5.5 adtm/ha/year 10.5 adtm1/ha/year

Biotechnology

1980 2014

+100%

• More wood / hectare

• More pulp / m³

• Superior quality

• Smaller area

• Decreasing costs / m³

Source: Suzano

Hardwood Productivity

(m3/ha/year)

Pulp Productivity

23

38

31

2522 20 19

1815

12

6 6

Brazil China Indonesia Australia Chile NewZealand

SouthAfrica

USA Portugal Finland Sweden

Stock Performance

Stock Performance - SUZB5

(100 basis: Jun/14 – Jun/15)

Daily Financial Volume – SUZB5

(R$ million)

6.574

8.990

11.279 12.486

2012 2013 2014 LTM*

SUZB5+99%

Ibovespa+0%

IBrX-50+1%

60

80

100

120

140

160

180

200

220

Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

35

25

37

44

62

2012 2013 2014 LTM*

Daily Trade Number - SUZB5

(Trade number)

*Last twelve months ending on 6/30/2015.

Source: Bloomberg



03 | Suzano IT


Corporate IT Overview

Suzano has an SAP-based implementation dating back to 1998, but only recently merged all BUs into

one integrated ECC suite on HANA.

4

SAP BW

SAP CRM 7

SAP HANA



03 | Suzano IT


Simplify Forestry

Project Objectives

Understand business needs in

Nursery/Plantation, Harvesting,

Forestry Development,

Procurement, Wood Purchasing

and Overall Mobility in the field.

1

Propose solutions on SAP, leveraging

standard features and existing

processes.

2

Identification in opportunities

for added value and increased

simplicity (operational).

3

Simplify Forestry

Project Methodology

Project Drivers:

• Simplify System Interaction

• Automation and Information Made Available

• Standardization and Security

• Improve Information Management

• Boost productivity

• Improve planning tasks

"Simply Innovate"

Operational

Needs

Economically

Viable

Available

Technology

Manufacturing demand

Production plan informed

by industry.

Planning and Budgeting

Setting harvesting plans,

purchasing and collection

needs

Industry

Wood receipt and

industrial production.

UNF - Sao Paulo

UNF - Bahia

UNF - Maranhão

Productivity and Cost Management

Operational KPIs

Technological package

Recommendation for clones,

nutrition and chemical control.

Nursery

Seedlings planning and

production management

based on Forestry

Demand.

Inventory Management

Demand management,

purchasing and goods

receipt.

Forestry Plantation

Planning and execution of

deployment orders, renovation, drive

and maintenance.

Promotion & Wood Purchasing

Promotion and purchase

management for timber

harvesting.Maintenance

Control of events,

preventive and corrective

maintenance. Logistics

Wood transport for

industry.

Harvest & Exhaustion

Planning and execution

management of logging orders

Simplify Forestry

Overview

Quality control

S-Flor Simplify Forest - Case Details

User interface: Focusing on mobility solutions for forestry

confirmations. Budget calculation, tactical planning using

simulation (SAP BPC).

Proposed solution: Continue the use of PP module in a

simplified way to control forestry and real cost of management.

Optimizations

Reports

19

59

2

Workflows

1 2

Mobility

Interfaces

Among the main proposed solutions:

• Creating simulator, using SAP BPC for generating budget, YP and Rolling

Forecast.

• Use of a single production order by stage to perform operations and

consumption of materials and quality control.

• Monitor planned and actual costs (and variances) directly in the production

order.

• Records of Production Areas in installation locations with integration of

master data and processes with Zenith.

• Nursery: Seedling quality control and notes for the operator to control

productivity.

Involved SAP modules:

SAP ERP-PP, ERP-PM, ERP-QM, SAP-BPC, SAP SMP

Process

FORESTRY & NURSERY

Involved systems: SAP / GIS / Zenith / Mobility (SAP SMP)

Requirements by Type


User interface: Focusing on mobility solutions for confirmation;

Simplification of wood movements and asset exhaustion in SAP

ECC.

Proposed solution: Implementation of integrated mobility solutions

with SAP, greater efficiency in the availability of data management

and reliability improvements for calculations (eg. Exhaustion)


• Solution deployment for mobility, adding better validation controls

and integrated directly with SAP (online and offline).

• Adjustments for Pre-Harvesting Inventory and production awards.

• Use of SAP QM for measurements and data collection for SPC.

• Improvements in calculations and cockpit efficiency Exhaustion.

• Increasing the speed for management data availability.

Process

HARVESTReports

13

52

1

Workflows

1 5

Mobility

Interfaces

Involved systems: SAP / GIS / Zenith / Mobility (SAP SMP)


SAP ERP-PP, ERP-PM, ERP-QM, SAP-BPC, SAP-SMP, SAP-DMS


Optimizations


ReportsWorkflows

Interfaces

19

1

13 4

Mobility

User interface: Use of mobile interface to simplify services

confirmation and receiving / consumption of raw materials and fuel.

Approval Center (Fiori)

Proposed solution: Automate operations with greater use of MRP

to purchase MRO and Supplies parts. Increased integration with PP

and PM module. Increased use of SAP Master Data improving

purchase history.


• SAP MRP Shopping for MRO and Supplies.

• Use of service registration DIEN enabling integration with Prod.

Order to improve procurement management / taxes.

• Schedule Agreements and automation.

• Integration with SAP PP and SAP PM.


SAP ERP-MM, SAP ERP-PP, SAP ERP-PM

Process

PROCUREMENT

Involved systems: SAP / Mobility (SAP SMP)

Requirements by TypeOptimizations


User interface: Use of mobility for technical visits, reports, services

and events. BI tools for management analysis.

Proposed solution: Greater efficiency in the process of prospecting /

contract through the system, alignment of processes with forestry /

harvesting and increase automation.

Reports

37

53

12

Workflows

6 5

MobilityInterfaces

Among the main solutions:

• Control for prospection, Letter proposal and contracts.

• Include Development in global planning processes (Simulation,

Budget, PB and RF).

• Automate processes in execution, accounting, compensation and

closing.


SAP ERP-FI, SAP ERP-MM, SAP-RE, SAP ERP-PP

Process

DEVELOPMENT & WOOD

PURCHASE



Optimizations


Reports

18

14

0

Workflows

1 3

MobilityInterfaces

User interface: Mobility for pointing events and interventions.

Cockpit sending / receiving equipment for exterior renovation.

Hierarchies in the equipment records.

Proposed solution: Implement SAP PM module for maintenance

management, availability of machines, costs and supplies.

Among the main proposed solution set:

• Control of Production Breaks (duration and reasons).

• Notes maintenance in Mobile devices (online and offline).

• Preventive Maintenance Control.

• Automation for goods receipts for equipment and fuel

supply.


SAP ERP-PM, SAP ERP-QM


Process of

MAINTENANCE

Requirements by TypeOptimizations


For each process, we evaluated the different reports and KPIs

used.

Part of the analysis work was the identification of the main sources of

information and the definition of un initial grouping of reports and

function indicators for base data.

BOOK MANAGEMENT, REPORTING AND

INDICATORS (AS-IS)

59Forestry / Nursery

14Maintenance

52Harvest

30Planning

TO-BE scenario:

• Workshops reviewed all the needs of the teams. The result

generated an extensive list of requirements. The list will be

reviewed / approved by IT staff in terms of business priority.

• From a technical point of view, we should analyze the

requirements to maximize the generation of basic views and

generate datamarts / views by specific area.

45Comptroller

53Development &Wood Purchase

Reports49%

KPI51%

81Priority 1

S-Flor Simplify Forest - Solution Map

NurseryProduction

demand Workflow

Management &

IndicatorsPlanning

Planning Forest

Registry

SAP Solution – Suzano Forestry

Forestry PlantationPlantation

Planning

Forestry &

Harvest

Technology

packageSimulators

Budget &

Versions

Capacity

Analysis

Own production &

Third Party

Production

(Phases)

Quality control

(seedlings)

Routing &

BOMs

Material

Requirements

Creating

Orders

Execution &

Confirmations

Development and

Wood Purchasing

Development

Planning

Prospecting &

Contract

Development -

Forestry

Development

- HarvestWood Purchase

Supplies Fuel

Inputs -

Forestry &

Nursery

MRO SeedlingsDirect

services

Maintenance

Services

HarvestCreating

Orders

Harvesting

Confirmation

Movement

Confirmation

Forest

Exhaustion

Production

Award

Maintenance Stops RenovationsCorrective

Maintenance

Preventive

Maintenance

Predictive

MaintenanceSupplies

Qu

ali

ty

Pla

nn

ing | M

ea

su

rem

ent | N

otifications

Simplify Forestry – Technical Solution Map

Strategic Planning & Analytics

Shipping & Materials

SAP MM

Operational

Maintenance

SAP PM

Production Planning &

Tactical

SAP PP / BPC

Document management

SAP DMS

Finance & Controlling

SAP FI / CO

Quality

SAP QM

Mobility

SAP SMP

Consolidation & Budget

SAP BPC

Analytics

SAP BO

Data Warehouse

SAP BWoH

Mobile

Legacy

REMSOFT GIS ZENITH* Partial Usage SAP SD / SAP WM

SGF* In Analysis: Deck of Use SAP S&OP

Forestry Assets

Suzano’s investment in R&D over many years allows the Company to expand its forestry assets to the northeast

region of Brazil

2015

Total area (k ha)¹ 1,064

Total planted area (k ha)² 522

Own planted area (k ha)¹ 438

Forest Partnership Program (k ha) 84

Own Preserved Area (k ha)¹ 462

Average Distance in Bahia (km)² 73

Average Distance in São Paulo (km)² 212

Average Distance in Maranhão (km)² 150

Base 6/30/20151 Own and leased areas2 Figures consider own, leased and third-parties areas

2015

Annual planting (k ha) 85

Planted seedlings / day (k) 276

Note: Both own and leased land can suffer variation up to 5% quarter over quarter.

The total amount can differ due to rounding.

8

Nursery in Mucuri

SAP Real Estate FX - Project Overview

Simplification of the forestry process in SAP Real Estate FX;

Aligning the new guidelines Suzano, with the implementation of a SAP system that allows managing the assets

of the company thoroughly, ensuring the reliability and traceability of information;

Centralized data management and generation KPIs enabling the direct management of processes;

Review processes for data cleansing; and

Cost reduction - competitiveness.

Payback 2.16 years

+ 6k real estate properties

+ 14k Production Units

Paulo Mancinelli

Executive IT [email protected]

36

Disclaimer

Certain statements in this presentation may constitute forward-looking

statements. Such statements are subject to known and unknown risks and

uncertainties that could cause the Company’s actual results to differ materially

from those set forth in the forward-looking statements. These risks include

changes in customer demand for the Company’s products, changes in raw material

costs, seasonal fluctuations in customer orders, pricing actions by competitors,

significant changes in the applicable rates of exchange of the Brazilian real against

the US dollar, and general changes in the economic environment in Brazil,

emerging markets or internationally.

2

improving efficiency and controls at suzano · 6/30/2015 · improving efficiency and controls at...

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