Solution in Detail Chemicals Executive Summary Contact Us Integrated Sales and Operations Business Planning for Chemicals
Navigating Business Volatility Navigating Volatility Anticipating Change Optimizing Performance Today, companies are facing increased supply chain risk due to economic uncertainty, fluctuating raw material and feedstock prices, demand volatility, and supply variability. To remain competitive, they must improve their ability to plan, analyze, and collaborate to help ensure long-term growth and profitability. 19% Higher sales when organizations facilitate the sales process by collaborating, communicating, and managing opportunity details Source: SAP Performance Benchmarking As the pace of global change accelerates, companies are addressing new and more complex challenges in their supply networks. Product lifecycles are shorter, supply lead times are less predictable, and customers are demanding increased product availability at lower cost. In addition, organizations are experiencing an amplification of business cycles with higher highs and lower lows. These challenges can be devastating to a company that is unequipped to deal with them resulting in lost market share, eroding profits, and declining shareholder value. As a result, companies must adapt their mid- to long-term planning processes to better anticipate and understand the potential impact of change. In many companies, this adaptation requires significant process change and cultural change along with the adoption of software solutions to support these changes. These solutions must address needs across the enterprise to avoid the use of siloed processes or outdated technologies. 2 / 19
Anticipating Change and Managing Risk Navigating Volatility Anticipating Change Optimizing Performance Best-run companies don t just manage risk they anticipate change and prepare for what s on the horizon. They also turn change into advantage by introducing new products, entering new markets, capturing new customers, and outpacing their competition while maintaining a high level of customer service and profitability. Best-Run Supply Chain To effectively anticipate change and manage risk, best-run companies must have the right tools and insight to make collaborative decisions. They need access to relevant data from a multitude of sources. This includes structured data, such as demand, supply, finance, and product information. It also includes unstructured data, such as market intelligence and raw material price indexes. They also need tools that enable extensive data analysis in any combination and any level of granularity. These tools should provide flexible modeling and decision-support capabilities to enable simulation planning, manage trade-offs, and make the best decisions for your business. Finally, these companies must establish a cross-functional collaborative process. This process links all stakeholders formally and informally and defines how decisions are made. SAP solutions help companies achieve this level of access and insight by integrating sales and operations planning with core operational processes and solutions. This level of integration supports financial, product, sales, and supply chain planning. 3 / 19
Optimizing Business Performance Navigating Volatility Anticipating Change Optimizing Performance Integrated sales and operations business planning helps companies gather data and perform analysis to anticipate change and make necessary adjustments for managing risks and capitalizing on opportunities. It enables collaborative decision making across the enterprise to efficiently and effectively drive sales, increase profitability, and improve customer service. Profitably balance demand and supply Help ensure product compliance to mitigate risks 54% Fewer errors in sales quotes, where organizations leverage analytics to gain actionable insights from sales outcomes Source: SAP Performance Benchmarking Significantly reduce inventory and working capital Optimize service levels, while helping to ensure profitability Make decisions that increase revenue growth, reduce supply chain costs, and improve customer service 4 / 19
Navigating Volatility Anticipating Change Optimizing Performance Sales and operations business planning solutions from SAP use the latest technologies to enable a near-real-time view of the most relevant supply chain planning data. Low-cost, low-risk, yet highly scalable applications empower planners company-wide. Mobile applications can keep users connected anywhere, anytime. SAP database and technology solutions, including those powered by the SAP HANA platform, provide visibility across demand, supply, customer orders, manufacturing constraints, and other activities at the appropriate level of granularity. Near-real-time technology allows sales and operations teams to make informed decisions during planning meetings. Analytics solutions give insight to determine how well a company is performing. For example, planners can analyze historical sales to develop statistical forecasts and then run capacitated simulations with various scenarios to mitigate risks. Mobile solutions provide access to sales and operations planning tasks, actions, and data through mobile devices, such as smartphones and tablets. Collaboration can provide internal and external partners with the ability to track specific tasks, provide input, and get updates on any progress. In an ever-expanding supply chain, coordination is critical and collaboration enables it. 5 / 19
Integrated Business Planning Sales and Operations Inventory and Service Business Planning Why SAP? Sales and Operations Planning Perform consensus planning, and match demand with supply. Align sales and operations with financial targets in an intuitive, collaborative environment. Inventory and Service-Level Optimization Determine optimal inventory amounts at each tier within the supply chain. Incorporate inventory management into planning processes to make better decisions 6 / 19
Integrated Sales and Operations Business Planning Sales and Operations Sales and Operations Planning Inventory and Service-Level Optimization Inventory and Service Business Planning Why SAP? Business Planning Sales and Marketing Supply Chain Demand Review Demand and Supply Alignment Service- Level Optimization Demand Intelligence Inventory Optimization Manufacturing Supply Review Management Review and Analysis Supply Intelligence Procurement Make the necessary adjustments to benefit from changing supply and demand and improve sales, profitability, and customer service. Finance Cross- Department Finance Update Supply Chain Monitoring 7 / 19
Sales and Operations Planning Sales and Operations Capabilities Benefits Integrated sales and operations planning is a highly effective, collaborative business process that facilitates the management of your global business. When everyone involved in the sales and operations process can share information and work from one consolidated plan instead of a series of individual plans they can drive the business in the same direction. In best-run companies, effective sales and operations planning processes span beyond sales projections and production capabilities factoring in financial goals, marketing efforts, and inventory targets. This level of collaboration calls for the use of all structured and unstructured data from all business areas. Manipulating this data requires tools that enable fast and insightful analysis in any combination and provide granularity with flexible modeling and decision support. To make the right decisions, a cross-functional, collaborative process helps define decision making by linking together all stakeholders, both formally and informally. With the SAP Sales and Operations Planning application, companies can combine demand, supply, and financial plans into an integrated environment to establish a single plan for driving business operations. 8 / 19
Transforming Planning into a Strategic Process Sales and Operations Capabilities Benefits By integrating people, processes, and systems in a cross-functional manner, best-run companies are able to plan activities around customer needs, better balance demand and supply, and enhance performance. Working together in this way can help increase revenue, grow market share, and enhance profitability. The demand review process leverages multiple sources of data from sales, marketing, products, and supply chain to help companies develop a unified demand plan that meets volume, revenue, and margin goals over the tactical planning horizon. The supply review process incorporates data from manufacturing, procurement, and supply chain to provide a complete view of planned inventory production for finished goods, intermediates, and raw materials supporting the consensus demand plan. Demand and supply alignment is the most critical part of the sales and operations planning process bringing together demand and supply plans to develop a single, unified, tactical plan for meeting strategic objectives. The management review and analysis process helps ensure that operations are aligned with business objectives. It facilitates the plan approval and release, so that the next sales and operations planning cycle can begin. 9 / 19
Sales and Operations Capabilities Benefits Improving Performance and Profitability Across the Enterprise Bringing together people, data, and analytics in an integrated planning environment allows companies to plan for business success. Companies can see the whole picture to devise a plan that can help improve performance and profitability at every level of the enterprise. Sales and operations planning is a collaborative business process that aligns company operations with business strategy. Using data from many sources helps companies identify opportunities for improvement and navigate change. The result is typically increased revenue, market share, and profitability. SAP software helps to support these benefits by integrating sales, finance, products, and operations for a complete and comprehensive process, enabling companies to: Find ways to reduce supply chain costs Improve the speed, agility, and accuracy of planning Identify improvements to increase revenue and market share Optimize product and customer profitability Manage inventory levels to reduce costs Avoid material and capacity shortages by making better use of resources Balance demand and supply as markets change 10 / 19
Innovations for Sales and Operations Planning Sales and Operations Capabilities Benefits 40% Greater ability to utilize Big Data to gain insights with well-established analytics and data modeling Source: SAP Performance Benchmarking Instead of reacting to unexpected fluctuations in demand and supply, the most effective companies are able to anticipate change and collaborate to form effective strategies that enable growth and profitability. SAP software can help companies capture and use the data needed to make better, faster decisions that enable these strategies. SAP Sales and Operations Planning powered by the SAP HANA platform makes extensive use of innovative technologies in the following areas. Big Data The SAP HANA platform enables real-time planning and analysis at any level of granularity and dimension with a unified model of demand, supply chain, and financial data. Social Networking Embedded, context-aware social collaboration enables rapid planning and decision making. Cloud Computing The SAP HANA Cloud Platform provides ease of delivery, consumption, and interaction at a new order of simplicity. Mobile Users can access SAP Sales and Operations Planning via mobile devices, such as smartphones and tablets. Integration SAP Data Services software enables integration across the enterprise. 11 / 19
Inventory and Service-Level Optimization Inventory and Service Capabilities Benefits 6% Lower inventory carrying costs in organizations that constantly reconcile book inventory and stock on hand Source: SAP Performance Benchmarking Best-run companies must determine the best place to store inventory and the right quantity for planning in a multilevel supply chain, while maintaining the right service levels to meet profitability goals. By providing a complete view of the supply chain, the SAP Enterprise Inventory and Service-Level Optimization application helps companies achieve the best balance. Companies around the world are facing issues caused by volatile markets and growing logistics complexity. Winning in this environment calls for excellent understanding of demand and a very efficient supply network. This requires continuous work on sales and operation plans, which consider revenue and profitability right away. The core and central goal of the sales and operations plan is to help ensure the highest level of customer satisfaction and the lowest inventory levels. Having the right inventory, at the right place in the network and the right time, is critical. SAP Enterprise Inventory and Service-Level Optimization enables companies to balance working capital and customer service through a complete view of all supply chain items at all stages and for all planning periods. The application enables companies to accurately capture variability and proactively hedge against complex network risks. 12 / 19
Optimizing Working Capital and Customer Service Inventory and Service Capabilities Benefits 10% Lower inventory obsolescence cost for organizations that trigger distribution planning at approval of demand plan Source: SAP Performance Benchmarking SAP Enterprise Inventory and Service-Level Optimization enables supply chain organizations to determine optimal inventory targets for every item at all locations throughout the supply chain. Service-level determination software provides the insight needed to optimize service levels based on profitability. The solution takes a global service-level target and breaks it down to granular item, location, and service-level targets. Demand intelligence software enables precise measurement of forecast errors to help ensure that safety stocks are correctly set to lower inventory costs and avoid lost sales. This detailed view helps ensure forecast accuracy to avoid misleading representations of the forecast error. Supply intelligence software helps capture various forms of variability to determine safetystock targets that reflect the full complexity of supply chains. The software helps organizations calculate mean lead time, lead time variability, and mean production schedule attainment and variability based on purchase and production orders. Inventory optimization software helps companies determine optimal quantity of safety stock to drive supply planning, maximize customer service levels at the lowest possible cost, and minimize working capital investment. 13 / 19
Inventory and Service Capabilities Benefits Optimizing Inventory and Service Levels to Free Working Capital and Minimize Lost Sales With SAP Enterprise Inventory and Service-Level Optimization, companies can use predictive analytics to better manage global distribution networks and vast, multistage supply chains. Determining optimal inventory and service levels throughout the supply chain helps free up working capital and minimize lost sales. SAP Enterprise Inventory and Service-Level Optimization helps companies achieve continuous insight into the drivers of supply chain performance. The application also facilitates process improvement initiatives up and down the supply chain. SAP Enterprise Inventory and Service-Level Optimization improves the synchronization of inventory planning for all finished products, intermediates, and raw materials over time dynamically linking inventory Investment with customer service goals. As a result, companies can: Improve customer-service levels and obtain higher sales Reduce inventory and increase working capital with better insight into the demand and supply network Improve planner productivity and accuracy by assessing forecast-error accuracy to maintain more precise inventory levels Reduce production and distribution costs, shorten lead times, and improve insight into variability to establish accurate safety-stock targets 14 / 19
Innovations for Inventory and Service-Level Optimization Inventory and Service Capabilities Benefits 31% Lower revenue loss from stock-outs when safety stock violations trigger workflow messages with an automated escalation process Source: SAP Performance Benchmarking Leverage the latest advances in Big Data, predictive analytics, mobile technology, and cloud computing. These breakthrough technologies make use of refined algorithms that provide critical supply chain visibility to help set optimal inventory levels while balancing both working capital investment and desired customer service levels. Analytics SAP Enterprise Inventory and Service-Level Optimization accelerates inventory optimization decisions by enabling the fast analysis of large volumes of granular data. Algorithms Highly specialized, advanced, and stochastic algorithms solve complex optimizations for large supply chain networks. Supply Chain Models A robust, cross-industry supply chain model can incorporate several hundred parameters and represent industry-specific supply chain scenarios, such as storage and production capacity constraints, shelf life, and merchandising stock. Mobile Supply chain analytics accessible from mobile devices enable use of dashboards for inventory performance; demand analytics; supply analytics; and fix-the-mix, cost curve, and scenario analysis. 15 / 19
Sales and Operations Business Planning Value Map Sales and Operations Inventory and Service Sales and Operations Planning Demand Review Supply Review Demand and Supply Alignment Management Review and Analysis Business Planning Why SAP? Inventory and Service-Level Optimization Service-Level Determination Demand Intelligence for Inventory Supply Intelligence for Inventory Inventory Optimization SAP solutions address key requirements for combining planning, logistics, and order fulfillment in real time. 16 / 19
Why SAP? Sales and Operations Inventory and Service Business Planning Why SAP? SAP solutions enable companies to describe supply-chain performance, predict future outcomes, and prescribe the best action to meet strategic goals. They enable quick access to information improving visibility and decision making while propelling organizations down the path to success. Sales and Operations Planning SAP Sales and Operations Planning supports an end-to-end process that drives profitable alignment of demand and supply. A robust, unified data model supports dynamic simulation and scenario analysis to achieve this alignment. The result is a simultaneous increase in revenue growth, a reduction in supply chain costs, and higher levels of customer service. This solution is deployable on demand for low-cost implementation and accelerated time to value. Inventory and Service-Level Optimization SAP Enterprise Inventory and Service-Level Optimization helps companies balance service levels and inventory investment at every stocking location throughout the supply chain. It enables the analysis and modeling of data to identify changes in demand, supply, and network alignment. This insight allows companies to make decisions, determine optimal inventory levels, free working capital, and improve customer service. 17 / 19
Find Out More About How Your Organization Can Become Best-Run Benchmark Your Performance Position your organization for dominance in this new economy with the business performance benchmarking program from SAP available free to SAP customers and select prospects. The SAP benchmarking program has helped more than 3,000 organizations assess their strengths, uncover areas for improvement, and identify best practices and IT strategies that generate clear, tangible value not someday, but today. Go Live in Weeks Here s the fastest way to run your business better: our rapid-deployment solutions. In one package, you get everything you need to be up and running quickly including preconfigured software and implementation services in just weeks. With a defined scope and predictable costs, there are no surprises. Join Your Community of Practices Visit valuemanagement.sap.com >> Visit sap.com/solutions/rds >> Every day, SAP Community Network (SCN) changes the way that thousands of SAP users work. It lets members help one another solve problems, learn, and invent new ways to get things done faster. Find out how to connect with people, content, and resources. Visit scn.sap.com >> 18 / 19
Solution in Detail Chemicals Executive Summary Contact Us CMP 27549 (13/08) Visit us online at: www.sap.com/industries/chemicals/index.epx Visit our community pages to find out more at: http://scn.sap.com/community/chemicals http://scn.sap.com/community/scm https://twitter.com/sap4chemicals www.facebook.com/sapforchemicals
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. National product specifications may vary. These materials are provided by SAP AG and its affiliated companies ( SAP Group ) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty. SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices.