Rethinking Supply Chain Management with SAP Business Suite powered by SAP HANA

Rethinking Supply Chain Management with SAP Business Suite powered by SAP HANA Dr. Wolfgang Faisst, SAP AG Head of SAP Suite on HANA Product Management (Outbound) July 3, 2014 Presentation in PPTs available to course participants. - not for distribution -

Agenda 1. SAP HANA 2. SAP Business Suite on HANA 3. Business innovations towards becoming a digital business 4. SAP Supply Chain Management on HANA 5. Summary & outlook 2

1. SAP HANA

Key drivers Technology push, demand pull SAP HANA Background Technology push Demand pull Increased hardware performance (main memory, multi-core, parallel processing) In-memory databases (all data in-memory, column Store, OLAP + OLTP, no aggregates, ) Big data (explosion volume + variety + velocity of data driven by the internet, sensors, ) Internet of things (availability of cheap sensors everywhere) Data science (predictive analytics, data mining, operations research, artificial intelligence, natural language processing) INNO- VATION Consumerization of IT (innovation in IT driven by consumer electronics, social media) Digitalization of business (automation of standard tasks, embedded systems, ) Segment of one (more and more precise targeting of customers) Enterprise analytics 2.0 (work gets more data-driven and analytical, empowerment of front-line workers) Top priority: Business Agility (Real real-time business) Source: SAP 4

SAP HANA Key Innovations In-memory and Parallel Computing Main memory 125.000 faster than disk Parallelization via multi-core processors Duration 10 10 100 ~0... ~0 Process to be parallelized 10 100 10 10 ~0... ~0 10 Duration sequential = 500 Duration parallel = 30 Speedup = 500/30 = 17 Source: SAP 5

SAP HANA Key Innovations Innovation Platform for SAP, Customers and Partners > SAP HANA as innovation platform for real-time applications and real-time analytics Usage as in-memory database for existing applications as well as development platform for next generation applications Real-Time Applications Real-Time Analytics Information Composer & Modeling Studio Application Services (e.g. HTML 5 Server, Search Engine) Text Search Planning and Calculation Engine Predictive Analysis Libraries R & Hadoop Integration Real-time Replication Services SAP HANA Platform In-memory Database Data Services SAP In-Memory Source: SAP 6

2. SAP Business Suite on HANA

SAP Business Suite on SAP HANA has great momentum Market momentum since launch in January 2013 SAP CRM SAP HANA Live more than 1,000 100,000 Users on a single SAP ERP on SAP HANA >7,500 Trained partners for SAP Business Suite on SAP HANA Customers of SAP Business Suite SAP on SAP HANA ERP >100 SAP Business Suite on SAP HANA Live >450 Ongoing projects Innovative 2014 2012 SAP SAP Solutions AG AG. or All an rights and SAP Enhancements affiliate reserved. company. in the All SAP rights Business reserved. Suite powered by SAP HANA 88

Suite on HANA - Key innovations & capabilities OLTP and OLAP together Traditional: OLTP & OLAP Separate Application 101010010101 001001010011 0101101101110 100100010011 101010010101 001001010011 0101101101110 100100010011 SAP Business Suite powered by SAP HANA >48+hr Old Data OLTP ETL OLAP OLTP + OLAP in SAP HANA Replication Replication Aggregate Replication HANA Live (Operational Reporting embedded in Suite on HANA) Multiple Data Sources Multiple Data Sources 10:00 AM 10:00 AM >48 Hours Decisions and Actions on Old Data 10:00:00 AM 10:00:00 AM Immediate Instant Insight to Action on Live Data 9

Suite on HANA - Key innovations & capabilities Consumerization of IT: Smart business cockpits Source: SAP 10

Suite on HANA - Key innovations & capabilities Fiori: Device responsive design based on HTML5 frontend Purchase order approval Source: SAP 11

3. Business innovations Towards becoming a DIGITAL BUSINESS

Innovation Adoption Model SAP Business Suite on HANA Maturity Level Business Impact Characteristics Processes Biz Model Digital Business EXAMPLES 5 NEW BUSINESS MODELS Business Innovation New customers New markets new new New BUSINESS MODELS with Suite on HANA: Predictive Maintenance instead of maintenance on customer request (Product Service!) 4 Better PRODUCTS Optimize products Offer new products or services new old Better PRODUCTS with Suite on HANA: Usage-based Car Insurance Location-based services (e. g., shoprecommendations in the vicinity) 3 Better PROCESSES Improve single processes Replace single processes Change end to end processes new Better PROCESSES with Suite on HANA: Flexible and quick MRP run Faster financial closing 2 Better DECISIONS Transparency Decision support Decision automation old Better DECISIONS with Suite on HANA: Customer 360 view (incl. external data!) E. g., instantly decide on a bank credit request 1 Source: SAP Better SPEED DB Exchange Better SPEED with HANA: BW on HANA & HANA Live (>1000 times faster reporting!) CO-PA Accelerator 13

1 Better SPEED: Performance improvement up to 320x Suite on HANA Example ElectricalGoodsCo ANONYMIZED CUSTOMER CASE > Significant performance improvement up to 320x was achieved in Materials Management, Finance & Controlling, Sales & Distribution and Production Planning processes. With improvements in DSO & Receivables Management, Profitability Management, Financial Close and Cash Flow & Liquidity Management, annual re-occurring business benefits in the financial domain are estimated at USD 251k per year ElectricalGoodsCo. expects overall net margin to improve up to 0.4% which accounts for a profit increase of USD 7,7M. Other productivity benefits are estimated at USD 200k per year. Source: SAP 14

2 Better DECISIONS: Leverage of Prediction & Optimization Suite on HANA Customer Examples 15

2 Better DECISIONS: Channel utilization optimization Suite on HANA Customer Examples HSE24, as live sales channels, is very dependent on time. What we ve seen is that we can get a complete picture of the customer in seconds - including data coming from new sources like social media. We can now have more detailed analysis of our sales in real-time, and deliver personalized offerings to the customer while he is calling for new cross and up-sell opportunities. We want to continue to grow our sales in new countries. Having one real-time platform will be a key success driver for us to conquer the markets in the future. Norbert Paulus, EVP Broadcast & IT, HSE24 Orders Source: SAP Time Comment: Key goal of HSE is to maximize utilization of the TV channel (only one product to be shown in parallel) Order entry analyzed in real-time in CRM on HANA system New product introduced on TV channel when turning point of order entry is reached 16

2 Better DECISIONS: Faster product availability Amazon example possible also with Suite on HANA MARKET BENCHMARK Example: Amazon filed a patent to start delivery before the actual order! The Goal: Minimized Delivery Times! Source: http://www.zdnet.de/wp-content/uploads/2014/01/amazon-antizipatorischer-paketversand.png 17

3 Better PROCESSES: MRP Planning for Manufacturing within ERP- Traditional Process MRP Controller Major Business Issues Outdated demand situation on components as changes are not propagated near-time Evaluation of snap-shot planning situation, not real-time situation Display / Change Production Order Execute MRP Planning Run!! Long (and therefore rarely) running MRP run Evaluate MRP Lists (snapshot) Evaluate Stock / Requirements List Limited, static analysis capabilities (e.g., shortages). No simulation or decision support. Evaluate Stock Requirements List Display / Change Planned Order Display / Change Purchase Requisition! Manual changes in individual transactions w/o supply demand context 18

3 Better PROCESSES: MRP Planning for Manufacturing within ERP- Traditional Process MRP Controller Major Business Issues Outdated demand situation on components as changes are not propagated near-time Evaluation of snap-shot planning situation, not real-time situation Display / Change Production Order Execute MRP Planning Run!! Long (and therefore rarely) running MRP run Evaluate MRP Lists (snapshot) Evaluate Stock / Requirements List Limited, static analysis capabilities (e.g., shortages). No simulation or decision support. Evaluate Stock Requirements List Display / Change Planned Order Display / Change Purchase Requisition! Manual changes in individual transactions w/o supply demand context 19

3 Better PROCESSES: MRP Planning for Manufacturing within ERP - Re-engineered HANA-based process MRP Controller Major Business Benefits Instant detection of critical situations in the material flow based on real time data Decision support by evaluating and simulating various solution proposals Instant execution of resolution options MRP Cockpit Execute MRP Planning Run Factor 10+ faster 1) Evaluate Supply & Demand situation based on real-time data 2) Monitor KPIs and alerts 3) Identify most urgent issues 4) Choose and execute from a set of preevaluated solution proposals Management by Exception (KPI Alerts) Decision Support & Simulation Demo Video Insight to Action 20

4 New PRODUCTS: Digitalization of products Customer Example # Industry Digitalization of product Description 1 Automotive Connected Car Electronic devices in the car Infotainment system as hub Access to internet 2 Insurance Usage-based insurance Sensor in e.g. in car or building for tailored insurance 2 Machines Machine-to-machine Internet of things Sensors in the machines Internet enablement of machine steering 3 Retail Smart vending machines Internet enablement of vending machines 4 Utilities Smart metering Consumption data to be transmitted via internet Usage analysis (leverage for market research) Individualization (segment of one) Provisioning of value-add services (ordered via touch screen) Remote maintenance Product-to-product connectivity 21

4 Better PRODUCTS: Usage-based Insurance Suite on HANA Customer Examples Telematics USAGE-BASED INSURANCE INSTALL Installation of OBD or Hardwired device Fair Premium calculation for Policy Holder Customer driving behaviour uploaded via wireless transmission DATA DATA Live data collected on Baseline s server and sent to Insurance company Data accessed from any device Comment Usage-based insurance (UBI) now available also from SAP in joint venture with Baseline Telematics Baseline implemented the first Pay How You Drive insurance program in Canada (www.mobiliz.ca) First solution led to the installation of nearly 250,000 tracking devices to find stolen vehicles totally $200 million in saved theft claims in 10 years Provided first certified 100% SaaS / PaaS based UBI Baseline s UBI connected to SAP Insurance Industry Solution Baseline s organization consists of actuarial services to assist clients in analysis & configuration of UBI rating Source: Baseline Telematics 22

4 Better PRODUCTS: Enhanced transportation visibility Customer Example - DHL MARKET BENCHMARK Source: SGAICO Forum: Recent Trends in Artificial Intelligence and Cognitive Science Zürich, May 2013 23

4 Better PRODUCTS: Enhanced transportation visibility Customer Example - DHL MARKET BENCHMARK Source: SGAICO Forum: Recent Trends in Artificial Intelligence and Cognitive Science Zürich, May 2013 24

4 Better PRODUCTS: TelcoCo. targeting the segment of one leveraging Big Data ANONYMIZED CUSTOMER CONCEPT Market Research (e. g., Nielsen, GFK) Customer Portal & E-Commerce (e. g., clickstream, requests, orders) ERP (e. g., customer data, transactions) Social Media (e. g., Facebook, LinkedIn, discussion forums, blogs) 360 Customer View CRM (e. g., customer service, requests, complaints, inquiries, emails, talk recordings) Text and voice information External Websites (e. g., partner shops) Device data (e. g., location history, usage history, call profiles) Billing Systems (e.g., invoices, call-bycall, payment history) Customer internal sources In focus with Big Data Source: SAP External sources 25

4 Better PRODUCTS: Segment of one requirements for supply chain Use customer requests for optimal planning and individual production! 1 Demand Forecasting 2 Purchasing 3 Reqs. Planning 4 Prod. Planning 5 Inv. Mgmt 6 Distr. Planning 7 Order Process. 8 Transpor tation 9 Customer Service Source: http://sloanreview.mit.edu/article/cracking-the-code-of-mass-customization/ 26

5 New BUSINESS MODELS: Predictive maintenance Suite on HANA Customer Examples Approach Compressor operating status can be automatically reported automatically via machine-to-machine. Interface. Data can be automatically compared with statistical models in real-time to predict potential problems and avoid them by taking the right action Energy consumption can also be monitored and analyzed continuously, so that users can optimize a system s energy efficiency at all times. Maintenance service (field service visits, spare parts logistics) can be better planed leveraging optimization algorithms Benefits for Customers Source: Kaeser Predictive maintenance can minimize costly unplanned outages and cut repair and maintenance costs through improved planning. These new processes have a direct, real impact on customers operations as they maximize system uptime, minimize maintenance and repair costs and continuously improve energy efficiency. Benefits for Kaeser Reduces operating costs and increases the availability of a compressed air station Move from selling machinery to selling an service level to the customer Value Drivers Innovative 2013 2012 SAP SAP AG. Solutions AG. All rights All rights and reserved. Enhancements reserved. in the SAP Business Suite powered by SAP HANA 27 27

3 NEW BUSINESS MODELS: Smart logistics for ports Transportation visibility and management 28

4. SAP Supply Chain Management on HANA

Volatile Markets & Growing Logistics Complexity Constant Challenges for Supply Chain Professionals Highest Customer Service Levels vs. Lowest Inventory Levels Sustainable Growth Minimize Demand Uncertainty vs. Maximize Customer Satisfaction Minimize Transportation Cost vs. Maximize On-Time Delivery Highest Quality of Products vs. Lowest Cost of Production 30

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 31

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 32

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Sales & Operations Planning powered by HANA Plan using a unified model of demand, supply chain, and financial data to analyze in real time at any level of granularity or dimension Rapid simulation and comparison of scenarios on a complete, detailed S&OP model Collaborate with an embedded, context-aware social platform to accelerate planning and decision making across the company 33

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 34

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Real-Time Inventory Management powered by HANA Real-time access to complex inventory management data High-performance inventory management with large volumes of documents New analytical inventory management cockpit enables real-time stock insight and inventory monitoring Higher process efficiency in adjacent procurement processes Recommendation of best resolution. Insight-to-action capability. Selected resolution can automatically be triggered with a single mouse-click 35

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 36

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Demand Signal Management powered by HANA Accurately manage demand, align consumer, promotional and forecast data Track demand for new product launches in detail at the point of purchase Incorporate market and competitive intelligence syndicated panel data Utilize social sentiments and web data to get a more holistic picture of demand Enable real-time visibility to avoid out-ofstock/out-of-shelf situations to increase revenue Integrate detailed demand signals into planning, fulfillment, execution 37

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 38

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring APO powered by HANA Making Supply Chain Planning faster and more responsive Increase speed of information analysis, simulations in areas of forecasting and supply network planning Accelerate reporting and processing on large volumes of supply chain planning data Pre-defined dashboards for different use cases (analytical workflows) for SAP APO based planning scenarios Faster and more responsive interactive and batch planning 39

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring MRP powered by HANA High-Speed Material Planning enabling end to end supply chain visibility and control Faster re-planning allowing more frequent MRP runs in shorter cycles Simulation of different what if scenarios in real-time Better synchronize demand and supply for global cross-plant planning (and reduction of Bullwhip-effect ) 40

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 41

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Service Parts Planning powered by HANA Leverage HANA as the database to perform service parts planning Optimize industry best practices that helps streamline planning processes and achieve transparency Synchronize parts planning with warehousing and fulfillment processes in real time Advanced parts forecasting and inventory planning Further future scalability and acceleration 42

SAP Supply Chain Management Solutions Supply Chain Monitoring Supply Chain GPS Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Sales & Operations Planning Demand Management Transportation Management Inventory & Service Level Optimization Collaborative Response Management Warehouse Management Supply Chain Scenario Planning Manufacturing & Supply Planning Track & Trace Service Supply Chain Service Parts Management 43

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Supply Chain Info Center powered by HANA Decision support based on near real time information (e.g. forecast accuracy, stock coverage, supply projection) Highly attractive UIs for operational reporting on APO data Increased performance for APO analytics by order of magnitudes Virtual Data Model that allows customers to develop reports and analytical applications 44

Sales & Operations Business Planning Demand Driven Supply Chain Logistics & Order Fulfillment Service Supply Chain Supply Chain Monitoring Supply Chain Performance Management Perform complex cause and effect analysis and build scenarios and simulations See how decisions cascaded down organization boundaries with performance monitoring and historical analysis 45

5. Summary & outlook

Only SAP Delivers a Real-time Supply Chain, Anytime, Anywhere Real-Time Collaboration Real-Time Responsivenes s Real-Time Distribution Real-Time Operations Real-Time Monitoring Reduce planning cycles Build and adjust profitable business plans across departments and companies Leverage real-time information to increase visibility and sustainability of the supply network Zero latency access to demand for all products in all markets Powered by SAP HANA Drive real time replenishment and order promising based on customer, product and supplier priorities Get closer to the customer and have improved visibility of inventory position across the network Leverage logistics to offer value added services Fast demand and supply planning processes Pan and re-plan based on short term changes to supply & demand Profitably plan based on distribution and manufacturing costs Improve visibility across the supply network Make informed decisions based on real time supply and demand dynamics 47

E2E transparency is more important than intra-company optimizations Transparency across the supply chain is key for OEMs! Vendors 3 rd -Party Warehouse(s) Manufacturer (OEM) OEM Warehouse Dealers Customers Logistics Providers Source: Suite on HANA Product Management (Outbound) 48

Thank you! Contact information: Dr. Wolfgang Faisst SAP AG Dietmar-Hopp-Allee 16 D-69190 Walldorf Tel. 06227-7-40042 wolfgang.faisst@sap.com