Digital Business Planning Strategy —

The Key to Engineering Your Future

Martin Barkman
SAP

© 2017 SAP SE or an SAP affiliate company. All rights reserved.

Digital Business Planning Solution Strategy
Your key to engineering your future

This session examines SAP’s current solution offerings and planned

investments that support digital business planning, including insight
into how leading organizations have transformed their supply chains
with SAP Integrated Business Planning. In this session, you will review
SAP’s overall solution strategy and draw valuable lessons from case
studies that enable companies to:

• Simplify and coordinate supply chain planning with a new, intuitive

user interface and embedded collaboration platform

• Enable more frequent planning cycles by avoiding any latency due

to data transfer between different planning systems

• Ensure plans are executed in operational systems by incorporating

predictive analytics algorithms in combination with SAP optimization
tools

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 1

Agenda

Digital Business Planning Solution Strategy

• Sales, Inventory, and Operations Planning

• Demand Management
• Demand Insights

Demonstration

Wrap-Up

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 2

Market Trends and Factors accelerating business transformation to
a Digital Supply Chain
Distributed Manufacturing

Customer Engagement Networked Economy

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 3

Combine Business Transactions with Intelligent Systems

Digital
Machine
Product
Learning
Innovation
Digital
Digital
Response
Business Analytics Big Data
and Supply
Planning
Management

Business Business Intelligent

Transactions System Systems

Digital Digital Data Internet of

Manufacturing Operations Intelligence Things

Digital
Blockchain
Logistics

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 4

Digital Business Planning powered by SAP Leonardo

Digital
Business Transform your supply chain into
Planning demand network with demand-driven
Sales,
Inventory and Demand business planning
Operations Insights
Planning Sales, Inventory and Operations Planning

Analytics
Demand
Blockchain
• Align strategic, financial, commercial, and
Management
operational goals

Machine Internet of
Demand Management
Learning Things • Manage and analyze demand streams to feed
operational planning
Big Data Demand Insights
• Empower supply chain, sales, and marketing with
real-time demand network visibility

• Leonardo IoT Bridge

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 5

Business Priority Summary
Digital Supply Chain
Digital Business Planning
How can SAP® solutions enable you to change the game?

SAP solutions help companies transform supply chains into demand networks, where demand information is
captured through signals from various sources including Internet of Things and fulfilled through the
orchestration of a complex network of internal and external partners.

What do SAP solutions help customers do? Key facts

Sales, inventory, and operations planning
Combine planning with
strategic, financial, sales, and
operational goals.
Demand management
-5% Days in inventory
Develop short-, mid-, and
When performing safety
long-term views of expected
stock planning for SKUs
demand.
and locations*

Demand Insights
+6.9% Order fill rate
Capture, interpret, and quickly When systems and
act on real-time demand signals operations are tightly
and sensor data in a fast and integrated*
profitable way.

What are the benefits?

SAP solutions transform supply chains into demand networks by enabling:
• Simplified and coordinated planning experiences for users across functions
• Quicker reactions to changes in demand to capture more sales
• Extended visibility to the point of consumption via Internet of Things
• More frequent planning cycles
• Plans that are executed in operational systems
• Reduced complexity and time to achieve business value
*SAP Performance Benchmarking
Internal
Solution Summary
Digital Supply Chain Sales, Inventory, and Operations Planning
How can SAP® solutions enable you to change the game?
SAP provides integrated sales, inventory, and operations planning solutions to help companies manage uncertainty and capitalize on
opportunities. These solutions enable collaborative decision making across the enterprise to effectively drive sales, increase profitability,
and improve customer service.
What do SAP solutions help customers do? Key facts
Product review Demand review
Understand the impact of
product launch plans on
Build a consensus demand plan
with sales, marketing and supply
1%–2%
Revenue growth
demand and supply chain
Supply review Demand, supply, and finance alignment With integrated sales and
operations planning*
Analyze supply and capacity Profitably balance demand supply
through integrated data through rapid simulations and
model.
Management review and analysis
analysis
Service-level determination
5%–10%
Inventory turns
Identify and close operational Improve service levels by
By setting relevant targets
and financial gaps in plan maximizing inventory
for higher turns and
efficiency
improved service*
Inventory optimization
Balance the supply chain with
optimal inventory targets

What are the benefits?

SAP solutions enable proactive supply-chain planning information through:
• Greater speed, agility, and accuracy of planning and increased inventory efficiency
to reduce costs
• Improved balance between demand and supply as markets change

*SAP Performance Benchmarking Internal

Effective orchestration of sales and operations
planning process with SAP IBP

Company or Organization Business challenges

Celulosa Arauco y Constitución  Disparate systems and poor data quality lead to significant manual effort (data capture,
validation, cleansing and reconciliation) within a limited time window
Increased
Headquarters Acceptance, trust and
Santiago, CL  Current solutions do not allow to support business growth opportunities
compliance across all
 Lack of easy and instantaneous access to business data
organizational units
Employees  No possibility of executing and evaluating What-If scenarios
40,000  Long planning cycle leaving very little time for Business analysis and strategic planning.

Revenue
US$ 5 billion
Implementation Decreased
• Phase 1: Pilot in Excel and processes definition Data consolidation time
Industry • Phase 2: S&OP Implementation for Forecasting Process (actual) from 7 to 2 days
Mill products (forestry) • Phase 3: Extension to other geographies (future) and include forecast models
• Phase 4 Evolution of SCM process, e.g., data integration
Products and Services
Wood pulp, Panels, Lumber
Key benefits Faster
Website  Give sales and forecasting team additional time for analysis and what-if scenarios by Forecasting process,
Arauco.cl reducing manual efforts significantly from 6 to 3 hours
 Improved data consistency by a consolidated and standardized process, leading to more
Partner trust and reliable input from Sales
SAP Consulting  Better data quality and less rework caused by erroneous data
 Smooth transition due to familiar user experience (Excel)

“SAP’s S&OP solution helped us to improve our data quality and shorten
our planning cycle considerably, leaving us more time for Analysis and
Scenarios.”
Diego de la Maza, Supply Chain Director, Arauco

© 2017 SAP SE or an SAP affiliate company. All rights reserved. CMP29938 (14/02) 8
Solution Summary
Digital Supply Chain

Demand Management
How can SAP® solutions enable you to change the game?

With SAP solutions, supply chain professionals across demand management functions are empowered with the latest technology.
The solutions enable fast response, real-time demand visibility, anywhere access, and low cost and scalable deployment options.

What do SAP solutions help customers do? Key facts

Promotion planning and optimization Demand planning

-12% Days of
inventory
Optimize the success of your Consolidate internal and
promotions with SAP software for external demand streams with When forecasts are
promotion planning and statistical forecasting dynamic and updated
optimization frequently*
Forecasting and multilevel replenishment Service parts planning
Outbound
Enables retailers to accurately
forecast customer demand and
Plan for massive numbers of
service parts
-35% expediting
integrate this key information into When forecasts are
all levels of the supply chain dynamic and
updated frequently*

What are the benefits?

SAP solutions help supply chains react quickly to changes through:
• More accurate and optimized demand plans based on the consolidation of multiple
demand streams
• Improved dynamic forecasting with powerful statistical methods and predictive
analytics tools
• Lower inventory by using more accurate demand plans
• Streamlined service part plans, which improve service levels for critical components

*SAP Performance Benchmarking

Internal
SAP Customer Use Case: Consumer Products Company

Demand Sensing Inventory Optimization

+10% -15 to 20%

Forecast Accuracy Inventory Inventory
reduction

+
S S S S S S

while
maintaining
• Powerful algorithms C C C C C C

high service
• Pattern recognition • Multi-stage & level
• Predictive forecasting inventory optimization
levels

One Data Model Real-Time Data Visibility

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 10

Ford of Europe: Successfully Managing Dealer
Inventory with SAP® Service Parts Planning
Objectives
Company
Ford of Europe GmbH  Improve customer service through improved parts availability
 Reduce inventory value and parts ordering workload for dealers
Headquarters
Cologne, Germany
 Increase dealer loyalty, parts penetration, and leveling of order flow into distribution centers
 Manage a complex, diverse, and high-volume dealer network
21%
Reduction in total inventory for
Industry pilot dealers after 12 months
Automotive
Why SAP
 Ford resources for and expertise with SAP® software, helping extend the proven SAP Service
Products and Services
Automotive manufacturing
Parts Planning application for OEM-managed inventory
 Ability to establish optimal inventory profiles for dealers and automatically determine replenishment 94%
Fulfillment service level,
orders for dealer approval
Employees  One central solution for complex supersession, tailored reorder point planning, sporadic parts an increase of six points
50,000 requirements, and obsolescence
Revenue
€25 billion
Benefits
 Increased profits for dealers and Ford by improving dealer fill to customers, focusing parts
<0.4%
Forecast returns value for
Website management on sell-out activities, and reducing Ford and dealer inventories dealer purchases
www.ford.com  Established an integrated, extended supply chain platform that connects more than 170 dealer
management systems and helps ensure consistent, correct, and complete data
 Leveraged the proven accuracy of the application’s forecasting capabilities and reduced manual
intervention for parts managers 100%
Dealer participation with overall
positive feedback
“Managing dealer inventories with SAP Service Parts Planning lets us provide the
necessary end customer demand visibility to improve the end-to-end supply
chain operation. This is a true win-win-win initiative that benefits customers,
dealers, and Ford Motor Company.”
Jose Rodriguez, SPRINT Program Manager, Ford of Europe GmbH

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 38545 (15/05) This content is approved by the customer and may not be altered under any circumstances. 11
Solution Summary
Digital Supply Chain
Demand Insights
How can SAP® solutions enable you to change the game?
With SAP software, supply chain, sales, and marketing professionals are empowered with insightful and actionable demand
network analytics. The solutions enable a single source of truth for real-time, high-fidelity, granular demand signals and sensor
data via Internet of Things to facilitate profitable demand response so companies can optimally match demand and supply
across multiple channels.
What do SAP solutions help customers do? Key facts

Sense and respond to demand insights Demand sensing -29% Stockouts

Gain powerful sales and market Respond profitably to demand With real-time, enterprise-
trend insights by combining patterns with accurate wide visibility into
demand signals and market data forecasts and optimized inventory*
with internal data promotions
Connected Goods -26% Revenue
Optimize utilization, availability When forecasting all
and performance of large combinations of SKU and
volumes of connected IoT inventory locations*
devices by leveraging sensor
data in real time

What are the benefits?

SAP solutions drive better decision making with external demand and market data through:
• Effective store promotions that monitor sales and measure variations in promoted prices
• Enhanced tracking of market trends, market size, and competitors to analyze market share
• Proactive response to out-of-stock and out-of-shelf situations to reduce revenue loss
• Increased accuracy of short-term demand forecasts from point-of-sale data
• Ensure adequate stock and proper storage by remotely monitoring connected devices in real time

*SAP Performance Benchmarking

Internal
Johnsonville: Improving Visibility into Supply and Demand with
SAP® Demand Signal Management
Company Objectives
Johnsonville Sausage LLC
 Harmonize external point-of-sale (POS) and stock data for multiple Centralization
retailers with master data, shipments, and stock Single source of harmonized,
Headquarters consolidated consumer demand
Sheboygan Falls,  Automate demand data uploads and quality checks data for more-accurate downstream
Wisconsin  Identify out-of-stock incidents and lost sales opportunities planning
 Improve promotion analytics with real-time POS data
Industry
Consumer products  Centralize Big Data from external sources Visibility
View into product launch performance,
Products and Services Why SAP end-to-end supply chain processes,
Sausage promotions, planning, and optimization
SAP® Demand Signal Management application powered by SAP HANA ® for
Employees its open, scalable, and customizable framework and in-memory computing
1,500 technology to map and use internal and external Big Data Speed
Faster third-party data logistics and
Website Benefits data quality management
www.johnsonville.com
 Customer-level key performance indicators, including days of supply,
on-hand stock, and daily POS data by store
 Measurement of sell-in versus sell-out activity
 Aggregation of POS consumer demand data for promotion visibility,
planning, and optimization

“SAP Demand Signal Management provides Johnsonville with a scalable platform for the
acquisition, harmonization, and enrichment of demand signal data while leveraging our
investment in existing SAP technologies.”
Ron Gilson, Vice President and CIO, Johnsonville Sausage LLC

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 13

SAP Connected Goods Customer Use Case
Large Beverage Company
Mass Market Device Business Drivers Use Cases

Coolers • Reduce losses due to cooler theft • 24x7 location monitoring to

• Maximize sales with fast inventory reduce theft
replenishment • Automatically create works
• Place cooler in highest yielding locations orders to replenish
• Pre-empt product malfunction and inventory in real-time
eliminate loss of sales • Analyze insights to
determine optimal location
• Alerts of forthcoming
malfunction or product
failure

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 14

 This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
15
iReFresh, Inc. Mission: Create a Superior Brand Experience
iReFresh, Inc. is a global manufacturer of popular Sales are primarily through two channels
beverages, ice cream, and frozen yogurt
1. Retail Stores – Three large retailers make up 60% of their revenue
2. iReFresh Coolers and Vending Machines deployed at
convenience stores, sports venues, shopping malls, airports, train
stations
Sales & Demand analysis reveals:
1. Sales highly dependent on weather, sporting events, holidays
2. Coolers often stolen or not operating optimally
3. Product out-of-stock occurrences is very high
4. Delivery network costs are high
5. Demand planning is primarily based on past sales and shipments
from customer facing distribution centers

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
16
Digital Transformation Journey Roadmap for iReFresh, Inc.
Cover End-to-End Demand Signal Spectrum with SAP Digital Business Planning
Source of Demand Signal
Ultimate Sources
of Demand
SAP Integrated Business Planning
SAP Demand Signal
Management
SAP Connected
Goods

Sales and Consensus

Demand Demand
operations Demand signals
IoT & Sensors
planning sensing
planning
Streaming
Days

Months to Weeks
Years to Months

Time Granularity of Demand

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
17
Key Takeaways

1. Companies face heightened expectations in an environment

with volatile demand and increasing complexity

2. Innovative technologies enable more agile supply chain

resulting in better, faster, and more profitable plans and
decisions

3. SAP provides an innovative solution portfolio that enables this

digital transformation

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
18
Where to get more information

Digital Supply Chain Solution Explorer

IBP Overview Video

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
19
Thank You!

Martin Barkman
Vice President, Global Head of Digital Business Planning
IoT & Digital Supply Chain

martin.barkman@sap.com

This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
20
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This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a
particular purpose, or non-infringement
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