Solution Overview Mining Executive Efficient Sales and SCM
The High-Profit Mining Company The High-Profit Mining Company Streamlined Supply Chain Processes Selling commodities where prices are very volatile and managing financial risk is key requires efficient supply chain processes to keep profitability high. Bulk shipments represent a large percentage of overall costs and a significant amount is spent on operational supplies. Competitive Advantage SAP Innovations As commodity pricing is market-driven, it is essential for mining companies to provide flawless execution of sales contracts. This includes handling quality-based pricing adjustments as well as providing pricing flexibility. Calculations are often still performed manually and price-risk mitigation processes are often poorly defined and incomplete. Shipment costs and spending on operational supplies represent a large portion of operational costs for mining companies and have a direct impact on profitability. In challenging markets, streamlined procurement and full visibility into global contracts with suppliers help companies to manage shipments efficiently. In this way, they can still offer a high level of flexibility, while reducing overall cost and increasing profitability. 2 / 27
Make Supply Chain Processes Efficient The High-Profit Mining Company Streamlined Supply Chain Processes Streamlining supply chain processes within sales, transportation, and procurement is driven by the need to keep flexibility high and costs low. Best-run companies eliminate manual processes and have full visibility into risk, revenues, and global procurement costs. Competitive Advantage SAP Innovations Efficient sales and supply chain management integrates logistics with finance management. Best-run mining companies automate commodity-price calculations from contract to billing. They also integrate directly with their finance operations for full visibility of exposure as a basis for hedging strategies. Collaboration with various partners and automated shipping execution increase on-time shipments and reduce overall shipment costs. Managing procurement contracts on a global level improves overall visibility of money spent on operational supply. It also allows different mine sites to benefit from negotiated prices. 3 / 27
Deliver a Market-Beating Edge The High-Profit Mining Company Streamlined Supply Chain Processes Competitive advantage can be gained in tough markets when price risks are mitigated, operational costs for shipments and spending are kept low, profitability is higher than for the competition, and customer satisfaction is high. Competitive Advantage SAP Innovations 65% Fewer errors in sales quotes when orders are accurately priced in real time using matrix-based rules to provide consistent invoice results to the customer Source: SAP Performance Benchmarking Effective price-risk mitigation strategies are based on full visibility of commodity-price exposures and a defined, well-executed hedging strategy. Automating pricing rules can help to ensure flawless sales execution. Efficient collaboration between all parties during the shipping process and a high level of process automation result in high customer-service levels. Spend analytics, global contract management, and efficient execution of procurement processes reduce manual labor and provide cost-saving opportunities. 4 / 27
SAP Innovations The High-Profit Mining Company Streamlined Supply Chain Processes Technology innovation allows data access anywhere, anytime. Advances in database and analytic tools provide insights that were not available before. This helps you deploy solutions faster with lower costs and at lower risk. Competitive Advantage SAP Innovations Database and technology solutions, including the SAP HANA platform, enable you to monitor high volumes of data. Analytic solutions enable you to monitor financial risk and measure supplier and contract performance, including shipment quality. Mobile solutions give you access to status reporting and purchasing approval, and let you capture events and ship-loading details. Cloud-based communities such as Ariba Network allow you to collaborate and procure through business networks. 5 / 27
and Customers Fulfill Contracts and Mitigate Risk Plan and Execute Efficient Shipments Optimize Operational Spending Efficient sales and supply chain management fulfills customer commitments, mitigates financial risk associated with commodity sales, and provides operating sites with supplies. Fulfill Contracts and Mitigate Risk From contracts and spot sales to differential billing, commercial departments must calculate formula-based prices using quality information. Managing commodity risk is essential in volatile markets, where there is a time lag between the purchase and sale of a commodity. Plan and Execute Shipments Efficiently plan, collaborate on, and execute shipments for bulk and non-bulk materials. Help Ensure Efficient Supply Supply operating sites efficiently and collaborate across business networks. 6 / 27
Fulfill Contracts and Mitigate Risk and Customers Fulfill Contracts and Mitigate Risk Plan and Execute Efficient Shipments Creating sales contracts is just the first step. Adding automated pricing formulas helps ensure efficiency and improve customer relations. Successful mining companies have deep insights into commodity price risk and use this information to apply mitigation strategies. Optimize Operational Spending 11% Of companies follow innovative hedging practices to protect against volatility in supply markets Source: SAP Performance Benchmarking Customers often commit to buying commodities over long periods of time. The commitment is fixed for the time period, the quality, and the quantity of the order. The way in which prices are determined for individual shipments is also fixed. These pricing rules account for the volatility of the commodity markets, with any deviation between the original contract and the delivery, product quality, and billing translated into price adjustments. At the end of the sales process, multiple invoices based on quotational periods and quality assays are created, using the pricing rules for automatic price calculation. Successful companies even outprice volatility and ensure a more stable revenue stream by applying risk mitigation strategies. These are based on real-time visibility of exposure levels, with ongoing updates on commitments made in sales documents. 7 / 27
Plan and Execute Efficient Shipments and Customers Fulfill Contracts and Mitigate Risk Plan and Execute Efficient Shipments Optimize Operational Spending 14% Lower outbound shipments expedited when shipments get dynamically replanned during order changes, based on real-time integration with the sales order software Source: SAP Performance Benchmarking Successful and cost-efficient shipping involves collaboration with involved parties. In this way, you can plan and book necessary transportation and track shipments during transport, while automating execution documents as much as possible. Early visibility of transportation demands enables you to secure the necessary transport capacity, while electronic collaboration and information exchange with carriers keeps planning data as accurate as possible. All necessary information is kept in one place from carriers to routes and stages. This supports automation of the execution process and enables flexibility if plans change. Event tracking provides full status visibility and integrates with procurement processes for shipping cost calculation. Capturing load and unload quantity with weight and quality adjustments provides accurate information for rapid bill settlement. 8 / 27
Optimizing Operational Spending and Customers Fulfill Contracts and Mitigate Risk Manage the complete procure-to-pay process across all areas of spend and integrate sourcing and procurement to maximize cost savings. Plan and Execute Efficient Shipments Optimize Operational Spending 43% Higher average annual savings when procurement plays a strategic role within the organization and contributes to decision making Source: SAP Performance Benchmarking Contract visibility allows you to proactively manage business relationships. Purchasing managers know when agreements will expire and can renegotiate those contracts ahead of time. They also see how much of the company spend is covered by agreements and which spend categories require strategic sourcing activity. You can increase productivity by standardizing and automating the entire procure-to-pay process, including support for requisitions, operational sourcing and contracts, purchasing, order processing, supplier collaboration, and settlement Supplier enablement and collaboration functionality automates and accelerates the procurement order cycle, and helps reduce supplier risk. It also enables you to participate in the networked economy through cloud-based procurement solutions. 9 / 27
Efficient Sales and Supply Chain Value Map SAP Solutions Effective Commodity Management Transportation Management SAP solutions address key requirements of efficient sales and supply chain management. Commodity Sales and Price Risk Mitigation Commodity Sales Commodity Risk Management Operational Procurement and Supply Bulk and Nonbulk Transportation Mgmt Bulk Transportation Transportation Management Operational Procurement and Supply Network Procurement and Order Collaboration Analyze Source Contract 10 / 27
Effective Commodity Management SAP Solutions Effective Commodity Management Transportation Management Manage pricing, profitability, and risk. Create contracts based on market quotes and fully automated price calculations. Understand and limit the impact of commodity price volatility and streamline invoicing. Identify, quantify, monitor, and reduce exposure to commodity price changes and foreign exchange risk in real time. Operational Procurement and Supply 26% Higher average annual savings when system tracks and communicates key performance indicators to suppliers Source: SAP Performance Benchmarking Commodity Sales and Procurement Commodity Risk Management Price commodities based on quotes from exchanges and automatic price calculations. Streamline invoicing and manage risk effectively in commodity procurement and sales processes. In real time, identify, quantify, monitor, and reduce exposure to commodity price changes and foreign exchange risk. 11 / 27
Transportation Management SAP Solutions Effective Commodity Management Transportation Management Enable efficient shipping planning and execution. SAP software for managing bulk transportation supports scheduling, planning, and execution of inbound and outbound bulk shipments. The SAP Transportation Management application supports the complete transportation management lifecycle. Operational Procurement and Supply 22% Less spend if transportation integrated with enterprise planning functions, trading partners, and key carriers Source: SAP Performance Benchmarking Bulk Transportation Transportation Management The transportation management process integrates order processing with order-to-cash and order-to-pay processes, providing early visibility into requirements for planning purposes. Companies can plan bulk and non-bulk shipments. The transportation management solution enables companies to tender a freight order to one or more carriers using an automated, business rulesdriven process. Nominations and carrier booking functionality enables companies to collaborate with carriers when booking ocean and train capacity for domestic or international shipments. 12 / 27
Operational Procurement and Supply SAP Solutions Effective Commodity Management Transportation Management Operational Procurement and Supply Manage global contracts and procure collaboratively. Manage contracts from negotiation through to finalization and integrate into day-to-day procurement activities. Fully understand and classify spend, cleanse and normalize spend data from multiple sources, and normalize and enrich supplier information.. Procurement and Order Collaboration Generate, negotiate, and manage contracts using contract management features and a single, searchable repository. Gain a full view of all supplierrelevant information and activities. 40% Lower purchase order error rate when changes are controlled and communicated to suppliers electronically Source: SAP Performance Benchmarking Analysis of Source Contract Use spend analysis to help reduce costs, identify supplier risk, and unlock new revenue opportunities. Gain visibility into strategic and transactional information from a single source that integrates with existing software systems. Exchange electronic communications relating to a purchase order, such as acknowledgements and confirmations and utilize business networks through cloud-based applications. 13 / 27
SAP Solutions SAP Innovations References SAP Innovations SAP Innovations SAP HANA Mobile Breakthrough technologies plus sales and supply chain related data equal unprecedented opportunity. Best-run companies will make faster decisions, improve efficiency, gain more visibility into their sales and supply chain operations, and create flexible procurement networks. Analytics Cloud SAP HANA Gain the ability to make fast decisions based on enormous quantities of real-time data. 36% Higher operating margin when organizations use IT to enable strategic and competitive advantages Source: SAP Performance Benchmarking Mobile Improve productivity and empower employees with access to information in the field whether approving purchasing requests on the go, capturing load data at the port, or viewing the latest sales numbers. Analytics Gain the ability to make fast decisions based on enormous quantities of real-time data. Provide visibility into contract status and profitability, take proactive steps to avoid delays, and effectively manage supplies. Cloud Enhance flexible supplier networks. 14 / 27
SAP Solutions SAP Innovations References SAP Business Suite Powered by SAP HANA SAP Innovations SAP HANA Mobile The current economic climate forces companies to make difficult operational and business decisions quickly. SAP Business Suite software powered by the SAP HANA platform enables mining companies to plan rapidly, work faster, and reduce risk. Analytics Cloud 53% Of organizations report a big gap between the availability of Big Data and their ability to analyze it for insights Source: SAP Performance Benchmarking Efficient Sales and Supply Chain Management Assess the risk profile of your company based on the latest market prices and exposure to find the optimal hedging strategy. Improve decisions in spare parts planning and purchasing based on real-time, accurate information. Move to automated reordering. Lower stock levels of spare parts, maintenance, and production consumables with enhanced materials resource planning functionality, resulting in improvements in working capital. 15 / 27
SAP Solutions SAP Innovations References Mobile SAP Innovations SAP HANA Mobile Empower managers and increase productivity by approving workflows for purchasing requests on mobile devices and enabling workers at loading facilities to capture loaded quantities using mobile devices. Analytics Cloud 24% Higher operating margins when enterprise mobility is embedded in all business processes Source: SAP Performance Benchmarking Efficient Sales and Supply Chain Management Receive the latest status updates on your shipments on your mobile device or let workers capture load tickets directly at the loading port. Receive workflows for approval requests of operating supplies directly on your mobile device for immediate approval. Support mobile devices through a proven, scalable platform that includes built-in support for enterprise-class security. Make it easier to deploy, support, and manage multiple mobile devices and apps, allowing the enterprise to future-proof its mobile strategy. 16 / 27
SAP Solutions SAP Innovations References Analytics SAP Innovations SAP HANA Mobile Mining companies with global mine and supplier networks need powerful analytic applications that give insights into supply chain performance and spending to allow fast decisions based on real facts. Analytics Cloud 20% Higher revenue per employee in organizations that use information to identify strategic and competitive advantages Source: SAP Performance Benchmarking Efficient Sales and Supply Chain Management Supply Chain Performance Management With a holistic view of the entire supply chain and insight into specific activities and interrelationships between planning, sourcing, operations, and logistics, supply chain executives can improve performance by making decisions based on fact. The SAP Supply Chain Performance Management analytic application allows organizations to measure and monitor various supply chain metrics, looking at how changing each factor impacts others. By understanding this correlation, supply chain executives can improve key performance indicators. Spend Performance Management Enterprise-wide visibility into spend and buying patterns enables you to control your spend based on complete, accurate, and trustworthy data. 17 / 27
SAP Solutions SAP Innovations References Cloud SAP Innovations SAP HANA Mobile On-demand working is all about fast and flexible deployment of both critical and complementary solutions. Best-run companies deploy cloud-based solutions to achieve this, with flexible business networks for service procurement and spare parts management. Analytics Cloud 65% Expect the greater flexibility and agility afforded by cloud computing to be a source of business advantage Source: SAP Performance Benchmarking Efficient Sales and Supply Chain Management Service Procurement Based on the procurement solution from Ariba, an SAP company, to create service requests using supplier relationship management or enterprise resource planning applications. Ariba Network is a business process collaboration solution with supplier catalog integration and purchase order and invoice management functionality. Spare Parts Management Process spare-parts requests as part of maintenance orders within Ariba Network. This helps ensure efficient spare parts management by automating the process in the cloud. 18 / 27
Best-Run Customers Best-Run Customers Abhijeet Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? 7 of the top 10 mining companies run SAP. 9 of the top 10 copper producers run SAP. 8 of the top 10 zinc producers run SAP. 7 of the top 10 aluminum producers run SAP. 6 of the top 10 nickel producers run SAP. 19 / 27
Customer Co-Innovation Best-Run Customers Abhijeet SAP co-innovates with leading mining companies, with the Industry Advisory Council for Mining setting the priorities. Council members lead co-innovation and support continual incremental enhancements across the value chain. Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Industry Advisory Council Chief information officers of leading mining companies come together to discuss business innovations and technology requirements and to share best practices. 20 / 27
Best-Run Customers Abhijeet Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Abhijeet Group is a diverse collection of companies engaged in the power, steel, mining, roads, cement, and ferro alloys business. It is one of India s fastest-growing corporations and has set itself ambitious growth targets in all areas of operation. For Abhijeet, growth demanded operational streamlining while presenting the opportunity for economies of scale. This meant centralizing procurement processes through one resource center. The Abhijeet Group picked the SAP Supplier Relationship Management and SAP Supplier Lifecycle Management applications because the software provides full transparency and vendor collaboration functionality. Key Benefits Lower material and service costs through increased purchasing efficiencies Better supplier performance visibility and more insight into divisional spends Reduced contract creation cycle time using relevant information and more collaboration -30% Contract bid process cycle time -60% Purchase order creation cost +30% Spend under management SAP SRM provides a 360-degree view of our procurement and supply functions. It has significantly improved system transparency both internally and externally. Vijay Singh, General Manager IT, Abhijeet Group 21 / 27
Best-Run Customers Abhijeet Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Konkola Copper Mines plc (KCM) is the largest copper mining and smelting company in Zambia and is a subsidiary of metals and mining group giant Vedanta Resources plc. KCM s operations span the mining value chain along Zambia s Copperbelt Province and consists of underground mines, open-pit mines, a tailings leach plant, a smelter, and a refinery. Konkola Copper needed a system to support the growing business demands across the entire business. Konkola Copper choose the SAP ERP application to enable company-wide visibility and the ability to scale the business for growth. Key Benefits Single and consistent view of the business from one data source Accurate and real-time metal accounting Improved data quality, allowing faster, more accurate decision making -$20M Reduction in store inventory >75% Less time from purchase order to requisition >75% Overall equipment effectiveness of assets Our visibility of, and access to, information on mining production, engineering, and all business functions across Konkola Copper Mines has improved significantly with SAP ERP software. Arun Phadke, CIO, Konkola Copper Mines plc 22 / 27
Best-Run Customers Abhijeet Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Samarco Mineração is a private Brazilian company engaged in the mining, beneficiation, pelletizing, and exportation of iron ore. Established in 1977, it ranks first in the overseas pellet market, selling its products in over 15 countries. Samarco was facing risks due to poor control over its segregation of duties (SoD). To resolve the lack of standardized procedures and be able to grant access to or execute changes in the company s SAP software environment, Samarco implemented the SAP Access Control application. This software enables all corporate compliance stakeholders to collaboratively enforce proper control of SoD on a continuous basis. Key Benefits Cultural change in SoD Integration of internal controls and IT Traceability of approvals risk of SoD Regular use of solution by top executives, reinforcing commitment -83% SoD risk reduction -50% Users with violation issues -70% Reduced time for access approvals We achieved a significant maturity on segregation of duties and an effective access risk control in our environment. That would not have been possible without SAP BusinessObjects Access Control, a truly valuable application. Celso Kovalek, IT Process and Application Manager, Samarco Mineração 23 / 27
Best-Run Customers Abhijeet Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Singareni Collieries Company Limited (SCCL) currently operates 13 open-cast and 42 underground mines in 4 districts. SCCL was facing data integrity issues in areas of purchasing, sales and distribution, finance, and inventory and payroll management due to manual integration and data duplication errors. To handle these challenges, SCCL chose to implement financial, controlling, materials management, quality management, payroll and sales and distribution software in the SAP ERP application. Key to this choice were strong SAP references from comparable public sector enterprises in India and the mining-focused functionality. Key Benefits Real-time information for more effective decision making Better materials management to help meet annual production targets Less time to settle sales orders and improve customer satisfaction Central management of business continuity initiatives via IT disaster recovery mechanism -50% Time to process sales orders -95% Time to generate coal bills -40% Time to settle advance payments Today, SCCL is a truly integrated enterprise. As we continue this journey, we hope to leverage other functionalities and develop a robust business intelligence platform that will further enhance decision making. J. V. Dattatreyulu, Director of Operations, Singareni Collieries Company Limited 24 / 27
Why SAP? Best-Run Customers Abhijeet Streamline sales and procurement processes, collaborate using supplier networks, and gain real-time visibility of contract profitability. Access data on premise, on mobile devices, and from the cloud to build a digital mining enterprise. Konkola Copper Mines Samarco Mineração Singareni Collieries Why SAP? Tightly Integrated, End-to-End Solutions To enable efficient processes and strategic sourcing, SAP offers a comprehensive portfolio of solutions for commodity management and transportation, and for procurement for operational supplies. The software is integrated and supports collaboration. Breakthrough Innovations The SAP software portfolio combines database and analytic solutions and cloud-based deployment options to enable efficient sales and supply chain processes. Reduced Time to Value in Large-Scale Implementations The world s leading mining companies across every major segment of the industry worldwide continue to rely on SAP to enable them to manage commodities with optimized sourcing solutions. 25 / 27
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Solution Overview Mining Executive CMP 23589 (13/02) For more information, please visit us at: http://scn.sap.com/community/mining-and-mill-products http://www.linkedin.com/groups?home=&gid=4532949&trk=anet_ug_hm http://www.facebook.com/sapmillproductsandmining https://twitter.com/sapmillmining
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