SAP Recipe Development Best Practices for the Chemicals Industry

SAP Recipe Development Best Practices for the Chemicals Industry STRATEGY IMPLEMENTATION ACCELERATION Nico Bonthuys, Director, PLM Global Services Linx/AS

AGENDA Introduction SAP Recipe Development Overview Developing a Strategy for Chemicals Integration to SAP EHSM Integration to Manufacturing Implementation Recommendations Close & Questions

What We Do Our success lies in fully understanding the people and processes that drive your business. Only then can we apply our indepth technical knowledge to design and deliver the right solution. From streamlining product development to improving corporate sustainability to giving your users access to SAP when, where, and how they want it we make SAP run like you ve never seen. SAP Consulting for Product Lifecycle Management (PLM) SAP Consulting for Environment, Health & Safety Management (EHSM) SAP User Experience (UEx) Consulting Software Innovations

SAP PLM Process Industry Expertise Over 15 years working with customers to develop PLM strategies and implement PLM solutions. 96-2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 SAP EH&S Zausner RECIPE DEVELOPMENT RECIPE MANAGEMENT INTEGRATION OF FORMULATION SYSTEMS SPECIFICATION MANAGEMENT EXPANDED USE OF EHS SPECIFICATION DATABASE

SAP Recipe Development Overview

Recipe Development Overview Product and Process structure definition for formulations Equipment Requirements Process Parameters Integrated Specification (Substance) development and management Fully integrated component of SAP ECC Full change management including sophisticated alternate and version management Multi-level formulation management Key Capabilities Formulation Capabilities include: Formula Optimization Formula aggregation, modeling, and comparison Product Labeling** Compliance verification Property calculations

Recipe Development Overview Recipe General Data

Recipe Development Overview Recipe Formula View

Recipe Development Overview Recipe Alternate Formula Views

Recipe Development Overview Recipe Process Structure

Recipe Development Overview Recipe Equipment Requirements

Recipe Development Overview Recipe Process Parameters

Recipe Development Overview Recipe Calculations: Ingredients

Recipe Development Overview Recipe Calculations: Composition

Recipe Development Overview Recipe Calculations: Costs

Recipe Development Overview Recipe Calculations: Costs

Achieving a Single Version of the Truth Provides a Single Source of Product Data that Drives the Downstream Processes SAP PLM Specifications Recipes Materials/BOMs Packaging Single Source of Product Data Documents Product Changes Portfolio & Projects

Developing a Strategy for Chemicals

Developing a PLM Strategy How does SAP Recipe Development fit into your overall PLM strategy or program. Identify your PLM requirements from innovation through development & commercialization. Identify and prioritize the PLM pain points, gain opportunities and concept requirements. Evaluate your IT landscape as-is and projected for the foreseeable future. Evaluate the benefits of a unified solution over best of breed point solutions Establish a strategic project roadmap that balances immediate needs with long-term PLM vision. 19

Critical Integration Points How does SAP Recipe Development integrate with EHSM to enable a design for compliance strategy? Sustainable Innovation Operational Excellence How does R&D hand over recipes to manufacturing? Sustainable Innovation Responsive Manufacturing

Innovation Management Portfolio Management Compliance Check Component & Task Sourcing Ramp-Up to Production Manufacturing Compliance Check Maintenance & Service Recycling Challenges across the Product Lifecycle ISSUE NUMBER 1 Disconnected Business Processes and Data Head of Marketing Head of R&D Head of Procurement Head of Manufacturing Head of Service Market Reports Product Reports Project Mgmt Procurement Reports Manufacturing Reports Service Reports Product Design Authoring Authoring Tools Authoring Tools Authoring Tools Tools ISSUE NUMBER 2 Missing single source of truth ISSUE NUMBER 3 Insufficient Sustainability Approach

Integration to EHSM

Common Compliances Issues Encountered in Product Development ISSUES IMPACT A significant amount of product data (formulas, finished product & raw materials) in multiple systems. No integration to SAP /ERP systems - from development through commercialization. Processes in place not efficient, resulting in manual entry & re-entry, data redundancy, and prone to error. Where interfaces are created to avoid data entry errors, potential points of failure still exist. High volume of new and changed formulations drive high workload for Product Stewardship Wasted effort and time dealing with data accuracy issues. Inefficient processes drive delays in compliance approval, which pose a competitive disadvantage with regard to cost & speed to market. Undue exposure to regulatory & compliance risks through lack of data consistency, data unification & process automation. Significant effort required to address changes to products due to reformulation and regulatory requirements

Islands of R&D, ERP, and Compliance Re-enter data or interface R&D Systems EH&S Systems Re-enter data or interface Re-enter data or interface This common scenario in chemicals industries creates areas of risk to data integrity and operational inefficiency. SAP

Innovation Management Portfolio Management Manufacturing Maintenance & Service Recycling Comprehensive Product Development & Innovation Approach Continuous Product and Service Innovation: The entire organization needs to ensure a continuous stream of profitable innovation Head of Marketing Head of Engineering/R&D Head of Procurement Head of Manufacturing Head of Service 1 Product Intelligence Project Management Product Design Component & Task Sourcing Embedded Product Compliance 2 Product Visualization and Collaboration Authoring Tools Ramp-Up to Production 3 Integrated Product Development: Connecting R&D with the Business Embedded Product Compliance: Being sustainable starts with simply being compliant with existing regulations

Unified Solution of Integrated SAP Modules SAP EH&S SAP RD SAP ERP

Recipe Transfer to Product Stewardship

SAP ERP-EHS Integrated Business Process Flow Product Safety (MSDS and Labels) Maintain Product Safety Data Product Safety Mgr. Author Documents Product Safety Mgr. Process Customer Order Generate MSDS/ Labels, Documents Label Packages and Distribute MSDS Customer Service Fulfillment Fulfillment SAP EHSM Maintain Product & Substance Data Repository Author Documents Generate MSDS /Labels Automatically Automatic MSDS Shipment Integration with RD Out-of-the-box Integration Material Master Integration Sales Order Processing Inventory Management Sales and Distribution SAP ERP Maintain Material Master Data Repository Customer Order Processed Automatic Label Printing Ship Product to Customer Compliant Label Compliant MSDS

SAP ERP EHS Integrated Business Process Flow Substance Volume Tracking in Purchasing Maintain Product Compliance Data Purchase Material Update Registration Quantity Purchase Material Compliance Expert Purchaser Compliance Expert Purchaser System Track the Volume SAP EHSM Maintain Product & Substance Data Repository Check the Volume Update the Registration Quantity Check the Volume Track the Volume Integration with RD Out-of-the-box Integration Material Master Integration Purchase Order Processing Purchase Order Processing SAP ERP Assign to material master Create Purchase order Block Purchase Order Purchase material

Chemical Compliance Integration Production Production Order Materials are the relevant objects throughout the Supply Chain, i.e. are sold, purchased, manufactured Material A 10 kg Goods Movement Goods Receipt Material A 10 kg Material A Substance Material A Purchase - Import Purchase Order Client 4711 10 Material A 10 kg 20 Material B 12 kg 30 Material C 15 kg Substances are relevant for REACH and need to be tracked! SVT Composition Component 01 Component 02

Business Benefits Significantly greater flexibility with addressing changing regulatory compliance requirements Reduction of compliance risk Opportunity to automate checks and processes focuses EHS staff on more value-added tasks Single version of truth from R&D to Product Stewardship to Manufacturing Scalability to expand to other regions of the world

Integration to Manufacturing

Typical R&D-to-Manufacturing Scenario

Product Structure Synchronization (RD to ERP) Product Structure Synchronization for Handover to Manufacturing R&D Process Manufacturing 1 2 3 R&D Structures RM Recipe & Formulas Synchronize Formula mbom Recipe BOM (plant) Features of PSS: Introduction of Mfg data (plant) BOM PP-PI* Recipe Process Order Requires: Output Mat l Recipe keys: Version Effectivity Usage Controlled release process Reconciliation of differences Update of Mfg BOM

Integration to Manufacturing (RD to MES) Why this scenario doesn t always work for chemicals? RD Recipes for chemical manufacturers often contain more process detail that are required in PP-PI Master Recipes Requirement frequently raised for RD Recipe transformation to MES (DCS and/or PLC) Standard Integration/Interface from RD does not exist Industry standards and ISA-88 and ISA-95 ISA-88 for Batch Processing ISA-95 for Continious Processing Integration Methods and Standards depends on MES and Client specific chemical processes

Integration to Manufacturing/MES

Integration to Manufacturing ERP/MES PSS PI-PCS XML/OXML/B2MML and other formats ISA-88 - Batch Processing ISA-95 - Continuous Processing

Implementation Recommendations

Process/Functional Design Establish a blueprint prototype based on industry standard processes. SAP PLM RDS for Process Industries will provide a baseline development system. Limited process scenario. Can augment RDS with partner extensions to better support to-be scenario e.g.: Linx/AS process accelerators include support for over 30 processes/sub-processes Linx/AS functional accelerators include solutions to overcome many industry-specific requirements, such as specification workflow solution for collaborative design and approvals, data collaboration (collection), etc. Alternative is a hosted prototype. Either way, involve business users from the beginning.

User Experience Think Like a Product Developer SAP Recipe Management/Development originally developed as solution for food Industry Need to configure/design experience for chemical industry product developer Formula Views Calculations Compliance Checks Reduce clutter and leverage custom layouts Again, get the business involved from the beginning.

User Experience Formula View - Adjust for Chemical specific use

User Experience Recipe/Calculations - Adjust for Chemical specific use

Close & Questions

Nico Bonthuys Director, PLM Global Services Linx/AS nbonthuys@linxas.com HEADQUARTERS: 920 Harvest Drive Suite 150 Blue Bell, Pennsylvania 19422 United States phone: 610.992.9333 fax: 610.992.9338 email: info@linxas.com South Africa: Verona Office Park Unit 4 Cnr Malibongwe & MacArthur Str Robindale, 2194 South Africa Europe: 5th Floor West 14 Fenchurch Avenue London EC3M 5BS UK www.linxas.com