SAP s Innovations for the Mining and Metals Industries

SAP s Innovations for the Mining and Metals Industries International SAP Metals and Mining Summit, September 17 & 18, 2015, Moscow Eckhardt Siess, Global VP IBU Mill Products & Mining, SAP SE

Industry drivers

Trends shaping the mining and metals industry Volatile markets, prices for raw materials and energy Combination of commodity products and fast product innovation Rapid growth of the cloud the reality of hybrid cloud landscapes Big Data to predict and decide Need to drive excellence across all operations Frequent order changes; key role of on-time delivery Smarter, cost-aware manufacturing Industry trends Technology trends Internet of Things and Industrie 4.0 to connect assets and logistics to the business Consolidated view of finance and operations in real time Multichannel business and brand(s) management Environmental impact Ad hoc and advanced analytics Mobile, simpler access to information Safety Availability of talent 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 4

SAP Solutions

Risk radar for Mining and Metals - 2015 vs. 2008 2008 2015 Megatrends The top 10 business risks are 1-2 year priorities of the mining and metals sector as influenced by the global megatrends that are impacting business, society, culture and the ecomomy. These include: Digital Transformation Changes in the way we work The global marketplace The urban world and ist demands on infrastructure A resourceful planet allocating scarce resources Helath re-imagined to meet growing needs The megatrends by their nature are medium to long term in relevance. Source: EY: Business risks facing mining and metals 2014 2015 http://www.ey.com/publication/vwluassets/ey-business-risks-facing-miningand-metals-2014%e2%80%932015/$file/ey-business-risks-facing-miningand-metals-2014%e2%80%932015.pdf 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 6

Risk radar for Mining and Metals - SAP Solution coverage Finance SAP S/4 HANA Finance with BW and BPC Human Resources - SuccessFactors - Contingent Workforce Management BI / Analytics - BW on HANA - Geospatial & Predictive - Analytics with Lumira Asset Operations & Maintenance - Predictive Maintenance - Manufacturing Integration & Intelligence on HANA Mining Operation & Downstream Processing - SAP Best Practices for Mining - Multiresource Scheduling Ariba Business Network Bulk & Non-Bulk Transportation - Transportation Management - Traders and Scheduler Workbench Commodity Management Project and Portfolio Management - Project System - Portfolio & Project Management - Commercial Project Management Enterprise Threat Detection Fraud Management 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 7

Innovation Platform SAP for mining and metals industries

Market realities are forcing the need for business transformation Accelerating Pace of Business 5B Middle-class consumers with 56 trillion spend power 1 Hyper-connectivity >2.8B Internet users worldwide 2 Business complexity 90% Of the world s data generated in the last two years 3 Sources: US$221B The merger of Glencore and Xstrata created the world s largest mining company by revenue (2014) 1 Morgan Stanley: Asian Influence, The Emerging 21st Century Middle Class, June 2011 2 Kleiner Perkins Caufield Byers, Internet Trends 2015, May 2015 3 Big Data, For Better or Worse: 90% of the World s Data Generated in the Last Two Years, ScienceDaily, May 2013 4 Worldwide Internet of Things Spending by Vertical Market 2014 2018 Forecast, IDC, June 2014 AUD$11.3B BHP Billiton demerging a group of assets to create an independent global metals and mining company, South32 11.28B ArcelorMittal market cap, world s largest steel manufacturer as a result of multiple mergers (as of Sept. 9, 15) 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 9

Transformation does not come from incremental improvement but from doing things fundamentally differently Streamlined expansion Easily onboard new remote mining operations using cloud Proliferation of mobile transaction and analytics users Mine of the future Largest fleet of autonomous, driverless trucks that deliver loads more efficiently, minimizing delays and fuel use Sustainable development In-depth integration of IT and industrial operations globally Breadth of KPIs for early detection of quality issues Worker Safety Wear-ables Track the biometrics, location and work conditions of employees in hazardous conditions in real-time 0% Training for Fiori applications in Kilometers covered by purchasing and human resources 3.9M Rio Tinto s autonomous trucks since 2012 Reduction in inventory with 80% a 50% rise in production Reduce Fatigue- and hazardous exposure related incidents The common denominator: a digital value chain enabling flexible, agile, interconnected operations and new levels of business insight By 2018, one-third of the top twenty market share leaders in most industries will be significantly disrupted by new competitors (and reinvented incumbents). * *Source: IDC, March 2015 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 10

The digital value network interconnects all aspects of the value chain in real time to drive business outcomes in mining and metals Workforce engagement Supplier collaboration and business networks Smarter and engaged workforce across all employees A networked travel management (concur) Supplier collaboration to accelerate growth and drive efficiency Operator & Manufacturer collaboration in Asset Intelligence Networks Contingent Workforce to respond to peak demand Harness Assets and Internet of Things to drive real-time insights and new business model Smarter mining and real time insights into operations Assets & Internet of Things Re-platform core business processes, and bring together business process and analytics in real time to be smarter, faster, and simpler SAP HANA PLATFORM Mine production / Metals Customer experience omni-channel Social marketing & selling B2C experience for B2B Offering new products and services that cross value chains 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 11

SAP S/4HANA, a real-time platform, at the core of the digital enterprise People Business networks Social networks SAP S/4HANA Application SAP Fiori SAP HANA Big Data Customers and Partners Internet of Things Devices 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 12

The Digital Core Introducing the next generation core and lines of business solutions for the digital economy SAP S/4HANA MARKETING SAP S/4HANA HUMAN RESOURCES SAP S/4HANA MANUFACTURING SAP S/4HANA SUPPLY CHAIN SAP S/4HANA ASSET MANAGEMENT Enterprise Management The Digital Core SAP S/4HANA SALES SAP S/4HANA FINANCE SAP S/4HANA SERVICE SAP S/4HANA SOURCING & PROCUREMENT SAP S/4HANA RESEARCH & DEVELOPMENT SAP HANA Cloud Platform HCP Technical Services HCP Business Services HCP HANA Cloud Integration HCP Database Services 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 13

Why embrace digital transformation? The digital value network will help you enable business transformation by: Transforming business processes Workforce engagement Supplier collaboration business networks Empowering the business Simplifying technology Reimagining the business Assets & Internet of Things SAP HANA PLATFORM Mine production 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 14

Transform business processes Reimagine business processes for fundamentally higher performance in mining Total workforce management Digital Core Supplier collaboration and business networks Optimized Mine Operations Detect inefficiencies, perform proactive maintenance on mine assets to maximize uptime Predict machine failures Use real-time analytics to drill down into the root-cause of production shortfalls from mine-level operations Commodity Supply Chain Management Optimize mine production and sales plans based on current financial data: Align sales aspirations with production realities by combining real-time market and operations data in rolling forecasts Avoid delivery glitches for bulk and non-bulk shipments by having real-time visibility into status and costs Operational Risk and Compliance Management Create safe and economic operations across the mining value chain: Collect sensor data from wear-ables to improve operational yields with less health and safety risks Avoid challenges to social license-to-operate by tracking public discussions throughout exploration, mine operations to re-naturalization HR Finance Procurement Assets & Internet of Things Manage, develop, reward, and retain a global workforce: Analyze and use creative best practices to counter competition and aging population Universally increase time spent on strategic projects Allow for visibility into the state of the business at any time: Enable real-time financial close for faster, more accurate, and more collaborative decision making and execution enterprise-wide Eliminate supply disruption risk while protecting margins: Collaborate instantly with global suppliers via the Ariba Network Monitor real-time commodity price-and-supply volatility Mine production 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 15

Operational Excellence from Pit to Customer Digital Business Scenario: Predictive Maintenance Value estimates Suppliers Collaboration Business Networks 7% - 10% Reduction in unplanned asset downtime 1 Collect, analyze sensor/meter data 2 3 Determine Asset Health Predict probable failure 4 5 Determine root cause of failure Evaluate proactive measures 6 7 Decide on best measure 9 Order (spare) parts 8 9 Create work order Collaborative Resource Scheduling and Task assignment 10 Maintain Asset Workforce Engagement 3% - 5% Reduction in maintenance and service costs Assets & Internet of Things Digital Core 3% - 5% Improvement in asset productivity Source: SAP Performance Benchmarking and Customer Business Case TIME 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 16

Transform business processes Reimagine business processes for fundamentally higher performance in metals Customer experience omni-channel Digital Core Supplier collaboration and business networks Profit-Driven Supply Chain Plant and Asset Operations Excellence Sustainable Customer Relationships Avoid supply chain disruptions/costs by tracking material movements in real-time Anticipate change to manage risks and leverage opportunities Use real-time plant floor data to improve delivery decisions Deliver the target quality and appropriate service level to different customer segments Optimize mill and plant production capacity, quality and profitability: Use sensor data to predict machine failures or product quality Consider skills, toolsets and resources in scheduling maintenance activities Standardize calculation and visualization of metrics like OEE or Energy Usage across plants Deliver a uniform digital experience through every channel : Arm your sales reps with key insights while at the customer Integrate social intelligence into the selling and marketing processes Streamline the complaint process and provide seamless support across channels HR Finance Procurement Assets & Internet of Things Manage, develop, reward, and retain a global workforce: Analyze and use creative best practices to counter competition and aging population Universally increase time spent on strategic projects Allow for visibility into the state of the business at any time: Enable real-time financial close for faster, more accurate, and more collaborative decision making and execution enterprise-wide Eliminate supply disruption risk while protecting margins: Collaborate instantly with global suppliers via the Ariba Network Monitor real-time commodity price-and-supply volatility Total workforce management 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 17

Differentiate on customer experience through predictive capabilities and connected manufacturing Digital Business Scenario: Predictive Quality & Complaints Value estimates 1 Social media triggers service ticket 2 2 Analyze similar customer complaints 3 Root cause analysis of quality issues 4 5 Global item traceability Predict future quality issues 6 Find & block affected inventory Adjust process 5 parameters for tighter process control Predict 7 future complaints & claims 8 Proactive customer service & callback 9 Constantly benchmark for golden run Balance 10 maintenance against compliance cost 11 Sense future quality issues at customer 12 Optimize warranty accruals Customer experience omni-channel Assets & Internet of Things Digital core 7-10% Reduced scrap value 5-10% Improved customer satisfaction 10%-15% Reduced revenue loss due to compliance and recall issues Time Source: SAP and customer benchmarks 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 18

Empower the business Reimagine planning and decision-making processes to align around common goals Analyze profitability using real-time revenue and costs to improve company s overall financial health 1 2 Evaluate impact of decisions on operations and strategy by using forecasting and simulation to better predict outcomes Collaborate with customers according to their unique business models and improve revenue and margin 3 4 Align sales aspirations with operational realities while ensuring highest return on capital invested 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 19

Simplify technology SAP S/4HANA simplifies technology for metals and mining companies Simplified data model Simplified system landscape Simplified user experience Elimination of aggregate tables Elimination of process steps Integration of analytics in transactions Reduced number of systems and business warehouses Flexible access to data and data compression Fewer interfaces between systems Role-based engagement across the business Instant access to any business insight Simple design across business processes Example: SAP S/4 HANA Supply Chain* inventory management Classic SAP Business Suite 11 Inventory aggregate tables 2 Document aggregate tables 11 History aggregate tables 2 Material master tables SAP S/4HANA 1 Document table Accelerate execution 2 Material master tables Example: SAP S/4 HANA Finance - reporting and analytics Saved 20% IT costs annually 33% lower costs to maintain business warehouse Reduce total cost of ownership Example: SAP S/4 HANA Finance - receivables management SAP GUI SAP Fiori UX Delta Duration 132 47-64% (seconds) Clicks 39 11-71% Screen changes 8 2-75% Fields filled 5 2-60% Increase user productivity 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 20

Internet of Things and Industrie 4.0 SAP Connected Manufacturing runs Industrial IoT with Industrie 4.0 scenarios Internal INDUSTRIAL scenario External scenario Industrie 4.0 focuses on all manufacturing industries and leverages value inside the four industrial walls and the production networks of the enterprise. Key topics are lot size of one, flexibility, traceability, production documentation and execution leveraging seamless integrated business processes connecting the top floor with shop floor. Internet of Things ERP» All industries» All things and devices SMART THINGS SMART DEVICES 1 MES SCADA / HMI Machine Layer Industrie 4.0» Manufacturing industries» OT- IT Convergence» Systems, things and devices in the Shop floor The external Internet of Things scenarios enable all smart devices and things to be connected wherever they are. Once connected the information can be transformed and new business scenarios can be realized. SMART industrial THINGS SMART industrial DEVICES 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 21

Connected Manufacturing 5 Scenarios of Connectedness 5 4 5 Scenarios: Quality Operator Service Provider 5 Machine Cloud 4 3 Mfg Collaboration E-Commerce 3 Supplier Consumer 1. Shop floor to Top floor Intra company vertical integration 2. Machine to Machine Autonomous machines 5 ERP 3. ecommerce Integration Direct integration of online configurators 1 2 1 MES SCADA Machine Layer Manufacturing Company 4. Manufacturing Collaboration - Visibility - Genealogy - Quality - Kanban / Direct replenishment 5. Machine Cloud - Predictive maintenance - Predictive quality 2015 SAP SE or an SAP affiliate company. All rights reserved. Customer 22

Demo Connected Mining

http://scn.sap.com/community/mining-and-mill-products http://www.linkedin.com/groups/sap-mill-products-mining-group-4532949 http://www.facebook.com/sapmillproductsandmining Thank You! http://twitter.com/sapmillmining @SAPMillMining Contact information: Eckhardt Siess Global VP IBU Mill Products & Mining SAP SE, Walldorf, Germany eckhardt.siess@sap.com +49 6227 749087 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 25