SAP SCM Transforming Supply Chains SAP Innovations for Demand Networks. Jesper Waaben SCM Expert, SAP Center of Excellence EMEA

SAP SCM Transforming Supply Chains SAP Innovations for Demand Networks Jesper Waaben SCM Expert, SAP Center of Excellence EMEA

Digital Economy World s largest taxi company owns no taxi s The Digital Disruption is Happening Largest accommodation provider owns no real estate Largest phone company owns no infrastructure World s most valuable retailer owns no inventory World s largest movie house owns no cinemas Largest music company owns no music Worlds biggest book distributor owns no books 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 3

Key Trends that revolutionize Supply Chain Management in general MOBILITY Smartphones outsell PCs. Today, mobile devices are the primary source to access Internet worldwide. CLOUD COMPUTING Users can access systems regardless of their location or what device they use. More than one third of the software purchases by 2014 was via the Cloud. SOCIAL NETWORKS There were 1.43 billion social network users in 2012. In 2012, 63.2% of the Internet users visited a social network at least once a month. BIG DATA The data volume for the enterprise applications is doubling every 18 months. Internet traffic will quadruple by 2015, up to 966 exabytes. INTERNET OF THINGS Supply chain visibility and automation remain key challenges within the next ten years. By 2020, there will be around 26 billion connected devices on the Internet of Things 2015 SAP SE or an SAP affiliate company. All rights reserved. Confidential 4

Driving Digital Transformation with SAP Extended Supply Chain Web Sites Mobile Kiosks Social Media Personalized Products Lot Size 1 Production 3D Printing Predictive Maintenance Retail Catalogs Design Plan Respond Produce Deliver - Operate Project Network Internet of Things Product Compliance Customer Centricity Omni Channel Network Response Same Day Delivery Strategic Sourcing Asset Network Response Network Outsourced Manufacturing Logistics Network 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 8

Our Solution Approach Simplify the Increased Complexity SAP Fiori on any device Business Network Public cloud Design Extended Supply Chain Plan Respond Operate Deliver Managed cloud Produce SAP S/4 HANA On-premise Connectors Internet of Things 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 9

managed cloud Enabling Demand Networks public cloud Real-time Network Insights Plan Respond Deliver SAP Business Suite 4 HANA on-premise SAP HANA Platform Plan Respond Deliver Sales, Inventory and Operations Planning Demand Management Demand Network Response and Supply Management Production Planning and Scheduling Response Network Warehouse Management Transportation Management Logistics Network 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 10

SAP Integrated Business Planning Solution Speeding up the Supply Chain requires a new Supply Chain Planning approach Mobile Enabled Experience Introduce state-of-the art user experience with communication capabilities (SAP JAM) and MS Excel Spreadsheets Built on SAP HANA Demand Networks require real-time monitoring and a focus on short-term planning SAP Integrated Business Planning Enhanced User Experience One Harmonized Data Model Avoid any latency due to integration efforts and leverage the SAP ERP data model New Planning Algorithms Leverage predictive analytics (e.g. demand sensing) algorithm in combination with optimization Cloud First Approach The solutions will be provided in the SAP Cloud but also be made available on-premise Supply Chain Control Tower Sales & Operations Planning Response & Supply SAP HANA Platform Inventory 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. This document is provided without a warranty of anykind, either express or implied, including but notlimited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 11

Evolution of SAP IBP 2016+ 2014 Today Q4 2015 2012 IBP 2.0 IBP for sales & operations New cloud-based HANA platform for advanced planning New Excel and HTML User Experience Common architecture / data model Support for internal collaboration 2013 IBP 3.0 New HANA Cloud Integration model Integration content for ECC, APO, EIS Extended S&OP Functionality 30 customers IBP 4.0 IBP for Inventory Supply Chain Control Tower IBP for Supply Gartner MQ Leadership Quadrant 75 customers IBP 5.0 IBP for Demand Further enhancements to each module 90+ customers IBP 6.0 IBP for Response & Supply Order-based data model Real time integration model IBP 7.0++ IBP embedded with S/4HANA Integration with financial planning Integration with Sales and Trade Promotion Planning 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. 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 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 12

Integrated Business Planning for sales and operations Customers and Industries Consumer Products Chemicals Mill Products & Mining Pharma Manufacturing High Tech Retail Services 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 13

IBP Supply Chain Planning Solution Architecture Sales & Operations Planning APO Production Planning and Detailed Scheduling Response & Supply Enhanced User Experience Supply Chain Control Tower APO SNP APO DP & Demand Signal Management Inventory Demand SAP HANA Platform (ERP & other solutions) APO Global Available to Promise Available, including IBP Supply for tactical and strategic planning IBP Response & Supply for Order Based planning planned for Q4 2015 Benefits Flexible roadmap to leverage existing implementations (i.e. APO) and adopt new innovations Standard integrations with Business Suite (ERP, APO, BPC ) Choice where to execute business processes, and can evolve over time APO and IBP bring deep industry capabilities to maximize value delivery now IBP and HANA enable evolution to next generation real time supply chain platform 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. This document is provided without a warranty of anykind, either express or implied, including but notlimited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 14

Supply Chain Excellence SAP Integrated Business Planning September 2015 Jesper Waaben Solution Principal SCM Center of Excellence, SAP EMEA

SAP Integrated Business Planning Speeding up the Supply Chain requires a new Supply Chain Planning approach Enhanced User Experience Introduce state-of-the art user experience with communication capabilities (SAP JAM) and MS Excel Spreadsheets Built on SAP HANA Demand Networks require real-time monitoring and a focus on short-term planning One Harmonized Data Model Avoid any latency due to integration efforts and leverage the SAP ERP data model New Planning Algorithm Leverage predictive analytics (e.g. demand sensing) algorithm in combination with optimization Cloud First Approach The solutions will be provided in the SAP Cloud but also be made available on-premise Enhanced User Experience Supply Chain Control Tower Sales & Operations Planning Supply Inventory Response Demand SAP HANA Platform SAP Business Network

S&OP Customer Testimonial Colgate Business Planning (CBP) is our integrated business planning process focused on accelerating profitable growth. We have engaged with SAP as an co-innovation partner and collaborator to utilize their S&OP tool to enable our integrated monthly CBP process to synchronize demand and supply. The S&OP capabilities on HANA include the real time simulation and analysis of demand opportunities during planning sessions. The tool s contextual social collaboration capabilities have facilitated more timely communication and updates of demand changes across the organization. It has also streamlined the preparation and information exchange leading up to key consensus meetings by providing one tool and repository for information. Jim Davis Colgate-Palmolive is a leading global consumer products company, tightly focused on Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate sells its products in over 223 countries and territories around the world. Global Director of Demand Planning and Customer Service 2015 SAP SE or an SAP affiliate company. All rights reserved. 18

HCI Out-of-the-box or configured Integration Web UI/https IBP Solution Architecture SAP Integrated Business Planning 5.0 Excel ERP CRM BPC APO BW SAP HANA IBP Model & Engine Attributes Key Figures Scenarios & Simulation Predictive Analytics Heuristics & Optimization Process Management Alerts Web Sales/ Marketing Demand Planning Finance Any other system SAP Jam Mobile Supply Chain Files Social Collaboration Executives

The IBP Pillars

IBP: Plan in Real-time With a Unified Data Model Capabilities: Plan in real-time, using a unified model of your demand, supply chain and financial data within a single data model, allowing planning on qty or value Analyze massive volumes of complex data instantly at any level of granularity, aggregation, and dimension Import massive amounts of detailed data directly from SAP and non-sap sources Benefits: Optimize product/customer profitability and product mix, considering supply and financial constraints Adjust inventory levels to reduce cost, while meeting target customer service levels Manage capacity utilization to avoid capacity and material shortages

User-driven embedded analytics Value Qty Alert management User-defined process template

IBP: Run Simulations and Scenarios Instantly Capabilities: Rapidly run simulations of demand, supply and financial changes using your full data model to support what-if analysis Compare planning scenarios and their impact on key performance indicators in real-time Drill down into simulated data to perform detailed analysis without the need for manual disaggregation Benefits: Identify optimal set of tactics to drive revenue growth and increase market share Uncover opportunities to reduce supply chain cost Prepare for potential changes in demand and supply before they happen

Select quantity or value Embedded alerts Create own master data for simulation Addresses NPI and invisible demand Plan on select key figures Plan on select hierarchy level and disaggregate

IBP: Enable Rich, Contextual Social Collaboration Capabilities: Track progress of your business process, including assignment and monitoring of action items and the stakeholders responsible Collaborate quickly and easily using embedded role and context-aware social tools Plan using user-friendly web and Microsoft Excel interfaces Benefits: Increase speed and agility of planning Drive greater engagement and improve input from users across your organization Improve precision of demand and supply balancing

Collaborate and share analysis Wealth of collaboration tools Messenger to key stakeholders

SAP Integrated Business Planning (IBP) Supply Chain Control Tower Sales and operations planning A A A A A P Demand Inventory Supply Response SAP HANA A A P Available Planned

SAP Integrated Business Planning (IBP) Supply Chain Control Tower Sales and operations planning A A A A A P Demand Inventory Supply & Response SAP HANA A A P Available Planned

SAP Supply Chain Control Tower Consider an airport control tower s real time visibility of all airlines events in the region. The air traffic controllers has all the relevant information presented to them in real time and are able to analyze, interpret and act on the information presented. They have a single interface to manage actions, corrective actions and communication with stakeholders. Taking these lessons learned into supply chain planning reacting to events in your supply chain timeously helps to prevent losses and increase profit. SAP enables global visibility of the supply chain linked to sales, operations and inventory planning in real time through the SAP Integration Business Planning solution delivered in the SAP Managed Cloud 2015 SAP SE or an SAP affiliate company. All rights reserved. 29

SAP Supply Chain Control Tower Understand current supply chain status with flexible dashboards Enable supply chain professionals to navigate, analyze and profitably manage the end-to-end supply chain in real-time Increase end-to-end visibility Provides historical and forward looking KPIs in a single view Drive visibility and action with user configurable dashboards and analytics Monetized impact of exception conditions Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA

SAP SUPPLY CHAIN CONTROL TOWER SAMPLE USE CASES KPI dashboard Global visibility Alerting to Action Task and Case management

SAP Integrated Business Planning for sales and operations Deliver a cross departmental sales & operations plan balancing the impact on inventory, service levels and profitability Create the optimal business plan to drive revenue growth and increase market share Effectively balance demand and supply and attain financial targets Increase speed and agility of planning and drive most profitable responses Improve forecast accuracy and on-time delivery Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA

SAP Integrated Business Planning for sales and operations S&OP process management Simulation Collaboration Dashboard analytics

Supporting different Business Models and Challenges

Net Business Impact Value Proposition with S&OP powered by HANA Benefits Real-time Planning Instant Simulations & Scenarios Plan in real-time, using a unified model of your demand, supply chain and financial data Analyze massive volumes of complex data instantly at any level of granularity, aggregation, and dimension Import massive amounts of detailed data directly from SAP and non-sap sources Rapidly run what-if simulations of demand, supply and financial changes using your full S&OP data model (30 to 40% improved response time) Compare planning scenarios and their impact on key performance indicators in realtime Drill down into simulated data to perform detailed analysis without the need for manual disaggregation Optimize product/customer profitability and product mix Single business plan for all stakeholders Avoid shortages Become prepared to seize opportunities or deal with imminent threats Lower safety buffers without raising risk Social Collaboration Track progress of the S&OP process, including assignment and monitoring of action items and the stakeholders responsible Collaborate quickly and easily using embedded role and context-aware social tools Plan using user-friendly web and Microsoft Excel interfaces Improve forecast accuracy through a faster and collaborative S&OP process Greater accountability & adoption from stakeholders

Net Business Impact Value Proposition with S&OP powered by HANA Business Impact 1 Standardize Process Standardize process with automated workflow and task management Enable collaboration with field providing ability for customer program managers to directly input forecast data Integration and consolidated data provides single version of the truth Participation & Accountability 2 Optimize Demand Plan Optimize demand planning by leveraging historical data (previous forecast, actuals, etc.) and current backlog data View different demand inputs to create a single consensus Forecast Accuracy (%) 3 Balance Supply- Demand Run financial impact simulations, e.g. revenue impact based on supply plan Perform constraint based supply planning Perform material and capacity analysis to balance supply-demand Inventory Costs 4 Real-time Data Refresh Real-time refresh of data fields including: product family, part number, ASP, customer master, form factor Run simulations in real-time to make better business decisions, faster Paradigm shift from time spent on data gathering to data analysis to uncover opportunities for improvement Time for Data Analysis vs. Gathering

Planning More Effectively with SAP IBP for sales and operations planning Company SMART Modular Technologies Inc. Headquarters Newark, California Industry High tech Products and Services Design, development, and deployment of current and next-generation memory products Employees 1,400 Web Site www.smartm.com Partner Intrigo Systems www.intrigosys.com Business challenges Planning processes that could not be scaled to keep up with fast company growth Lack of capabilities to support a value-driven and profitability-oriented sales and operations planning process that is linked to business strategy Technical implementation Implemented the SAP Sales and Operations Planning application powered by the SAP HANA platform Key benefits Standardized, optimized, and automated the sales and operations planning process, substantially reducing planning cycle times and workload Increased efficiency and accuracy of the forecasting process, and enabled the identification of critical component shortages Enabled integrated business planning SAP Sales and Operations Planning powered by SAP HANA helps SMART Modular manage our sales and operations planning in a collaborative and efficient manner. We see a single version of the plan from sales to planning to materials to the factory, all of which can be correlated to financial performance. The result is true integrated business planning. Srini Tanikella, Director IT Solutions, SMART Modular Technologies Inc. Unified Picture of sales, profits, and share targets, all in one system Fast Cycle times with fewer manual and laborintensive sales and operations planning processes Intuitive User interfaces and embedded collaboration tools that help boost user productivity 2015 SAP SE or an SAP affiliate company. All rights reserved. 37

There are two methods to get an accurate forecast They are both wrong

SAP Integrated Business Planning for demand Gain full Demand Transparency for short-, mid- and long-term forecasting by leveraging demand sensing and statistical forecasting methods Develop more accurate mid-term statistical forecasts React faster to short term demand changes with pattern recognition based algorithms Drive more accurate deployment of product based on short term demand Manage multiple demand signals Collaborate to ensure the most accurate forecast Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA

SAP Integrated Business Planning for demand Demand Sensing Scenario planning for demand Defining a forecast model Issue Resolution Fiori app

(great idea, though... let's talk about it in some year's time)

SAP Integrated Business Planning for inventory Optimize multi stage Inventory Targets to most efficiently meet or exceed customer service levels, fully considering uncertainties like forecast error and supply uncertainty. Improve customer service levels Maximize the efficiency of inventory and working capital Improve planner productivity, standardize planning processes Standardize the inventory target-setting process at each tier within the supply chain to feed operational plans Determine right amount, right place, and right time for inventory to carry while meeting plan objectives Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA

SAP Integrated Business Planning for inventory Inventory positioning in network Inventory & Service optimization Drivers of inventory What if analysis on inventory

Mastering complex hub & spoke supply chain model with SAP IBP for sales and operations and SAP EIS Company McKesson Corporation Headquarters San Francisco, CA, US Industry Pharmaceuticals Products Pharmaceuticals, Healthcare products, Medical technology Employees 43,500 Revenue US$ 122.455 billion Web Site McKesson.com Partner SAP Consulting Business challenges Spreadsheet-based planning approach prevented achieving aspired business growth targets Limited to no possibility to gain insight / analyze vast amounts of relevant data on the required levels of granularity Growing and enabling business organization quickly to fulfill growth targets Implementation Integrated solution for sales & operations planning and inventory optimization/replenishment planning SAP HCI pivotal piece of integrating IBP for s&o, EIS, ECC and BW One Business Unit globally first, subsequent Roll-out Key benefits Improved confidence in and integrity of the S&OP process Optimal inventory positioníng and level setting in complex supply chain environment Simplification of planning and fully exception-based procedures enabled scaling up the business organization quickly Aggregation/disaggregation on the fly through millions of relevant data records for rapid insight for business users Generation of optimal constrained and balanced business plan in line with corporate financial targets Simplification of sales and operations planning, the introduction of an optimized inventory positioning and replenishment process, and the rapid enablement of the human organization was key for scaling up the business according to the business growth targets. Jim Smith, Director of Solution Management, McKesson Corporation Increased User acceptance through centralized analytics and alerting Decreased Working capital through optimized invetory targets and levels Greater Speed, efficiency and effectiveness of planning process 2015 SAP SE or an SAP affiliate company. All rights reserved. 44

SAP Integrated Business Planning for supply Available now - will be upgraded to IBP for response and supply with IBP 6.0 Create tactical level supply planning simulations for S&OP based on forecasts, orders, and inventory or safety stock targets. Simulate either constrained or unconstrained production and distribution plan, using heuristics or optimization based algorithms Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA Multi level sourcing determination for both distribution and Bills of Material Development of rough cut capacity plan in a times series bucketed supply plan Gain visibility for projected stock or shortages at relevant levels of aggregation

SAP Integrated Business Planning for response and supply PLANNED Q4 (will supercede IBP for supply in 6.0) Fast, flexible supply planning supporting a variety of approaches, suitable for many industries, including: Support of tactical (time-bucketed, rough cut) supply planning in conjunction with IBP for sales and operation Create specific orders for production and procurement in short mid term, in alignment with tactical plan Supply Chain Control Tower Sales and operations planning Demand Inventory Supply Response SAP HANA Constrained optimization and priority rules-driven algorithms. Unconstrained demand propagation and heuristics options as well Make short-term supply adjustments What-if analysis of actual or hypothetical changes to demand and / or supply Pegging and gating-factor analysis Optionally generate and provide allocations to ATP, and reschedule sales orders

SAP Integrated Business Planning for supply&response Entry screen KPIs and alerts overview Back order processing and confirmation simulation Stock projection Demand supply pegging analysis

SAP Integrated Business Planning for supply&response Entry screen KPIs and alerts overview Stock projection Demand supply pegging analysis

Customers

Integrated Business Planning for sales and operations Customers and Industries Consumer Products Chemicals Mill Products & Mining Pharma Manufacturing High Tech Retail Services