1. The BW and APO Business Solution Succeeding in BW and APO Demand Planning Integration

2. Introductions Gary Sutera Gary has been involved in multiple full-cycle SAP Business Information Warehouse and APO Demand Planning implementations and has witnessed the evolution of the products first-hand. He has 5 years of ERP and data warehousing implementation experience and 10+ years of industry experience in plant management, sales, and material maintenance. He has also been involved in numerous business process improvement and data warehousing endeavors. He is certified in BW 2.0 and 3.0. Gary is the Business Intelligence thought leader for CoreVal, developing strategies and solutions to aid clients in data storage and reporting initiatives. He is a member of APICS and has become a skilled Value Chain analyst drawing on his years as a plant manager in the Packaging Industry and his many software implementations. He has written several industry white papers on the evolution of BW, and the utilization of BW as a data warehousing solution. He has also engaged in business development initiatives, including demonstrations and presentations at several industry conferences.

3. Introductions Jack Springer Jack has been involved in ERP consulting for the last seven years, assisting clients in determining the appropriate solutions that deliver return on investment. Previous consulting projects have involved Business Case and ROI Rationalizations, business strategic planning, acquisition and divestiture strategies, project planning and management throughout the full SAP implementation cycle, including strategic planning, analysis, design, development, and implementation. Prior to consulting, Jack has over 15 years of experience as V.P. of Finance and CFO in the Discrete Manufacturing and Retail industry sectors. He has worked in multiple computing environments. He possesses extensive functional expertise in financial, manufacturing and distribution systems in a variety of industries, including medical products manufacturing, discrete, repetitive and process manufacturing, consumer products, distribution, and others. Jack has led multiple business process reengineering activities and ROI Rationalizations for initiatives during his career within industry and consulting. In Q1 of 2002, he was the featured speaker in the “Achieve Tangible Returns on Investment’ Summit, held in ten cities across the United States. This Summit was sponsored by Microsoft, HP and SAP.

4. Agenda IntroductionsIntroductions State of Supply Chain AmericaState of Supply Chain America Version and integration enhancements for BW and APO Case study –Real Life Client Improvements –Alignment of Strategic Objectives to ROIC Model Questions and Answers

5. The Opportunity Succeeding in BW and APO Demand Planning Integration Optimized Plant and Supplier Scheduling Optimized Plant and Supplier Scheduling Business Planning Business Planning Transportati on Planning & Scheduling Transportati on Planning & Scheduling Execute Sales & Ops Planning DP Master Scheduling Demand/Supply Network Optimization Production Planning Business Opportunities Distribute Service Collect Cash Integration from business plan to collection of cash Integration of business processes into SAP tool Integrated, Aligned Collaborative Technology Tools Lower costs Customer satisfaction Correct inventories Process improvement Best Practices Enhanced forecast accuracy

6. State of Many Organizations Succeeding in BW and APO Demand Planning Integration Optimized Plant and Supplier Scheduling Optimized Plant and Supplier Scheduling Business Planning Business Planning Transportati on Planning & Scheduling Transportati on Planning & Scheduling Execute Sales & Ops Planning DP Master Scheduling Demand/Supply Network Optimization Production Planning Distribute Service Collect Cash Excel Spreadsheets SAP Core R/3 Plant Tools Legacy Systems Access Databases

7. The Solution Succeeding in BW and APO Demand Planning Integration  Holistic view of the organization  Process improvement mentality  Alignment of technology tools to support processes – Core R/3 – BW and APO –Non-SAP solutions  Utilization of KPM’s to measure improvement and performance  Total customer focus Business Process Mindset Elimination of Steps, Activities and Non-value Add System Alignment to Business Processes

8. Agenda Introductions State of Supply Chain America Version and integration enhancements for BW and APOVersion and integration enhancements for BW and APO Case study –Real Life Client Improvements –Alignment of Strategic Objectives to ROIC Model Questions and Answers

9. Succeeding in BW and APO Demand Planning Integration Show of Hands: Looking to implement both BW and APO Have implemented BW; looking at APO Have implemented APO; looking at full BW Have implemented both APO and BW; looking to improve

10. Our Focus Today Succeeding in BW and APO Demand Planning Integration Optimized Plant and Supplier Scheduling Optimized Plant and Supplier Scheduling Business Planning Business Planning Transportati on Planning & Scheduling Transportati on Planning & Scheduling Execute Sales & Ops Planning DP Master Scheduling Demand/Supply Network Optimization Production Planning Distribute Service Collect Cash APO DP APO Full Functionality

11. Succeeding in BW and APO Demand Planning Integration Application Overview SAP BW: Business Information Warehouse Part of SAP’s Business Intelligence suite, along with SAP Enterprise Portal SAP APO DP: Advanced Planner and Optimizer; Demand Planning Part of SAP’s Supply Chain Management suite, including all other APO modules (SNP, PP/DS, TLB, TP/VS, gATP), Inventory Hub, and Event Manager modules

12. Succeeding in BW and APO Demand Planning Integration BW 2.0B BW 2.1C APO 3.0 (BW 2.0B) BW 3.0A BW 3.0B X X X X X X X X X X X X APO 3.1 (BW 2.1C) SCM 4.0 (BW 3.0B) Integrated Compatibility BW 3.1 ContentXXX Beginning with BW 2.0B, a stand-alone BW solution integrates with APO 3.0 and later versions

13. Succeeding in BW and APO Demand Planning Integration BW 2.0B BW 2.1C APO 3.0 BW 3.0A BW 3.0B XX X X X X X APO 3.1SCM 4.0 Embedded BW Functionality Available BW 3.1 Content SAP APO 3.0 contains an embedded SAP BW 2.0B SAP APO 3.1 contains an embedded SAP BW 2.1C SAP SCM 4.0 contains an embedded SAP BW 3.0B

14. Succeeding in BW and APO Demand Planning Integration Application Enhancements SAP BW: More robust integration with other SAP solutions Better data management capabilities –DB Connect –Open Hub Improved data optimization tools Improved data presentation tools SAP APO DP: More robust automated forecasting tools Collaborative forecasting Improved use of BW functionality for demand planning

15. Succeeding in BW and APO Demand Planning Integration Example of Aggregated Forecasting

16. Succeeding in BW and APO Demand Planning Integration Integration Enhancements and Benefits: Integrated data warehousing Combination of structured and unstructured reporting Quicker time to information Quicker turn-around of demand plan to production plan Faster S&OP process cycles Streamlined business processes Improved organizational communication Data consistency Web-enabled reporting

17. Succeeding in BW and APO Demand Planning Integration

19. Landscape Considerations: Performance –Size of initial and on-going data loads –Timing of data loads vs. APO DP usage –Use of BW for overall reporting System Optimization –APO Demand Planning: forecast runs –BW queries: data retrieval runs Version Compatibility –Stand-alone BW vs. Embedded BW

20. Agenda Introductions State of Supply Chain America Version and integration enhancements for BW and APO Case studyCase study –Real Life Client Improvements –Alignment of Strategic Objectives to ROIC Model Questions and Answers

21. Succeeding in BW and APO Demand Planning Integration Client Situation It takes 2 weeks of each month to get through the Sales & Operations Planning process 7 plants, each doing their own forecasting, using independent methodologies Legacy mainframe, Access DB, and Excel are being utilized for forecasting process Many one-time reports are being created, with no regulation No integrated data between sales history and forecasts Each product line’s sales rep is updating their own forecasts, with no consideration to common sub- products Excel forecasts are e-mailed into central location from individual sales reps No automated forecast tools are being utilized

22. Succeeding in BW and APO Demand Planning Integration As-is Application Landscape: Plants Legacy Mainframe Sales reps E-mail Demand Planners E-mail Plants Demand Planners E-mail Sales reps E-mail Excel Access DB

23. Succeeding in BW and APO Demand Planning Integration Client Objectives Cut S&OP process cycle time from 2 weeks to 1 ½ weeks Consolidate forecasting of 7 plants into centralized department – top down forecasting Integrate current sales data with sales history Automatically account for promotions in forecasting Measure forecast accuracy against history Implement a forecast model that takes trend analysis and seasonality into account Automatically publish demand plans to OLTP MRP and production planning Develop web reporting on company intranet of demand plan versions, for sales rep updating

24. Succeeding in BW and APO Demand Planning Integration Solutions: driving a true picture of sales forecasting S&OP process cycle time cut from 10 days to 6 days Each plant uses APO DP interactive planning within an individual planning book, saved to liveCache BW MultiCube is used to integrate current sales data, historical sales data, and different versions of forecasts –Reports created to measure forecast accuracy and forecast trends, with running timelines that point out seasonal trends APO DP promotion functionality used Central demand plan is automatically sent from liveCache to R/3 MRP module Executive-level reporting developed that highlights forecast accuracy Exception reports are sent to each plant that highlight cross- plant forecasts of common products

25. Succeeding in BW and APO Demand Planning Integration New Application Landscape: BWAPO Interactive Demand Planning Plant specific planning books Reporting R/3 Source System Sales data Plan data Multi Cube Sales data Reporting Sales rep updates Reporting Unconstrained Forecast PlantsSales reps Flat File Sales History On-going Sales Demand Planners

26. Succeeding in BW and APO Demand Planning Integration Optimize Cash Flow Foundation for Global, Integrated DW Environment Optimize the S&OP Process All initiatives, including APO and BW, should be able to support one or more of an organization’s strategic objectives or initiatives. Below is a representation of the Case Study Client objectives and the alignment of the APO benefits to the Objectives. Reduce the S&OP process from two weeks to 1 ½ weeks Vastly improved forecast accuracy Capitalize on the tight integration with Core R/3 View Forecasts by Product Families, Geography, Business Unit over variable units of time Incorporate Promotions and seasonality adjustments into process Utilize integrated and consolidated forecasting techniques  Reduce excess inventory levels  Reduction of safety stocks  Identification of optimal inventory levels for products and customers  Strengthen the Balance Sheet  Correct utilization of plant and manufacturing assets  WEB based access, data creation and reporting  Consolidated data from multiple source systems  Multi-dimensional data modeling

27. Succeeding in BW and APO Demand Planning Integration Soft Benefits Achieved S&OP process cycle time cut from 10 days to 6 days One definition of forecast accuracy company-wide Optimized forecast process supported by technology “What if” analysis and data versioning promoted many views and considerations before conversion to the actual forecast Automated, accurate and integrated forecast means a realistic forecast WEB based entry, reporting and analytics delivered efficiencies in the sales force and analytics process

28. Succeeding in BW and APO Demand Planning Integration Invested Capital Net Working Capital Net PP&E ROIC Profit Revenue Costs SG&A COGS Inventories Strategic Objectives:  Optimize the S&OP Process  Optimize Cash Flow  Foundation for Global, Integrated DW Environment Demand

29. Succeeding in BW and APO Demand Planning Integration Demand Enabling Technologies ResultsMetricsRationale Constraints Business Process Enabler SG&A  Increased revenue through increased customer fill rates and reorders  Forecast Accuracy measurement  Elimination of headcount  Interest Expense  Legacy maintenance fees  APO DP  BW  APO DP  BW  Forecasting  Order Fulfillment  Forecasting  Extraordinary demand variation  Forecast accuracy increased needed available inventory resulting in higher fill rates of 4% and average reorder cycle improvement of 16 days  Promotion functionality enabled more correct inventory builds for revenue spikes  Increased revenue of $9.6 million @ 32% margin generated realizable ROI of $3,072,000  Consolidated forecasting techniques will allow a centralized concept of forecasting, eliminating the need for personnel at all seven plants  Reduction of interest on inventory borrowing  Elimination of legacy forecasting & reporting  Elimination of (3) headcount (loaded) generates annual reduction of $215,000  Formula of 50% availability on inventory @ 7% = $238,000  Elimination of fees & support of $82,000  Execution of redefined, centralized forecasting process

30. Succeeding in BW and APO Demand Planning Integration COGS Enabling Technologies ResultsMetricsRationaleConstraints Business Process Enabler Inventories  Material cost & variance  Labor cost & variance  Expedited transportation costs (incoming)  Inbound freight/material acquisition costs  Inventory days of supply (Product, Group, Customer)  Inventory obsolescence  Material overstock  Forecast accuracy  APO DP  BW  APO DP  BW  Forecasting  Order Fulfillment (Make)  Forecasting  False trends  Promotion, trend analysis and seasonality functionality enabled planning and smoothing of production schedules reducing “surprise demand”. Expedited materials and packaging were reduced and O/T and outsource labor were reduced.  Decrease in raw material premiums and price variances of $380,000  Reduction of excess demand generated overtime and outsource premiums of $178,000  Expedited inbound freight costs were reduced by $20,000  Improved forecasting and demand planning resulted in decreased safety stocks carried by some plants  Significant reduction of obsolescence  Rationalization of inventory by product and customer  Net inventory reduction of 9% representing $6.8 million  Offline systems and processes  Change management required to trust and use new system

31. Succeeding in BW and APO Demand Planning Integration Demand SG&A Inventory S&OP Cash Flow DW Foundation $3,072,000$0 $3,072,000 $215,000$238,000 $82,000 $535,000 $0$6,800,000 $0 $6,800,000 $10,985,000 $3,865,000$7,038,000 $82,000 ROI Summary COGS $578,000$0 $578,000 Strategic Objectives

32. Thank you for attending! Please remember to complete and return your evaluation form following this session. Session Code: [204]