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SAP S/4HANA Value Starter EngagementPoint of View: Example CustomerPUBLIC
SAP S/4HANA Value StarterWhat is this document?An Outside-In Analysis of Your Strategic Priorities(impacted by Internal and External Factors)A Point of View of how SAP can help you achieve your Strategic Priorities and how someof your other peers are making their MOVEDelivered as part of the SAP S/4HANA Value Starter Engagement as a starting point todefine a Benefits Assessment & Next Steps aligned with your Priorities 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public2
Industry situation, trends and challengesStrategic Priorities, Impact Areas and Value DriversReferences, Proof Points and further information 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public3
Capitalizing on Trends for Value Creationin the Building Products IndustryKey Challengeswithin your industryKey Trendswithin your industryKey Value Creation Leverswithin your industryDemanding customersSmart factories & distribution networksListen, sell, plan and source Socially connected customers 360-degree view of customer Omni-channel business Providing vital information across the network andenabling better collaboration Segmentation & brand management Improving real-time analysis Planning and scheduling with collaborativeplanningChanging playing fieldValue-added services and new businessmodelProduce safely and sustainably Digitalization or interconnection of products andservices Energy management with optimized energy mixand use Outcome-based services can both increasecustomer satisfaction and revenue Quality: meeting expectations at lowest cost.Work safety in tracking environment and warningworkers Competition coming in from industries as varied asretail and high tech Diversified products Smart homesGlobal operations Increasing global activities Procurement with machine matchingOperating for purposeDeliver, track and trace Complex supply chain Products that are designed and built withsustainability topics in mind Volatile raw material prices Leads to purchase decisions Maintenance through optimized assetperformance Leads to employee engagement Service with optimized asset performance 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicAdapted from White Paper for the Building Products Industry at www.sap.com4
Industry situation, trends and challengesStrategic Priorities, Impact Areas and Value DriversReferences, Proof Points and further information 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public5
Strategic Priorities for Example CustomerExample Customer’s STRATEGY IS FOCUSED ON continuing to growbusiness continuing to focus on Process Excellence Use of the most modern IT & equipment Standardized processes ensure to meetsustainability commitments(reduction of 30% greenhouse gasemissions by 2025) reacting on trends andnew mandatory regulations(European regulation on chemicalbuilding products ECBP) 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicWhile doing so, ExampleCustomer needs to focuson accelerated revenue growth( 5% increase in main business,and 20% in emerging markets) cost control & marginimprovement (Decrease costsfor raw materials and logisticswith improved Sourcing) improve operational efficiency expanding internationally intomarkets in Africa and South America(new offices in Nigeria and Colombia)Sources: Company Website, Annual reports6
��s View on some of Example Customer’s Strategic PrioritiesYOURStrategicPriorities01Continue to grow company’s mainbusiness and in emerging markets02Focus on Process Excellence03Ensure to meet sustainability commitments04Expand internationally05React on trends andnew mandatory regulationsSource: Annual Report & Other publicly available information 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public7
Multiple Value Drivers improved In Building Products by SAP solutionsVALUE LEVERSREVENUE GROW THPROFABILITYASSET EFFICIENCYSTRATEGICImpact AreasSales volume,New business models M&ACOGS, SG&A,Pre-tax marginFixed assets (PP&E),Working capitalAgility, Experience,Risk, InsightsPrimaryValue DriversOther KeyValue DriversExample Customer’sStrategic Priorities Reduce time to market fornew products Increase revenue fromnew products / services Reduce un-planned downtimeor outages Reduce finance costReduce total manufacturing costReduce service and support costImprove procurementFTE productivity Reduce sales cost Reduce days in inventory Reduce days sales outstanding Improve on-time deliveryperformance Improve customer satisfaction Increase employee engagement Reduce revenue loss due tostock-outs Increase revenue from crosssell/up-sell Reduce customer churn Optimize research anddevelopment expense Reduce inventory carrying cost Reduce turnover Improve accounts payableFTE productivity Improve days payableoutstanding Support mergers & acquisitions Improve overall equipmenteffectiveness Increase sales forecast accuracy Increase financial forecastaccuracy01 – Continue to growcompany’s mainbusiness and in emergingmarkets02 – Focus on processexcellence04 – Expand internationally 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public02 – Focus on processexcellence03 – Ensure to meetsustainability commitments05 – React on trends andnew mandatory regulations8
SAP Business Capabilities can enable Example Customer’sStrategic Priorities & Supporting ProcessesClick here for the Building Products Shareholder Value Map05 – React on trends andnew mandatory regulationsStrategicPriorities 03 – Ensure to meet sustainability commitments01 – Continue to grow company’s mainbusiness and in emerging markets02 – Focus on process excellence are enabled bySAP BusinessCapabilities by drivingmaturity acrossbest practicesacross Core LoBs& E2E processes Portfolio and ProjectManagement Buy and deliverdirect goods Product Development Central Procurement Commercial ProjectManagement Procurement Analytics Supplier & RiskManagementR&DProcurement04 – Expand internationally Plant and AssetOperations Excellence Quality Management Industrial Insights Environment, Healthand Safety Manufacturing Execution Manufacturing NetworksManufacturing Order Promising Quote to Cash Product Compliance Sales Force Support Warehouse Management Order and ContractManagementSupply ChainSales & MarketingCORE FINANCEHR 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public9
Benchmarking indicates significant Value PotentialKEY PERFORMANCEINDICATORSBOTTOM QUARTILERevenue growth (in %)Peer company 1Operating margin (in %)Example customerCost of goods/servicessold (% revenue)Peer company 4Example CustomerTOP QUARTILE5.8Peer company 2Impact Areas for ExampleCustomer0.66.8Peer company 3Accelerate revenue growth84.167.1Example customer-9.9-9.7Cost control & margin improvement8.4SG&A expense (% ofrevenue)Peer company 215.0Days in inventoryPeer company 468.351.65.4Peer company 348.1Peer company 1Manage credit & receivablesFinancial numbers of Example customer are based on Group/Parent level informationDirectional overview based on Peer set: Peer company 1, Peer company 2, Peer company 3, Peer company 4Source: S&P Global Market Intelligence. Data is normalized by S&P for comparative purposes and might not exactly match the financial filings of the companies. 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public10
SAP S/4HANA can play an important role in helping Example Customerimprove Opportunity & Strategic Areas and transform its businessFinanceAcceleraterevenue growthReduce G/L Effort andFinancial Closing Time:by enabling automated, highlyefficient closing taskssupported by single source oftruthSourcing & ProcurementReduce revenue loss due tostock-outs: by searchinginventory using rich, descriptiveitem descriptions, multipleimages, videos, and stocklevels by locationSalesSupply ChainImprove customersatisfaction: by generatingclear, easy-to-understandinvoices for all services on asingle billManufacturingAsset ManagementReduce manufacturing cycletime by seamlessly integratingquality monitoring and trackingin the manufacturing cycleReduce unplanneddowntimes or outages:Leverage preventive orcondition based maintenancestrategies to keep assets in ahigh performance statusReduce total manufacturingcost: by embedding qualityengineering in the productdesign processReduce fixed asset serviceand maintenance costs:Enable streamlined work orderplanning and execution, whileincluding effective safetymeasuresIncrease revenue from crosssell/up-sell: by recommendingcontextual offers that are morelikely to be accepted bycustomersCost control &marginimprovementReduce finance cost byproviding a holistic view of thedrivers of cost and the causesof underperformanceReduce inventory carryingcost: by optimizing inventoryusing prediction aboutpurchase order item deliverydateReduce service and supportcost: by automaticallyrecording costs incurred as aresult of providing services,which are then rolled up toprofitability analysisReduce Sales Cost: bypromoting trusted customerand partner relationshipsManage credit &receivablesReduce days salesoutstanding: by taking astrategy-based approach toprioritizing customers forcollections activities 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicImprove days payableoutstanding: by enablingeffective liquidity planning byupdating cash managementrecords with invoice dataReduce accounts receivablesmanagement cost: byconsolidating invoices andbilling items from multiple linesof billingImprove demand forecastaccuracy: by leveragingsophisticated forecastingalgorithms that take intoaccount seasonality, trend, andall known demand-influencingfactorsImprove supply chain FTEproductivity: by establishingeffective collaboration withinternal and external partnersReduce days in inventory: byanalyzing inventory coverageand ensuring inventory isaligned with demand throughtotal visibility11
Industry situation, trends and challengesStrategic Priorities, Impact Areas and Value DriversReferences, Proof Points and further information 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ Public12
Building Products Industry Shareholder Value MapIMPACT AREASKey OutcomesRealized Proof Pointsacross Value DriversREVENUE GROW THPROFABILITYASSET EFFICIENCYSTRATEGICFaster Time to Market, Increasedportfolio of Products/Services, NewRevenue StreamsEnabled Intelligent and autonomousprocesses, Reduced Costs, OptimizedR&D Spend, Improved Sales ProductivityReduced inventory levels, OptimizedCAPEX, Improved uptime andasset utilizationImproved customer satisfaction,Reduced TCO, Improved Agility,Increased Scalability, ReducedBusiness & Technology Risk, ImprovedDecision Making, Reduced emissionsfrom operationsFUYANG DAKE NEW MATERIALSIncrease revenue growth with betterproduct personalization Increase the qualified rate ofcustomized furniture by 99%FUYANG DAKE NEW MATERIALSReduce total manufacturing cost Increase the accuracy of costaccounting and reduce productioncost by 10% Reduce labor cost and working timeby 50% with unchangedmanufacturing outputFUYANG DAKE NEW MATERIALSReduce days in inventory Reduce the inventory counting timefrom 1 day to 2 hours and improvethe inventory turnover rate by 20%GEOGRAPHEImprove customer satisfaction 97% on-time delivery for increasedcustomer satisfactionReduce time to market for newproducts Increase the productionefficiency & capacity of customizedfurniture 3 timesEXIDEReduce customer churn 25% improvement in customerretentionKATERRAReduce COGS with better productdesign 50% Potential savings in buildingtime and costsNEWSEGAReduce inventory carrying cost 6% cost reduction for the finishedproduct due to optimized inventorycontrol (lowering inventory workingcapital by 8%”) 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicTALCAImprove days payable outstanding Vendor payments went down from 90days to 15 – 20 daysEDGEWELLIncrease sales forecast accuracy Improve on-time deliveryperformance Captured demand and increased ontime delivery rates while reducinginventory-carrying costs. Unifiedmanufacturing and inventoryoperations globally, boostingefficiency and slashing overheadNEWSEGAReduced TCI Go-live in just 3 months, surpassingmanagement expectationsClick here to view a comprehensive list of S/4HANA driven Value Proof Points for LoB/Industries13
Building Products Industry Shareholder Value MapOutcomes: Realized!IMPACT AREASKey OutcomesWhat Outcomesare others realizing?(Business & IT)REVENUE GROW THFaster Time to Market, Increasedportfolio of Products/Services, NewRevenue StreamsPROFABILITYEnabled Intelligent and autonomousprocesses, Reduced Costs, OptimizedR&D Spend, Improved Sales ProductivityROYALSTAR“Make more-accurate, data-drivendecisions about market expansion,product replacement, and R&Dthrough real-time access to dataregarding marketing, finance, andconsumer behaviors”EVEREST SPICES“With the real-time insights providedby SAP S/4HANA, we’re able to reactquickly to identify and resolve anyissues in our supply chain, helpingensure that our products reachcustomers in optimal condition”JAPAN TOBACCO INTL.“To be fit for the future, we needcapabilities that allow us toconsistently deliver high-qualityproducts and launchinnovations fasterTAT DUZEY“Düzey is an important partner forTAT. We now work together betterthan ever and are saving big interms of effort and costs.” 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicASSET EFFICIENCYReduced inventory levels, OptimizedCAPEX, Improved uptime andasset utilizationGUANGZHOU SHUANGQIAO CO.LTD.STRATEGICImproved customer satisfaction,Reduced TCO, Improved Agility,Increased Scalability, ReducedBusiness & Technology Risk, ImprovedDecision Making, Reduced emissionsfrom operationsALCOHOL SIBERAIN GROUP“Alcohol Siberian Group digitalizedits operations and uses data-drivendecisions to respond faster toshifting consumer tastes”14
Featured Story: Customers Are Achieving Value with SAP SolutionsFuyang Dake New MaterialsIndustryMill Products – furnitureCustomer Web Sitewww.dakecn.com (Chinese)Click here to read thebusiness transformation study.SAP SolutionSAP S/4HANA Cloud*Increase revenue growth withbetter product personalizationIncrease the qualified rate of customizedfurniture by 99%*Reduce total manufacturing costIncrease the accuracy of cost accounting and reduceproduction cost by 10% Reduce labor cost and workingtime by 50% with unchanged manufacturing output*Reduce time to market for new productsIncrease the production efficiency &capacity of customized furniture 3 times*Reduce days in inventoryReduce the inventory counting time from 1 day to 2hours and improve the inventory turnover rate by 20%Fuyang Dake New Materials Co. Ltd., a privately owned fiberboard producer, wanted toexpand into the customized home furnishings market. The company implemented SAPS/4HANA Cloud to help it transform to a design-to-production business and address theneed for both customization and mass production. Fuyang Dake has been able toincrease the production efficiency and capacity of customized furniture by 3 times whilereducing labor cost and working time by 50%. 2021 SAP SE or an SAP affiliate company. All rights reserved. ǀ PublicExplore SAP S/4HANA customer stories and videos; find out how organizations that have made the shift to an intelligent ERP system are realizing remarkable result15
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SAP S/4HANA can play an important role in helping Example Customer improve Opportunity & Strategic Areas and transform its business . Reduce accounts receivables management cost: by consolidating invoices and billing items from multiple lines o
