Business Blueprint 1.1

BUSINESS BLUEPRINTFor

Sumitomo Chemical Asia Pte Ltd

Created by : Prajesh Dhasmana

Date of creation : October 2006

Changed by : Prajesh Dhasmana

Date of the last changes : 24 November 2006

Approval

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As a representative of the business, I approve and accept this document:

Approved by Title Signature Date

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Version Control

This table must be completed for versions 1.0and greater.

Version Number

Date Issued Reason for Update By

Version 1.1 First Issue Prajesh Dhasmana

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1. INTRODUCTION & OVER VIEW.................................................................................................6

1.1. INTRODUCTION.................................................................................................................................61.2. SYSTEM OVERVIEW.........................................................................................................................7

2. PHASE WISE TIME LINES..........................................................................................................11

3. PHASE II: SAP SYSTEM ONLINE AT SCA FOR FI AND HR. APRIL 2007........................12

3.1 BUSINESS REQUIREMENT OF SCA FOR ACCOUNTING...........................................................................133.1.1. List of Business processes SCA needs......................................................................................133.1.2. SAP relating documents...........................................................................................................13

3.2. BUSINESS REQUIREMENT OF SCA FOR HR....................................................................................143.2.1. List of Business processes SCA needs......................................................................................143.2.2. SAP relating documents...........................................................................................................14

4. PHASE III : PRE MARKETING PHASE: OCT 2007.................................................................16

4.1. BUSINESS REQUIREMENT OF SCA FOR SALES AND DISTRIBUTION (SD)......................................184.1.1. List of Business processes SCA needs......................................................................................184.1.2. SAP relating documents...........................................................................................................18

4.2. BUSINESS REQUIREMENT OF SCA FOR MATERIAL MANAGEMENT (MM).....................................204.2.1. List of Business processes SCA needs......................................................................................204.2.2. SAP relating documents...........................................................................................................20

4.3. BUSINESS REQUIREMENT OF SCA FOR LOGISTICS EXECUTION (LE)............................................214.3.1. List of Business processes SCA needs......................................................................................214.3.2. SAP relating documents...........................................................................................................21

4.4. BUSINESS REQUIREMENT OF SCA FOR FI(ADDITIONAL SUB MODULES IMPLEMENTED IN PH II).224.4.1. List of Business processes SCA needs......................................................................................224.4.2. SAP relating documents...........................................................................................................22

4.5. BUSINESS REQUIREMENT OF SCA FOR HR (ADDITIONAL MODULES IMPLEMENTED IN PH II)......234.5.1. List of Business Processes SCA needs.....................................................................................234.5.2. SAP relating documents...........................................................................................................23

4.6. BUSINESS REQUIREMENT OF SCA FOR COSTING (CO).................................................................244.6.1. List of Business processes SCA needs......................................................................................244.6.2. SAP relating documents...........................................................................................................24

5. PHASE IV. FULL OPERATION. OCT 2008(IMPLEMENTATION OF BW, CRM & EP). .25

5.1. BUSINESS REQUIREMENT OF SCA IN PHASE IV............................................................................265.1.1. Website for Communication with Customers...........................................................................265.1.2. Customer Relationship Management.......................................................................................265.1.3. Business Analysis.....................................................................................................................265.1.4. SAP and/or other software relating documents.......................................................................27

6. PHASE V – COMPLETE SYSTEM LANDSCAPE MARCH 2009...........................................28

6.1. BUSINESS REQUIREMENT OF SCA FOR DEMAND FORECAST AND OPTIMIZATION..........................286.1.1. List Of Business Process SCA needs for Optimization............................................................286.1.2. SAP relating Documents..........................................................................................................28

7. SIZING AND NETWORKING (BASIS) RELATING PROPOSAL..........................................31

8. APPENDIX.......................................................................................................................................32

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1. INTRODUCTION & OVER VIEW

1.1. INTRODUCTION.Company background

Sumitomo Chemical Asia Pte Ltd (SCA) was established in May 2006. Sumitomo Chemical Asia Pte Ltd (“SCA”) is a wholly-owned subsidiary by Sumitomo Chemical Co., Ltd. of Japan (“Parent Company”).

Saudi Arabian Oil Company (Saudi Aramco) and the Parent Company established a 50-50 joint venture, Rabigh Refining & Chemical Company (“PETRORabigh”) in Saudi Arabia in September 2005 to engage in a ten-billion-dollar project of upgrading the existing oil refinery and building new petrochemical facilities in the town of Rabigh and to operate those oil refining and petrochemical manufacturing facilities. The project is to be completed in late 2008 to start the operations. After the project, PETRORabigh will have the following production capacities:

They will upgrade the existing facilities of the oil refinery to 400,000 barrels/ day crude distillation unit with rather simple configuration

Current Post ProjectGasoline: None => 63,000 bpd

Naphtha: 77,000 => 71,000Fuel Oil: 151,000 => 89,000 etc

Petrochemical Product – Installation of new facilitiesPolypropylene resin (PP) 700,000 Tons/ Y

Polyethylene resin (PE) 900,000 Propylene Oxide (PO) 200,000Ethylene Glycol (MEG) 600,000

The Parent Company is entitled to market the petrochemical products worldwide (except Middle East) produced by PETRORabigh, while the refinery products (gasoline etc) are to be marketed by Saudi Aramco.

For the purpose of carrying out the said marketing, the Parent Company will use SCA as a vehicle for marketing control and coordination. Under a scenario with rather conservative oil price (crude oil price of US$35/ bbl), SCA will handle more than $2 billion worth of products per year. The manpower of SCA, as well as the overseas offices coming under SCA’s control, will exceed 50.

SCA will act as Control Center of PETRORabigh petrochemical products. SCA will off-take and market a vast volume of petrochemical products manufactured by PETRORabigh. In addition, SCA will operate as a marketing, sale, and distribution coordination center, which includes:

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- Primary responsibility for preparing global (excluding Middle East) marketing plan (e.g. overall marketing plan, pricing policy, product promotion, plan for supply chain and market development) for polymers.

- Control and coordination between the various sales channels for polymers/monomers including the Parent Company’s subsidiaries.

- Coordination between PETRORabigh’s manufacturing and SCA’s sales and supply chain. For this purpose, SCA will develop a highly integrated IT system for sales and logistics.

1.2.SYSTEM OVERVIEW SCA has a very lean structure. There will be around 50-100 people to run the entire operation. The entire HR function will be run by 1-2 people. A small SCM group will handle the logistics for more than 100000 containers per annum in multiple countries. The Sales and marketing group will like to maximize their time doing their core activities like spending time with customers instead of doing backend transactions. The lean structure will be supported by outsourcing of non core activities and support from IT systems. It is hence critical in this scenario that most operations are automated and are efficiently handled. In order to better respond to customer’s needs and to support its lean structure it has been envisaged to implement multiple IT systems.

SCA will have a backend transaction processing ERP which will handle the Finance, HR, Sales and Procurement functions. It has been decided to implement SAP R/3 as the backend ERP system.

SCA will have supply chain software which will facilitate the demand forecasting and planning as well as optimal utilization of the supply network. The software selection for the supply chain optimization will be done later based on functional fitment and cost. However for the purpose of this document we have used SAP’s APO application as a part of the solution.

Enhanced customer service is a key part of SCA’s differentiating strategy in the marketplace. Customer focus is a key part of SCA’s mission statement. In order to help in the management of customers and aid its sales force SCA will implement Customer Relationship Management (CRM) software.

SCA would be using multiple systems for providing different functionality. In order to use data from multiple systems, for analysis and reporting, it is envisaged that SCA will implement the Business Warehouse application of SAP.

SCA will also provide access to its customers to view data relating to them e.g. account information. SCA may also provide a view of the customer’s order status and delivery status. An evaluation will be done later to decide on whether SAP’s Enterprise Portal (EP) Application will be implemented or some other application will be developed. However for the purpose of this document we have used EP application as a part of the solution.

Since the number of dispatches by ships is very large it is essential to have a system for optimizing the transporter selection and cargo allocation. Since the automatic cargo allocation function is not present in SAP R/3 an evaluation will be done on whether to go for custom development in R/3 or go in for another application.

The polymer containers will be dispatched from Jeddah through shipping lines. These will be dispatched to Singapore, China or Europe either to SCA stock point or directly to customers.

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SCA will need to do booking of vessels in the systems provided by the shipping lines. These could be either through PSA’s CargoD2D or EDI to other systems. The 3rd party logistics providers will be handling the stock point inventory in various locations. The information of dispatches will need to be interfaced with SCA’s backend ERP system. In addition there will be interfaces with banks to exchange information and do automatic reconciliation in SAP. Hence a large no of interfaces will need to be developed with various business partners of SCA. At present the partnerships with various vendors have not been firmed up. The details of the kind of interfaces will be clear later.

The Application Architecture for SCA when all the IT Applications have been implemented will be as shown below:

Glossary:ERP-FI : Finance ModuleERP-HR: Human resources ModuleERP-CO: ControllingERP-SD: Sales and Distribution

EP

FI HR CO LEMMSD

ERP

FI HR CO LEMMSD

DP

GATP

APO

DP

SNP

APO

AM LM

Analytics

CSS

CRM

Interface to external systems

Application Architecture Mar 2009

BW

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ERP-MM: Material ManagementERP-LE: LogisticsAPO-DP: Demand PlanningAPO-SNP: supply Network PlanningCRM-LM : Lead ManagementCRM-CSS: Customer Service & SupportCRM-AM: Account ManagementEP: Enterprise portalBW: Business warehouse

The above application landscape envisages the implementation of the ERP, CRM, BW and APO or equivalent application. In the document we have used the supply chain solution as APO, however since the supply chain software will be evaluated and selected subsequently; it should be read as APO or the selected Supply Chain package.When the above application architecture is fully implemented by March 2009 the following departments at SCA will have application support in their operations:

Human Resources: The SCA HR dept will be able to handle the following functions through the HR module of the ERP system: Recruitment Career planning of Employees Benefits and Compensation Management of employees Time and Leave management Employee appraisal and performance management Training course management Travel management Payroll processing

Finance: The Finance department of SCA will be able to do the following through the FI module

of the ERP system: Financial Reporting Managing of Customer’s account Receivables Managing of Vendors Account Payables Management of Fixed Assets Tax Accounting Cash Forecasting and Liquidity Management including interfacing with banks.

The Management of SCA will also be able to use the CO module to do the following

functions: Analysis of Profitability Internal Segment reporting through Profit Center Accounting Analysis of overhead costs through Cost Center Accounting

Sales and Marketing: The sales group of SCA will be able to do the following through the SD module of the ERP. Sales Order Processing Processing of Customer inquiries Customer master maintenance Maintaining pricing information and calculation of prices in the sales order processing

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Processing of Consignment stock at customers location and SCE. Billing and related functions

The Sales and Marketing department at SCA will be able to do the following function through the CRM application: Lead Management Analysis of customers data through CRM Analytics Management of customer related information including activities related to customers like

sales call information Customer service and support

SCM: The SCM group within SCA would be able to do the following through the LE Module of ERP. Inbound logistics processing Creation and monitoring of deliveries and executing movement of goods (issue and

receipt) Execution of shipments planned in the APO application Calculation and settlement of freight and other costs related to the shipments

The SCM group will also be able to use the MM functionality to perform the following functions: Processing of purchase orders

The SCM group at SCA will also be able to do the following using the APO application: Forecast demand using various Algorithms in the Demand Planning module of APO Perform sales planning at the grade level in the Demand planning Module of APO Perform a mid term to long term plan optimized on cost for satisfying demand from

various sources (stock points and JV) using the SNP module of APO Perform transportation planning, choosing the shipping line and assigning the vessel to a

cargo (container) shipment in the custom application or custom development

The Enterprise Portal application will be evaluated for implementation based on and analysis of cost and benefits. This application would provide the following benefits: A single sign on and role based access to users for multiple applications. A platform for seamless integration of SAP’s applications and provision of a single screen

access for multiple applications Employees web based access to do self service transactions like booking leave, travel

expenses etc. A tool for Knowledge Management which can act as the knowledge repository for easy

management and retrieval of information.

The Management of SCA will be getting the following additional tools in order to aid their decision making: Analysis of trends in the market and customer buying pattern in the BW application.

The External systems mentioned here are links to 3PL systems, shipping lines, banks, custom houses, insurance COs, JV’s system etc. At the moment these linkages have not been decided as the partners have not been frozen.

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2. Phase wise time lines

Since the business is processes for SCA are being set up, the above application architecture will be rolled out in phases. SCA has decided on a phased approach for the implementation of the above architecture so that the applications are available when there is a need for them. Since the present Blueprint exercise is designated as the phase I, the subsequent phases start from Phase II.

The schedule for the phases is shown below:

Phase Implementation date Applications to be implemented

II April 2007 R/3 (FI, HR)

III October 2007 R/3 (SD, MM, LE, CO)

IV October 2008 R/3 (TR), CRM, BW, EP

V March 2009 APO

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3. Phase II: SAP System online at SCA for FI and HR. April 2007 The first phase of the implementation will start with the SAP system going “Live” with some functionality in FI and HR modules. Implementation of Phase II will be completed by April 2007. Since there are no logistics transactions in the system and hence no meaningful management reporting can be done, CO module will be implemented in Phase III.

The Application Architecture for this phase is shown below:

Glossary:HR-PY: Payroll HR-OM: Organization managementHR-PT: Time Management in HR ModuleHR-TR: Travel ManagementHR-PA: Personnel AdministrationFI-AM: Account ManagementFI-AP: Account PayablesFI-GL: General Ledger

In this phase the basic FI sub modules like GL (General Ledger), AP (Accounts Payable) and AM (Asset Management) and Master data and other critical sub modules of HR module will be implemented. The main objective of this is to start getting the financial statements from SAP R/3 and capture the basic HR organization and other master data in the R/3 system and enable the processing of payroll and leaves and travel related transactions for the employees.

ERP/R/3

Application Architecture Apr 2007

AM AP GL

FI

OM TM PYPAOM PT PYPA

HR

TR

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3.1 BUSINESS REQUIREMENT OF SCA FOR ACCOUNTING

SCA intends to start getting the Balance Sheet and Profit and Loss Statements from the system. SCA needs to process payments to vendors other than the JV (e.g. office supplies and payment of rentals etc). For the payment to the JV (which will start after Oct 2008) the final purchase price is known only at the time of the sale of the product. SCA’s margin is a fixed percentage of the fixed price with some expenses being reimbursable by the JV. Initially the procurement of the polymers and monomers is done at a provisional price which changes every quarter. The payment to the JV will have to be done after 45 days. However when the sale is made the difference between the calculated purchase price based on sales price and provisional purchase price needs to be reconciled. This is done along with the reconciliation invoice for the JV. Due to the above scenario there is an implication on the Inventory valuation of the finished goods. The final method of inventory valuation has not been decided and will be decided later.

There is a need at SCA to track the acquisition and disposal of assets. Additionally asset depreciation needs to be accounted for in the Profit & Loss statement as an expense and the Balance sheet statement to reflected value of the assets.

3.1.1. List of Business processes SCA needsPlease refer the BPML listing in Appendix11

3.1.2. SAP relating documents

3.1.2.1. SAP module list to be needed The GL sub module will get implemented in this phase so that the financial statements can start to be produced from the SAP application. In order to process payments to vendors the AP sub module of FI will be implemented during this phase. The standard system does not support the scenario for reconciliation of the JV payments. This will have to be addressed through suitable custom development and reporting. The Asset Accounting sub module will also get implemented during this phase in order to handle the acquisition, depreciation and retirement of assets by SCA. Since there is not going to be any sales transactions at SCA till the next phase the Account Receivable (AR) sub module will not get implemented in this phase. The Standard system will support SCA’s requirement in the GL, AA and AP except for the reconciliation of JV payment, which will require a custom development. Thus the FI sub modules that will be implemented in this phase are:

GL AA AP

3.1.2.2. Blueprint documents for FI

Please refer the Appendix5 for the GL Blueprint

Please refer the Appendix 6 for AP Blueprint

Please refer the Appendix 8 for AA Blueprint

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3.2.BUSINESS REQUIREMENT OF SCA FOR HR It is critical for SCA to have a system to process the payroll as soon as possible as the HR dept at SCA is very leanly staffed and the organization plans to recruit 50-100 employees in a short time period. Since there is no legacy system for processing of payroll it is imperative to implement a system for this in the phase II itself. Since the SCA staff will also be traveling quite extensively for market visits and putting agreements with service vendors (e.g. shipping lines etc) a system to handle the Travel related transactions will be required soon if SCA needs to avoid the hiring extra staff for doing this. Hence a system for travel management is envisaged in the Phase II itself. Additionally there is a requirement for the travel requests to be routed, in the system, to the employees’ manager for approval. During this period there is also a need to handle recruitment, master data and leave processing of employees. SCA also requires that there be an approval process for leaves and for the leave requests to be forwarded to the Outlook Inbox.

3.2.1. List of Business processes SCA needsPlease refer the BPML listing in Appendix11


3.2.2.1. SAP module list to be needed

After implementation in this phase the HR department at SCA will handle the recruitment and administration of employees through the PA (personnel Administration) sub module. Since a large number of employees will be inducted in this period PA is a critical module.

The Organisation Management sub module will be implemented in this phase as it is essential to put the organization structure and master data into the SAP system in order to implement HR module.

The payroll (PY) sub module, as pointed out earlier is a key module and needs to be implemented in this phase to process the salaries of the employees. This will require at least some parallel run (wherein the salary payslips are prepared manually as well as calculated in the SAP system) so that there are no errors. This will be a challenge considering the tight schedule for Phase II implementation.

The Time management (PT) sub module will be implemented in this phase in order to process the leave related data of employees.

In order to handle the travel related transactions, Travel management (TR) sub module will be a key requirement. However since SCA HR dept is very leanly staffed it might be a challenge to implement this module considering that the payroll module requires extensive testing and parallel runs and there will not be a full time HR person devoted to the project from SCA. Hence a judgmental call needs to be taken on whether implementing this module will be feasible in Phase II.

SAP Workflow will have to be implemented for implementing leave approval process and travel approval process.

SCA’s requirement will be supported in the standard SCA for the above modules except for some reports will require custom development. In addition workflow customization will be required.

The Following sub modules of HR will thus be implemented in this phase:

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PY: payroll.

PT: Time Management.

OM: Organisation Management.

PA: Personnel Administration.

TR: Travel Management.

3.2.2.2. Blueprint documents for HR

Please refer the Appendix3 for the Blueprint Document

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4. Phase III : Pre Marketing Phase: Oct 2007 In this phase SCA will start market seeding operations before the setting up of the JV production facilities in Oct 2008. This phase will be implemented by Oct 2007. The Application Architecture on the implementation of this phase is shown below:

Glossary:HR-PY: Payroll HR-OM: Organization managementHR-PT: Time management in HR ModuleHR-PA: Personnel AdministrationHR-TR: Travel ManagementHR-PD: Personnel DevelopmentHR-PE: Training and Event ManagementFI-AM: Account ManagementFI-AR: Account ReceivablesFI-AP: Account PayablesFI-GL: General LedgerSD-BF: Basic Function and master dataSD-PR: PricingSD-CM: Credit ManagementSD-SLS: Sales Order ProcessingSD-BL: BillingMM-IV: Logistics Invoice Verification MM-SRV: External Services management

BF SLS CMBL

SD

PR

ERP / R3

Application Architecture Oct 2007

OM PT PYPA

HR

TR PE PD

IM IV SRVPUR

MM

SHP TRA

LE

AM AP GL

FI

AR

CO

PCA PACCA OM

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MM-IM: Inventory ManagementMM-PUR: PurchasingMM-SHP: Shipping LE-TA: TransportationLE-SHP: Shipping CO-PCA: Profit Center AccountingCO-CCA: Cost Center AccountingCO-PA: Profitability Analysis

CO-OM: CO Organization Management

Since SCA would start procurement of material from suppliers other than the JV to be sold in the market, the logistics functions of R/3 will get implemented at this time. Thus the full SD and MM functionality will get implemented. The Account receivable sub module of FI will also get implemented at this time in order to monitor receivables from Customers and process the incoming payments. In addition to enable the Management of SCA to analyze profitability and costs based on different metrics it is also essential to implement the Controling Module (CO) of SAP. The Logistics Execution (LE) module of SAP which enables the dispatches and transportation of finished goods will also be implemented during this time. The transportation planning in this phase does not include the shipping line selection based on costs and availability. The purpose is just to enable the monitoring of shipments and the processing of cost related to the shipments. There is also a need to do the cargo allocation as per the required rules. The polymer containers that are being shipped to the ports on Vessels (floating inventory) would be needed to be assigned to sales orders based on the date of arrival and customers requested date. The cargo allocation function could be handled either through a custom development in R/3 or another application. However in SAP the batch would be assigned to the sales delivers. This process would reserve the stock to that order.

Due to optimally utilize the time of the SCA HR personnel it has been decided to implement HR module in Phases. Some core sub modules like Organisation Management and payroll would be implemented in phase II while Performance Management and Training and Event Management will also be implemented in phase III.

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4.1.BUSINESS REQUIREMENT OF SCA FOR SALES AND DISTRIBUTION (SD)

Since SCA will start selling to customers after the implementation of this phase the full Order Management functionality will be needed at this time.

The master data relating to customers will need to be maintained and the pricing information will need to be maintained. The pricing data (pricing and discounts etc) for the various products will need to be maintained. These could be maintained for different criteria like product grades, Application, customer groups, customers, region etc.

There will also be a need to enable the sales order processing including quotation processing to take care of offers to customers. SCA will also need to raise invoices to the customers. The sales orders which do not have stock allocated to them will get the allocation when the stock is received in the system. Also in the case of back to back orders (direct supply from JV to customer) the price in the purchase order will need to be calculated based on the sales price (96%) SCA would be supplying the products to customers only on their furnishing Letter of Credit or prepayment. Hence SCA would need a system to control and monitor the credit exposure to customers. In case the customer has a number of subsidiaries, SCA would like to control credit limit at customer subsidiary level and also customer group level (HQ). This may occur when credit limit at customer subsidiary is exceeded and allowed to proceed, however it will be blocked if limit at customer group level is exceeded.

4.1.1. List of Business processes SCA needs

Please refer to BPML list in Appendix 11


4.1.2.1. SAP module list to be needed The sales staff of SCA would need order management functions to be supported in SAP in this

phase. For this the Sales Order Processing sub module (SLS) will be implemented in this phase. The order management will allow sales reps to easily price and create sales orders for customers. For automatic allocation of stock to sales order without stock allocation (back order processing), a custom development will be required.

For maintaining the prices the Pricing (PR) sub module will need to be made. In order to invoice the customers based on the dispatches made to them the Billing sub module

(BIL) will be implemented in this phase. In order to control the credit exposure to customers the Credit Management sub module (CM) will

be implemented in this phase. However the standard system does not support the multi level credit control for subsidiary and HQ. This will have to be addressed through custom development.

In order to maintain the customer master data the Basic functions and master data sub module will need to be implemented.

It is envisaged that the standard solution will meet the SCA’s requirements except for the custom development for stock allocation to back orders. However some custom reports may need to be developed based on a detailed analysis of reporting requirements.

SCA would need the following sub modules of SD to be implemented in this phase: BF: Basic functions and Master Data

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SLS: Sales order Processing BIL: Billing PR: Pricing CM: Credit Management

4.1.2.2. Blueprint documentsPlease refer Appendix1 for the SD Blueprint Document.

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4.2.BUSINESS REQUIREMENT OF SCA FOR MATERIAL MANAGEMENT (MM)

SCA would start the procurement of polymers/monomers from various suppliers in this phase. SCA would be purchasing the finished goods from various suppliers, handling the movements of the inventory. This would include activities ranging from placing of purchase orders to the swap or other suppliers to receiving the goods and transferring of the goods from the various ports in Jeddah to other ports (Singapore, China or Europe) to SCA stock points or customer locations. These stocks could be managed by the third party logistics provider.

There would be a need to manage the inventory movements of the stocks. SCA would also be processing the purchases of various services like logistics services etc. The invoices processing for various suppliers for both goods and services would also happen in this period.


Please refer to BPML list in Appendix11


4.2.2.1. SAP module list to be needed There would be a need for SCA to use the R/3 system to handle the purchasing of the

polymers/monomers. This would include placing of purchase orders to the swap or other suppliers which would require the Purchasing sub module of MM.

Receiving the goods and transferring of the goods between various ports and management of Inventory would require the Inventory Management Module in this phase.

To process the invoices of vendors the Logistics Invoice Verification (IV) sub module of MM will need to be implemented.

The External Services Management Module will need to be implemented for process the payment to service vendors

SCA’s requirements will be met by the standard system. Custom development effort would be required for some reports. SCA would need the following sub modules of Material Management to be implemented in this phase:

PUR: Purchasing IM: Inventory Management SRV: External Services Management IV: Logistics Invoice Verification

4.2.2.2. Blueprint documentsPlease refer Appendix2 for the MM Blueprint Document.

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4.3.BUSINESS REQUIREMENT OF SCA FOR LOGISTICS EXECUTION (LE)

With the logistics operations starting at SCA the LE module will need to be implemented to support the logistics transactions.

There would be a need to assign cargo to sales orders, chose shipping lines and book the vessels.

There would be a need to monitor shipments and the costs related to the shipments.

There would also be a need to process the payment to the various logistics service providers as well as other charges as customs fees etc.

SCA would also need to control the issue of goods for various dispatches to customer and internal transfers.




4.3.2.1. SA SAP module list to be needed

LE module in SAP R/3 covers the execution aspects of Transportation providing a complete and integrated solution to create, execute, and monitor shipments.

The cargo Allocation and booking function is not supported in standard SAP and this critical gap will be bridged either through additional software application or through custom development in R/3.

The transportation sub module would be needed in order to create the shipments in R/3 and monitor their status.

The shipping sub module is needed to facilitate the delivery creation and goods movement in the system.

TRA: Transportation

SHP: Shipping to facilitate delivery processing

4.3.2.2. Blueprint documentsPlease refer Appendix 1 and 2 for the LE Blueprint Document.

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4.4.BUSINESS REQUIREMENT OF SCA FOR FI(ADDITIONAL SUB MODULES IMPLEMENTED IN PH II)

Since in this phase SCA will start selling polymers/monomers to the customers there would be need to monitor the receivables from customers. With the implementation of order fulfillment and billing functionality in this phase there will also be a need to monitor the receivables of the customers. SCA will also need to process payments and pre payments (down payments) from customers. Customer account information and dunning (reminder letters to customers for overdue payments) will also be handled by Finance Dept department of SCA.





For monitoring the customer’s receivables the Account receivables (AR) will be needed in this phase. This sub module manages customer accounting data and is an interface between SD and FI. The AR sub module will also support the recording of payments and down payments in the system. Customer account information and dunning (reminder letters to customers for overdue payments) will also be handled through AR sub module of FI module.

SCA’s requirements for AR will largely be met through the standard SAP system.

Hence the following sub module of FI will need to be implemented in this phase:

Account Receivables (AR)

4.4.2.2. Blueprint documentsPlease refer Appendix7 for the FI AR Blueprint Document.

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4.5.BUSINESS REQUIREMENT OF SCA FOR HR (ADDITIONAL MODULES IMPLEMENTED IN PH II)

In order to optimally utilize the time of the HR department personnel it has been decided that some of the functionality required by the HR department will be implemented in Phase 3.

The HR department of SCA needs to assign of employees to training programs and events management. The HR department of SCA would need to maintain a standard training calendar and assign employees to the training courses. There would also be a need for Ad-Hoc training organized for employees.

The SCA department needs to track employees’ career plan and succession plan for key positions.

4.5.1. List of Business Processes SCA needs

Please refer to BPML in Appendix11



The Personnel Development (PD) sub module can help plan and implement specific personnel and training measures to promote the professional development of SCA employees. It would enable the planning of qualification up gradation of employees. The PD sub module will also enable SCA managers and HR dept to do career and succession planning.

The Training and Event Management (PE) sub module would be implemented in order to enable the HR department of SCA to maintain a standard training calendar and assign employees to the training courses. Also any ad hoc training needs for employees would be registered in the system by creating a new training and assigning the employee to it.

SCA’s requirement in these sub modules would be satisfied by the standard system.

The following sub modules of HR will be needed to be implemented in this phase:

PE: Training and Event Management

PD : Personnel Development

4.5.2.2. Blueprint documentsPlease refer Appendix 3 for the HR Blueprint Document.

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4.6.BUSINESS REQUIREMENT OF SCA FOR COSTING (CO)

With the start of the purchasing of polymers/monomers and sales to various customers there would be a need for the management of SCA to analyse the various costs and profitability according to various criteria. This would be critical as the systems get established for the full operation commencement with JV’s production going on-stream.

There would be a need for the SCA management to analyze costs and revenues by market segment, which could be grades, customers and customer groups, orders, region or country or any other market segment. The analysis could be to calculate the contribution margin for each market segment or for analyzing the cost of servicing a customer segment or the profitability of a particular grade.

Since the transportation costs are to be reimbursed by the JV and hence are not treated as expense in accounting. However for the purpose of the profitability Analysis these cost need to be considered.

There would be a need to analyse the inventory carrying costs and transportation costs in this period in order to arrive at an optimum operating model on full operation in October. 2008.

SCA plans to assign revenue and cost responsibility to polymers and monomer products separately and below that to the region level.





The Profitability Analysis (PA) module in R/3 will need to be implemented for recording and analysis of costs and profitability by various segments.

The Profit Center Accounting (PCA) and Cost Center sub Modules of R/3 would be needed to facilitate the internal reporting for revenue and cost.

The Cost Centre Sub module records costs incurred during the company operations by assigning them to cost centers (assigned to managers or organizational units).

The standard solution will mostly support the CO requirements except for some reports which might be required.

Hence the Costing (CO) modules that will need to be implemented in this phase are:

Profit Center Accounting (PCA)

Cost Center Accounting (CCA)

Profitability Analysis (PA)

4.6.2.2. Blueprint documentsPlease refer Appendix 4 for the CO Blueprint Document.

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5. Phase IV. Full Operation. Oct 2008(implementation of BW, CRM & EP)The Application Architecture on the implementation of this phase is shown below:

With the JV plant being commissioned at this time, there would be a need to implement additional modules. Additional functionality will get implemented by Oct 2008. In this phase there is a need to implement the CRM functionality in order to capture the sales force activities and management of Customer base. Since full sales and procurement operations would start this time there would be a need to do estimate the payment (cash) flows from the company in the near term forecast. There would also be a need to interface with the banks so that automatic processing of the bank statement and reconciliations can be done. For this purpose the Treasury Module of FI will be implemented in this phase.In order make better use of business information in the various transaction processing applications like ERP, CRM etc SCA will need BW to be implemented in this phase. BW will enable the users to create or run simple excel based queries which could make use of data in the different systems.

EP

FI HR CO LEMMSD

ERP

FI HR CO LEMMSD

AM LM

Analytics

CSS

CRM

Interface to external systems

Application Architecture Oct 2008

BW

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5.1.BUSINESS REQUIREMENT OF SCA IN PHASE IV

5.1.1. Website for Communication with CustomersSCA website is required for displaying SCA company/ Products/ Product Catalog information. It should also have a provision to store prospect customer’s details, their enquires and need to be effectively handle the data volume. It should also be equipped with tools like inquiry form, communication form (that is used to send the customer’s feedback back to SCA, for example a “Contact to SCA” or “Reply to SCA”). This website should be seamlessly integrated with SCA’s CRM system to conveniently handle the processes such as Technical Support System, Customer Complaint etc. It should be also integrated with employee database so that SCA employees can query/update their own records for example, designation, leave request etc via SCA’s intranet. If SAP EP is implemented then, though these features are available, the integration aspects of all these components/processes need to thoroughly analyzed. Additionally an EDI subsystem needs to be installed as the same will take care of the SCA’s EDI communication with partners such as SCA’s JV, channel partners. SCA can opt for a SAP certified EDI solution partner for such EDI implementation as it guarantees the compatibility with SAP systems.

5.1.2. Customer Relationship ManagementSCA needs the Customer relationship management (CRM) solution to effectively manage the it’s customer base. The proposed CRM solution needs to process such as the Account information/planning, Lead Management and Customer Service. It should also able to incorporate the Sales Force Automation(SFA) process that is indeed very helpful for predicting the sales forecast (and hence the pipeline revenue) by taking into consideration of various parameters such as potential opportunities. SFA also automates some of the company's critical sales and sales force management functions, such as, lead/account management, contact management, opportunity management etc. Furthermore, since SCA is envisaging to have Cargo Tracking System (CTS) for its inbound as well as outbound logistics, the integration aspect of the SCA website/CRM system with 3P (third-party) IT systems needs to thoroughly analyzed

5.1.3. Business Analysis Since the success of a company like SCA depends on how accurately the past data is analyzed, CRM analytics will significantly help SCA in apt analysis of Customers, Products, Sales and Service related activities. The effective analysis followed with a strategic decision will aid SCA in great way to achieve its business objectives. For CRM analytics to be operational, a data warehouse component such as SAP BW system needs to be implemented. The BW (Business Warehouse) is not only helpful for CRM Analytics but also highly useful for analysis of other data such as Logistics, Financial and Controlling (for example CO-PA) through well designed reports. Since SCA is planning to implement Knowledge Warehouse component for its business (esp as a part of Customer Service), the BW component is a prerequisite for KW. The Enterprise Portal (such as SAP’s Net weaver) coupled with BW/CRM systems will definitely facilitate SCA to have a rewarding integrated solution that can really make a difference for SCA in the future.

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5.1.4. SAP and/or other software relating documents

5.1.4.1. Software list to be needed

For the Website the Enterprise Portal Solution of SAP will be evaluated by SCA. A cost benefit analysis will be done in comparison to hosting a website and developing the web applications.

For the CRM functionality SAP’s CRM will be needed. However this will be evaluated later for a functional and cost fitment against other products in the market.

For the Business Analytics the SAP CRM Analytics along with SAP Business Warehouse (BW) is proposed to be used.

5.1.4.2. Rough Blueprint

Please refer Appendix 13 for a more detailed discussion of the above.

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6. Phase V – Complete System Landscape March 2009 After this phase the complete application architecture of SCA will be in place.The modules to be implemented by March 2009 are: APO: DP, SNP. Since DP requires historical data for reasonable forecasts and SNP would require the stabilization of the supply network it is recommended that these modules get implemented after the entire system has been online for 5 months. APO or equivalent software will be selected after evaluation. BW: additional requirements. Some additional requirements may be required with the implementation of additional modules

6.1.BUSINESS REQUIREMENT OF SCA FOR DEMAND FORECAST AND OPTIMIZATION

6.1.1. List Of Business Process SCA needs for Optimization


6.1.2. SAP relating Documents


The Following modules have been proposed to be implemented in this phase considering APO or some equivalent product:

Demand Planning (DP)

Supply Network Planning (SNP)

6.1.2.2. Rough Blueprint In this phase, the business planning process would need to be supported by an advanced planning system. Based on historical sales, a baseline forecast would be generated by the system as a guide to better forecasting. Sales personnel would use the baseline forecast and modify it to reflect existing market conditions and come up with a rolling three monthly forecast.

The forecast by the sales personnel can be aggregated up to the product level and the country/region level. The forecast can also be aggregated by customer group level, if such groups are defined in CRM. The aggregated forecast can be viewed by the central sales and marketing personnel and modified/fine tuned based on their assessment of market conditions, market intelligence and the company’s product portfolio plan. Central sales and marketing personnel can also check on forecast versus actual orders booked for the previous period. This would help in identifying trends such as over forecasting and under forecasting by different sales regions/personnel. Comparison can also be done with the annual plan to check whether sales in progressing in line with plans drawn up at the start of the year.

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The forecasted sales are then subjected to the constraints in the system. The constraints could be the production volumes by grade, number of grades that can be made in a month, requirement of safety stock and need to lift the material produced by the supplier. If forecasted sales are greater than the supply quantity, then the company could decide which forecast it would like to fulfill. This could be based on a combination of the company’s portfolio plan, the customer relationship strategy and profitability. If Optimization is used to constraint supply plans, then in case of supply< demand, the system will suggest optimal plans based on SS levels, forecast and cost parameters defined in the system (transportation cost, storage cost etc). If forecast is lesser than the supply quantity, then the company may explore alternate options of increasing demand such as tapping new markets or special pricing schemes or changing the product mix.

The meeting to constrain the Sales forecast, called a Sales and Operations Planning meeting (S&OP), should be a cross functional meeting with representatives from Sales, Marketing, SCM and Finance involved. Information from the supplier on available capacity, shutdowns and grades that can be produced and their quantities would be required. Marketing would come to the meeting equipped with information on competition and pricing in the next three months. SCM would highlight constraints either in shipping or in handling/storing. Plans to address these constraints would be discussed.

The output of the constraining would be the following Grade wise volumes to be sourced from the supplier called as the Supply Plan Volumes of material to be transferred between stocking location called the Offtake Plan.

Information on current stocks, stocks in transit and safety stocks required would be inputs to the finalization of the Supply and Offtake Plans. The Supply Plan would be used by the supplier to produce. This plan would get revised every month.

The Offtake Plan would be used to get an initial assessment of the volumes to be shipped. This would be an initial indication to the carriers as to the cargo to be shipped during the period. Every week the actual cargo to be moved would be arrived at based on actual orders and stocking requirement. This would be further used by the transportation planning process to finalise the vessel and further by logistics execution to facilitate the movement of the products.

Before finalizing the Supply Plan, the company can generate various alternatives and compare them. One alternative could be to satisfy the most important customers first and the others later. Another alternative could be to satisfy the most profitable orders/forecasts. The finalized Plan would be arrived at after the cross functional discussions on actions to address or overcome constraints in the system. The finalized plan will be the working document on which the company will operate.

The actual performance against the finalized supply plan would be compared every month and analysis carried out to identify the variances. Plans to reduce these variances in the future would be discussed.

Proposed Solution A combination of APO – DP and SNP modules and BW are required to support the process in this phase. This will be required in March 2009.

The historical information on sales forecasts and actual sales will be stored in BW. Demand Planner would use this information and apply forecasting models to generate the baseline forecast. The Demand Planner would store the information in a multidimensional data structure that would enable it to

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aggregate the information and drill down the aggregated information. Once finalized, the forecast can be frozen. Demand Planner can also be used to calculate various measures such as forecast accuracy.

Supply Network Planning matches purchasing plan to demand and balances and optimizes the entire network. Constraints such as production capacities, inventory requirements along with the master data would be maintained in R/3. Supply Network Planning would extract the relevant master data and use it for carrying out the Planning run. The matching of demand and supply is done either using heuristics or optimization. Heuristics determines a feasible plan. It considers lead time and calculates dependent requirements. Optimisation works on meeting the objective function using either a linear program or a mixed integer program or network flow algorithms as appropriate. Planning books are used to generate multiple plans. What-if Simulations can be carried out to generate multiple scenarios which can be used for comparison. The output of the optimization/heuristic would be the supply plan – the quantities that need to be purchased and the offtake plan – the movements required in the entire supply chain network.

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7. Sizing and Networking (Basis) relating proposal

The technical landscape of Sumitomo after phase V will be as shown below.

3

Sumitomo Employees

User Community

SAP Enterprise PortalSAP Enterprise Portal

Other Systems/External Systems

Message Bus and Transformation

SAP Applications

SSO & URL based Authorization

Sumitomo LAN

WebSphere Message Broker

SAP BISAP BISAP CRMSAP CRMMySAPMySAPERP ERP SAP SCMSAP SCM

Portnet JVCustoms Sys.

WMS x n 3PL Cargo D2D

Jeddah WMSSystem

InsuranceSystem

ShippingSys

B2B Layer WebSphere Partner Gateway

Network Layer Intranet VPN/Extranet-Internet

SAP Adapter WebSphere TX Extender

Tivoli Storage Mgr

In addition to the application there are certain additional components which are required for technical infrastructure.

Message Bus and Transformation layer. This layer would essentially aid in the interchange of messages (EDI or XML etc) including routing and format transformation. For solution purposes the WebSphere products are shown but it could be any equivalent product.

B2B Integration. This layer would handle the connection, security and protocols for the connectivity to partners. Though the Websphere partner gateway is shown here for the purpose of the solution, it could be any equivalent software.

For details and Phase wise landscape please refer Appendix10

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8. AppendixAppendix 1: Marketing and Sales

Appendix1A: Sales Scenarios

Appendix2: Logistics

Appendix 3: HR

Appendix4: CO

Appendix5: FI-GL

Appendix6: FI-AP

Appendix7: FI-AR

Appendix8: FI-AA

Appendix9: FI-TR

Appendix10: Infrastructure

Appendix10B: Hardware Sizing

Appendix 11: BPML

Appendix12: Overall process Map

Appendix 13: CRM

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