SAP and the Chemical Industry

SAP and the Chemical Industry

SAP Industry Business Unit ChemicalsMarch 2009

1. SAP & Chemicals2. SAP & Associations, User Groups3. Industry Value Network4. Upcoming Solutions for Chemicals5. Customer Successes

Agenda

© SAP 2009 / Page 3

The Chemical Ecosystem – High Level View

Oil&Gas OrganicMaterials

InorganicMaterials Mining

ChemicalProcessing(Conversion)

BasicChemicalManufacturer

EndCustomers Exports Other

Manufacturers

SpecialtyChemicalManufacturer

DistributionNetwork

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Petrochemicals Basic Chemicals Specialty Chemicals Chemical Distributors Chemical End Users

Chemicals Extended Ecosystem – A Networkof SAP Clients

Constrained Revenue Growth

Product Portfolio Management

Downward Margin Pressure

Supply Chain and NewProduct Efficiency

Increasing GovernmentRegulations

Sarbanes Oxley

EHS Compliance

FDA 21CFR part 11

Increased chemical trade& security regulations

REACh (Europeanregistration andevaluation)

Increasing GovernmentRegulations

Sarbanes Oxley

EHS Compliance

FDA 21CFR part 11

Increased chemical trade& security regulations

REACh (Europeanregistration andevaluation)

Chemical Industry Drivers & Implications

Macro-Economic EnvironmentPersistent low growthHeavy M&A activityDemand and pricing often cyclicalImpacted by feedstock & energy costs

Macro-Economic EnvironmentPersistent low growthHeavy M&A activityDemand and pricing often cyclicalImpacted by feedstock & energy costs

Intense Chemical Competition & High CostsSKU erratic demand/small batches/critical qualitycauses scheduling challengesMust tightly control working and fixed capitalCustomers moving production to AsiaHigh distribution costs

Intense Chemical Competition & High CostsSKU erratic demand/small batches/critical qualitycauses scheduling challengesMust tightly control working and fixed capitalCustomers moving production to AsiaHigh distribution costs

Increased CustomerPower

Pricing Challenge - valuein use pricing vs. retailerpower

Locked in formulas –barrier to entry

Increasing R&D pressurefor new productsCustomer servicerequests add to costs

Increased CustomerPower

Pricing Challenge - valuein use pricing vs. retailerpower

Locked in formulas –barrier to entry

Increasing R&D pressurefor new productsCustomer servicerequests add to costs

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SAP Industry Solutions

Tailored to the standards, processes, andchallenges ofa specific industry

Based on best business practicesdeveloped with industry leaders

Portfolio of 28 industry solutions

Built on a consistent technology andapplication stack

Industry Solutions for...Aerospace & DefenseAutomotiveBankingChemicalsConsumer ProductsDefense & SecurityEngineering, Construction & OperationsFinancial Service ProvidersHealthcareHigher Education & ResearchHigh TechHospitality ServicesIndustrial Machinery & ComponentsInsuranceLife SciencesLogistics Service ProvidersMediaMill ProductsMiningOil & GasPharmaceuticalsPostal ServicesProfessional ServicesPublic SectorRailway ServicesRetailTelecommunicationsUtilities

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100% of Global Fortune 500 chemical companies run SAP

35+ years of industry expertise – SAP‘s very first customer was ICI

Over 2,100 chemical customers with over 1,000,000 users

The top 15 global chemical companies run SAP

1,700 chemical midmarket companies run SAP globally

SAP in the Chemical Industry

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Cov

erag

e C

hem

ical

requ

irem

ents

Evolution of SAP Solutions for the Chemical Industry

Definitionof first ERPfor SAPin Chemicals

ERP asbusinesssoftware

ERP as the basisfor new businessapplications

IntegratedBusiness Suite, xApps,and NetWeaverExpand Solution

2000sSAP has over 1500customers in the ChemicalIndustry

SAP Chemical Solutionenhancements include:Transportation Mgmt.Emission ManagementRecipe ManagementSample Management

1990sLaunched SAPChemicals Solutionand Best Practices forChemical companies.

CITA EstablishedPISUGCIDX

SAP is deeply rooted in the ChemicalIndustry

1980sSAP becomes theleading ERPvendor in theChemical industry

1970sFirst SAPcustomer is fromthe Chemicalindustry

© SAP 2009 / Page 8

WalldorfWalldorf

SingaporeSingapore

TokyoTokyoPhiladelphiaPhiladelphia

IBU Chemicals has global responsibilityfor the SAP Chemical solution

Development

RegionalField Org.

IBUChemicals

ISGChemicals

IndiaIndia

SAP‘s Industry Approach: IBU Chemicals

© SAP 2009 / Page 9

Chemical Solution Map

Suppliers &Partners

Customers &Channels

Develop Plan Source Make Deliver Sell & Serve

Enterprise Management & Support

Innovation ManagementR & D Management

Product Development

Supplier CollaborationStrategic Sourcing

Procure to Pay

Supply Chain Planning & ExecutionCollaborative Demand & Supply Planning

Logistics & Fulfillment PlanningWarehouse & Inventory Management

ManufacturingManufacturing Planning

Manufacturing Execution & CollaborationManufacturing Visibility

Enterprise Asset ManagementSales & Marketing

Sales and Operations PlanningOpportunity Management

Inquiry to ContractOrder to Cash

Customer Service & ComplaintManagement

Quality Management & ComplianceQuality Management

Environmental, Health & Safety ComplianceREACH Compliance Management

Corporate Compliance

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SAP Best Practices for ChemicalsScenario Overview

Stock Handling: Rework, Scrap,Blocked (131)Repetitive Manufacturing with Co-Products and QM (906)Bulk Manufacturing (without PI Sheet)(907)Bulk Manufacturing with PI Sheet andOPC for Data Access (908)Make-to-Stock (Process Industry) withWM (909)Make to Order (Process Industry) (910)Multiple Product Campaign Run incl.MQC (911)Active Ingredient Processing (912)Blending (913)Repackaging (914)Relabeling (915)Storage Tank Management (916)Subcontracting (external&Internal)(918)

Enterprise Management &Support

General Ledger (156)Accounts Receivable (157)Accounts Payable (158)Period End Closing FinancialAccounting (159)Cash Management (160)Cost of Sales Accounting (161)Asset Accounting (162)Asset Acquisition for ConstructedAssets (Investment Orders) (164)Segment Reporting (166)General Cost Center Planning (175)Internal Order for Marketing and OtherOverhead Planning (180)Overhead Cost Accounting - Actual(184)Internal Order for Marketing and OtherOverhead Actual (186)Time-Recording (211)SAP ERP Reports for Accounting (221)Period-End Closing Activities (224)Operational Maintenance (929)Preventive Maintenance (930)Investment Management in PlantMaintenance (932)Parallel Accounting (leading HGB,+IFRS) (943)

Manufacturing Planning &Execution

Supplier Collaboration

Quotation for Procurement (128)Consumable Purchasing (129)Procurement of stock materials (130)Procurement Contract (133)Return to Vendor (136)Procurement & Consumption ofconsigned inventory (139)Procurement of batch managed stockmaterials (901)Procurement of WM stock materials(902)Procurement of pipeline materials (903)Procurement of external services (904)Quality Management in Procurement(905) Quality Management &

ComplianceEngineering Change Management(934)EH&S Products Safety (935)EH&S Dangerous Goods Management(936)EH&S Industrial Hygiene & Safety(937)EH&S Waste Management (938)EH&S Business Compliance Services(939)REACH: Substance Volume Tracking(940)

Supply Chain Planning &Execution

Lean Warehouse Management (124)Stock Transfer with Delivery (134)Stock Transfer without Delivery (135)Physical Inventory / Inventory Count &Adjustment (137)SAP ERP Reports for Logistics (222)Supply & Demand Planning (900)Tank Trailer Filling (919)Outbound Logistics (923)Totes Handling (927)Vendor Managed Inventory (928)

Innovation Management

Internal Order R&D Planning (177)Internal Order R&D Actual (185)Transformation of General Recipes(942)

Sales & Marketing

Third party with Shipping Notification(107)Credit Management (108)Sales Order Processing: Sale fromStock (109)Free-of-Charge Delivery (110)Returns and Complaints (111)Sales Quotation (112)Prospect Customers Sales OrderProcessing (113)Third Party without ShippingNotification (114)Sales of Bought-in Item (115)Debit Memo Processing (116)Sales Order Processing withCustomer Down Payment (201)Closing Operations SD (203)Credit Memo Processing (204)Samples Processing (917)Presales Activities (920)Sales Order Processing (incl. PoD andCoA) (921)Sales Order Processing with WM (922)Returns and Complaints (incl. BatchRecall and QM ) (924)Credit Management (incl. RiskCategories) (925)Rebates Handling (926)


Agenda

Chemical Industry User Group (CISUG)(American Chemistry Council)

Verband der Chemischen Industry (VCI)German Chemical Industry Federation

Adaptive Manufacturing & ManufacturingStandards Initiative based on ISA 95

Active CIDX member (Chem eStandardsTM)

Chemical Executive Advisory Board (CEAC)

SAPPHIRE and ASUG Tracks

SAP is a trusted Partner of the ChemicalCommunity

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American SAP User Group(ASUG)

ASUG

SIG B SIG…CISUGSIG A

EastmanDuPontDow CorningDowNova ChemicalCelaneseAlbemarleRohm and Haas

SAP Representation:Ray Adams, IBU Chem.Frank Kochendoerfer, IBU Chem.

CISUG Steering Team

American SAP User Group (ASUG) / ChemicalIndustry SAP User Group (CISUG)

SpecialtyInterest

Groups (SIG)

InfluenceCouncils

Chapters

© SAP 2009 / Page 14

VCI

18 CIO’s

Information &TelecommunicationSteering Committee

Executive Board

Secretary

Service LevelAgreement

NetworksVCI SAPCybersecurity

BASFBayerDegussaHenkelBaiersdorfCelaneseRocheAlessachemieMerckWacker ChemieLanxessSolvaySGL CarbonBoehringer-IngelheimCognisSüd ChemieDowClariant

SAP Representation:Rainer Möckel (IBU Chemicals)

VCI Steering Team

eSolutions

•Manufacturing•MDM•SCM•Financial-Controlling•EAM•CRM•BIA•eSOA•EH&S (REACH)•QM/LIMS

VCI (German Chemical Association)

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SAP for Chemicals – Landing Page

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BPX Community for the Chemical Industry

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Agenda

INDUSTRY ecosystems bringing together leading customers, partners & SAP

Creating VALUE by focusing on priority industry needs & opportunities

With strong NETWORK collaboration, combined expertise, resources & solutions

Industry Value Networks –SAP’s Unique Industry Ecosystem Initiative

SAPIVN Lead & Enabler

System IntegratorsIndustry Services & Solutions

Technology VendorsSupporting Technology

CustomersInnovation Needs &

Solution Validation

ISVsComplementary Solutions

© SAP 2009 / Page 19

The IVN for ChemicalsStrong industry-leading players coming together to drive value &industry growth

IVN lead & Enabler

Complementary Solutions

Industry Customer Needs

Industry Services & Solutions

Chemical customer groups(CISUG, CEAC, VCI…)Innovation Leaders

© SAP 2009 / Page 20

Partner Solution / Activity Status

SAP Price and Margin Management by Vendavo (SAP PMM)Set pricing strategy and objectivesSet optimal prices and policies for all segmentsAdminister and communicate price lists and booksNegotiate prices and terms for direct and channel businessExecute order to cash accurately

SAP Solutions for ComplianceSAP REACH [SAP Product]SAP Environmental Compliance (formerly Emissions Management) includingEnterprise Energy Management [SAP Product]Compliance for Products [SAP Product]Services:

– EH&S Content– Phrase Translation– Document Creation

Reseller

SAP Visual Information for Production by NRX (SAP VIP)Solves the “usability” issue by employing role-based, simplified functionalityUnifies critical functions and information into one workspaceIntegration of 3rd party information through SAP MII to provide a holisticmaintenance solution

Asset CenterCombined source of data for improved asset visibilityStandardized processes and asset master data

VIP =Reseller

Asset Hubtargeted forEBSA

= degree of completion of Reseller, Endorsed Business Solution agreement or PBNW certification

VIP

AssetCenter

IVN Partners for Chemicals - 1/3

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Partner Solution / Activity Status

Manufacturing Process Optimization (MPO)Advanced process control (APC) technology that controls and optimizes the operationalproduction process using predictive performance metricsAdvanced decision making comparing future scenarios of production, economic and other data,integration with SAP ERP financial data, leveraging SAP xMII

PBNW,available,targeted forEBSA

Reliability Centered Maintenance & Optimization (RCMO)Provides the framework to define maintenance strategies based upon RCM and Failure Modesand Effects Analysis (FMEA) principlesIntegrates the recommendations from an RCM analysis into SAP maintenance plans in SAPERP (PM)Certified xApp


Enterprise Inventory Optimization (EIO)Multi-echelon inventory optimization (SmartOps MIPO)Advanced demand and supply profiling leverages SAP BW/BI and mySAP SCMTotal supply chain view and operational synchronizationCertified xApp


Manufacturing Workbench (MW)Advanced planning and scheduling Add-On solution for SAP R/3 (SAP ERP) and SAP SCM.Individualized configuration for improved visualization, usability and data integration

Real-Time Finance (RTF)Real-time accounting on a process unit, area, and plant basis of the entire manufacturing floorGraphical feedback of financial and strategic performance in the correct operational context

= degree of completion of Reseller, Endorsed Business Solution agreement or PBNW certification


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Partner Solution / Activity / Status Status

Intellectual Property Manager (IPM)Docking Management - Guides legal business process for securing Intellectual Property rights &associated litigationIP Portfolio management - R&D and Marketing workspace for valuating IP & managing data anddocumentation.Modeling and Analytics - Executive reporting to monitor efficacy of IP strategy

PBNW,development inprogress

Inventory Reconciliation, Real-Time Performance ManagementData Reconciliation for inventory and energy balancesReal-time Reports of inventory, energy balances and unit balancesFacility Monitor

Joint solutionunderdiscussion

LIMS Connect (LC)Enterprise wide view of data from different LIMSComparison of laboratory analysis from different labs using different LIMSBuilt on SAP MII

Available asxApp built onxMII

Rapid SigmaContinuous improvementBased on the DMAIC methodology – Define, Measure, Analyze, Improve, ControlRoles and project basedBuilt on SAP MII

xMESManufacturing Execution engine including Plant Floor UI’sLeverages existing SAP Functionality & Infrastructure (MII)SOA architected, small footprint and “Out of the Box” configuration, xApp certified

= degree of completion of Reseller, Endorsed Business Solution agreement or PBNW certification© SAP 2009 / Page 23


Agenda

Importance of the Chemical Industry for SAP

Process Industries*

24%

Public Services10%

Consumer Industries17%

Discrete Industries23%

Service Industries20%

Financial Services6%

* incl. Life Sciences, as % of total revenue

© SAP 2009 / Page 25

Chemical RoadmapCurrent Plan Going Forward

2008Planned

Future Themes

Product Compliance

TransportationCompliance

Enhanced Supply andChain Planning

Resource and ProjectManagement Integration

MES CompositionCapabilities

Extended EnvironmentalCompliance

TransportationExcellence

Extended Demand andSupply Collaboration

Advanced Product andPortfolio Management

MES ContentEnhancements

Corporate Sustainability

ExtendedTransportation Mgmt.

Integrated BusinessPlanning

Open InnovationFramework

Closed-Loop ManufacturingPlanning & Execution

Enable efficient, innovative, and sustainableBusiness Networks

Note: subject to change


Agenda

SAP Has Broad Experience in the Midmarket

Select SAP Chemical Industry CustomersTotal: 2,100

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Success Stories – Rohm and Haas (CRM)

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Success Stories – Mosaic (RCM)

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Success Stories – AZ Electronic Materials(Best Practices)

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Success Stories – AZ Electronic Materials(Best Practices)

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Success Stories – FutureFuel (Best Practices)

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SAP and the Chemical Industry