Newport discussion corporate sustainability reporting using sap grc v3

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

March 2010

Newport Consulting Group, LLC

FOR DISCUSSION

Corporate Sustainability ReportingStrategies and Frameworks using SAP GRC Approaches

Newport Consulting Group

Newport Consulting Group, LLC Corporate Sustainability Reporting using SAP GRC 1

1.

Introductions and Firm Overview

2.

Corporate Drivers of Sustainability Programs

3.

Global Reporting Initiative Considerations

4.

Enterprise Architecture using SAP Building Blocks

5.

Considerations for Roles-based Process Controls

6.

Framework for CSR Planning and Implementation

7.

Summary and Next Steps

Agenda


Introductions and Firm Overview / 1

Newport Consulting Group is an independent consulting firm founded by several leading consultants from DMR Consulting Group and strategy firm Booz & Company

Our clients enjoy working with our experienced professionals who deliver large firm capabilitiesin the context of a boutique firm culture

We function as top-end, high-touch advisorsto our clients, unencumbered by large overhead cost models or downstream deployment agendas



Our clients represent a broad industry base– Commercial

Consumer Electronics & ProductsAutomotive & TransportationAerospace & DefenseIndustrial EquipmentMedical Device & Health Systems

– Non-commercialElectric and Water UtilitiesState GovernmentsMunicipal / County GovernmentsNot for Profit Organizations

We maintain strategic partnerships with leading enterprise software companies, service providers, and institutions– Under NDA with SAP America since 2005– Under NDA with Dassault Systems since 2008

Our Experience and CapabilitiesOur Experience and Capabilities

We retain our staff through teaming agreements creating a business affiliate model with low overhead and high performance services

Experience and Education Profile of StaffMinimum 20 years professional experience average per staffManagement experience at one or more Fortune 1000 organizationsPractice and delivery management experience at top-tier strategy firmsClient and delivery management experience at global system integratorsInternational experience working with customers and partners in Europe and Asia-Pacific

Additional experience in medical device, consumer electronics, and high tech

We are the experts in the field of enterprise performance management bridging “classic SAP” and strategy throughout the enterprise

We retain our staff through teaming agreements creating a business affiliate model with low overhead and high performance services

Experience and Education Profile of StaffMinimum 20 years professional experience average per staffManagement experience at one or more Fortune 1000 organizationsPractice and delivery management experience at top-tier strategy firmsClient and delivery management experience at global system integratorsInternational experience working with customers and partners in Europe and Asia-Pacific

Additional experience in medical device, consumer electronics, and high tech

We are the experts in the field of enterprise performance management bridging “classic SAP” and strategy throughout the enterprise



Newport Consulting is an “independent” firm alignedwith SAP since our founding in 2005

Our Principals and staff have provided Program Advisory, Planning, OCM, and Governance services

We have particular expertise in SAP Business Objects EPM and GRC solutions– We are writing the book on EPM for SAP Press– Under NDA with several clients to date

Our staff maintains current knowledge and experience in additional areas of SAP including ERP (FI/CO, MM, PP, SD), SCM, PLM, SRM, and GTS

Most of our clients operate in technologically diverse environments — as such, our staff is able to look at broad landscapes and topologies to consider the best solution



William Newman, CMC, MBAManaging Principal

Nearly 25 years of strategy and operations planning with various technologies across multiple industry sectorsOver 10 years experience planning and managing complex, global enterprise programs (ERP, GRC, PLM, SCM)Has developed recommended approaches for operations readiness, value realization, change management, global program structures, innovation management, and business transformationCertified Management Consultant (CMC) since 1995

William Newman, CMC, MBAWilliam Newman, CMC, MBAManaging Principal

Nearly 25 years of strategy and operations planning with various technologies across multiple industry sectorsOver 10 years experience planning and managing complex, global enterprise programs (ERP, GRC, PLM, SCM)Has developed recommended approaches for operations readiness, value realization, change management, global program structures, innovation management, and business transformationCertified Management Consultant (CMC) since 1995

Bill Rudiak Principal–Lead Consultant Strategy & Technology Practice

Over 20 years of business and technology consulting, software development, systems integration, and managed services experience for a broad range of clientsLarge-scale project and program management for significant change initiatives including workflow efficiency improvements, technology deployments, and global shared services for multi-cultural/multi-national teamsBroad base of technology expertise including IT systems management, ERP, PLM/CAD, GIS, and digital video

Bill RudiakBill Rudiak Principal–Lead Consultant Strategy & Technology Practice

Over 20 years of business and technology consulting, software development, systems integration, and managed services experience for a broad range of clientsLarge-scale project and program management for significant change initiatives including workflow efficiency improvements, technology deployments, and global shared services for multi-cultural/multi-national teamsBroad base of technology expertise including IT systems management, ERP, PLM/CAD, GIS, and digital video

David Tharp, PMP, MBA Senior Program Manager Risk & Program Management Practice

Over 20 years of business and IT professional experienceResponsible for managing all phases of large-scale key global IT projectsHas led multi-cultural/multi-national cross-organizational team in application development and system implementationinitiativesCertified Professional Project Manager (PMP) and IT Management Certified Professional

David Tharp, PMP, MBADavid Tharp, PMP, MBA Senior Program Manager Risk & Program Management Practice

Over 20 years of business and IT professional experienceResponsible for managing all phases of large-scale key global IT projectsHas led multi-cultural/multi-national cross-organizational team in application development and system implementationinitiativesCertified Professional Project Manager (PMP) and IT Management Certified Professional

Joseph Stockemer, MBA Principal–Lead Consultant Operations Practice

Over 20 years of business and strategy consulting, marketing, sales management,cost reductions, asset management, and capital funding for start-up venturesRecently served as interim COO for a high-energy food and beverage client, responsible for protoconcept development, initial product run, sourcing, and sales team hiringHeld several interim management positions for not-for-profit organizations, including community service and faith-based institutions

Joseph Stockemer, MBAJoseph Stockemer, MBA Principal–Lead Consultant Operations Practice

Over 20 years of business and strategy consulting, marketing, sales management,cost reductions, asset management, and capital funding for start-up venturesRecently served as interim COO for a high-energy food and beverage client, responsible for protoconcept development, initial product run, sourcing, and sales team hiringHeld several interim management positions for not-for-profit organizations, including community service and faith-based institutions



StrategyStrategy

OperationsOperations

Risk &Risk & Program ManagementProgram Management

TechnologyTechnology

Newport’s Services Model (“SORT”) allows our Clients to benefit from a broad, holistic perspective on key business issues and challenges, while focusing on deep experience in one or more critical areas.

What market and business strategies do I need to address post-crisis scenarios? What KPIs govern my initiatives and what do I do when KPIs are “out of bounds”?How do create a culture of sustainability?How do I strategically manage intellectual property?

What market and business strategies do I need to address post-crisis scenarios? What KPIs govern my initiatives and what do I do when KPIs are “out of bounds”?How do create a culture of sustainability?How do I strategically manage intellectual property?

How do I fit my organization to improve existing or introduce new operating models?How do I structure the functions, people, and resources in my organization to drive strategic initiatives?

How do I fit my organization to improve existing or introduce new operating models?How do I structure the functions, people, and resources in my organization to drive strategic initiatives?

What approaches do I use to structure and prioritize initiativesinside my organization?How do I manage and mitigate risk across my business operations?How do I drive maximum value from my portfolio of initiatives?

What approaches do I use to structure and prioritize initiativesinside my organization?How do I manage and mitigate risk across my business operations?How do I drive maximum value from my portfolio of initiatives?

Based on my operations and existing technology investments to date, how do I select and implement the best technology solutions to support my business?How do I manage that process from planning to go live?

Based on my operations and existing technology investments to date, how do I select and implement the best technology solutions to support my business?How do I manage that process from planning to go live?


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Agenda


Corporate Drivers of Sustainability Programs / 1A recent McKinsey study shows that while improved risk management may be one value driver, increased market opportunities, operational efficiencies, and brand equity are key on the minds of executives as companies position themselves for the post-crisis economy.

Source: Valuing Corporate Social Responsibility, The McKinsey Quarterly, February 2009

3

24

35

39

43

52

79

27

24

36

9

24

42

39

61

79

Improving access to capital2

Strengthening competitive positioning 14

Improving risk management18

Improving new growth opportunities24

Improving operational efficiency and/or decreasing costs29

Meeting society’s expectations for good corporate behavior30

Attracting, motivating, and retaining talented employees55

Maintaining a good corporate reputation and/or brand equity75

CSR ProfessionalsInvestment ProfessionalsCFOs

Where CSR Value Comes FromPercentage of respondents (%)


Corporate Drivers of Sustainability Programs / 2The Dow Jones Sustainability Index (DJSI) created in 1999 represents over $US 9 billion in total market capitalization. The DJSI STOXX40 has outperformed the nominal DJ STOXX50 by 7.5% to date (and up to 15-20% during the period preceding the financial crisis).

Source: SAM Sustainability Annual Review, September 3, 2009

The DJSI comprises publicly traded organizations that

follow the Global Reporting Initiative (GRI) for

Sustainability reporting

The investment community is giving increased weight to Corporate Sustainability to guide rating and investment decisions.

The investment community is giving increased weight to Corporate Sustainability to guide rating and investment decisions.


Corporate Drivers of Sustainability Programs / 3Sustainability has Three Pillars — we find that while there may be an immediate focus on one key area of Corporate Sustainability, attention must be given to how reporting and decision-making occurs. This increases value drivers, reduces redundancy, improves operations, and manages costs.

Target Focus of Sample Fortune 500 CSR ProgramsSurvey of Selected Cross-section of Industries 2007-2009

Company Economic and Financial Environmental Social Responsibility

UPS Strengthen the Enterprise Protect the Environment Improve the Human Condition

Starbucks Sustainable Coffee Prices Minimize Environmental Impacts

Local Community Engagement

Kimberly-Clark Commitment to Ethical Business Practices Environmental Stewardship Safety and Health

Lockheed Martin Perform with Excellence Eliminate Adverse Impacts from Operations Safety of Every Employee

Source: CSR documents from each organization, selected from 2007-9 supplier manuals and other internal corporate documents.

Generally organizations focus on one particular domain of sustainability which needs immediate attention, however understanding the strategic interaction of the other Corporate Sustainability areas is essential and often required by reporting guidelines.

Generally organizations focus on one particular domain of sustainability which needs immediate attention, however understanding the strategic interaction of the other Corporate Sustainability areas is essential and often required by reporting guidelines.


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Agenda


Global Reporting Initiative Considerations / 1In 2006, the Global Reporting Initiative (GRI) was created to provide guidelines and audit recom- mendations for organizations participating in corporate sustainability reporting (CSR) activities. These guidelines ensure a level of consistency and governance in the practice of corporate sustainability.

Sources: The Future of Corporate Sustainability Reporting, The Journal of Accountancy. The American Institute of Certified Public Accountants, 2006. Royal Dutch Shell, 2003 Corporate Sustainability Report (courtesy of AICPA).

CSR as a practice in accounting areas is still emerging, with general guidelines based on the objectives of the Corporate Sustainability program.

CSR as a practice in accounting areas is still emerging, with general guidelines based on the objectives of the Corporate Sustainability program.

How does GRI consider CSR?How does GRI consider CSR?

CSR “involves reporting financial and nonfinancial information to key stakeholders on the company’s operational, social, and environmental activities and its ability to deal with related risks.”Considers the “triple bottom-line” of reporting – Economic Performance– Social Responsibility– Environmental Compliance

Considers broader set of stakeholders beyond shareholders – Financial– Regulatory– Political – Others based on company program

CSR “involves reporting financial and nonfinancial information to key stakeholders on the company’s operational, social, and environmental activities and its ability to deal with related risks.”Considers the “triple bottom-line” of reporting – Economic Performance– Social Responsibility– Environmental Compliance

Considers broader set of stakeholders beyond shareholders – Financial– Regulatory– Political – Others based on company program


Global Reporting Initiative Considerations / 2GRI reporting for CSR is a function of confirming that program initiatives, principles, and objectives are tracked, monitored, and reported correctly. Few specific guidelines outside of the broad principles of GRI have emerged, leaving management free to “do what you say” from an auditor’s point of view. UPS is an exemplar in this area as shown by their reporting presentation.

Source: 2008 Corporate Sustainability Report, United Parcel Service (used with permission). Newport Consulting Group record of client interviews and feedback, 2009.

Overall graphic, such as a Venn diagram, communicates the areas of importance to various stakeholders.

Areas of CSR program called out, then detailed against Key Performance Indicators (KPIs) in subsequent sections of the sustainability report.

Interactive Web sites allow stakeholders including shareholders to create personalized reports, graphics, and tables.


Global Reporting Initiative Considerations / 3Companies may have several reasons for implementing a corporate sustainability program. While the initial or primary focus may be on fixing “hygiene” problems, organizations may exploit the opportunity to achieve more strategic objectives in corporate sustainability and corporate social responsibility.

ProblemsProblems

Manual (spreadsheet-based) systems are siloed, error-prone, and do not reuse data in enterprise systems

Roll-up processes to support audits and other reporting needs are cumbersome

Organizational accountabilities for sustainability are unclear

Risk of being out of compliance with changing global regulations

No systematic way to respond to crisis or other unforeseen event

No alignment with overall corporate sustainability goals

Manual (spreadsheet-based) systems are siloed, error-prone, and do not reuse data in enterprise systems

Roll-up processes to support audits and other reporting needs are cumbersome

Organizational accountabilities for sustainability are unclear

Risk of being out of compliance with changing global regulations

No systematic way to respond to crisis or other unforeseen event

No alignment with overall corporate sustainability goals

OpportunitiesOpportunities

Adopt a more proactive approach to supplier management

Anticipate and mitigate risk events; develop response plans should these events occur

Elevate profile of global corporate citizenship and enhance competitive brand position

Permeate sustainability initiatives anda culture of social responsibility throughout the organization

Improve efficiency of adjacent core processes (design, manufacturing, QA)

Incorporate sustainability in strategic planning and enterprise performance management

Adopt a more proactive approach to supplier management

Anticipate and mitigate risk events; develop response plans should these events occur

Elevate profile of global corporate citizenship and enhance competitive brand position

Permeate sustainability initiatives anda culture of social responsibility throughout the organization

Improve efficiency of adjacent core processes (design, manufacturing, QA)

Incorporate sustainability in strategic planning and enterprise performance management


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Agenda


Enterprise Architecture using SAP Building Blocks / 1

SAP provides several platformssupporting CSR program goals– “Classic SAP” which provides real-time

information around emissions, product/ material consumptions, supplier compliance via SAP ERP, SAP SRM, SAP SCM, and SAP PLM platforms

– SAP BusinessObjects Enterprise Performance Management (EPM) which provides a platform for strategic formulation

– SAP BusinessObjects Governance, Risk, and Compliance (GRC) which provides a platform for program enablement and monitoring

Strategic enablement with real-time decision-making capability– This is the “secret sauce” for SAP, not

addressed in most other platform options (which by and large are spreadsheet driven)

– Linkage to other strategic initiatives (balanced scorecard, KPI / KRI tracking)

SAP offers a number of solution approaches consistent with CSR program structure and GRI reporting requirements, based upon the operating model and existing IT footprint of the organization.

FIFISDSD SRMSRM

MMMM QMQM

Operations

Strategy

Non-SAP data and applications


Enterprise Architecture using SAP Building Blocks / 2

Source: SAP America, SAP BusinessObjects, as modified by Newport Consulting Group.

PortfolioPortfolio--driven driven Value and Outcomes Value and Outcomes

Enterprise Performance ManagementBetter control performanceIncrease organizational agilityProvide improved context for decision making

Enterprise Performance ManagementBetter control performanceIncrease organizational agilityProvide improved context for decision making

1Governance, Risk, and Compliance

Aggregate and manage key risk activitiesAutomate controls across processesMonitor risk & controls across disparate systems

Governance, Risk, and ComplianceAggregate and manage key risk activitiesAutomate controls across processesMonitor risk & controls across disparate systems

2

Business Intelligence/Business WarehouseAccess to all informationIntuitive experience for all peopleSingle information infrastructure

Business Intelligence/Business WarehouseAccess to all informationIntuitive experience for all peopleSingle information infrastructure

3Information Management

Trusted informationOperational excellence for ITFlexibility and agility

Information ManagementTrusted informationOperational excellence for ITFlexibility and agility

4

SAP BusinessObjectsSAP BusinessObjectsSAP BusinessObjects

Enterprise Performance Management Governance, Risk, and Compliance

Business IntelligenceInformation Management

Ensure Trusted

Information

Proactively Manage

Risk

Create Enterprise VisibilitySAP BusinessObjects™

SCM (APO, SNP)SCM (APO, SNP)

SRM (eSourcing)SRM (eSourcing)

PLM (NPI, PPM)PLM (NPI, PPM)

ERP (MM, PP, SD, PS)ERP (MM, PP, SD, PS)

Non-SAP Environments

Non-SAP Environments

Connectivity to…

ILLUSTRATIVE


Enterprise Architecture using SAP Building Blocks / 3The sustainability solution map for SAP BusinessObjects GRC comprises seven domains, each providing functionality across operating areas. Companies can “menu select” building blocks based on CSR program objectives and monitoring/reporting needs.

Source: 2009 SAP AG public domain website, www.sap.com/sustainability.

1

2

3

4

5

6

7

Generally the SAP SPM solution is used with other

EPM products to drive CSR program objectives.


Enterprise Architecture using SAP Building Blocks / 4The SAP BusinessObjects SPM application provides a global view of a sustainability program. Risk officers and C-levels can easily track Key Performance Indicators (KPIs) deemed important for CSR purposes, fed by real-time operational data from back office “classic SAP” functionality.

Source: “Improve Your Corporate Sustainability Program using SAP BusinessObjects Sustainability Performance Management,” GRCExpert, 2009.

Drop-down KPI library

Performance settings based on KPIs thresholds (“triggers”) that can be dynamically linked to operational data.


Enterprise Architecture using SAP Building Blocks / 5KPIs generally are summarized by aggregating various individual indicators which can come from different areas in the organization. The relationship diagram of KPIs provides sustainability managers visibility into the decomposition of each top-level company KPI.


The KPI “composer” feature allows for the networking relationship and mapping of source information to “build up” KPIs.


Enterprise Architecture using SAP Building Blocks / 6SAP SPM offers balanced scorecard views which can be configured to specific goals of CSR programs. The scorecard view can also provide indicators for each goal area and specific goals for easy monitoring and reporting.


The balanced scorecard feature can also be expressed as a strategy map, and tailored to the elements of each scorecard.


Enterprise Architecture using SAP Building Blocks / 7SAP SPM can be linked to other SAP BusinessObjects EPM and SAP BusinessObjects GRC platforms, such as SAP BusinessObjects Strategy Management for strategic formulation of KPIs and SAP BusinessObjects Risk Management to view the impact of key risk indicators (KRIs) on financial targets and enterprise risk management (ERM).


SAP BusinessObjects Sustainability Performance Management

CSR Program Boundary

SAP BusinessObjects Strategy Management

KPIs, triggers

SAP BusinessObjects Risk Management

KRIs, tolerances


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Agenda


Considerations for Roles-Based Process Controls

/ 1

Responsibility Matrix fro Program Area A - ABC CompanyENGR MFG

Task # Task Requireme nt1 Collect OE / Industry Requirements R, A A R C2 Apply requirements to program objectives R, A R C3 Determine information reporting gaps and needs A I C4 Develop c losure plan for information reporting gaps and needs R, A A R C5 Determine product information source list A R C

… … … Final Acceptance Review

LegendR Review ENGR EngineeringS Support MFG ManufacturingA Approve PUR PurchasingC Create PMO Program OfficeI Inform

Program AreaPUR PMO

RASCI Diagram – Responsibilities by Work Step

Program Management

Key Process Area

1. Refine and develop the project plan2. Maintain the project plan3. Monitor progress against baselines (scope, schedule, cost) and targets using EVM metrics4. Craft and manage communications plan5. Conduct Project Status Meetings with Key Stakeholders6. Brief leadership on Project Progress7. …

Key Activities

Program Management

Key Process Area


Key Activities

A history of requirements review suggests the need for strong product configuration management. Program management presence is the single most critical factor in the successful delivery of compliance program at ABC.Summary

Program Compliance ManagerRundown Role

Program AdministratorSecondary Resource

Primary Resource




Primary Resource

Playbook – Roles & Responsibilities

… …

… …

1 … … … … … … …

Compliance Process – Work Steps

Product Business Unit Lead (VP, GM, Director level)

Sales Account and/or Purchasing Manager

Product and/or Quality Manager

Sustainability/Compliance Manager (enterprise-wide or per program area)

Environmental C

ompliance

Environmental C

ompliance

Managem

ent ProcessesM

anagement Processes

Roles Defined in the Organization

For sustainability initiatives, an approach that leverages roles, access, permissions, and processes in a structured Governance model, provides clarity in program design and execution.


Considerations for Roles-Based Process Controls / 2From a solution architecture perspective, a compliance layer is used to define the stages, processes, and key activities for sustainability program compliance

Key questions to ask:– Where are the data most persistent (i.e. system of record)? How are data governed and managed?– What are the process and access controls used for compliance?– For product companies, is compliance largely design or manufacturing BOM driven?

PLMPLM SAP ERP HCMSAP ERP HCMSAP ERP (MM, SD)SAP ERP (MM, SD) SRMSRM

Product Business Unit Lead (VP, GM, Director)

Sales Account and/or Purchasing Manager

Product and/or Quality Manager

Compliance Manager (Enterprise-wide or Program-level)

Com

pliance Managem

entC

ompliance M

anagement

ProcessesProcesses

GRC ControlsGRC ControlsGRC ControlsSAP EH&SSAP EH&SSAP EH&S

GRC Compliance Layer(Data Content, Analytics, Reporting, Process Management, Governance)

GRC Compliance LayerGRC Compliance Layer(Data Content, Analytics, Reporting, Process Management, Governa(Data Content, Analytics, Reporting, Process Management, Governance)nce) WHOWHO

Access OK by Role, Department, and Cost Center?

WHATWHATAccess OK by

compliance process, product program?

Program Management

Key Process Area


Key Activit ies

Program Management

Key Process Area


Key Activit ies




Primary Resource




Primary Resource

Playbook – Roles & Responsibilities– Can be unique to each company


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Framework for a Corporate Sustainability Program

7.


Agenda


Framework for a Corporate Sustainability Program / 1A sustainability program should be approached based on three fundamental premises, which guide all phases of the initiative. This optimizes schedule performance, controls the costs through manageable budget/decision gates, and applies sound architecture principles.

A hypothesis-driven approach differs from other approaches that are typically analysis-driven or even experimentalThe program team very quickly develops and confirms a set of working understandings (i.e. hypothesis) during the initial weeks of the initiativeThis hypothesis serves as the basis for the preliminary design of the SAP solution and impacts to the organization

A hypothesis-driven approach differs from other approaches that are typically analysis-driven or even experimentalThe program team very quickly develops and confirms a set of working understandings (i.e. hypothesis) during the initial weeks of the initiativeThis hypothesis serves as the basis for the preliminary design of the SAP solution and impacts to the organization

Follow a HypothesisFollow a Hypothesis-- Driven ApproachDriven Approach

1

Leverage an IntegratedLeverage an Integrated Systems LifeSystems Life--Cycle DeliveryCycle Delivery

(SDLC) Methodology(SDLC) Methodology

2

Focus on a Core TargetFocus on a Core Target PlatformPlatform

3

Adhering to a common SDLC methodology reduces risk, optimizes schedule performance, and allows for a common vocabulary throughout all activities of the initiativeAny SDLC methodology should be viewed as a “guidebook”, not a “cookbook” – we have found success leveraging ASAP

Adhering to a common SDLC methodology reduces risk, optimizes schedule performance, and allows for a common vocabulary throughout all activities of the initiativeAny SDLC methodology should be viewed as a “guidebook”, not a “cookbook” – we have found success leveraging ASAP

Utilizing numerous point solutions to achieve sustainability goals will create very high integration complexity and cost in the eventual solution architectureIt is best to consider a small landscape of possible corporate sustainability solutions, leveraging a core target platform (like SAP) to satisfy the objectives of the sustainability initiative

Utilizing numerous point solutions to achieve sustainability goals will create very high integration complexity and cost in the eventual solution architectureIt is best to consider a small landscape of possible corporate sustainability solutions, leveraging a core target platform (like SAP) to satisfy the objectives of the sustainability initiative


Framework for a Corporate Sustainability Program / 2

Generally successful sustainability programs follow ASAP, leveraging the planning phase to identify key objectives from the requirements documents– Select a preferred sustainability solution path– Develop an implementation plan

Typically the Project Preparation phase may be reflected as a sequence of tasks defined by deliverables that meet key sustainability objectives

At the end of the Project Preparation phase, the company should be ideally positioned to continue immediately with the subsequent phase (Business Blueprint) through the remaining phases of the sustainability program initiative, culminating in Go-Live and Support

Key success factors to maximize value realization from an SAP solution– Scope management– Sound architectural principles– Stakeholder alignment– Organizational change management– Risk management

Phases, tasks, and deliverables generally consider the following — starting with Planning and Project Preparation, which is the first phase of the ASAP methodology and approach.


Framework for a Corporate Sustainability Program / 3In Phase 2 of the ASAP model, the team develops the “Blueprint” — how conceptually and functionally the selected solution will support the business. Functional Specifications across key “work streams” are mapped to core technologies, OCM and risk plans, and “RICEF” estimates.

Level 3Area Req # Business Requirement

(What)Business Reason for the Requirement (Why)

Comments Req # Business Requirement (What)

Business Reason for the Requirement (Why)

Comments

1 1

1.01

Ability to view inventory quantity and the following statuses at the plant, storage location, item and batch level

• Stock on-hand (booked, available)• Frozen/Blocked• Quarantined• Reserved (available, unfilled reserved request)• Enroute (shipped, not shipped) • O&S Enroute (“S” bldg)• Overage and Short • Month-to-date• Week-to-date• Today

The business needs to be able to view quantities and inventory statuses to perform the necessary replenishment and/or allocation activities

Storage locations can have different shipping points (due to being miles apart)

‘Month-to-date’, ‘Week-to-date’ and ‘Today’ values refer to production data and P/O receipt data only. 1.01

Ability to view inventory quantity and the following data elements at the plant, storage location and batch level for a specified material number:

• Stock on-hand (booked, available)• Frozen/Blocked• Quarantined• Reserved (available, unfilled reserved request)• Enroute (shipped, not shipped) • O&S Enroute (“S” bldg)• Overage and Short • Week-to-date• Actual Production and Purchase Order Receipt data (Month-to-date, Week-to-date, Today)

A custom report will be developed serving as an inventory dashboard.

SAP transaction MMBE can be used to view several of these fields. However, it does not meet all of the Bridgestone requirements. A new T-code, e.g. ZMMBE, will be developed

Security will be developed to control who can view the inventory by storage location. Specifically, Bridgestone wants to control who can view the inventories in storage location ‘MISC’.

2 2

2.01

Ability to valuate inventory appropriately

The business needs to accurately represent the value of inventory. 2.01


Inventory valuation will be in SAP. The country-of-origin of the batch will be mapped to the country of the split valuation

2.02

Ability to verify that the inventory valuation increased by the split valuation amount for the country that produced this product

The business needs to accurately represent the inventory value for product/inventory produced in various countries.

A material number with multiple countries of origin have the same transfer price if one of the UPCs is made in the U.S. If a tire is made, for example, in Japan and in Thailand and is not made in the U.S., the transfer prices may be different.

2.02

Ability to verify that the inventory valuation is properly adjusted as the inventory changes at the batch level.

Inventory valuation will be in SAP The country-of-origin of the batch will be mapped to the country of the split valuation

3 3Ensure integrity of batch data The business needs to ensure the batch data

accurately represents the UPC data/class d ithi th t l ti f th l t

When a warehouse reclassifies i t th SAP

Ensure integrity of batch data As changes to the inventory Class Codes are occurring in COPS, these changes will be

fl t d i SAP b i t ti d

As inventory is moving from one class to

th l (

Level 1 & 2

Ability to perform inventory overview and analysis Ability to perform inventory overview and analysis

Ability to perform inventory valuation

Ability to monitor batch level inventory



Level 3Area Req # Business Requirement

(What)Business Reason for the Requirement (Why)

Comments Req # Business Requirement (What)

Business Reason for the Requirement (Why)

Comments

1 1

1.01

Ability to view inventory quantity and the following statuses at the plant, storage location, item and batch level

• Stock on-hand (booked, available)• Frozen/Blocked• Quarantined• Reserved (available, unfilled reserved request)• Enroute (shipped, not shipped) • O&S Enroute (“S” bldg)• Overage and Short • Month-to-date• Week-to-date• Today

The business needs to be able to view quantities and inventory statuses to perform the necessary replenishment and/or allocation activities

Storage locations can have different shipping points (due to being miles apart)

‘Month-to-date’, ‘Week-to-date’ and ‘Today’ values refer to production data and P/O receipt data only. 1.01

Ability to view inventory quantity and the following data elements at the plant, storage location and batch level for a specified material number:

• Stock on-hand (booked, available)• Frozen/Blocked• Quarantined• Reserved (available, unfilled reserved request)• Enroute (shipped, not shipped) • O&S Enroute (“S” bldg)• Overage and Short • Week-to-date• Actual Production and Purchase Order Receipt data (Month-to-date, Week-to-date, Today)

A custom report will be developed serving as an inventory dashboard.

SAP transaction MMBE can be used to view several of these fields. However, it does not meet all of the Bridgestone requirements. A new T-code, e.g. ZMMBE, will be developed

Security will be developed to control who can view the inventory by storage location. Specifically, Bridgestone wants to control who can view the inventories in storage location ‘MISC’.

2 2

2.01


The business needs to accurately represent the value of inventory. 2.01


Inventory valuation will be in SAP. The country-of-origin of the batch will be mapped to the country of the split valuation

2.02

Ability to verify that the inventory valuation increased by the split valuation amount for the country that produced this product

The business needs to accurately represent the inventory value for product/inventory produced in various countries.

A material number with multiple countries of origin have the same transfer price if one of the UPCs is made in the U.S. If a tire is made, for example, in Japan and in Thailand and is not made in the U.S., the transfer prices may be different.

2.02

Ability to verify that the inventory valuation is properly adjusted as the inventory changes at the batch level.

Inventory valuation will be in SAP The country-of-origin of the batch will be mapped to the country of the split valuation

3 3Ensure integrity of batch data The business needs to ensure the batch data

accurately represents the UPC data/class d ithi th t l ti f th l t

When a warehouse reclassifies i t th SAP

Ensure integrity of batch data As changes to the inventory Class Codes are occurring in COPS, these changes will be

fl t d i SAP b i t ti d

As inventory is moving from one class to

th l (

Level 1 & 2

Ability to perform inventory overview and analysis Ability to perform inventory overview and analysis





Level 1 and 2 Functional Design (multiple design paths) Program Communication and OCM Plan

Program Implementation Risk Management Plan

INT # P1/P2 OBJECT NAME

1 2 AMTS -> SAP (Tire orders, auto parts, replenishment order tires, replenishment order auto parts)

2 2 SAP -> AMTS (Order confirmation) 3 2 AMTS -> SAP (Order receipt from AMTS C&F stores) 4 1 BFDI -> SAP (ATB) sync 5 1 BFDI <- SAP (Material Master Common Format) 6 1 BFDI <- SAP (Customer Master Common Format) 7 1 BFDI <- SAP (Zip Code Master) 8 1 BFDI / DR -> SAP (External billing input/bil ling credits - Common Format) 9 1 SAP -> BFDI (Government price books)

10 T COPS -> SAP (Item master synchronization) 11 T COPS -> SAP (Customer master synchronization) 12 T COPS -> SAP (Order reconciliation) 13 T COPS -> SAP (Customer orders) 14 T COPS -> SAP (Customer Change Orders) 15 T COPS -> SAP (Customer shipments) 16 T COPS -> SAP (Inventory receipts) 17 T COPS -> SAP (Bay lane inventory) 18 T COPS -> SAP (Inventory adjustments-scrap, lost inventory, etc) 19 T COPS -> SAP (Inventory reconcil iation) 20 T SAP -> COPS (Deliveries) 21 T SAP -> COPS (New materials) 22 T SAP -> COPS (Customer Orders) 23 T SAP -> COPS (Item master synchronization) 24 T SAP -> COPS (Order master synchronization) 25 T SAP -> COPS (Customer Change Orders) 26 T SAP -> COPS (Customer shipments) 27 T SAP -> COPS (Inventory receipts) 28 T SAP -> COPS (Bay lane inventory) 29 T SAP -> COPS (Inventory adjustments-scrap, lost inventory, etc) 30 T SAP -> COPS (Inventory reconcil iation) 31 1 DiForce (Warren) -> SAP 32 1 SAP -> DiForce (Warren - ASRS) 33 1 DiForce (LaVergne) -> SAP 34 1 SAP -> DiForce (LaVergne - ASRS) 35 1 DRP -> SAP (Stock transport orders) 36 1 SAP -> DRP (Finished ti re/tube inventory) 37 1 SAP -> DRP (Finished ti re/tube sales orders) 38 1 SAP -> DRP (Finished ti re/tube enroute) 39 1 SAP -> Central Forecast 40 1 SAP -> MPS

INTE

RFA

CE

S

41 1 MPS -> SAP

Interface Scenarios, Analytics, Reports, Enhancements, Forms


Framework for a Corporate Sustainability Program / 4In latter phases of the ASAP model, the project team will configure the core functional and technical elements, implement the OCM and Risk Management plans, ready the technical environment for Go- Live, and plan and execute testing, system cutovers, and “sunsets” (retirements) as necessary.

Technical Environment Readiness

Program Risk Readiness

CostOutsourcer Contract buy Spot but Contract buy Ga

Process steps # transactions (mn) nternal (mn Supp (mn) Internal (mn) Supp (mn) Internal (000$) Supplier (000$) Internal (000$)

-$ -$ -$ Source Strategic 1,330,000 4 0 0 0

Exception <$500 1,820,000 6 0 0Other 350,000 0 0 15 10,150$ -$ 3,281$

Requisition and ap Strategic 1,330,000 0 0 0Exception <$500 1,820,000 0 0 0Other Expert (client) 175,000 10

Non-expert (clien 175,000 0 0 20 -$ -$ 3,281$ Order Vendor direct Expert (client) 3,150,000 4 5 0

SAP Non-expert (clien 0 0 0 0Expert (client) 350,000 0 0 5 5 7,875$ 9,844$ 1,094$

Ship / Receive Strategic 1,330,000 5 10Exception <$500 1,820,000 1 2Other 350,000 5 10 5,294$ 10,588$ 1,094$

Verify Strategic 133,000 1 0 0 0Exception <$500 1,820,000 0 0 0 0Other 350,000 0 0 0 0 83$ -$ -$

Invoice None 35,000 0 0 0 0Electronic 3,115,000 0 3 0 0Paper 350,000 0 0 0 3 -$ 5,841$ -$

Match None 1,820,000 0 0 0 02 w ay 1,330,000 3 - 0 0 0

vity 3 w ay 350,000 10 0 0 - 0 466$ -$ 2,188$ Approval Required 1,330,000 3 2 0 0 0

Required 350,000 3 0 2 4,156$ -$ 1,094$ Pay Electronic 3,150,000 0 0 0 0

Check 350,000 6 0 2 0 2 -$ 438$ 1,313$ Systems 3,500,000 27,000$ 3,000$ Finance Charge -$ 132,559$ -$

Total 55,024$ 159,268$ 16,344$

Cost Envelope Management

Organization Change Readiness (Playbooks, Procedure Enablement)

Value StreamValue Stream

1. Inventory Reduction

1. Inventory Reduction

2. Asset Utilization2. Asset Utilization

15. Supply Chain Efficiencies

15. Supply Chain Efficiencies

16. Sales Improvements

16. Sales Improvements

Value Capture MilestonesValue Capture Milestones

Site Deployments / Process Improvement UpdateSite Deployments / Process Improvement Update

Inventory UpdateInventory Update

BU Equipment Utilization UpdateBU Equipment Utilization Update

Forecast accuracy updateForecast accuracy update

Logistics - route optimization update Logistics - route optimization update

Materials cost reduction -improved forecastsMaterials cost reduction -improved forecasts

BU Call-Center DeploymentsBU Call-Center Deployments

Time-to-Repair reduction update Time-to-Repair reduction update

MonthsMonths

Value Capture Plan

BU GO Live1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Months

29

...

Site 1 Site 2 Site 3 Site 4 Site 5 Site 6

Implementation Program Readiness

Go-live1 2 3 n

Functional & Technical Configuration

Like

lihoo

d of

Occ

urre

nce

Inherent Impact SeverityLow (1-2) Medium (3) High (4-5)

Low

(1-2

)M

ediu

m (3

)H

igh

(4-5

)

Quick win A - AccountabilityExecution T - Technical

Strategic P - ProgramS - Scope

A1

A2

A3 A4

A5

S1 S2S3

T1

T2 T3

T4

P1

P2

DEV ELOPM ENT

030

INTE GRATION

030

PRODUCTION

030

SA NDBOX

030

OTC

030

Pr ior S D Solution

030

040

BF D DE VELOPM ENT

BF QQUA LIT Y

B FP PROD UCTION

BF S SA NDBOX

B FT Pr ototype

B FB

4.5B Release

T ranspor t Path

System NOT in Transport Path


1.


2.


3.


4.


5.


6.

Framework for a Corporate Sustainability Program

7.


Agenda


Summary and Next StepsNewport’s planning phase consists of the facilitation of business and system requirements, and development of stakeholder buy-in, recommended internal processes and monitoring controls, metrics and indicator formulae and mapping, and solution “building blocks” for downstream implementation.

Planning and Engagement Model8-week timeline of activities

Organization Change and Project Management

Project Launch and Scheduling

Confirm Solution

Hypothesis

Validate Indicators to

Operating Model

Kickoff Presentation

Engagement Workplan

Stakeholder Interview Schedule

Kickoff Presentation

Engagement Workplan

Stakeholder Interview Schedule

Guiding Principles

Understanding of Existing Landscape

Pro forma Balanced Scorecard

Guiding Principles

Understanding of Existing Landscape

Pro forma Balanced Scorecard

Updated Balance Scorecard

Key Indicator Formulation

Operating Model Implementation Considerations

Updated Balance Scorecard

Key Indicator Formulation

Operating Model Implementation Considerations

Align to Landscape of

SAP Solutions

Conceptual Application

Requirements

Initial Data Mapping

Conceptual Technical

Requirements

Conceptual Application

Requirements

Initial Data Mapping

Conceptual Technical

Requirements

Recommend “to be”

Process and Solution Set

Recommended Solution Set

Key Solution Requirements

Target Solution Vision

Recommended Solution Set

Key Solution Requirements

Target Solution Vision

Develop Business Blueprint Project Charter

Blueprint Transition Plan

High-level Engagement

Workplan

Monitoring Processes

Blueprint Transition Plan

High-level Engagement

Workplan

Monitoring Processes

1 2 3 4 5 6

Week 0 Weeks 1-2 Weeks 2-4 Weeks 4-5 Weeks 5-7 Weeks 7-8

Phase 1“Strategic Alignment”

Phase 2“Solution Positioning”Checkpoint



Newport’s experience has been that as we engage with our clients, we discover additional opportunities, challenges, ideas, and observations that are tangential or even unrelated to the initial scope of our engagement

In these cases we will advise our clients of these areas and when appropriate will recommend staff and Newport partners who might be able to assist our clients in these areas:

– Leadership development– Organizational conflict resolution– Strategic and Operational Planning– Lean Manufacturing Practices– Idea and Intellectual Property Management– Other Functional IT solution capabilities– Enterprise Performance Management


Contact


William Newman, CMC

Managing Principal

[email protected]

7286 North Village Drive

O 248-978-2000Clarkston, MI 48346 USA

M 248-635-9902


Bill Rudiak

Principal

[email protected]

7286 North Village Drive

O 248-978-2000Clarkston, MI 48346 USA

M 415-601-3152