ADVANCED PLANNING @ BEIERSDORF

USING SAP-APO

ADVANCED PLANNING @ BEIERSDORF

Agenda
Our company : Beiersdorf
Overview and strategy

BSS as internal Service Provider

Business and IS architecture

Our planning system : SAP APO

Structure and design

Our experiences
Experience with SAP APO and next steps

JrgenBttcher

Our company: Beiersdorf

Overview

ADVANCED PLANNING @ BEIERSDORF

Beiersdorf: Passion for Skin and Beauty Care

As a global manufacturer of branded consumer goods, we understand our consumers and delight them with innovative products for their skin and beauty care.
Founded in 1882 More than 21,000 employees worldwide

More than 150 affiliates worldwide

2007 sales: 5,507 million (+ 9.1 %) Listed on the M-Dax NIVEA is the largest body care brand in the world

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF

Successful All Over the World

Our consistent consumer orientation is the reason for our global success.
Group sales 2007: 5,507 million Group profit after tax 2007 in million*
486

In 2007, group sales exceeded 5.5 billion the best result in the companys more than 125-year history Sales growth of 9.1 % (adjusted for currency translation effects)

14,8 %
335

387

14,2 % 71,0 %

301

302

Continuous rise in group profit after tax

Europe America Africa, Asia, Australia 2003 2004 2005 2006 2007

*Excluding special factors.

JrgenBttcher

Our Company: Beiersdorf

Strategy

ADVANCED PLANNING @ BEIERSDORF

A Clear New Strategy

Our consumer business strategy systematically focused on our consumers wishes.
Leading international brands that provide consumers with compelling, innovative products Globally integrated production and delivery processes designed to reach consumers rapidly and reliably A clear geographical focus that enables us to cater to local needs Strong leadership through performance orientation, the promotion of change, and innovation at all levels of our company This enables us to increase our market share and stay ahead of the international competition

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF

Superior Supply Chain

Priorities to drive supply chain excellence

1. One global, process-oriented supply chain organisation

All major supply chain processes (for example: plan, source, make, deliver, and return) will be managed centrally. Clear end-to-end and cash-to-cash process responsibilities.

Supplier

Production Center

Distribution Center

Market / Customer

Plan

Launch / Re-launch Trade promotion Market information

Customer service
Return

Source

Make

Deliver

Cash-to-cash
JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF

Superior Supply Chain

Priorities to drive supply chain excellence 2. Best-in-class supply chain processes

Processes will be tailored to our business model, optimized, and measured end to end from supplier to customer Implement continuous improvement processes

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 10

Supply Chain Realignment

Adapting production sites and logistic centers to meet actual and future requirements
Building hubs in strategic locations to bundle storage, distribution, and promotion management Optimizing worldwide procurement by entering into strategic partnerships with our suppliers Taking advantage of a uniform IT infrastructure to react faster and more flexible to new situations Actively meeting the demands of our retail partners

Running down inventories at outlets Ensuring short restocking times Minimizing tied-up capital Reducing shelf management effort (retail-ready packaging)

JrgenBttcher

BSS as Internal Service Provider

Business and IS architecture

Impact of Beiersdorf Strategy on IS/Accounting

Exploit synergies / enable strategy implementation

Beiersdorf Shared Services A Beiersdorf company providing best-practice services to support Beiersdorfs growth

BSS provides IS and accounting services to internal customers in the Beiersdorf group BSS established on April 1st 2003 as a wholly owned affiliate of Beiersdorf AG BSS translates enterprise into systems architecture providing regional/global systems

Regional ERP SAP systems Europe, Asia, Americas / global supply chain systems: PLM, APO/CRP. . . BSS hosts SAP R/3 systems of 62 companies worldwide and provides infrastructure services groupwide Accounting services to Europe and Middle East Number of employees: approx. 360, 270 of which at BSS premises in Hamburg Local/regional IS in the Americas and Asia/Pacific under BSS guidance with some 100 employees
ADVANCED PLANNING @ BEIERSDORF 12 5 Dec 2007

Alignment IS with Business: SAP IT Architecture As-Is Nov 2007

PLM GTS
4.6c Latin1

SAP Product Lifecycle Management*

SAP ERP 6.0, global (Latin1)

SAP GRC Global Trade Services

Global GTS 3.0 (Unicode)

Brazil

ERP SCM SRM

BLASS*
Latin America SAP ERP 6.0 (Latin1)

North America
SAP R/3 4.6c (Latin1)

BESS*
Europe SAP R/3 4.6C (MDMP)

BASS*
Asia SAP ERP 6.0 (Unicode)

Australia
SAP R/3 4.6c (Latin1)

SAP APO
Europe & Americas& Dubai SCM 5.0 (Latin1)

SAP SRM
Germany only (Latin1) SAP SRM 5.0

HR*
Germany, Italy SAP ERP 6.0 (Latin1)

HCM BW
SAP BW
Latin and North America SAP BW 3.1 (Latin1)

e-recruiting
global 6.0 (Unicode)

SAP BW
Europe and corporate reporting SAP BW 3.1 (Latin1)

Common development environment

SAP BW POS
SAP BW 3.1 (Latin1)

Americas
ADVANCED PLANNING @ BEIERSDORF

Europe
* Multiple SAP clients in one system 13

Asia
5 Dec 2007

Alignment IS with Business: SAP IT Architecture Post PRIME 2010

PLM GTS ERP SCM SRM
BLASS*
Latin and North America SAP ERP 6.0 (Latin1)

SAP Product Lifecycle Management*

Global SAP ERP 6.0 (Latin1)

SAP GRC Global Trade Services

Global GTS 3.0

BESS2*
PRIME, PCs, and other clients SAP ERP 6.0

BASS*
Asia SAP ERP 6.0

SAP APO
Global (Latin1) SCM 2008

SAP Supplier Relationship Management

Global SAP SRM 5.0

HR*
Global SAP ERP 6.0

HCM
e-recruiting
Global 6.0

SAP NetWeaver Business Intelligence

Latin and North America, BI 7.0

SAP NetWeaver Business Intelligence

Europe and corp. incl. POS, BI 7.0 Common Development Environment

SAP NetWeaver Business Intelligence

Asia, BI 7.0

BI

SAP NetWeaver Business Intelligence EDW system

Global, BI 7.0

Americas
ADVANCED PLANNING @ BEIERSDORF
-All

Europe
* Multiple SAP Clients in one System. Applications not explicitly mentioned are Unicode. 14

Asia
5 Dec 2007

From Beiersdorf Consumer Business Strategy to PRIME Rollout

Consumer business strategy

Consumer strategy: superior brands / superior supply chain

European business model PRIME templates

New business model for a common Europe

Process Redesigned IT Model for Europe

PRIME rollout

Implementation and support of standardized processes

PRIME supports the implementation of the consumer business strategy

ADVANCED PLANNING @ BEIERSDORF 15 5 Dec 2007

Our planning system : SAP APO

Structure and design

ADVANCED PLANNING @ BEIERSDORF 17

History of SAP APO @ Beiersdorf

2000
2000: First tests of replenishment scenario with SAP APO 2.0 2001: Pilot SNP France-Poland with SAP APO (weekly replenishment) 2003: Big-bang implementation (DP, SNP, PPDS) in Germany (Release 3.1) 2004: Big-bang implementation (DP, SNP, PPDS) in France 2005: Start of international DP + SNP rollout 2006: Major rollout in Europe + United States (release 4.0) 2007: Rollout PRIME, Asia started 2008: Rollout PRIME, South America, Asia, and Australia

2008
Since January 2007 SAP SCM release 5.0
JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 18

Properties of Beiersdorfs Supply Chain

Make to stock Production cycles: weekly/bi-weekly/monthly Daily deliveries to warehouses and customers Strong VAS business (e.g. displays), use in bill of material (BOM) Short product life cycle short history per product Highly promotion-driven Subcontractor (VAS production) Use in BOM Production center Central warehouse Finished goods safety stock Market B Decentralized warehouse Transport to other location Market A

VAS = Value-added service

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 19

Integrated Planning
Target: stock reduction with high service level by optimization of planning processes (faster and more accurate)

Integration of following 3 SAP APO components:

Demand planning

Supply network planning

Production/ planning detailed scheduling

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 20

Coordination and Data Flow in APS Modules

Procurement Long-term
Configuration

Production

Distribution

Sales

Strategic network planning

Simulation results Long-term forecast Forecast APO-SNP Purchasing quantities Capacity booking Stock levels Capacity booking Distribution quantities/allocations

Mid-term

Master planning

Demand planning

Production Planning
APO-PPDS

Quantities Due dates

Distribution Planning
APO-SNP Transportation Quantities and modes

Forecast APO-DP Customer orders

Short-term

Materials requirements planning

Lot sizes

SAP R/3 PP APO-PPDS Due dates

Scheduling
APO-PPDS Due dates

Transportation Planning
APO-SNP / TP/VS

Demand fulfillment and ATP

APO-gATP

Supply

Source: Rohde in Stadtler (2000), p.184

Flows in BDF planning process

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 21

Planning Steps and Planning Horizons

Demand planning (DP) Baseline (monthly) + promotions (weekly)
SNP planning / deployment (partly push) / TLB Exact lot size / pallet lot size daily process worldwide Planning of finished products (PP) Enhanced block planning Detailed scheduling finished products (DS)
2-3 month Dependent requirements (integrated) 15-month 20-month

Planned independent requirements (daily transfer) 20-month

Distribution orders (integrated)

Procurement planning of packaging materials

Planning of compounds (PP) Fixed batch sizes | Monthly lot sizes Detailed scheduling compounds
2/3 weeks

15-month

Procurement planning of raw materials

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 22

Present SAP APO Installations

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 23

Systems and Data Flow

ERP
SD
Sales and distribution

BI
EDW

APO-DP
Demand planning Promotion planning

External sources

BI
Reporting

MM
Materials management

APO-SNP
Supply network planning Deployment Transport load builder

PP-PI
Production planning process industry

APO-PPDS
Production planning Detailed scheduling

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 24

Structure of Worldwide APO

APO-DP Regional
POS/planning areas Europe/Africa POS/planning areas America Planning books Template POS/planning areas Asia/Australia Planning books Template

Planning books
PRIME template

APO-SNP Global

SNP-Europe

SNP-America

SNP-AAA

APO -PPDS Local

PC 1

PC 2

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 25

Demand Planning (DP)

Worldwide DP rollout Highlights

DP:
Planning customer demands

3 standardized planning areas (split by region because of time zones) Standardized rollout with predefined structure / key figures as well as process and reporting Monthly baseline approach, weekly promotions added

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 26

Demand Planning the Process

1 2 3 4 5

Load history

Correct history

Forecast

Correct plan

Transfer to SNP

Daily upload from BI Fill 10 different key figures Structure: Product Plant Country

Manual corrections in separate data view (e.g. promotions) Automatic outlier correction (history 5 a)

Statistical forecast approx. 40 predefined models (monthly) Life-cycle (predecessor/ successor) planning used

Promotion planning used (weekly) Manual adjustment for future events (media, sales)

Daily transfer

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 27

Demand Planning Example

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 28

SNP: Worldwide Distribution Planning

SNP:
PC-DC relation distribution planning Continuous replenishment (CRP) in Beiersdorf logistic network Highlights SNP standard scenario

Integration of locations from different (logical) SAP R/3 systems

Split of existing plants in production and distribution plants; replenishment planning by SNP, deployment + TLB

Daily planning of the complete BDF supply chain worldwide

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 29

Supply Network Planning: The Process

Replenishment planning
1 2 3 4 5 6

Define networks

Demand transfer

SNP planning

Deployment

TLB

Integration SAP R/3

SNP planning

Distributes demands within supply network Creates distribution demands rounded to logistical units (pallet/layer/carton)

Deployment

Confirms distribution demands according to receipt situation (stocks, planned orders, etc.) Push and pull logic used

TLB

Combines all demands per date to order and optimizes truck Generates purchase order
JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 30

SNP - Integration with different logical systems

Demand planning APO-DP Demand Receipt
One connected element

SNP
Demand Stock

History
data

Master data

Stock

Production orders

TLB confirmation

Reporting

Purchase Master data

requirement

Purchase
order

Orders

Sales orders Delivery + GI Production orders

Master Data

Reporting
Inbound delivery + GR
DESADV

Invoice

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 31

SNP: Example

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 32

Vendor Managed Inventory (VMI)

VMI (DP+SNP):
DC-customer Vendor-managed inventory (VMI) to customer Highlights Delivery to customers central warehouse Fixed delivery dates

Weekly delivery
Forecast on SKU level (not EAN) 6 customers in 3 companies 200-400 SKUs each

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 33

Production Planning and Detailed Scheduling (PPDS)

PPDS
production centers Planning of finished products, components, and raw and packaging materials Highlights Mid-term planning for finished products and components (15 month), various heuristics used (block planning, standard lots, 3-horizon heuristic, Conti-IO heuristic) Short-term scheduling using PPDS graphical planning board

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 34

Enhanced Block Planning

Fixed frequency Fixed sequence Flexible block duration Sequence-dependent set-up times Smooth production Smooth procurement Reliable deployment to HUB/DC Reliable schedules

86003-061 86003-054 86003-01

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 35

PPDS: Example

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 36

Alert Management
Exception-based planning: Used in DP SNP PPDS Important part for a complex supply chain Predefined alerts used worldwide Reporting on number of alerts

JrgenBttcher

Our experiences
Experience with SAP APO and next steps

ADVANCED PLANNING @ BEIERSDORF 38

Data Volume
APO users Locations Location products Planned daily Resources Customer order lines per day Purchase reqs. per day Planned orders Trucks per day 700 Active users (all modules DP, SNP, PPDS)
33 plants, of which 2 PPDS locations 6 VMI customers Including, raw- semi, historic articles Active finished goods In 2 locations Only partially transferred to APO / special development 150,000 in SNP, 80,000 in PPDS, additional 150,000 extra on weekends Mainly on weekends, partly daily Planned by TLB
JrgenBttcher

40
177,000 26,000

700
> 100,000 230,000 80,000

40

ADVANCED PLANNING @ BEIERSDORF 39

APO Project Results

Production/ planning detailed scheduling

Demand planning

Supply network planning

APO implementation will increase turnover and profit by: Improving responsiveness to market opportunity (daily planning works)

Reducing stock while maintaining high service level usually stock reduction in CRP > 30% (daily delivery according to demand instead of monthly as before)
Improving production and transportation efficiency Scaling down of obsolete stocks Optimizing planning processes faster and more accurate (improved forecast accuracy by some 20%)

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 40

Learnings
Very flexible and professional tool APO-DP/SNP/PPDS is used for planning; Microsoft Excel etc. not in use anymore Various design options, APO-DP/SNP is more a tool-set standardization required design-strategy: All companies use same planning area (data standardization: horizon, frequency, parameter) Standard planning books for fast rollout (process standardization by fixed proceedings) Various processes supported

Very high integration possible

Integration DP, SNP, PPDS and APO - SAP R/3 works well Benefit: better planning quality Benefit does not come overnight Support from system (views, alerts . . .) Vehicle to standardize processes
JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 41

What Comes Next?

Further rollout Asia/Pacific and Latin America Medium-term volume planning (3 5 a) (new products, growth factors . . . balance with capacities, raw materials, tools . . .) Supplier integration with APO (supplier viewed as location in APO and integration into suppliers ERP-system (batch)) Advanced safety stock planning (based on statistical methods to achieve 98% service level), enhancement of APO-SNP advanced safety stock methods

JrgenBttcher

ADVANCED PLANNING @ BEIERSDORF 42

Thank You for Your Attention

Questions?

Dr. Jrgen Bttcher

Beiersdorf Shared Services Juergen.Boettcher@Beiersdorf.com

JrgenBttcher

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