Food Overview

8/6/2019 Food Overview

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SAP ERP for theFood Industry



Challenges, Strategies, and Benefits

The Solution




The Solution



© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products

The Food Business Ecosystem

Government

Regulations(Taxes, Compliance,Trade Restrictions,

Import/Export Rules)

CP Food

Company

Raw/Packaging

Material

Supplier

(Commodities,Intermediate Materials)

Services

Supplier (Packaging Design,

Research, Service

Partners)

Co-Packer (Can Be Outsourced;

Packaging, Product

Finishing)

Distribution

Center

Third-Party

Logistics(Logistics Service

Providers)

Consumer

Wholesaler (Typically for Smaller

Food Companies)

Hotel,

Restaurant,

Food Service

Retailer (Retailers, Mass

Merchandisers)




YOUR FOCUS

Increase Shareholder Value

Increase Revenue and Profit Margins

Cost Leadership

Product Leadership

Improve Customer Satisfaction

YOUR FOCUS

Increase Shareholder Value

Increase Revenue and Profit Margins

Operational Excellence

Product LeadershipImprove Customer Satisfaction

Food Companies Often Havethe Right Focus and the Right Strategies …

Business STRATEGY

Protect and enhance revenue

Improve margins

Drive for lower costs

Get closer to the consumer

Improve time-to-market

Enhance operational efficiency




A business enabler is required to

help the organization refocus on

business strategies!

Often employees cannot execute on the company’s

business strategy because the business platform is …

COMPLICATED TO OPERATE

Complex and broken process flows

Incomplete or hidden information

DIFFICULT TO CONTROL

Lack of visibility

Lack of traceability

CHALLENGING TO CHANGE

Multiple costly integration points

Redundant and inconsistent data

Business

Enabler

Business STRATEGY

Ability to EXECUTE

… But Mostly Not Enough Ability to Execute


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Market Forces and Business Needs

Market Forces

Retailer power (Wal-Mart effect) Consumer concerns about food safety;

media attention

Increased legislation and regulationsaround food safety by FDA and other authorities (e.g., EU Dir. 178/2002, The U.S.Bioterrorism Act of 2002)

Changing consumer demands due todemographics and trends

Decreasing consumer loyalty to productsand brands

Shorter product life cycles

Global commodity price fluctuations

Price pressure and margin erosion

Restrictive consumer spending pattern Market consolidation (globalization, M&As)

Increasing competition

Emerging private labels

New technologies reshaping the industry

Resulting Key Challenges

Improve Sales Efficiency

Enhance Customer Retentionand Loyalty

Ensure Food Safety and

Regulatory Compliance Optimize Supply Chain

Optimize Efficiency inProcurement andManufacturing

Create Visibility to All Internal

and External Processes andOperations



Improve Sales Efficiency

Benefits

Higher sales volume

Better account retention

Closer customer relationship

Optimal sales force operation

Higher customer satisfaction

Strategies

Obtain first-hand information

about the market

Optimize process settlementin sales

Increase customer service

offerings

Increase customer

satisfaction

SAP® can help you

Plan, track, control, and

optimize sales performance

Expand service processes

Strengthen collaboration withpartners and key customers

Track indirect sales and

customers

Ensure correct handling of

rebates

Challenges

Protect market share

Meet retailer requirements

Improve sales force

productivity

Get visibility in the sales

process

Get closer to the customer



Enhance Customer Retention and Loyalty

Benefits

Higher sales volume

Better account retention


Strategies

Enhance relationships between

manufacturer, wholesalers,

customers, and consumers Improve customer service

Make account management

more efficient

Use effective trade promotion

activities for specific

demographics, channels, and

retailers

SAP® can help you

Strengthen collaboration with

business partners

Optimize customer retention

through rebate management Manage and control trade

promotions efficiently

Expand service processes

Manage key customers

Challenges

Increase brand loyalty

Ensure market share

Get closer to the customer

Reach a high service level for

customers

Compete for shelf space



Ensure Food Safety and Regulatory Compliance

Benefits

Reduced penalty risk

Decreased risk of food-safety

compensation payments

Reduced risk of badreputation

Lower operating costs

Strategies

Support mid- and long-term

company success by ensuring

regulatory compliance Set efficient processes in

place to enable traceability

Allow targeted product recalls

to minimize costs

SAP® can help you

Track, monitor, and trace

batches and inventory

Streamline procurement,

production, and sales Manage sales returns

Enable targeted product

recalls

Challenges

Align with governmental

regulations (EU 178/2002, The

U.S. Bioterrorism Act of 2002,import/export)

Enable fast, effective product

recalls

Track and trace from “farm to

fork”



Optimize Supply Chain

Benefits

Improved operations

excellence

Lower capital commitment

Reduced operating costs


Strategies

Reduce costs

Streamline supply chain

processes

Improve supply chain control

Gain more supply chain

visibility

SAP® can help you

Optimize distribution

processes

Optimize end-to-end planning

Improve asset utilization

Fully integrate logistics

management, including

transportation and warehouse

and inventory management

Shorten order-to-delivery

cycles

Challenges

Decrease process costs

Create operational efficiencies

and supply chaintransparency

Ensure comprehensive

product availability in multiple

channels

Ensure accurate and timely

shipments

Avoid out-of-stocks



Optimize Efficiency in Procurement and Manufacturing

Benefits

Decreased costs

Consistent monitoring of

product quality

Integrated processes

Strategies

Reduce costs

Streamline processes

Gain more visibility and

transparency

Improve relationship with

suppliers

SAP® can help you

Set up integrated and flexible

processes for manufacturing

and procurement

Monitor production costs Ensure integrated quality

management

Track batches

Challenges

Decrease process costs


and transparency

Use efficient procurement

processes

Optimize production

Respond to last-minute

changes in the demand

situation



Create Visibility to Internal and External Processes

Benefits

Improved operations

excellence

Access to actionable

information to manage thebusiness

Lower operating costs

Greater process transparency

Strategies

Improve end-to-end

operations efficiency

Improve asset utilizationthrough better production

planning

SAP® can help you

Integrate procure-to-stock

processes

Streamline production and

distribution processes Ensure failsafe batch

management process

Optimize end-to-end planning

Optimize inventory levels

Challenges


to reduce costs and time

Create supply chaintransparency and batch

traceability




The Solution



Analyze,

Plan, and

Develop

Procure ManufactureMarket

and Sell

Deliver and

Service

Busine

ss

Object iv

es

Define business

strategy and

goals Understand

company

performance and

profitability

Realize savings

in aggregate

purchasing Improve

purchasing

efficiency

Ensure tracking

and traceability

Improve

manufacturing

efficiency Ensure quality

management in

manufacturing

process

Establish closer

contact with

customer Enhance control

over delivery

process

Improve marketing

effectiveness

Increase saleseffectiveness

Description… Focuses on key business processes that create a baseline for future growth

… Delivers immediate benefits by solving the problem of system heterogeneity

… Enables significant business process automation

Key Performance Indicators

Purchased Raw Materials Volume

Production Adherence

Warehousing/Distribution Costs

Gross Profit/Total Net Sales

Net Case Growth

Inventory Turns

Complete logistical and financial integration

SAP ERP Packaged Solution for the Food Industry



SAP ERP Packaged Solution for the Food Industry

Suppliers & Partners Customers (e.g.

Retailers) & Channel

Partners

Analyze, Plan &

Develop

Procure Manufacture Market & Sell Deliver & Service

Sourcing & Procurement

Procure to StockThird Party Procurement

Manufacturing

Production Planning

Production

Sell & Deliver

Sales Order Processing

Direct Store Delivery (DSD)

Indirect SalesReturns

Operational End-to-End Scenarios

Inventory Management

Quality Management

Traceability & Food Safety

Cross Company Transactions

Enterprise Management & Support

Financials

Financial Accounting Cash Management Asset Management

Controlling

Standard Cost & Profit Center

AccountingProduct Cost Planning

CO-PA for Consumer

ProductsCost Object Controlling




Industry Pain Points Improving purchasing activities’ efficiency

Realizing savings in purchased value

Allowing visibility on vendors’ conditions and

services Ensuring tracking and traceability

Ensuring quality of all materials andcomponents used in manufacturing food

Efficient purchasing is on the top task list of food companies today. The SAP™ ERP

packaged solution supports price comparison of vendors’ offers, incorporating flexible

pricing processes for the actual value of the raw ingredients delivered. It provides tools to

gain greater spend visibility in procurement and automate operational tasks. It also helps

to manage quotations, contracts, batch handling, and quality.

Business Benefits Automate operational tasks

Improve vendors’ selection and prices comparisonthrough quotation handling

Formalize agreements by introducing contractmanagement and relating it to quotations

Introduce batch management for raw materialstracking and traceability

Guarantee quality check through goods receipt

inspections

Solution

Procurement of

Stock Materials

Issue request for

quotation

Compare prices

Issue purchase

requisition

Process purchase

order

Receive goods

Inspect goods

receipt

Automatic batch

number creation Update stock

Procurement

Contracts

Create contract:

quantity contracts,value contracts,

and delivery

schedule

Create purchase

requisition

Assign vendor to

contract

Procurement

Third Party

Procurement

Order

Purchase Order

Processing

Vendor Invoice

Verification

Billing Documents

Controlling




Industry Pain Points Reducing time-to-market in food

manufacturing

Ensuring quality checks over the entire

manufacturing process Managing expiration dates

Improving manufacturing efficiency

The SAP ERP packaged solution gives the flexibility to manage multi-step manufacturing

processes. It incorporates in-process and post-process quality management and

performs automatic batch determination based on expiration date during production order

processing. The solution also includes cost-object controlling, such as preliminary

costing, simultaneous costing, and period end closing.

Business Benefits Create and modify bill of materials and

receipts easily and quickly Identify quality-noncompliant lots by

defining product inspection lots andrelated usage rules

Manage expiration dates throughautomatic batch-number generation

Calculate and monitor production costs

Solution

Production

Planning

rough-cut planning

long-term planning

generation of

planned orders

Manufacturing

Production

Production order creation

Bill of material

management

Production order

processing

Batch management

Quality

management

Cost object

controlling

Inventory update GMP compliance




Industry Pain Points Managing variable pricing conditions by

different customer/product combinations

Shortening order cycle times

Meeting customers’ requests for improvedservices (e.g., order fulfillment, invoicing, andpayments methods)

The SAP ERP packaged solution can effectively manage the entire customer order

process — variable pricing, delivery, invoicing, and payment. Capabilities such as

electronic data interchange (EDI), handling consignment sales, and foreign trade are

provided as standard. You can focus on shortening order cycle times, make on-time and

in-full deliveries, and provide customers with optimal payment methods.

Business Benefits Define standard and ad hoc price lists easily and

quickly Improve sales execution timeline by implementing a

seamless process and the timely availability of keyinformation

Improve order fulfillment through stock availabilitychecks

Provide the customer with alternative services and

methods for invoicing and payments

Solution

Extended Sales

Order

Processing

Sales order

creation

Delivery creation

Picking

Goods issues

posting

Billing creation

Display billing

documents

Availability checks

and batch

determination areincluded

Customer

Consignment

Processing

Consignment Fill-

up

Consignment

Issue

Consignment

Pick-up


EDI

Inbound sales

order via EDI

Outbound billing

document via

EDI




Industry Pain Points Succeeding in the face of intense

competition between brands

Establishing direct contact with customers,

such as retailers, restaurants, and pubs Improving operational efficiencies in a

complex system

The SAP ERP packaged solution features a powerful route-management function that you

can use to load, dispatch, and track any number of deliveries efficiently. Route planning

tools optimize your entire approach to deliveries, helping eliminate redundant trips and

allowing you to match the appropriate vehicles and drivers to your customers for each

delivery.

Business Benefits Improve customer service through better

service levels and multiple points of access Increase revenue by improving order fill rate

and reducing shrinkage

Reduce operating costs and increaseefficiency by reducing administrativefunctions

Lower working capital by reducing inventory

carrying costs

Solution

Visit Control and

Scheduling

Group customers in

visit plans

Assign visit calendar

and routes

Schedule deliveries

Optimize shipments

daily

Create visit list

Picking, Packing,

and Loading

Calculate workload

estimates

Complete goods

issue process

Route

Accounting

Check-in/check-out

Balance materials

and payments

Perform settlement

process incl. post

goods issue receipts

Credit or debit

customer and driver

accounts

Direct Store Delivery (DSD)




Industry Pain Points Obtaining usable and relevant data about

customers through third-party wholesalers

Allocating promotional spend efficiently

Securing correct rebate processing acrossa complex supply chain

Managing sales returns cost effectively

Obtaining customer information through a third-party wholesaler can be a challenge for

many food companies. The SAP™ ERP packaged solution enables food companies to

gain a more complete understanding of their business performance by allowing them to

track their sell-through in different channels and to specific accounts.

Business Benefits Understand better those customers that are

serviced by a third-party wholesaler due to

improved data quality and availability Allocate promotional spend more efficiently

by collecting and analyzing valuable customer information

Process rebates and commissions correctlydue to improved data quality and availability

Increase efficiencies by using a centralized

tool to manage the returns process

Solution

Indirect Sales

Data

Management

Maintain

information about

wholesalers’

customers

Create template for

data requirements

Create requests for

sales reports

Receive indirect

sales data (volume,

quantity, and value)

from wholesalers

Confirm and

validate received

data for rebates

calculation

Analyze indirect

sales data

Perform periodic

partial settlement

Rebate

Agreements

Define rebate

agreements

Track rebate

obligations for both

direct and indirect

sales

Take contractual

agreements into

consideration

Set up reserves

based on planned

sales

Settle indirect

agreements

Indirect Sales and Returns

Returns &

Complaints

processing of credit

memos in case of

complaints

returned goods go

through a quality

evaluation

Centralized

processing of

subsequent

inventory and billing

activities based on

multiple analysis

results Generation of

settlement

documents in

background

processing




Industry Pain Points Being fully compliant with food

regulations, such as EU (Article 18 of Regulation 178/2002), U.S. (TheBioterrorism Act of 2002), HACCP (Hazard

Analysis and Critical Control Points)

Addressing growing food-safety concernsfrom consumers

Food safety requirements are becoming more stringent across the food industry, which

means that food companies must have track-and-trace capability for all products, as well

as the ability to recall a defective batch. The SAP™ ERP solution allows companies to

meet the industry requirements for food safety and traceability and to reduce operational

risk significantly.

Business Benefits Minimize risk of losing customer trust by

professionally managing a possible recallof a defective batch

Minimize risk of noncompliance with foodregulations

Enable effective batch-specific returnsprocessing

Monitor materials planning, sales and

distribution, procurement and production

Solution

Quality

Management

Batch

Management

Plan for quality

Inspect for quality

Record laboratory

analyses

Create reports on

quality

Improve quality

Monitor

procurement,

production,

distribution

processes

Manage automatic

batch creation,

determination,

status, and batch-

where-used-list

Track defects

Recall batches and

create follow-up

activities

Manage batch

specific return

processing

Manage batches

based on shelf-life

expiration and

other usability

differences

Traceability and Food Safety, Quality Management

Handling Unit

Management

Manage production

processes with

HUM

Handle Serial

Shipping Container

Code (SSCC)

numbers

Integration with

quality

management and

batch management




Transportation

Management

Plan transports

Monitor execution

Calculate costs

Manage

transportation

settlement

Industry Pain Points Maintaining low inventory levels

Avoiding out-of-stock situations atretailer shelves

Establishing visibility to inventorylevels throughout the entire supplychain

Managing inventory levels efficiently, that is, maintaining low inventory levels while

avoiding out-of-stock situations, is a high priority for food companies. The SAP™ ERP

packaged solution enables food companies to optimize both inventory levels and storage

space based on inventory planning and turnover. At the same time, quality checks can be

performed in combination with warehouse management and transportation management.

Business Benefits Reduce working capital by keeping

inventory levels low Increase sales by reducing out-of-stock

situations

Improve consumer retention due toproduct availability

Solution

Inventory

Management

Achieve full

integration with

accounting

Receive and issue

goods

Manage different

stock categories

(available, blocked,

in QA)

Valuate inventory

Warehouse

Management

Manage goods

receipt, storage,

goods issue

Manage and

inspect for quality

Manage return of

goods

Perform picking

Manage materials

in batches





Industry Pain Points Meeting local legal and fiscal requirements

Improving administrative activitiesefficiency

Maintaining focus on most profitablecustomers and brands

All food companies need to manage financial requirements and enterprise profitability.

The SAP ERP packaged solution helps to get an insight into all aspects related to

accounting and controlling and provides streamlined functionalities that allow visibility,

increase productivity, and help food companies regain control of their business

processes.

Business Benefits Implement an enterprise resource planning (ERP)

solution fully compliant and continuouslyupdated with local legal and fiscal requirements

Improve efficiency in accounting activities due toa seamless process integration across thebusiness that eliminates double-checks andredundancies

Enhance company profitability analysis throughprofit and loss calculation by customer and brand

Solution

Financials Controlling

Use general ledger

accounting

Use accounts

payable and

receivable

accounting

Use bank

accounting

Perform closing

activities

Monitor payment

flows and

safeguard liquidity

with cash

management

Manage and

process assets incl.

depreciations

Use standard cost

and profit center

accounting

Perform profitability

analysis incl.

reporting on

contribution

margins and sales

figures

Perform product

cost planning

Perform Cost

Object Controllingby period or by

order

Financials and Controlling

SAP ERP for the Food Industry Provides Increased




Reduce operating costs and

increase efficiency

Shareholder

Value

Revenue

Growth

Improve customer

satisfaction

Increase sales

Reduce

Cost

Reduce

Working

Capital

Customer service

Distribution

Inventory

Reduce

Risk

Finance

Procurement

Production

Comply with food

regulations

Improve order fulfillment

Enable correct rebate processing

Improve customer understanding

Optimize trade promotion spend

Improve efficiencies in

accounting activities

Optimize and streamline the

production process

Utilize full track-and-trace

capability

Optimize inventory usage

Direct Store Delivery


Manufacturing


Food Safety

Indirect Sales

Sales ReturnsIncrease efficiency for sales

returns

Sourcing and Procurement

Financials and Controlling

Increase demand planning

accuracy

Lower materials costs

Optimize production planning Planning and Manufacturing

Reduce out-of-stocks

Optimize truck utilization

Reduce size of fleet

Reduce number of routes

Improve route settlement time

SAP ERP for the Food Industry Provides IncreasedShareholder Value for Your Business

SAP Scenarios(SAP ERP for the Food Industry)

Business OpportunitiesBusiness AreasBusiness Objectives

