Dairy Presentation

SAP™ ERP packaged
solution for the dairy

industry
Midmarket Dairy Industry
Version: 11.01.2005
© SAP AG 2005, SAP ERP Packaged Solution for the Diary Industry / 1
1. Challenges, Strategies and Benefits
2. The Solution
3. SAP™ ERP packaged solution for the dairy industry
4. Value and Proof Points
5. Summary
2. The Solution
5. Summary
The Dairy Industry Ecosystem
Farmer Tank Dairy Retailer

Collect
Raw Milk
Truck Production
Distr. Centers
Raw Material, Packaging, Service
Supplier Wholesaler
Add. Purchase of Raw Material / Raw Milk Broker

Dairy
Sell Raw Material and Ingredients
Cooperatives Authorities External Laboratories
Dairy Companies Often Have
the Right Focus and the Right Strategies…
Protect and enhance revenue

Improve margins Business STRATEGY
YOUR FOCUS
Drive for lower costs
Get closer to
Increase the consumer
Shareholder Value
Increase
Improve Revenue and Profit Margins
time-to-market YOUR FOCUS
Enhance operational efficiency Increase Shareholder Value

Operational Excellence Increase Revenue and Profit Margins
Product Leadership
Cost Leadership
Improve Customer Satisfaction Product Leadership
Improve Customer Satisfaction
…But Mostly They Lack the Ability to Execute
Often employees cannot execute the company’s business

strategy because the business platform is …
COMPLICATED TO OPERATE
Complex and broken process flows
Incomplete or hidden information
Business STRATEGY
DIFFICULT TO CONTROL
Lack of visibility
Lack of traceability Business
Enabler
CHALLENGING TO CHANGE
Multiple costly integration points
Redundant and inconsistent data Ability to EXECUTE
A business enabler is required

to help the organization refocus
on business strategies!
Market Forces and Business Needs
Market Forces
Retailer power (Wal-Mart effect)
Consumer concerns about food safety; Resulting Key Challenges
media attention
Develop new products faster
Increased legislation and regulations
around food safety by FDA and other and more effectively
authorities (e.g., EU Dir. 178/2002, Optimize supply chain
the U.S. Bioterrorism Act of 2002)
Changing consumer demands due to Increase efficiency in
demographics and trends procurement
Shorter product life cycles
Optimize manufacturing
Extreme price pressure and margin
erosion Ensure food safety and
Restrictive consumer spending pattern regulatory compliance
Market consolidation (globalization, M&As)
Improve sales efficiency
Increasing competition
Emerging private labels
New technologies reshaping the industry
Develop New Products Faster and More Effectively
Challenges Strategies
Adapt to ever-changing Enable collaborative
consumer tastes and engineering
requirements
Consolidate product
Develop product efficiently development data and
documents
Address increased demands
for new products Reduce development effort
and time-to-market
SAP® can help you Benefits

Integrate all product-related Faster development by
information creating reusable product
specifications
Reduce data redundancy and
inconsistency Reduced time-to-market
Integrate into manufacturing Ensured competitive
process advantage
Optimize Supply Chain
Decrease process costs Reduce costs
Create operational efficiencies Streamline supply chain

and supply chain processes
transparency
Improve supply chain control
Manage shelf-life-based
Gain more supply chain
picking and distribution
visibility
Ensure accurate and timely
shipments
Avoid out-of-stocks

Optimize distribution Improved operations
processes excellence
Optimize end-to-end planning Lower capital commitment
Improve asset utilization Reduced operating costs
Fully integrate logistics Higher customer satisfaction
management, including
transportation and warehouse
and inventory management
Shorten order-to-delivery
cycles
Increase Efficiency in Procurement
Cope with ever-changing Reduce costs
quantity and quality of the raw
Streamline processes
milk
Gain more visibility and
Manage complex payment
transparency
conditions
Improve relationship with
Cope with seasonal
producers
fluctuation
Create operational efficiencies
and transparency

Set up integrated and flexible Increased demand planning
processes for procurement accuracy
Streamline raw milk collection Consistent internal and
and reception external procurement
reporting
Ensure integrated quality
management Integrated processes
Track batches
Optimize Manufacturing
Base plans on a non- Maximize raw material
standardized raw material utilization
Define optimal product mix Increase demand planning
accuracy
Create operational efficiencies
and transparency Streamline processes
Optimize production Gain more visibility and

transparency

Set up integrated and flexible Improved asset utilization
processes for manufacturing
Increased profitability of
Monitor raw material produced product mix
utilization and losses
Consistent cross-stages
Ensure integrated quality monitoring
management
Integrated processes
Track batches
Ensure Food Safety and Regulatory Compliance
Align with governmental Support mid- and long-term
regulations (EU 178/2002, the company success by
U.S. Bioterrorism Act of 2002, ensuring regulatory
import/export) compliance
Enable fast, effective product Set efficient processes in
recalls place to enable traceability
Track and trace from “cow to Allow targeted product recalls
consumer” to minimize costs

Track, monitor, and trace Reduced penalty risk
batches and inventory
Decreased risk of food-safety
Streamline procurement, compensation payments
production, and sales
Reduced risk of bad
Manage sales returns reputation
Enable targeted product Lower operating costs
recalls
Improve Sales Efficiency
Protect market share Obtain first-hand information
about the market
Meet increased service level
expectations of customer Optimize process settlement
in sales
Get visibility in the sales
process Increase customer service
offerings
Manage quality-based price
determination for raw material Increase customer
sales satisfaction

Plan, track, control, and Higher sales volume
optimize sales performance
Better account retention
Expand service processes
Closer customer relationship
Strengthen collaboration with
Optimal sales force
partners and key customers
operation
Track indirect sales and
Higher customer satisfaction
customers
Ensure correct handling of
rebates
1. Challenges, Strategies, and Benefits
2. The Solution
5. Summary
SAP™ ERP packaged solution for the dairy industry
Description
… Focuses on key business processes that create a baseline for future growth
… Delivers immediate benefits by solving the need for system heterogeneity
… Enables significant business process automation
Analyze,
Market Deliver
Plan, and Procure Manufacture
and Sell and Service
Develop
Define business Realize savings Improve Improve marketing Establish closer
Objectives

Business
strategy and in aggregate manufacturing effectiveness contact with

goals purchasing efficiency customer
Increase sales
Understand Improve Ensure quality effectiveness Enhance control
company purchasing management in over delivery
performance and efficiency manufacturing process
profitability process
Ensure tracking
and traceability
Complete logistical and financial integration
Key Performance Indicators

Gross Profit/Total Net Sales Purchased Raw Materials Volume – Value
Sales Volume Growth Warehousing/Distribution Costs
Inventory Turns Route Settlement Time
SAP™ ERP packaged solution for the dairy industry
Suppliers & Analyze, Plan & Develop Procure Manufacture Market & Sell Deliver & Service Customers (e.g.
Partners Retailers) &
Channel
Partners
Sourcing & Procurement
Milk Procurement from Producer
Additional Raw Material Procurement
Procure to Stock
Internal Procurement
Product
Development
Recipe Management Manufacturing
Dairy Production
Planning
Dairy Process Control
Sell & Deliver

Sales Order Processing
Raw Material Sales
Returns
Operational End-to-End Scenarios
Traceability & Food Safety
Inventory Management
Quality Management
Enterprise Management & Support

Financials
Financial Accounting Cash Management Asset Management
Controlling
Standard Cost & Profit Center
Product Cost Planning CO-PA for Consumer Products Cost Object Controlling
Accounting
Generic Food Scenarios
Suppliers & Analyze, Plan & Develop Procure Manufacture Market & Sell Deliver & Service Customers (e.g.
Partners Retailers) &
Channel
Partners
Procure to Stock
Sell & Deliver

Returns

Quality Management

Financials
Controlling
Accounting
Procure to Stock
Suppliers & Partners Analyze, Plan & Procure Manufacture Market & Sell Deliver & Service Customers,
Develop Consumers, Channel
Supports price comparison of vendors’ offers

Partners

Procure to Stock
Third Party
Plan &
Manufacture
Production Planning
Production
Sell & Deliver
Provides tools to gain greater spend visibility in procurement

Direct Store Delivery (DSD)
Rebate & Bonus Management
Commissions
Indirect Sales
Returns
Empties Processing
Quality Management
Helps to manage quotations, contracts, batch handling and quality

Cross Company Transactions
Financials & Controlling
Excise Duty (Beverage) G65
Industry Pain Points Solution

Improving purchasing activities efficiency Procurement of Procurement –
Realizing savings in purchased value Stock materials Contracts
Allowing visibility on vendors’ conditions Request for Create contract:

Quantity contracts;
and services quotation
Prices Comparison
Value contracts;
Delivery schedule
Ensuring tracking and traceability Purchase
requisition
Create purchase
requisition
Purchase order
Assign vendor to
Business Benefits
processing
contract
Goods receipt
Inspect goods
Batch number
Automate operational tasks assignment
Stock update
Improve vendors’ selection and prices comparison Invoice verification
through quotation handling
Formalize agreements by contract management
Guarantee quality check through goods receipt
inspections
Encompasses cross-plant internal procurement of products including
Partners

Procure to Stock
Third Party
Plan &
creation of all required documents for both with or without delivery

Manufacture
Production Planning
Production
Sell & Deliver
Commissions
Indirect Sales
Returns
Provide functions to monitor stock in transit

Empties Processing
Quality Management

Improving internal purchasing activities Stock transfer Stock transfer
Ensuring tracking and traceability with delivery without delivery
Create stock Create stock

transport order transport order
Process delivery Post goods issue
Post goods issue
Business Benefits
Automate operational tasks
Increased visibility of stock and stock transfers
Manage the entire customer order process — variable pricing,
Partners

Procure to Stock
Third Party
Plan &
delivery, invoicing, and payment.

Manufacture
Production Planning
Production
Sell & Deliver
Commissions
Indirect Sales
Returns
Includes Electronic Data Interchange (EDI), handling of

Empties Processing
Quality Management
consignment sales, and foreign trade


Managing variable pricing conditions
Inbound/Outbound
Sales Distribution
Long order cycle times EDI Processing
Meeting customers’ requests for Process sales order Picking & Inbound sales order
improved services Billing distribution based
on shelf life
via EDI
Outbound billing
Payment
expiration date document via EDI
Managing sales returns cost effectively Freight settlement
Handling unit mgt.
Business Benefits
Improve sales execution timeline
Improve order fulfillment rate
Provide the customer with alternative services and
methods for invoicing and payments
Returns
Focuses on the processing of credit memos if no goods
Partners

Procure to Stock
Third Party
Plan &
are sent back.

Manufacture
Production Planning
Production
Sell & Deliver
Commissions
Indirect Sales
Returns
Includes quality evaluation for returned goods and

Empties Processing
Quality Management
appropriate stock movement.


Efficient handling & document Returns and Returns
complaints. Complains Processing
Managing sales returns cost efficiently. Process credit Ship pallets
memos Return pallets
Quality evaluation
Goods movement
to blocked or
unrestricted stock.
Business Benefits
Enable corporate compliance strategy
Effective batch-specific returns processing
Capability to track and trace products at all stages of
Partners

Procure to Stock
Third Party
Plan &
production, processing, and distribution

Manufacture
Production Planning
Production
Sell & Deliver
Commissions
Indirect Sales
Returns
Allow fast and efficient recall of a defective product batch

Empties Processing
Quality Management

Complying with food regulations Quality Batch
Management Management
HACCP (Hazard Analysis & Critical Control Points)
EU (Article 18 of Regulation 178) Quality planning Batch creation and
Quality inspection determination
US (the US Bio-terrorism Act 2002) Recording of Batch-where-use
laboratory analysis lists
Addressing growing food-safety concerns from Quality reporting Recall batches and
create follow-up
consumers Quality
improvement activities
Manage batch-
Business Benefits
specific return
processing
Manage batches
based on shelf life
Professionally managing a possible product expiration
recall
Minimize risk of non-compliance with food &
beverage regulations
Effective batch-specific returns processing
Consists of the whole procurement and delivery cycle with
Partners

Procure to Stock
Third Party
Plan &
Manufacture
warehouse for the storage management, including

Production Planning
Production
Sell & Deliver
Commissions
quality inspection
Indirect Sales
Returns
Empties Processing
Quality Management
Return rejected goods to the vendor


Maintaining low inventory levels Inventory Warehouse Transportation
Management Management Management
Avoiding out-of-stock situations at retailers
Integration with Storage Plan transports
Establishing visibility to inventory levels supply chain Management Monitor execution
throughout the entire supply chain accounting
Goods receipt
Quality
Management
Calculate costs
Manage
Goods issues Quality Inspection transportation
Managing different Return of goods settlement
stock categories
Business Benefits Inventory valuation
Reduce working capital by keeping

inventory levels low
Increase sales by reducing out-of-stock
situations
Improve consumer retention due to
product availability
Helps to get an insight into all aspects related to
Partners

Procure to Stock
Third Party
Plan &
accounting and controlling

Manufacture
Production Planning
Production
Sell & Deliver
Commissions
Indirect Sales
Returns
Provides streamlined functionalities that allows visibility,

Empties Processing
Quality Management
increases productivity and regain control of their business processes


Meeting local legal and fiscal requirements Financials Controlling
Improving administrative activities efficiency
General Ledger Standard cost and
Maintaining focus on most profitable customers accounting profit center
and brands Accounts payable
accounting
accounting
Profitability analysis
Accounts Product costs
Business Benefits
receivable planning
accounting Product cost
Bank accounting controlling
Closing activities
Implement an ERP solution fully compliant Cash management
and continuously updated with local legal Assets
management
and fiscal requirements
Improve efficiency in accounting activities
due to a seamless process integration
Enhance company profitability analysis
through profit and loss calculation
Our specific Solution Offering for the Dairy Industry
Suppliers & Partners Analyze, Plan & Procure Manufacture Market & Sell Deliver & Service Customers (e.g.
Develop Retailers) & Channel
Sourcing & Procurement Partners
Procure to Stock
Internal Procurement Dairy
Additional Raw Material Procurement Food
Manufacturing
Product Dairy Production
Development Planning & Process
Recipe Management Control
Sell & Deliver

Returns
Raw Material Sales

Quality Management

Financials
Controlling
Accounting
Product Development with Recipe Management
Managing the fast and efficient product development by structured Suppliers & Partners Analyze, Plan &
Develop
Procure
Sourcing & Procuremen t

Manufacture Market & Sell Deliver & Service Customers (e.g.
Retailers) & Channel
Partners
re-usable product specifications

Procure to Stock
Produc t
Development
Recipe Management
Manufactu ri
ng
Dairy Production
Planning
Dairy Proce ss Control
Seamless integration into the production planning and execution process

Sell & Deliver
Raw Material Sales
Indirect Sales
Di rect Store Delivery (DSD)
Opera tional End-to-End Scena rios

Quality Management
Cro ss Company Transactions
Ente rprise Management & Support

Financials
Controlling

Slow and inefficient product development Product Data Product Lifecycle
Management Management
Changing consumer tastes and
requirements Maintain product
specifications
Document
Management
Increasing demand for new products Label Management Change
Management
Multilevel recipe
mgt. Integrate Recipe
Define Batch into production
Management process
Business Benefit Create master

recipe
Create process
order
Reduce development cycle time & costs
Ensure company-wide consistent product
information
Reduce time-to-market to gain competitive
advantage
Milk Procurement from the Producer
Encompasses the efficient procurement and collection of raw milk Suppliers & Partners Analyze, Plan &
Develop
Procure

Partners

Procure to Stock
Ensure compliance with high quality standards and traceability requirements

Produc t
Development
Recipe Management
Manufactu ri
ng
Dairy Production
Planning
Sell & Deliver

Calculate payments based on quantity and quality characteristics

Raw Material Sales
Indirect Sales

Quality Management

Financials
Monitor procurement and payment process

Controlling

Managing the complex payment conditions Milk Collection Milk Reception Milk Analysis
Coping with seasonal fluctuation and
changing demands Maintain standard Dairy reception Gather results of
routes cockpit inspection lots from
Complying with the high quality standards Provide route list to Process purchase producer samples
truck driver Order Gather results of
and traceability requirements Automatic creation inspection lots from
of inspection lot tank truck samples
and batch number Create usage
Business Benefits Batch management decision for

inspection lots
Enable accurate payment both for Reporting &

Milk Payment
Analysis
producer and transport service provider
Provide payment reporting to the producer Calculate payment Monitor raw milk
for producer quantity & quality
Streamline raw milk collection & reception Calculate payment characteristics
for transport service Payment reporting
process provider
Settle payment
Maintain payment
calculation scheme
Supports the additional purchase of raw materials from other companies Suppliers & Partners Analyze, Plan &
Develop
Procure

Partners
on the determined shortage in the demand planning process

Procure to Stock
Produc t
Development
Recipe Management
Manufactu ri
ng
Dairy Production
Planning
Calculate vendor payment based on the raw material quantity and

Sell & Deliver
Raw Material Sales
Indirect Sales

quality characteristics.
Quality Management

Financials
Controlling

Raw Material
Determining demand for additional Demand
Raw Material Raw Material
required raw material due to ever- Reception Analysis
Planning
changing quantity and quality of collected Determine required Post goods receipt Gather results of
raw milk additional raw
materials
Automatic creation
of inspection lot
inspection lots
Create usage
Managing the vendor payment based on Create purchase

order
and batch number
Batch management
decision for
inspection lots
raw material quality characteristics
Business Benefits Raw Material Reporting &

Payment Analysis
Increase demand planning accuracy Calculate vendor Monitor raw
payment for material quantity &
Handle the quality-based payment for the additional quality
purchased raw characteristics
vendor material Payment reporting
Settle payment
Maintain payment
calculation scheme
Dairy Production Planning & Process Control
Manage the multilevel manufacturing processes including seamless Suppliers & Partners Analyze, Plan &
Develop
Procure

Partners
batch and quality management

Procure to Stock
Produc t
Development
Recipe Management
Manufactu ri
ng
Dairy Production
Planning
Sell & Deliver
Incorporates the ever-changing quantity and quality of the raw material

Raw Material Sales
Indirect Sales

Quality Management
Provide powerful tools to gain a cross-stages raw material controlling

Financials
Controlling

Production Planning based on a non- Production Quality
Process Control
standardized raw material Planning Management
High cost of the raw material comparing to Demand planning Maintain product Create inspection
the total production costs based on historical
data
master data & recipes
for multilevel
lots for semi-
finished and
Defining optimal product mix in order to Production planning production finished goods
synchronous to Batch management Gather results of
maximize utilization & profitablity sales across all stages inspection lots
Material resource Separate raw milk Create usage
Business Benefits planning (without

shelf-life)
into components
Material valuation
decision for
inspection lots
Simulate planning Manage shelf-life
Graphical capacity expiration date for
Optimize and streamline production process planning final products
Increase profitability by improved visibility Controlling &

to raw material utilization and losses Analysis
Comply with the high quality standards and Cross-stages raw
material controlling
traceability requirements Product costing
Batch information
cockpit
Production
information system
Raw Material Sales
Supports the sales of raw materials between dairies based on the raw Suppliers & Partners Analyze, Plan &
Develop
Procure

Partners
material requirements and the available surpluses

Procure to Stock
Produc t
Development
Recipe Management
Manufactu ri
ng
Dairy Production
Planning
Pricing and distribution are based on the raw material quality

Sell & Deliver
Raw Material Sales
Indirect Sales

characteristics
Quality Management

Financials
Controlling

Managing variable pricing conditions Production Sales Distribution
based on quality characteristics
Manage process Process sales Picking based on
order document quality
Create inspection characteristics
lot Create inspection
lot for picked raw
material
Usage decision and
Business Benefits goods issue
Simplify price determination by using

Billing
the integrated batch and quality
management system Invoice processing
Improve sales execution timeline Price determination

based on quality
characteristics
SAP ERP for the Dairy Industry Provides Increased
Shareholder Value for Your Business
Business Objectives Business Areas Business Opportunities SAP Scenarios
(SAP ERP for the Dairy Industry)
Improve customer Improve order fulfillment
Sales and Customer Order
Revenue satisfaction Improve sales execution timeline
Growth Improve customer understanding
Indirect Sales
Increase sales
Improve order fill rate Raw Material Sales
Reduce operating costs and
Distribution increase efficiency Recipe Management
Enable detailed profitability

Finance analysis Financials and Controlling
Improve efficiencies in
accounting activities
Shareholder
Increase efficiency for sales
Value Customer service returns
Returns
Reduce
Cost Improve transparency in dairy
Milk Procurement
procurement
Procurement
Lower raw materials costs Procure to Stock
Realtime access to production

Product Cost Controlling
cost information
Production Improve yield and reduce waste

Manufacturing
Calculate and monitor production
Reduce costs seamlessly
Working Inventory Optimize inventory usage Inventory Management
Capital
Reduce Comply with food Utilize full track-and-trace Food Safety
Risk regulations capability
* For further details, please refer to the SAP ERP for the Dairy Industry Brief.
2. The Solution
5. Summary
Why SAP™ ERP Packaged Solutions?
I know that SAP® software can be

tailored in a very flexible way, but I What does SAP have to offer
really want to see proof that SAP that will spare me starting
understands the dairy business. from scratch?
Sure, SAP can support me in my

daily business, but I’ve heard it I am already working with SAP
takes a lot of work to implement software. How do the SAP
the software. I need to execute solutions fit together?
today!
I’m not a large dairy company. The

The processes demonstrated
classical implementation is not the
here were just right for me.
right thing for me. I need software
Can I use them to leverage my
that works immediately, ideally via
global implementation in order
a hosting or outsourcing partner.
to save time and money?
What can you offer me in this way?
Reviewing the Packaged Solution Approach
Fast ROI
SAP™ ERP packaged
solution for the dairy industry SAP
mySAP ERP 2004 ERP
packaged
• SAP’s next generation Enterprise Resource
Planning solution
mySAP ERP
• Powered by SAP NetWeaver TM
• Designed for all industries solution
• Fully integrated within the mySAP Business Suite
++ Implementation
SAPSAP Best
Best® Practices
Low Risk Fixed Scope
•
ERP
Practices
Best-in-class industry expertise built into SAP
• Predefined end-to-end processes for the dairy

industry
+
• Industry-specific documentation
• Preconfigured System
Services
•Preconfiguration settings
•Master Data
Fast
•Configuration documentation
•Test catalogs
+ Proven
Services
• Deep dairy industry knowledge
• Focus on value creation and risk reduction
• Delivery excellence
Reliable
Composition of mySAP™ ERP
The next generation SAP®

enterprise resource planning
mySAP ERP solution
Analytics
Financials Powered by SAP NetWeaver
Human Capital Management
Operations Designed for all industries
Corporate Services
Fully integrated within the
mySAP Business Suite
SAP NetWeaver™
Insight to business processes
PEOPLE INTEGRATION
Multi-channel access and corporate compliance
Composite Application Framework
Portal Collaboration Adaptable business processes
Life Cycle Management

INFORMATION INTEGRATION from end to end
Bus. Intelligence Knowledge Mgmt
Flexible deployment of business
Master Data Management
processes
PROCESS INTEGRATION
Integration Business Enhanced user productivity
Broker Process Mgmt
APPLICATION PLATFORM
J2EE ABAP
DB and OS Abstraction
Basic Approach of SAP™ ERP Packaged Solutions
Traditional strategy for an Implementation using

implementation project best practices for SAP ERP
packaged solution
Conception and
Effective evaluation
Conception and implementation of
Rapid
implementation of customer processes implementation
customer processes Explicit business
Best practices expertise
using mySAP ERP Implementation
instrument
packaged solution
Get a living and fully documented
prototype within days that you can
rapidly turn into a productive solution.
We know your concerns, risks, and business needs – and we know

Target how to support them perfectly based on identifying and anticipating
reusable business processes and project activities.
SAP™ ERP Packaged Solution: The Components
Suppliers & Partners Engineering Procurement Manufacturing Sales & Distribution Customer Service Customer & Channels
OEM Relationship Management

Collaborative Engineering
Key Account Management
Time-to-Market
New Product Development & Introduction
Life-Cycle Data Management
Supplier Collaboration
Strategic Sourcing
Operational Procurement & Inbound Logistics
Make-to-Order/Make-to-Stock
Supply to Line
Manufacturing Execution
Outbound Logistics
Enterprise Asset Management
Sales Order Management
Demand & Order Scheduling
Order Execution & Receipt Settlement
Customer Service
Warranty Management
Service Parts Planning
Service Parts Fulfillment

Analytics
Financials
Human Capital Management
Corporate Services
Operations Support
Best-in-class industry expertise built into Preconfigured System
SAP ERP
Preconfiguration
Predefined end-to-end processes
settings
Use of customer language Master data
Subset
Industry-specific documentation Configuration
documentation
Documented business know-how Test catalogs
Workshop
content
Definition and documentation of Development of supplier specific

integrated, supplier specific business Preconfigured Systems based on
processes. defined and documented business
processes.
Key ERP Processes for CP – Service Offering
Consulting Deliverables
In basic scope* Options
Project management End-user training
Delta requirements workshops Automated data migration
Implementation of defined scope Custom forms, reports, and interfaces
Technical installation of system Custom authorizations
Key-user training on the job Hosting
End-user documentation Financing
Predefined sheets for data migration Change management
Predefined test catalogs Post-implementation support
Predefined forms and printouts Off-shore components (e.g., data

migration, custom reports)
Go-live support
Data archiving
Operational concept
* Deliverables in English
Benefits
Clearly defined scope and time frame
Preconfigured end-to-end business scenarios
Predefined implementation
⇒ Reduces implementation time and costs
Fast
SAP®
ERP
Packaged
Solution
Proven Reliable
SAP® Best Practices deliver proven business World-class enterprise resource planning
expertise to enhance competitiveness solution
Implementation methodology and accelerators State-of-the-art technology and scalability
More than 15,000 midmarket organizations have Over 30 years’ industry experience,
chosen SAP to enhance performance and financial viability, and strong R&D
efficiency ⇒ A safe investment
⇒ Optimizes business processes and ensures ROI
What the Statistics Say
Implementation
More than 60% of

all mySAP™ ERP
> 9 months implementations
< 9 months are accomplished
in less than nine Food customers by no. of employees
months. Range of Employees
X-Large > 25,000

469
Large 5,000-25,000
Recent Local
1,000-4,999 592
40 40%
35% implementations of Small < 1,000 338
30 SAP® solutions at
25%
20
midsize companies
have averaged only Total 1.399
10
13 weeks.
0
10-11 12-13 14-16
weeks weeks weeks
Average implementations for SAP is already successful in the

midsize companies are measured food midmarket.
in weeks.
1. Challenges, Strategies, and Benefits
2. The Solution
5. Summary
SAP®: The Smart Choice for Your Global Business
12 million users. 69,700 installations. 1,500 partners.

28,900 people in more than 50 countries. 27 industry
solutions. $7 billion in revenue and more than
$1 billion annually in R&D.
SAP is the recognized leader in providing collaborative

business solutions for all types of industries and for every
major market.
SAP is the world’s largest interenterprise software

company and the world’s third-largest independent
software supplier overall.
SAP will continue to provide you with solutions for all

future trends to protect your investment.
Fast, Predictable Payback
Cash
Flow Shorter
Implement what you

Payback
Time
need, when you need

it, with SAP. Accelerate
Time-to-Benefit
Time
Reduce Initial Investments
SAP’s phased implementation approach provides the

following benefits:
Addresses key business issues from an industry- Supports future growth
specific perspective Delivers business value through the
Limits business disruption through predefined service providers that best fit customer
services focused on industry best practices needs:
Provides real ROI within budget and timeline Customers can choose familiar
industry partners
Enables customers to buy only the modular Customers can choose SAP
functionality they need if needs dictate
Leverages and extends existing investments;
customer decides what to add or replace
SAP® R&D Investment
R&D Investment (€ Millions)
“Importantly, the stronger

margin does not appear to
be coming at the expense
of future growth – R&D
head count is up Q/Q and
Y/Y, and S&M head count
is down marginally quarter-
on-quarter and up year-on-
year – both indicating that
capacity and product
investment are not being
curtailed.”
Solomon Smith Barney
SAP® – The Right Short-, Mid-, and Long-Term Choice
Total License Revenue: Relative Market Shares

(Rolling four quarters, based on license revenues)
60% 56% 58% 59%

54%
51%
48%
50% 46%
43% 44%
40% 40% 41%
40%
30%
21% 22% 21% 20% 20%

20% 18% 18%
17% 18% 17% 17% 17%
19% 17% 15%
18% 15% 14%
16% 17% 16% 14%
15% 15% 14%
16% 16% 16% 16% 15% 13%
14%
13%
10% 12% 12% 11%
4% 5% 4% 4% 3% 3% 2% 2% 2% 2% 2%
2%
0%
Q2 2000- Q3 2000- Q4 2000- Q1 2001- Q2 2001- Q3 2001- Q4 2001- Q1 2002- Q2 2002- Q3 2002- Q4 2002- Q1 2003-
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003E
I2* PSFT&JDEC* Oracle ** Siebel* SAP AG
* Forecast by financial analysts (I2, PSFT&JDEC, SEBL)

** Fiscal year is not calendar year; comparison based on most recent quarter (e.g., SAP Q1 vs. Oracle Q3)
Source: CMI analysis based on company data and financial analysts estimates as of January 20, 2004
SAP® in the Dairy Industry
The SAP solution for the dairy industry is based on

20 years of industry experience.
The SAP solution for the dairy industry is proven by over

100 dairy customers worldwide.
SAP is working with the best in the food industry.

6 of the top 10 dairy companies are SAP customers.
What the Customer Community Is Saying
“
When you produce food, there is a holding time before you get the lab results that
authorize release of goods. This is very easy to track in the SAP® solution – everything is
stored by a batch date, so we can quickly access how much product we have on board,
where it is, the date we produced it, and when it is ready for release.
Ryan Peralto, General Manager
“
Instead of having data with significant delays, as it happened before, we can now have
them at our disposal with the desired speed and quality.
Robert Schlingensiepen, Managing Director
“
Morgan Foods looked at many software packages, and as we continued looking and
continued learning, we were very amazed at SAP’s breadth of technology and
capabilities to control.
Dan Slattery, Vice President and Chief Financial Officer, Morgan Foods
SAP® Customer Examples in the Dairy Industry
Deloitte Is Your Partner for Success
37,000 business consultants. 5,000+ dedicated SAP

practitioners in +35 countries, 1,600+ clients, more
than 50% of our SAP consultants have 10+ years of
experience, 1,200+ live installations worldwide
Deloitte is the recognized leader in providing quality SAP
implementation services for all industries.
Deloitte is dedicated to the development of true partnerships

with food and beverage companies – we work with our
customers not just for our customers.
Deloitte will measure its success by the value created for food
and beverage companies – our approach is value-driven and
focused on creating immediate results for the organizations we
work with.
The Overall Objective for the Deloitte/SAP Alliance Is to
Create More Value for Your Dairy Company
Solution Package Service Package Customer Value
+ = ☺
The world’s leading The market’s leading Effective response to
provider of business business advisors changing market
solutions and system integrators conditions
World-class integrated Deep industry Maximizing operational

solutions knowledge effectiveness
Preconfigured CXO relationships Shorter implementation
processes Delivery excellence projects
Food-specific Defined scope Minimizing risk
prepackaged solutions Lower TCO
Predefined effort
Fast installation Decreasing project costs
Global project
experiences Higher shareholder value
Extensive Experience with SAP® Implementations
Implement SAP packaged solutions

in time, within budget, and with full
benefit realization!
Working with Deloitte is the first step toward a successful

SAP implementation for your organization:
As a leading SAP partner, Deloitte offers a Successfully implementing SAP solutions
complete range of implementation services: – and extracting full value from an
Business case development implementation – isn’t just about
System design technology. It’s about focusing in on
Configuration business value drivers.
Testing Deloitte has a reputation for delivering
Deployment successful, business-driven
implementations with low risk.
Complementary services in tax, finance, HR,
assurance, and risk Deloitte provides a robust set of tools,
solutions, and methodologies to
Vast experience in delivery of solutions and
complement SAP’s business solutions .
services to the middle market
SAP® Consulting: Your Partner for Success
SAP Consulting
More than 10,000 consultants around the world,
32 years of SAP implementation experience
SAP Consulting delivers value to your business based on measurable
results …
SAP Consulting is well-known for its excellent competence and

experience in implementing SAP solutions within the core areas of the
food and beverage industry (“SAP knows SAP best”).
Decades of SAP Consultants’ project experience have been merged into

the SAP ERP packaged solution for the beverage and food industry.
Pragmatic project approach tailored to the needs of the midmarket:

Short project durations due to experienced consultants
Customer enablement instead of dependency from consultants
Efficient remote consulting model
SAP’s offering also includes financial and/or hosting services
SAP® Solutions and SAP Consulting
Create More Value for Your Dairy Company
Solution Package Service Package Customer Value
+ SAP Consulting
= ☺
The world’s leading The industry’s leading Effective response to
provider of business provider of SAP changing market
solutions implementations conditions
World-class integrated Deep industry and Maximizing operational

solutions solution experience effectiveness
Preconfigured Implementation Shorter implementation
processes approach tailored to projects
needs of the midmarket Minimizing risk
Beverage-specific
prepackaged solutions SAP solution out of Lower TCO
“one hand” (end-to-end
Fast installation Decreasing project costs
solution provider)
Highest quality and Higher shareholder value
commitment due to our
product responsibility
Customer Value Proposition of SAP® Consulting
SAP Consulting
Is a valued business partner to SAP’s customers,
ensuring the fast and enduring success of their SAP investment.
Expertise and capability Commitment to reduce Capability to leverage

to create and realize customer risk entire SAP ecosystem
business value
First-hand knowledge of SAP Every SAP Consulting customer Direct access to development
business and technology must be a reference for short Leverage SAP Customer
innovations time to value, low TCO, and Services Network knowledge
Best practice methodologies and realization of business benefits and resources
project management to leverage Constant engagement Support and commitment to
the value of software investments throughout entire customer life our partner ecosystem
Global presence and 30 years’ cycle
experience with 69,000 SAP has never let a customer
installations in 27 industries down in 30 years
Committed to support
customer’s push for self-
sufficiency
Skills and Unparalleled Leverage

Competencies + Motivation + Potential
= Customer Success
2. The Solution
5. Summary
Our Initiative for the Dairy Industry
A full solution with low total cost of ownership, scalable

to your needs! Low-cost implementations with deep
industry skills, best practices, and preconfigured SAP
components!
Accelerated Time to Value
Flexible components
Rapid success: Implementation in less than 6 months
Industry Best Practice

More than 20 years in business, with over 400 beverage customers
Number one enterprise software vendor in the world with
more than $1B annual R&D
Preconfigured SAP Solutions

A combination of SAP’s core solution and our preconfigured market
industry solution
Financing Options
No upfront investment
A 5- to 7-year financing deal
In Summary
SAP is flexible to grow with your business

Allows for increasing market share
Is scalable to your needs
Gives you operational visibility
Helps shorten time to market
Helps improve customer loyalty
SAP is quick to implement, with fast,

predictable payback
Fixed-price, 16-week average implementation time
Phased approach and best practices
SAP is the smart choice for your investment

Over 20 years in business, with over 400 beverage customers
Number one enterprise software vendor in the world, with

over $1B annual R&D

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SAP™ ERP packaged

solution for the dairy

Farmer Tank Dairy Retailer

Add. Purchase of Raw Material / Raw Milk Broker

Cooperatives Authorities External Laboratories

 Protect and enhance revenue

 Enhance operational efficiency Increase Shareholder Value

Often employees cannot execute the company’s business

A business enabler is required

SAP® can help you Benefits

 Create operational efficiencies  Streamline supply chain

SAP® can help you Benefits

SAP® can help you Benefits

 Optimize production  Gain more visibility and

SAP® can help you Benefits

SAP® can help you Benefits

SAP® can help you Benefits

strategy and in aggregate manufacturing effectiveness contact with

Complete logistical and financial integration

Key Performance Indicators

Sell & Deliver

Enterprise Management & Support

Sell & Deliver

Operational End-to-End Scenarios

Enterprise Management & Support

 Supports price comparison of vendors’ offers

Sourcing & Procurement

 Provides tools to gain greater spend visibility in procurement

 Helps to manage quotations, contracts, batch handling and quality

Industry Pain Points Solution

 Allowing visibility on vendors’ conditions  Request for  Create contract:

Sourcing & Procurement

creation of all required documents for both with or without delivery

 Provide functions to monitor stock in transit

Industry Pain Points Solution

 Create stock  Create stock

Sourcing & Procurement

delivery, invoicing, and payment.

 Includes Electronic Data Interchange (EDI), handling of

consignment sales, and foreign trade

Industry Pain Points Solution

Sourcing & Procurement

are sent back.

 Includes quality evaluation for returned goods and

appropriate stock movement.

Industry Pain Points Solution

Sourcing & Procurement

production, processing, and distribution

 Allow fast and efficient recall of a defective product batch

Industry Pain Points Solution

Sourcing & Procurement

warehouse for the storage management, including

 Return rejected goods to the vendor

Industry Pain Points Solution

Business Benefits  Inventory valuation

 Reduce working capital by keeping

Sourcing & Procurement

accounting and controlling

 Provides streamlined functionalities that allows visibility,

increases productivity and regain control of their business processes

Industry Pain Points Solution

Sell & Deliver

Operational End-to-End Scenarios

Protect and enhance revenue

Enhance operational efficiency Increase Shareholder Value

Create operational efficiencies Streamline supply chain

Optimize production Gain more visibility and

Supports price comparison of vendors’ offers

Provides tools to gain greater spend visibility in procurement

Helps to manage quotations, contracts, batch handling and quality

Allowing visibility on vendors’ conditions Request for Create contract:

Provide functions to monitor stock in transit

Create stock Create stock

Includes Electronic Data Interchange (EDI), handling of

Includes quality evaluation for returned goods and

Allow fast and efficient recall of a defective product batch

Return rejected goods to the vendor

Business Benefits Inventory valuation

Reduce working capital by keeping

Provides streamlined functionalities that allows visibility,

Seamless integration into the production planning and execution process

Business Benefit Create master

Ensure compliance with high quality standards and traceability requirements

Calculate payments based on quantity and quality characteristics

Monitor procurement and payment process

Business Benefits Batch management decision for

Enable accurate payment both for Reporting &

Calculate vendor payment based on the raw material quantity and

Managing the vendor payment based on Create purchase

Incorporates the ever-changing quantity and quality of the raw material

Provide powerful tools to gain a cross-stages raw material controlling

Increase profitability by improved visibility Controlling &

Pricing and distribution are based on the raw material quality

Simplify price determination by using

Improve sales execution timeline Price determination

The next generation SAP®

Portal Collaboration Adaptable business processes

Project management End-user training

Delta requirements workshops Automated data migration

Implementation of defined scope Custom forms, reports, and interfaces

Technical installation of system Custom authorizations

Key-user training on the job Hosting

End-user documentation Financing

Predefined sheets for data migration Change management