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8/6/2019 Food Overview
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SAP ERP for theFood Industry
8/6/2019 Food Overview
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Challenges, Strategies, and Benefits
The Solution
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Challenges, Strategies, and Benefits
The Solution
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© 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)
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
8/6/2019 Food Overview
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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
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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
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Enhance Customer Retention and Loyalty
Benefits
Higher sales volume
Better account retention
Higher customer satisfaction
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
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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”
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Optimize Supply Chain
Benefits
Improved operations
excellence
Lower capital commitment
Reduced operating costs
Higher customer satisfaction
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
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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
Create operational efficiencies
and transparency
Use efficient procurement
processes
Optimize production
Respond to last-minute
changes in the demand
situation
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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
Create operational efficiencies
to reduce costs and time
Create supply chaintransparency and batch
traceability
8/6/2019 Food Overview
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Challenges, Strategies, and Benefits
The Solution
8/6/2019 Food Overview
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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
8/6/2019 Food Overview
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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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
Sales Order Processing
EDI
Inbound sales
order via EDI
Outbound billing
document via
EDI
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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)
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
Inventory Management
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
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© SAP AG 2005, ERP 2004, SAP Best Practices for Consumer Products
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
Sales Order Processing
Manufacturing
Inventory Management
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
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