Process Performance Management @ DSM

Going from Re-active to Pro-active BPM

Caspar TC Jans MSc Manager Business Process Management

November 14, 2014

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TOPICS

• DSM

• SHAPE • Up!BiZZ • Up!BiZZ & Process Performance Management • Road Map

DSM AT A GLANCE

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• Our purpose is to create brighter lives for people today and generations to come

• We connect our unique competences in Life Sciences and Materials Sciences to create solutions that nourish, protect and improve performance

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Mission

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Chemical synthesis & biotechnology

Energy, chemistry & polymer technology

Biotechnology

Hoffman La Roche’s Vitamins (1930s)

DSM (1902)

Gist-Brocades (1869)

Vitamins

Omega’s

Carotenoids

Premixes for food & feed

Enzymes

Minerals

Cultures & Yeasts

Nutraceuticals

Pharmaceuticals

Cellulosic bioethanol

Biomedical materials

Bio-plastics

High Performance Plastics

Polyamides and precursors

Resins for coatings and composites

Functional Materials

Solar – advanced surfaces

Life Sciences

Materials Sciences

Building on an impressive history

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DSM at a glance*

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Sales ~€10 billion

EBITDA ~€1.3 billion

Global presence

~24,500 employees worldwide

Listed at Euronext

NYSE

Share price quintupled in 25 years

• DSM is a global Life Sciences and Materials Sciences company active in health, nutrition and materials

• DSM delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, medical devices, automotive, paints, electrical & electronics, life protection, alternative energy and bio-based materials

Sustainability leader

Top ranking Dow Jones

Sustainability Index

* 2013 numbers total DSM

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Leader in Health, Nutrition and Materials

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• Leading supplier of nutritional ingredients (including vitamins, carotenoids, omega’s, food/feed enzymes, cultures, yeasts, nutraceuticals) for the feed, food and personal care industries

• Leading supplier of sustainable high performance materials for the automotive, electrical & electronics and building & construction industries

• Recognized as top innovator active in biomedical materials, advanced biofuels, bio-based chemicals and advanced surfaces for solar systems

Health Nutrition Materials

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12%

4%

7%

2%

24%

3% 6% 8%

7%

9%

11%

7%

Key markets Food &

Beverages

Pharma E&E

Textiles

Automotive

Building & Construction

Other Infant nutrition

Dietary Supplements

Animal Feed

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Personal Care

2013 Sales by end-market

(Food) Packaging

DSM offers products & solutions to a wide range of markets

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Latin America ~2,000

employees

North America ~5,000 employees

Europe

~12,500 employees

Strong & increasing global presence World total ~24,500 employees*

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* 2013 numbers including employees Pharma cluster

China: ~3,500

employees

Rest of Asia: ~1,500

employees

41%

5% 34%

20%

Rest of the World

High Growth Economies

Western Europe

North America

2013 Sales by destination**

Increase in % of sales to High Growth Economies**

22% 32% 41%

2005 2010CSD

2013

** 2013 Sales from continuing operations

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TOPICS

• DSM

• SHAPE • Up!BiZZ • Up!BiZZ & Process Performance Management • Road Map

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To support the DSM strategy “DSM in Motion, driving focused growth” our key assets needs be fitter than ever…

“To my own big surprise, it is not the strongest nor the fastest but the fittest who survives” – Charles Darwin

People Plants Knowledge & IP Processes & IT

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MASTER DATA

RISK

MANAGEMENT REPORTING IT SYSTEMS

BUSINESS

PROCESSES

1 INTEGRATED

CONCEPTS LEAN 6 SIGMA

2 CONTINUOUS

IMPROVEMENT

FLEXIBILITY

WHERE

NEEDED

BEST

PRACTICES IF

POSSIBLE

STANDARDS IF

BUSINESS

INDEPENDENT

3 BASIC

PRINCIPLES

SHAPE SHARING SOLUTIONS

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SHAPE solutions model

GOVERNANCE

PEOPLE & BEHAVIOR

KPI’S, RISKS, REPORTING & MASTER DATA

BUSINESS PROCESSES & CONTROLS

IT SYSTEMS

Single Standard Solution

Modular Standard Solution

Unique Business Solution

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SHAPE BPM supports DSM businesses and enables us to choose between flexibility where required and full standards where possible

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• DSM

• SHAPE • Up!BiZZ • Up!BiZZ & Process Performance Management • Road Map

TOPICS

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SHAPE

EaZBiZZ Up!BiZZ

Up!BiZZ… …an opportunity to unlock potential and becoming sustainably successful…

Process

Promoter Score Value created

1 BUSINESS

INSIGHTS

2 IMPROVEMENT

POTENTIAL

3 QUANTIFIABLE

VALUE

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• Inefficiencies COST money

• Process optimization is CONTINUOUS activity

• We need to become SMARTER

• BENCHMARKING, for better and worse

• Transparency on LINK between business process & value

Page

TOPICS

• DSM

• SHAPE • Up!BiZZ • Up!BiZZ & Process Performance Management • Road Map

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First, some theory…

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Up!BiZZ & PPM

SOFTWARE AG PPM (“Process Performance Manager”) … is a service that supports Up!BiZZ with full process insight. Detailed process scanning reveals opportunities, benchmarking information, cycle times, etc…

MANUFAC-TURING &

SUPPLY CHAIN

PROSPECT TO ORDER & ORDER TO CASH

SOURCING &

PURCHASE TO PAY

SMART index alert! OTC opportunities identified!

Scanning…

!

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Optimizing Business Processes based on measured performance

DOCUMENTED

PROCESSES

IMPLEMENTED

PROCESSES

EXECUTED

PROCESSES

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Positioning Up!BiZZ & SOFTWARE AG PPM

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Financial Managerial Reporting

(periodically)

Process Performance Management

(periodically)

Operational Process Monitoring

(real time when required)

Financial KPIs and PPIs

• Revenue • Profit • Margins • ….

Process KPIs and PPIs

• Order Cycle Times • Analyze Order Blocks • ….

Operational Reporting

• Manage Deliveries Due • Manage Blocked Orders • ….

SOFTWARE AG PPM SAP Business Warehouse

Up!BiZZ

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Up!BiZZ & BPM PPM scans processes end to end, all BPM elements taken into account

… other available and used sources: • Corporate

Reports • Unit Reporting • External

benchmarking • PA&S & BG

process expertise

• ….

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Up!BiZZ & Value Tree

MANUFAC-TURING &

SUPPLY CHAIN

PROSPECT TO ORDER & ORDER TO CASH

SOURCING &

PURCHASE TO PAY

Process Performance Indicator “SMART” Indicators !

“Value” indicators Fictive Numbers

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From theory to reality…

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Up!BiZZ & OTC Scanning the process 360°on cycle times, process efficiency and effectiveness

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CASH IN BILLING DELIVERY HANDLING

ORDER TO CASH

ORDER HANDLING

Optimize Cash-flow and minimize bad debt

Uninterrupted order flow

Timely and accurate billing with minimized revenue

leakage

Fast and successful delivery with quality material from SCM

2. First time right:

More order changes occur then the actual number of created orders

1. Credit blocks:

Orders with a credit block take xxx days longer

until cash collected 3. Revenue Leakage:

€ xxx mln in order

values have not been invoiced

4. Overdue Accounts Receivable:

X% overdue > best in class for DSM Globally (>XX%)

Scanning… Scanning

complete

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Same

day

1 Order Handling Cycle time from order entry until cash received is xx days longer for credit blocked orders.

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… correlation is strong on business unit level

… 50% of all credit blocks

is released same day…

€ xx k cost in

handling direct

released orders

€ xx mln AR

reduction

!

∆ = 34%

1-2

days

3-5

days

6-10

days

10-30

days

>30

days

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2 Order Handling # Order Changes > # Orders!

€ XX k worth of FTE costs spent on order changes related same day intervention in 1 Business Group…

!

Create Change

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… Approximately

xx mln order

value confirmed

without invoiced

value. …

!

0m €

-xm €

0m €

-xm €

0m €

-xm €

Confirmed versus Ordered value

3 Invoicing Revenue leakage identified. Potential impact on sales value

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… up to xx% was requested however not confirmed and therefore a missed sales opportunity…

… > xx% is located in two legal entities…

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4 Cash In Overdue invoice analysis identified €MLN opportunity

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Unlocking the identified potential by Root Cause Analysis and Improvement Initiatives

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Roadmap

Page ©2014 Software AG. All rights reserved. 34 |

Up!BiZZ & SOFTWARE AG Process Performance Management

• Proven Value generation

for DSM

• Business Connect required

• Strong driver for

continues improvement

• Think big, Start small

…

BG4

BG3

BG2

BG1

OtC PtP SCM …

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Caspar Jans

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