SAP Solutions for Cement Industry Optimization

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SAP in Cement Industry
6/17/2014
Cement Industry Process
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6/17/2014
What Is Cement?
• Cement is a fine powder which sets after a few hours when

mixed with water, and then hardens in a few days into a solid,
strong material.
• Cement is a hydraulic binder, i.e. it hardens when water is
added.
• There are 27 types of common cement which can be grouped
into 5 general categories and 3 strength classes namely :
• Ordinary,
• High
• Very high.
• In addition, some special cements exist like sulphate resisting
cement, low heat cement and calcium aluminate cement.
3 | 6/17/2014
Cement - Making Processes
• Below are six major processes followed from raw

material procurement to delivery which are performed at
cement Industry :
• Raw Material Extraction

Click• Raw
to edit Master
Material Preparationtitle style
• Raw meal preparation
• Clinker Production
• Cement Grinding
• Packing & Shipping
4 | 6/17/2014
Processes overview
• Raw Material Extraction

– Mining for uncrushable limestone
• Raw Material Preparation
– Crushing the uncrushed limestone
• Raw meal preparation
– Additive like clay & sand are added to crushed limestone
•
Clinker Production
– Raw meal is heated in kiln and get the clinker, small rock or pebble
like substances.
• Cement Grinding
– Clinker along with gypsum is grinded to make cement.
• Packing & Shipping
– Cement is either packed in 50 kg bags or in jumbo boxes or in trucks
or ships as per facility in factor.
5 | 6/17/2014
Cement Industry Workflow
6| 6/17/2014
Applying SAP in cement Industry
Putting Wisdom to work
6/17/2014
Sales
Inventory Management Supply chain
Human Resources Demand Planning
Emissions Management Supply network

planning
Environment Health & Shipping &Transport

Safety solution Management
Project System Global availability check

Cost budgeting
In Cement Industry Manufacturing
integration
Maintenance
Production
planning
Enterprise asset
management
Quality
management
Performance
Management
Strategic & operational
Financials procurement
|
Optimized organization & process landscape
Reference : SAP 9 | 6/17/2014

Solution for cement industry
Central Processes Localized services Plant operations

> Strategy management
> Customer relationship
> Analytics > Production execution
management
Click to edit Master title
> Compliance solutions
> Business process
style
> Transportation
> Quality management
> Shop floor visibility
planning
modeling > Inventory
> Price and margin
> Multi-language management
management
capabilities > Maintenance planning
> Supply chain planning
> Solution manager
10 | 6/17/2014
Solution map
11 | Reference
6/17/2014
Reference : SAP SAP
Application solution Architecture

Customer service : Sales order management
Assuring high customer service levels is critical for Building Materials companies to improve customer retention and
loyalty. Sales can easily, quickly and accurately, determine pricing and costing, check production resources, as well as
track and manage quotations, contracts, deliveries & invoices – reducing sales cycle time & ultimately increasing
revenue. SAP provides a comprehensive sales order management solution to efficiently process quotations and sales
orders.
Industry Challenges
• Low sales efficiency with order fulfillment errors generated by a lack
of insight into purchasing, production and inventory information.
• Long sales order lead times and slow response times to customer
„
queries on order status due to manual processes and siloed info.
• Low customer & product profitability due to lack of available

information, analysis & decision-making support tools.
Business Benefits with SAP

• I„mproved customer service thanks to comprehensive capabilities
that enable sales to deliver accurate product specification and
usage, price, quantity and delivery information to customers.
• Reduced order processing costs through streamlined, automated

processes.
• Increased customer profitability with comprehensive sales quotation

and order analysis.
13 | 6/17/2014
SAP Sales Order Entry via a Call Center
Business challenge for concrete companies

• Inefficient sales order processing
• Sales order processing done at each concrete plant
• Lack of standardized sales order processing
• No optimization of production and transport across plants
Solution
• Centralized order entry at call center
• Automatic credit management
•
•
Checks available production capacity of plants
Checks availability of transport vehicles
• Incoming orders automatically distributed to plants
Business benefits
• Less personnel required
• Can operate 24 hours per day, if necessary
• Improved accuracy of order information
• Reduced transport cost
14 | 6/17/2014
Supply Chain : Demand & supply planning
Consolidated, synchronized supply and demand planning helps Building Materials manufacturers enable and
improve forecasting in a commoditized product portfolio, as well as supply chain visibility and efficiency. SAP
Business All-in-one provides a flexible, powerful solution for integrated annual operating, sales & operations, as well
as materials requirements planning.
Industry Challenges
• Inaccurate forecasting due to an unstructured planning process
with distributed data across sales and business units.
• I„nefficient portfolio management through poor visibility into global
demand and supply status.

• Lost sales and high inventory levels through siloed sales,
production and inventory planning processes.

• I„mproved customer service levels through accurate,
consolidated sales and revenue plans, and better supply chain
visibility to enable improved customer responsiveness and order
fulfillment.
• Optimized portfolio management with better insight into product and

customer profitability, as well as the demand and supply situation.
• „Better supply chain efficiency with asset optimization and reduced

inventories through synchronized sales & revenue planning with
production planning.
15 | 6/17/2014
Functions of demand Planning
• Structure Demand Information by freely definable characteristics customer, Product,
Sales Office, Region, Location, etc.
• Display Demand Information by freely definable Key figures: Last years Sales,
Committed Contract Volume, Marketers Forecast, Customer Forecast, etc.
• Different options for Data Sources Direct manual input by user, Entry via Internet
(customers), Upload from data warehouse, Calculated data (i.e. multiply row last years
sales by 5 %)
• Click to edit Master title style

Aggregation and Disaggregation of Demand Data
• Different Views on the same data based on user role
• Flexible time buckets to enable strategic and tactical planning
• Statistical Forecasting methods (i.e. seasonal trend models)
• Alert and Macro Functions
• Flexible Reporting Options

16 | 6/17/2014
Demand Planning
Collaborative forecasts
> Order & shipment actuals
& history
> Cost
> POS data Statistical Methods –
Planner’s Knowledge –
> Nielsen / IRI data Multi-model approach
Task-specific planning tools > etc. > Average models
> Flexible views
> Exponential smoothing
> Graphics
> Causal factors
> Promotional planning
> Trend dampening
> Life cycle management
> Model combination
> Accuracy reporting
> Pick best
Anticipation
of Future
Demand
17 | 6/17/2014
Solution overview
18 | Reference
6/17/2014
: SAP
Supply Network Planning optimization
• Cost minimization - Profit maximization
Flexible Constraint Definition Sourcing

Click
Forecast Sales to edit Master
• Capacities
• Material availability
title styleProduct mix
Production &
Order procurement plan
• Market constraints Inventory
• Costs of opportunity strategies
19 | 6/17/2014
Optimization profile
Selection of most suitable

production plant
Optimization of production
costs, transportation costs,
and storage costs
Mixed integer linear

programming / meta-
heuristics
Feasible plans
20 | 6/17/2014
Shipping & Transportation management

Transportation planning & Execution capabilities

Global availability check
• Checking Product Availability at time of Sales Order

creations
– Simulating Global Supply Chain based on projected inventories in
the future
– Consider product substitution based on predefined rules
– Consider substitution of supplying location based on predefined
•
Click
rules
to edit Master title style
Re-simulate Product Availability Check at any critical point
in time
– Re-consider priorities based on predefined rules
• Enable Sales Managers to immediately check on delivery
capabilities
23 | 6/17/2014
Manufacturing : Seamless Integration

Production planning

Operational compliance : Quality Management
Efficient quality management helps Building Materials companies better manage and assure product quality,
monitor & improve quality standards, as well as document quality compliance for subsequent audits. The SAP
solution delivers a robust quality management solution to support high quality sourcing and improved vendor
management.
Industry Challenges
• Quality issues cause lower quality end products lowering operating margins
and customer satisfaction.
• Poor tracking of supplier material quality results in high cost return to vendor
processing and delayed time-to-customer.
•
Complex tracking of materials and quality documentation for regulatory
compliance.

• Increased customer satisfaction through efficient quality management processes
to assure high product quality.
• Improved supplier selection and management with vendor evaluation process.
• Lower operating costs and increased product profitability support by quality

inspection and monitoring throughout the product life cycle to reduce product
errors.
• Easier regulatory compliance with quality documentation & auditability of

information & actions across the supply chain. 26 | 6/17/2014
Sourcing & Procurement –
Strategic & Operational procurement
Maximize the return on relationships through all suppliers within the supply chain – from strategic sourcing to
operational procurement. SAP enables Building Materials Companies in reducing procurement cost & time of
inventory replenishment. SAP delivers a complete, integrated solution for the entire procurement cycle.
Industry Challenges
• Poor vendor selection results in long lead times, over-priced
materials, and low material quality triggering high cost returns.
• Inefficient, manual and paper-based procurement processes.

• Optimized vendor selection with vendor evaluation – vendor
pricing, service, lead-time & performance comparison/evaluation
to better negotiate contract terms, reduce material costs, lead
times and returns.
• Reduced operational costs with automated procurement tasks in

administration, production and transportation including purchase
requisition creation, invoice verification, payment processing etc.
• Comprehensive visibility into the supply chain through integrated

processes for better inventory turnover, cycle times, and lower
receiving and material storage costs.
27 | 6/17/2014
Financials
Building Materials companies need comprehensive, accurate enterprise visibility and strong financial management
support to (1) fulfill financial requirements, (2) enable profitable growth and (3) operational efficiency. SAP provides
the market-leading solution for accounting, financial reporting, and performance management – integrating
financial management with business processes.
Industry Challenges
• Inefficient accounting and controlling processes with information
located across transaction and financial systems.
• Inaccurate, incomplete cost and revenue data for portfolio, asset
and operations management.

• Different, country-specific financial accounting processes,
principles and regulations.

• Efficient, automated accounting and controlling processes.
• Complete and accurate data through seamless process
integration across operational areas of the company.
• Enhanced company profitability analysis by market segment
(products, customer, orders, business units).
• Automated calculation & comprehensive visibility & analysis of
project, asset and product costs throughout the life-cycle.
• Easier multi-country financial reporting with, multi-currency and
asset & inventory valuation capabilities.
28 | 6/17/2014
Financial management
29 | Reference
6/17/2014
: SAP
All SAP applications are completely integrated into
accounting
30 | Reference
6/17/2014
: SAP
Cost accounting
31 | Reference
6/17/2014
: SAP
Cost accounting – Cost Center

Process flow for cement plant
33 | Reference
6/17/2014
: SAP
Ease of further evolution

Analytics and operations support
Cement companies need a complete, integrated view on financial and operational targets and figures to (1) develop
realistic business plans as well as (2) monitor and support operational decision making. SAP provides tools to
generate a complete picture of Cement companies to control growth and operational excellence.
Industry Challenges
• Lack of visibility into financial and logistic key figures throughout
all company departments.
• Inaccurate and incomplete statistical data base to link strategic
plans to operational performance.

• Lack of analytic support to understand the profit drivers of
Materials business.
• Single analytical platform for the whole enterprise in a cross-
functional and collaborative environment.
• Support of integrated and realistic business planning and

monitoring of costs and revenue during execution.
• Actual detailed operations reporting and support of operational

decision making in sales, production and procurement.
• Integrated operational support of cross functions like quality

management, procurement and project management.
35 | 6/17/2014
Performance Management –Sample Indicators

SAP Quality management – Quality control
• Quality Control enables recording, tracking

and analysis of product and process
characteristics to ensure quality compliance.
• Key Benefits:
– Supports automatic or manual triggered
inspection lots

– Integrated tightly with the complete supply
chain (e.g. inventory, batch, purchasing)
– Enables statistical process control (SPC) to
monitor critical product and process
characteristics in the manufacturing process
and allows instantaneous intervention
– Documents product quality to achieve
regulatory compliance
– Includes integrated problem management
37 | 6/17/2014
Quality Inspections
• Comprehensive inspection processing
– Goods receipt inspection
– In-process control
– Post-process control
– Inspections at goods issue
– Recurring inspections
• Test equipment interfacing
• Statistical process control (SPC) with integrated problem
management
• Use as Enterprise LIMS
• Results recording - mobile or Web-based
• Functions integrated in logistics (e.g. inventory
management)
38 | 6/17/2014
Enterprise asset management

EAM : Functional scope

Facility & Asset management
41 | Reference
6/17/2014
: SAP
Plant maintenance (PM) in SAP ERP on
basis of EAM

Maintenance – Cost budgeting
• History Based Budgeting

• Ad hoc Budgeting
• Simulation
– Location Based
Click to edit
– Equipment Based
Master title style
– Tasks Based
43 | 6/17/2014
Mobile asset management – Functional overview

Project Systems
45 | 6/17/2014
Reference : SAP
SAP Environment Health & Safety solution
• SAP EH&S offers comprehensive and complete business

solution for environment, health and safety management!
• Functional overview
– Product Safety
– Click to edit Master title style
Hazardous Substance Management
– Dangerous Goods Management
– Industrial Hygiene and Safety
– Waste Management
– Occupational Health
– EH&S Analytics / EH&S Reporting
46 | 6/17/2014
SAP EH&S occupational health –
Medical service data
47 | 6/17/2014
Reference : SAP
SAP Emission management - Capabilities

SAP Emission management

Sales
Inventory Management Supply chain
Human Resources Demand Planning
Emissions Management Supply network

planning
Environment Health & Shipping &Transport

Safety solution Management
Project System Global availability check

Cost budgeting
In Cement Industry Manufacturing
integration
Maintenance
Production
planning
Enterprise asset
management
Quality
management
Performance
Management
Strategic & operational
Financials procurement
|
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6/17/2014

SAP Solutions for Cement Industry Optimization

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Click to Putting

SAP in Cement Industry

• Cement is a fine powder which sets after a few hours when

• Below are six major processes followed from raw

• Raw Material Extraction

• Raw Material Extraction

Click to edit Master title style

Human Resources Demand Planning

Emissions Management Supply network

Environment Health & Shipping &Transport

Project System Global availability check

Click to edit Master title style

Click to edit Master title style

Reference : SAP 9 | 6/17/2014

Central Processes Localized services Plant operations

Click to edit Master title style

Click to edit Master title style

Reference : SAP 12 | 6/17/2014

• Low customer & product profitability due to lack of available

Business Benefits with SAP

• Reduced order processing costs through streamlined, automated

• Increased customer profitability with comprehensive sales quotation

Business challenge for concrete companies

Click to edit Master title style

Business Benefits with SAP

• Optimized portfolio management with better insight into product and

• „Better supply chain efficiency with asset optimization and reduced

• Click to edit Master title style

• Different Views on the same data based on user role

• Flexible time buckets to enable strategic and tactical planning

• Statistical Forecasting methods (i.e. seasonal trend models)

• Alert and Macro Functions

• Flexible Reporting Options

Click to edit Master title style

• Cost minimization - Profit maximization

Flexible Constraint Definition Sourcing

Selection of most suitable

Mixed integer linear

Click to edit Master title style

Reference : SAP 21 | 6/17/2014

Click to edit Master title style

Reference : SAP 22 | 6/17/2014

• Checking Product Availability at time of Sales Order

Click to edit Master title style

Reference : SAP 24 | 6/17/2014

Click to edit Master title style

Reference : SAP 25 | 6/17/2014

Business Benefits with SAP

• Improved supplier selection and management with vendor evaluation process.

• Lower operating costs and increased product profitability support by quality

• Easier regulatory compliance with quality documentation & auditability of

• Inefficient, manual and paper-based procurement processes.

Click to edit Master title style

• Reduced operational costs with automated procurement tasks in

• Comprehensive visibility into the supply chain through integrated

Click to edit Master title style

Business Benefits with SAP

Click to edit Master title style

Click to edit Master title style

Click to edit Master title style

Click to edit Master title style

Reference : SAP 32 | 6/17/2014

Click to edit Master title style