1130-1200 Dinesh Mohan Operational Excellance at RAK CERAMICS

FOUNDER: HH Sheikh Saud Bin Saqr Al Qasimi, the Ruler of Ras Al Khaimah

CHAIRMAN: HH Sheikh Mohammad Bin Saud Bin Saqr Al Qasimi, the Crown Prince of Ras Al Khaimah

OPERATIONAL EXCELLENCE AT RAK CERAMICS

Dinesh Mohan, CIO [email protected]

Annual turnover of $1 billion, exports to over 160 countries

Annual output: Tiles-117 mil sq.m., Bathware-4.5 mil pcs, Tableware-20 mil pcs

Manufacturing plants in UAE, Bangladesh, China, Sudan, Iran & India

Over 8,000 models of ceramic tiles and sanitary ware

8,000 employees in UAE, 15,000 employees worldwide

RAK CERAMICS

World’s Largest Ceramics Manufacturer

2

- Diversified portfolio

- Complex interdependencies; poor visibility at the top

- Critical knowledge only with few executives

- Restructure around core competencies

- Make SBUs more accountable for their respective performance - Transform from ‘person-driven’ to ‘process-driven’

RAK CERAMICS PSC

2010: Restructuring Around Core Competencies

•India

•B’desh

•China

•Sudan

•Iran

UAE

RAK CERAMICS

AL-HAMRA REAL EASTATE

RAK PORCELAIN

KLUDI-RAK AL-HAMRA CONSTRUCTION

3

THE RIGHT MARKETS AND CUSTOMERS

To drive the right mix of customers and products in each geography, to achieve profitable growth

WORLD CLASS OPERATING SYSTEMS AND PROCEDURES

To create common world class operating systems and procedures, facilitating sustainable, profitable growth

PERFORMANCE BASED CULTURE

To create a performance based culture managed by a measurement structure that will enable continuous improvement

THE BEST PEOPLE

To create a development programme that provides opportunity for our employees and attracts the people that we need for the future

Become the

most competitive company in our business

Increase

EBITA margin by 2%

THE CERAMICS BUSINESS

2011: Envisioning The Future

Integrate Products, Processes and People with

SAP as integrating mechanism

4

Innovation Priorities

Are we Continuously Improving?

“ “

Are we geared up to be in sync with the Business Roadmap?

“ “ “ “

Financial Impact

Realization time and effort

Technology innovation (hardware/ software)

High

Medium

Low

High Medium Low

Today

Future

Scalability

Business IT

Alignment

Execution Excellence

Optimization

We need to focus our funds & resources for Business Growth

THE CIO AGENDA

Setting The Priorities

Is our Business getting Benefit?

5

BUSINESS- IT ALIGNMENT

SCALABILITY

OPTIMIZATION

PROLIFERATION

EXECUTION EXCELLENCE

Business Vision Drives IT Vision

Joint Business-IT Planning

User driven IT

SAP Best practices Implementation

Tier-2 Data Centre

Decommissioned legacy systems

Reduction in number of applications

Business process improvements

Implement best practice s (ITIL)

Established CoE concept

Right sizing IT organization

Global Template creation

Rollout to other locations

Rollout to other Subsidiaries

Data Analytics

Financial Consolidation

Cloud Infrastructure

Global Support Center

Right sizing DRP

Archiving optimization

2011 2012

THE IT ROADMAP

Aligning With The Transformation

2013 2014 2014-2015 6

Financial Excellence

Finance

Financial Compliance/IFRS

Financial Performance and Risk Management

On-line Banking

Finance Shared Services

Superior Customer Value

Sales Effectiveness

Customer Contact Center

Customer Service and Support

Consumer Products: Trade Promotions Mgt.

Product and Service Leadership

Product Lifecycle Mgt.

Responsive Supply Networks

Supply Chain Planning

Warehouse Mgt.

Transportation Mgt.

Demand Planning

Distribution

Supply Chain Planning

Professional Business Networks

Operational Excellence

Manufacturing

Procurement

Preventive Maintenance

Lean Enterprise

Quality Management

End to End Processes

Enterprise Healthcheck – Manufacturing

Enterprise Healthcheck - Services

Public Sector Healthcheck

Order to Cash

Fashion: Order to Cash

Retail: Merchandising

Private Equity: Operational Assessment

Best People and Talent

HCM

Talent Management

HR Shared Services

Strategic IT

Business Intelligence

Enterprise Information Management

High Performance Analytics

Enterprise Mobility

Total Cost of Ownership

Best Run IT

Value Management

Enterprise Architecture

Implementation Services

High Performing Assets

EH&S Compliance

Enterprise Asset Mgt.

Optimized Asset Mgt and Operations

Benchmarking Survey

Best Practices Survey

Industry Specific Benchmarking Survey

PLANNING FOR SAP

Driving Change Through Best Practices

7

SALES can rapidly put new designs into SOP

PLANNING production flexibly

QUALITY is maintained through value chain

MANAGEMENT can identify and resolve constraints to maintain optimal production

OPERATIONS efficiently utilizes labor, material and assets

MAINTENANCE effectively allocates capital and ensures asset availability

SUSTAINABLE resources and operational risks are managed

Distribution Center

Planning & Execution

Sales & Service

Raw Materials

Component Supplier

Contract Manufacturer

Planning & Control

Quality

Management Operations

Sales Sustaina

bility Maint

PLANNING FOR SAP

Benefits And Value Creation

8

Project name: RAK-on-SAP (Read as “Rock-on-SAP”)

Scope: SAP ERP 6. EHP5, SAP CRM 7.0 EHP1, SAP Netweaver 7.3 (JAVA),

SOLMAN 7.1

Process coverage: Comprehensive coverage of processes across Sales, Manufacturing, Procurement, Logistics, Maintenance, Marketing, Finance and HR

Implementation type: BIG BANG – All Modules

Rollout scope: UAE operations - 13 manufacturing units, 15 warehouses, 6 retail showrooms and all administrative offices

Implementation partner(s): SAP

Estimated project effort: 14600 person days

Duration: 8 months

THE SAP PROJECT

Scope and Scale

9

Business speaks to the Implementation Team with “One Voice”

Project success means profitable business

The Challenge

Our Strategic Goal

No surprises - issues and risk are addressed at the right level at the right time Our Immediate

Objective

THE GOVERNANCE AGENDA

Effective Execution

10

RAK Ceramics Board Chairman, Executive Director, CEO

Executive Sponsor Executive Director

Project Owner CIO

Project Manager CFO

Top Level Ownership

Business Drive

Scope Management

Accountability

Change Managers CXO’s

Integration into strategic program

KPI Owners

Benefits Accountability

Quality Assurance KPMG

End to End Quality Compliance

Outside In View

Enterprise Standards

Project Team SAP MENA

Product Owners

Delivery Assurance

Best Practice

First Level Issue and Risk Mitigation

Core Team Leads - 14 Senior Business Managers

Master Data and Core Team Associates - 72 Business Managers and Executives

Steering Committee Executive Director

CEO All CXO’s

PROJECT ORGANIZATION

The Best Practice

11

THE BACKBONE

Building The Data Center

Private Cloud

Complete redundancy

Scalable architecture

Highly Available

Disaster recovery

BS7799 based security

Phase 1 Applications • SAP ERP for Manufacturing Hardware • HP integrity rx2800 i2 Servers • HP Integrity BL860C i2 Server Blades • HP Integrity BL890C i2 Server Blades • HP ProLaint BL460c Server Blades • HP EVA P6300 Storage • HP Switches for Core and Edge 12

Software • HP-UX 11iv3 • Microsoft Windows • HP Data Protector for rapid backup and recovery Phase 2 • HP Matrix Cloud

…an integrated approach

Global landscape control using SAP Solution Manager

Rule-based landscape change management policy

High visibility and transparency

Instant Collaboration between distributed IT (Dev./Ops.), business and Implementation Teams

DEV

IND

CHD

BND

PQA

INQ

CHQ

BNQ

PRD

INP

CHP

BNP

RAK Ceramics UAE

RAK INDIA

RAK CHINA

RAK BANGLADESH

GTD GTQ

Transport route Solution Manager connection

Global Development Server Global Template

Solution Manager

…….

RAK PORCELAIN

…………..

…………..

2012

2014

2015

…….

……. ……. …….

TACKLING THE GLOBAL COMPLEXITY

SAP Solution Manager

13

DELIVERING VALUE

SAP - Finance

Group and Local Policies

Faster closing, shorter planning cycles, respond faster to market conditions

Effective credit control

On-line banking

Accurate foreign currency

valuation

IFRS reporting

14

DELIVERING VALUE

SAP - Controlling

Actual costing of each product manufactured

Profitability analysis – LOB, Product, Sales Order, Customer, Salesman, Region-wise

Huge impact on planning and decision making

15

DELIVERING VALUE

SAP - Sales And Distribution

Increase profit - Move from ‘Revenue-based targets’ to ‘Product-mix based profit targets’ for each salesman

16

DELIVERING VALUE

SAP - Production Planning

Flexible production planning and scheduling over multiple production lines

Online production monitoring and control

MTO - production strictly against sales order

Match supply to demand

17

DELIVERING VALUE

SAP – Materials Management

Regulate Inventory levels thru MRP and ageing analysis

Empower lower/middle managers thru workflows for requisitioning and purchase

Faster inventory reconciliation

Real time visibility on production & dispatch schedule

Spend analysis for smarter sourcing

18

DELIVERING VALUE

SAP – Quality Management

Customer complaints

Vendor analysis

Visibility into ‘B’ grade inventory throughout the supply-chain

19

DELIVERING VALUE

SAP – Plant Maintenance

Move from ‘Corrective-maintenance’ to ‘Preventive-maintenance’

Repair vs Buy decisions

20

DELIVERING VALUE

SAP – Human Capital Management

Largest GCC payroll on SAP

Online leave and benefits calculation

Annual leave/tickets

ESS/MSS

21

Big bang approach for Go-Live

CIO reporting to the Board of Directors

Distinct SAP PMO in addition to the Project Org

Innovative contract – reciprocal penalties

Quality Assurance from KPMG to avoid costly errors/rework

Systemic balancing of various interest groups

ASAP methodology

Adoption of Standard SAP processes and reports

Second-in-command from each department as the Core Team

Ex-stock availability of sandbox machine as essential condition for

Hardware Contract

SOLMAN and RWD for simultaneous documentation

and control

11 Steering Committee reviews in 8 months

Off-shore ABAP delivery

Realization and Unit Testing delivery planned for Ramadan

Upfront identification of Strategic, Op and Tech risks –

mitigation plans

CxO-level Change Managers

Master Data Cell established under CFO

‘Train-the-trainer’, 100% coverage before Go-Live

Computer awareness for shop floor

User manuals prepared by Core Team

Identified post Go-Live Support vendor early, ensured knowledge

transfer

SAP Support Vendor identified for Quick Stabilization

At Go-Live, Core Team converted into L1 Support Team

SAP COE

STRATEGY OPERATIONS

MANAGING CHANGE

STABILIZATION

IMPLEMENTATION

Speed And Quality As Key Deliverables

Project Go-Live in 8 m. On budget, on time No deviation in scope

STRATEGY

22

Cloud-based Infrastructure

Minimized downtime (e.g. during upgrades)

Right sized backup / recovery

Performance Optimization

Automated Job Scheduling

Standardized Template-based Testing

Implemented best practice ITSM processes (ITIL)

Established Super User Concept

Global Support Center

From Service SLA’s to Output Based Management

EXECUTION EXCELLENCE The IT Paradigm Shift

23

MEASURING THE OUTCOMES

The Short-term Win

RAK Ceramics delivers more than 200,000 sq.m. every day from the RAK facility

On Day-4 we were shipping this quantity

And we have been on steady state ever since

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MEASURING THE OUTCOMES

Auditing The Business Benefits

Metric Pre-SAP 9 m after Go-Live Future Target

Time to close monthly accounts 12 days 5days 4 days

Time to prepare Quarterly accounts for publishing to Abu Dhabi Stock Exchange

60 days 45 days 30 days

Credit/Debit Notes per month 100-150 50 25

Cost Report Coverage Select Few Complete Complete

Costing of new products 3 days 12 hours Real-time

Publishing of Monthly Cost Report 6 days 2.5 days Real-time

Reduction in Net Debt 4% 10%

Reduction in Av. Overdue Receivables 6% 10%

Reduction in F&A Manpower Cost 7% 20%

……………..and many more across departments

25

MEASURING THE OUTCOMES

The IT Benefits

Metric

One Production Landscape - Cloud based scalable Infrastructure

Zero Downtime (planned and unplanned)

40 Incidents per month lowest in industry

3 Changes per quarter lowest in industry

IT Spend at 1% of Revenues industry average spend for manufacturing

26

THE FINAL TEST

Realizing The Value

Metric Pre-SAP Present

NET PROFIT (m. AED) 224 272.3 (Up 21.55%)

EARNING PER SHARE 0.38 0.78

SHARE PRICE (AED) 1.34 3.89*

Realizing the Leadership Vision through effective IT

* As on May 1, 2014 27

“Even executives and staff who would not be directly involved with using the finished implementation were included in training and briefings, to ensure an enterprise-wide view was taken……………the realization that there are certain elements outside of the traditional technical skill sets or hardware requirements, that are essential to successful deployments.” MARK SUTTON

Senior Group Editor, ACN

LARGE IMPLEMENTATIONS CATEGORY

CITED FOR INNOVATION

Exceeding Expectations

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THANK YOU.