Challenges in the IM&C Industry

8/3/2019 Challenges in the IM&C Industry

1/29

MidmarketIndustrial Machinery& Components

Level One Presentation


2/29

Challenges, Strategies, and Solutions

Quick Implementation

Why Now?

Why SAP?


3/29

SAP AG 2005, Midmarket Industrial Machinery & Components/ #

YOUR FOCUS

Increase Shareholder ValueIncrease Revenue and Profit Margins

Operational Excellence

Product LeadershipImprove Customer Satisfaction

You Have the Right Focus and the Right Strategies

Business STRATEGY

YOUR FOCUS

Increase Shareholder Value

Increase Revenue and Profit Margins

Cost LeadershipProduct Leadership

Improve Customer Satisfaction

Increase margins with virtualmanufacturing capabilitiesthroughout the extended supplychain

Improve time-to-market by fosteringengineering and productdevelopment collaboration

Gain a complete view of all externaland internal processes andoperations

Foster customer loyalty with cutting-edge customer service and support


4/29


But Not Enough Ability to Execute

You need a business enabler to

helpyourorganization refocus on

yourstrategies!

Your people cant execute on your business

strategy, because your business platform is

COMPLICATED TO OPERATE

Complex and broken process flows

Incomplete or hidden information

DIFFICULT TO CONTROL

Lack of visibility

Hard to enforce corporate policies

IMPOSSIBLE TO CHANGE

Multiple costly integration points

Redundant and inconsistent data

BusinessEnabler

Business STRATEGY

Ability to EXECUTE


5/29


Market Forces and Business Needs

Market Forces

Price erosion due to globalization andcyclical capital investment

Customer demands for customizedproducts with short lead times

Decreasing customer loyalty

Increasingly complex customer baseand regionally diverse customer base

Trend toward offshore manufacturing

Low market growth

Resulting Key Challenges

Counter margin pressures

Speed up time-to-market

Improve visibility

Improve customer loyalty


6/29



Market Forces


Customer demands for customizedproducts with short lead times




Low market growth




Improve visibility



7/29 SAP AG 2005, Midmarket Industrial Machinery & Components/ #

Margin Pressures

Benefits

Lower material cost

Lower capital commitment

Lower operating costs

Strategies

Reduce cost through strategicsourcing

Optimize production process

Cut production costs throughoutsourcing and offshoremanufacturing

Improve asset utilizationthrough better productionplanning

Increasing cost pressuredue to globalization

Increased demand forcustomized productsand options

Lack of operationalefficiencies, leadingto higher inventories

Challenges

SAP can help you

Track, measure, and optimizematerial costs

Optimize end-to-end planning

Streamline production

Optimize inventory levels

Manage asset utilization



What Customers Have Experienced

Kaeser reduced production lead times by up to 15%

and lowered the inventory level for spare parts in itssubsidiaries by 23%

Trumpf Improved processes and increasedproductivity in production planning, logisticcontrolling, and quality assurance.

Leybold reduced the number of people involvedin planning process from 90 to 4 and achievedoverall cost savings of approximately1 million per year.




Market Forces


Customer demand for customizedproducts with short lead times




Low market growth




Improve visibility




Time-to-Market

Challenges

Engineers spend up to 80% non-value added time during product

definition. (CIM Data)The success rate of new productintroductions has dropped from75% to 25% over the last decade.

Product innovation cycles in theIM&C industry are shortening.

Strategies

Design to minimize complexityand support material cost

optimizationConduct collaborative designwith dispersed design locationsand with large customers toeliminate inefficiencies in thedesign process

SAP can help you

Collect and manage ideas

Define new products andservices

Collaboratively design andspecify new products

Benefits

Shorter product innovationcycles

Streamlined development

process with reduced R&Dcosts

The ability to market the rightproduct at the right time

Technology leadership resultingin additional pricing power



What Customers Say

Thanks to mySAP Product Lifecycle Management,

we could significantly lower costs. Higher-quality

product data is now available earlier in the

development process.

Thomas Hirtz, Project Leader, Schuler Pressen

With mySAP Product Lifecycle Management, we are

able to shorten product development time, achieve

higher customer satisfaction, and benefit from

competitive advantages.

Erlfried Koenig, IT Manager, Uhlmann Pac-Systeme GmbH & Co. KG
http://www.schulergroup.com/




Market Forces






Low market growth




Improve visibility




Visibility

Challenges

Increased speed of business

Need to identify and quickly

respond to competitive threatsand emerging businessopportunities

Greater scrutiny of corporateaccounting practices bygovernments and the financialcommunity

Strategies

Integrate data from hetero-geneous sources to obtain a

complete view of all externaland internal processes andoperations

Gain complete insight into theprocesses of customers, partners,and employees

Identify and standardize key

performance indicators

Benefits

Better information foremployees to foster optimizeddecisions

Greater responsiveness tochanging conditions

Compliance with governmentregulatory requirements

SAP can help you

Get information from one sourcethrough common logistics andfinancial reporting

Improve financial planning withone trigger for financial andlogistics tracking, integration offinancials, and cost evaluations

Manage lead times throughcapacity, supplier, and resourcevisibility




Kaeser achieved a 32% decrease in finished stock.

Schumacher cut the time required for month-end closingin half.

Trumpf is centrally monitoring productionand logistics KPIs for eight plants.




Market Forces






Low market growth




Improve visibility




Customer Loyalty

Challenges

Fewer distinct technicaldifferences commoditizationof machines and components

Pricing pressure on newmachinery increases,importance of aftersalesbusiness

New technologies encouragecherry picking in aftermarket

Aftermarket business is turninginto a competitive battle ground

Strategies

Generate new revenue streamsthrough value-added servicesand proactive maintenance

Exploit up-selling and cross-selling potential

Bundle services with productsales

Lock customers into long-termservice level agreements

SAP can help you

Manage customer interactionsover multiple channels

Enable customers to buy

products and spare parts onlineand browse through theirinstalled base

Plan the stock levels of spareparts to improve order fill ratewhile minimizing inventories

Manage service level agreementsand track their profitability

Benefits

Offer improved service with24x7 availability

Allow for bundles of service

offerings and maximize marginson these offerings

Improve customer satisfactionand retention

Increase revenues andprofitability


17/29



Komatsu is putting self-service tools intocustomers hands.

Halton is offering customers complete,end-to-end solutions.

Leybold improved on- time delivery from 87% to 95%.

Mennekes significantly increased customerservice and customer satisfaction.


18/29



Why Now?

Why SAP?


19/29


Fast, Predictable Payback

Implement what you need, when youneed it with SAP.time

cashflow

AccelerateTime-to-Benefit

ShorterPayback

Time

Reduce InitialInvestments

Supports future growth

Delivers business value through theservice providers that best fit customerneeds:

Customers can choose familiarindustry partners

Customers can choose SAPif needs dictate

Addresses key business issues from anindustry-specific perspective

Limits business disruption through predefinedservices focused on industry best practices

Provides real ROI within budget and timeline

Enables customers to buy only the modularfunctionality they need

Leverages and extends existing investments.Customer decides what to add or replace

SAPs phased implementation approach provides the following benefits:


20/29


What the Statistics Say

More than 60% of

all SAP R/3implementationsare accomplishedin less than ninemonths.

< 9 months

> 9 months

Implementation

Recentimplementations ofSAP solutions atmidsize companieshave averaged only

13 weeks.0

10-11weeks

12-13weeks

14-16weeks

10

20

3025%

40%

35%40

Average implementations formidsize companies are measuredin weeks.

IM&C customers by no. of employees

Range of Employees

X-Large

Large

Medium

Small

Not Assigned

Total

>25,000

5,000-25,000

1,000-4,999

< 1,000

45

97

293

804

190

1.429

IM&C is already successful in themidmarket.


21/29


Pro-featuredpower tools for

homeowners,hobbyists, andcraftspeople.

The distinguishing characteristic of SAP SI is its

practical approach to rapid SAP implementationswithout compromise to quality or increment to

project risk. Its emphasis on customer educationcombined with cross-industry domain, processimprovement, and extensive functional SAP R/3standards and specific product knowledge providedour company with an ERP infrastructure supportiveof our business and information technology goals.

The success of our SAP implementation was whollydependent upon the contributions of SAP SI.

Martin Harbeck

SAP Implementation Project ManagerRyobi North America, Inc.

Challenge Solution Implementation Result

Aging systems and increasingcompetition.

SAP R/3 20 weeks Significant cost savings andoperational improvements

What Our Customers Say
http://www.ryobitools.com/index.asp


22/29


I valued not only the overall management

of our SAP project implementation, but alsoSAP SI Americas leadership in the

application of the MaxValu methodology.for NexPress Solutions LLC. Eight weeksinto the project, MaxValu had us testing

in a working environment. You can countme as a satisfied customer and chalk thisone up as an on-time, on-budget project forNexPress Solutions.

Robert ScheidtIS/IT Manager

NexPress Solutions, LLC

.

Challenge Solution Implementation Result

Integrated business processes,a consistent platform toimprove and standardizeinformation systems for itsglobal business operations.

SAP R/3 16 weeks All business processes andinformation systems are nowlinked with other familycompanies, which dramaticallyimproves operational efficiencies.

What Our Customers Say

Joint venture of Kodakand HeidelbergerDruckmaschinen AG,supplying the printingindustry.


23/29

Why SAP?



Why Now?

SAP Th S t Ch i f Y Gl b l B i !


24/29


SAP: The Smart Choice for Your Global Business!

12 million users. 69,700 installations. 1,500partners. 28,900 people in more than 50countries. 27 industry solutions. $7 billion inrevenue and over $1 billion annually in R&D.SAP is the recognized leader in providing collaborativebusiness solutions for all types of industries and for everymajor market.

SAP is the worlds largest interenterprise software company

and the worlds third-largest independent software supplieroverall.

SAP will continue to provide you with solutions for all futuretrends to protect your investment.

SAP R&D I t t


25/29


SAP R&D Investment

R&D Investment (Millions)

Importantly, the strongermargin does not appear tobe coming at the expense offuture growth R&Dheadcount is up Q/Q andY/Y, and S&M headcount isdown marginally quarter-on-quarter and up year-on-year

both indicating thatcapacity and productinvestment are not beingcurtailed.

Solomon Smith Barney

W ld id R l ti M k t Sh


26/29


Worldwide Relative Market Share

Q2 2000-Q1 2001

Q3 2000-Q2 2001

Q4 2000-Q3 2001

Q1 2001-Q4 2001

Q2 2001-Q1 2002

Q3 2001-Q2 2002

Q4 2001-Q3 2002

Q1 2002-Q4 2002

Q2 2002-Q1 2003

Q3 2002-Q2 2003

SAP AGSiebel*Oracle **PSFT&JDEC*I2*

Q4 2002-Q3 2003

Total License Revenue: Relative Market Shares(Rolling four quarters, based on license revenues)

* 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 20th 2004

59%

16%15% 15%

14%

13%

2%

58%56%

54%

51%

48%

46%44%

43%41%

40%40%

11%12%12%

13%

16%

18%18%

20%20%21%

22%21%

14%

15%

14%15%

19% 17%18%

17%

16% 16% 16% 16%

17%

18% 14%15%

17%17%

17%

2%2%2%2%2%3%3%

4%4%5%4%

0%

10%

20%

30%

40%

50%

60%

Q1 2003-Q4 2003E

IM&C C t P tf li


27/29


SAP Industrial Machinery & Components Customers

IM&C Customer Portfolio
http://www.framatech.com/home.htmhttp://www.duofast.com/http://www.perkinelmer.com/index.htmlhttp://www.mts.com/http://www.boschrexroth.com/BoschRexroth/index.jsphttp://www.lamson-sessions.com/Index.htmlhttp://www.ditchwitch.com/dwcom/index.jsphttp://www.southernpump.com/default.asphttp://www.hubbell-ltg.com/http://www.bourns.com/http://www.nexpress.com/dyn/index.jsphttp://www.usa.siemens.com/http://www.starite.com/http://www.dbt.de/en/www-dbt-de/index2.htmlhttp://www.multiquip.com/index.htmlhttp://www.advanced-energy.com/http://www.phmining.com/http://www.joy.com/http://www.komatsu.com/http://www.milacron.com/default.htmhttp://../


28/29

Why Now?

Why SAP?



I S


29/29

In Summary

SAP is flexible so it grows with your business:

Allows for increasing market share

Scales to meet 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, 13-week average implementation time

Phased approach and best practices

SAP is the smart choice for yourinvestment:

Over 30 years in business with 1,500 industrialmachinery and component customers

Number one enterprise software vendor in the worldwith more than $1 billion in annual R&D

Challenges in the IM&C Industry

Documents