Next Generation Benchmarking Results

Supply Chain Planning Assessment

Company Harman International

Monday, September 11, 2023

CONFIDENTIAL
Program Overview

Next Generation Benchmarking Assessment for Supply Chain

Planning

Within this results document, you will see the following:

• A clear understanding of digital maturity of your core business processes which can be used as an
input into strategic planning for Intelligent Enterprise roadmap
• Benchmarking guidance aligned to KPIs of 3 process areas, comparing your organization to peers
• A prioritized gap assessment of best practices aligned with the 3 process areas:
• Demand Management and Insights
• Response and Supply Planning
• Sales, Inventory and Operations Planning
• Key observations based on customized results
• Examples of best-in-class organizations that are enabling digital transformation of their supply chain
planning operations

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Participant Profile and Company Information

Organization Level Harman International

Geography World

Industry Consumer Products

Sub industry Consumer Electronics

Annual Revenue 8800000000

Currency [Link]

Participant Name rizky gularso

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Digital Priorities in Supply Chain

Digital Technologies Customer Centricity Predictive Business

are having a profound impact on supply chain operations.

Customer Centricity requires the Segment of one requires predictive
The change summoned by the digital economy is turning
ability to design supply chain business processes that are geared to
industries upside down. Highly agile supply chains give processes to service the customer be flexible to changing customer
companies new capabilities to quickly capitalize on new segment of one. This demand drives demands. This requires a network of
opportunities to break down old barriers. Here are few integrated business planning digital twins to give a 360 degree view
digital priorities that can help organizations navigate in processes that not only generate of the products and assets within the
smart plans, but are also responsive business. Visibility and product
the digital world.
and flexible to changes in supply, intelligence at this level improves
demand and other signals across the customer service and enhance overall
supply chain. customer satisfaction.

Smart Automation Total Visibility

Move from mass production to mass Individualization, automation and

customization of personalized responsiveness requires improved
products requires smarter and visibility across the supply chain.
automated processes in all areas of Visibility helps improve sustainability
the supply chain. There is a move and compliance and enables the
from continuous production lines, to business processes to be more
flexible production cells. Rethinking on analytical and predictive. It also helps
the design, manufacturing and organizations to identify patterns in
logistics processes would help deliver big data that can improve business
on the promise. outcomes.

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Executive Summary - Key Metrics (1/2)

Supply chain planning cost (% revenue) Cost of goods/services sold (% revenue)

Cluster: Consumer, Industry: Consumer Products, N = 77 Cluster: Consumer, Industry: Consumer Products, N = 256

Days in inventory Inventory carrying cost (% of revenue)

Cluster: Consumer, Industry: Consumer Products, N = 233 Cluster: Consumer, Industry: Consumer Products, N = 102

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Executive Summary - Key Metrics (2/2)

On-time delivery performance (in %) Revenue loss due to stock outs (%)

Cluster: Consumer, Industry: Consumer Products, N = 148 Cluster: Consumer, Industry: Consumer Products, N = 78

Recommendations

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Executive Summary - Best Practices

Demand Management Response and Supply Sales, Inventory and

and Insights - Best Planning - Best Practices Operations Planning -
Practices Best Practices
N =176 N =190 N =180

Peer Group: Global

Recommendations

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Supply Chain Planning Cost and FTE - Key Metrics (1/2)

Supply chain planning cost (% revenue) Supply chain planning headcount cost (% of revenue)

Cluster: Consumer, Industry: Consumer Products, N = 77 Cluster: Consumer, Industry: Consumer Products, N = 36

Supply chain planning technology cost (% of revenue) Supply chain planning external cost (% of revenue)

Cluster: Consumer, Industry: Consumer Products, N = 32 Cluster: Consumer, Industry: Consumer Products, N = 12

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Supply Chain Planning Cost and FTE - Key Metrics (2/2)

SCP FTEs per Billion in Revenue (overall)

Cluster: Consumer, Industry: Consumer Products, N = 32

Recommendations

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Demand Management and Insights - Key Metrics

Demand forecast accuracy (in %) Customer churn(in %)

Cluster: Consumer, Industry: Consumer Products, N = 81 Cluster: Consumer, Industry: Consumer Products, N = 42

Demand management and insights FTE Cost (% of

total supply chain planning FTE Cost)

Cluster: Consumer, Industry: Consumer Products, N = 12

Recommendations

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Demand Management and Insights - Best Practices (1/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

1 The organization is able to develop short-, mid-, and long-term view of the expected demand and
create an optimized demand plan

2 The organization runs a 'Demand Sensing' process to create and adjust short-term forecasts on a
daily basis

3 The organization supports hierarchical planning and is able to plan at the most detailed level

Peer Group: Global

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Demand Management and Insights - Best Practices (2/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

4 The organization has visibility into customer demand coming from multiple channels and can
provide the same service across all channels

5 The organization has a strong personalization strategy to cater to individual needs of the
customers and is able to fulfill this demand profitably

6 The organization has end-to-end visibility of the supply chain in real-time, with an integrated
platform for analytics, simulations and alerts

Peer Group: Global

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Demand Management and Insights - Best Practices (3/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

7 The organization has the ability to carry out performance management to monitor business
performance across multiple locations

Peer Group: Global

Recommendations

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Response and Supply Planning - Key Metrics (1/4)

On-time delivery performance (in %) Revenue loss due to stock outs (%)

Cluster: Consumer, Industry: Consumer Products, N = 148 Cluster: Consumer, Industry: Consumer Products, N = 78

Planning frequency (in days) Planning cycle time (in hours)

Cluster: Consumer, Industry: Consumer Products, N = 31 Cluster: Consumer, Industry: Consumer Products, N = 37

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Response and Supply Planning - Key Metrics (2/4)

Order fill rate (in %) Order line item fill rate (in %)

Cluster: Consumer, Industry: Consumer Products, N = 64 Cluster: Consumer, Industry: Consumer Products, N = 36

Order line items back ordered (in %) Orders cancelled (% of orders backordered)

Cluster: Consumer, Industry: Consumer Products, N = 14 Cluster: Consumer, Industry: Consumer Products, N = 16

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Response and Supply Planning - Key Metrics (3/4)

Order fulfillment lead time – ETO (in days) Order fulfillment lead time – MTO (in days)

Cluster: Consumer, Industry: Consumer Products, N = 13 Cluster: Consumer, Industry: Consumer Products, N = 28

Order fulfillment lead time – CTO (in days) Order fulfillment lead time – MTS (in days)

Cluster: Consumer, Industry: Consumer Products, N = 17 Cluster: Consumer, Industry: Consumer Products, N = 47

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Response and Supply Planning - Key Metrics (4/4)

Response and supply planning FTE cost (% of total

supply chain planning FTE Cost)

Cluster: Consumer, Industry: Consumer Products, N = 9

Recommendations

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Response and Supply Planning - Best Practices (1/2)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

1 The organization produces a constrained supply plan - managing capacity and sourcing supply
across the network

2 The organization has what-if modeling capability to evaluate multiple scenarios of supply planning
during the day and create an optimized plan

3 The organization has advanced deployment strategies for stock deployment across the supply
chain

Peer Group: Global

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Response and Supply Planning - Best Practices (2/2)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

4 The organization commits orders in real-time, considering customer prioritization, alternatives and
constraints

5 The organization understands the impact of supply chain disruptions and analyzes alternatives in
real-time

6 The organization collaborates on business decisions and share insights across business networks
(suppliers, contract manufacturers etc.)

Peer Group: Global

Recommendations

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Sales, Inventory and Operations Planning - Key Metrics (1/3)

Days in inventory Inventory carrying cost (% of revenue)

Cluster: Consumer, Industry: Consumer Products, N = 233 Cluster: Consumer, Industry: Consumer Products, N = 102

Days in inventory - raw material Days in inventory - work in progress (WIP)

Cluster: Consumer, Industry: Consumer Products, N = 42 Cluster: Consumer, Industry: Consumer Products, N = 35

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Sales, Inventory and Operations Planning - Key Metrics (2/3)

Days in inventory - finished goods Obsolete inventory (% of inventory value)

Cluster: Consumer, Industry: Consumer Products, N = 45 Cluster: Consumer, Industry: Consumer Products, N = 52

Inventory write-offs (% of revenue) Safety Stock Inv. (% of total inv.)

Cluster: Consumer, Industry: Consumer Products, N = 38 Cluster: Consumer, Industry: Consumer Products, N = 25

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Sales, Inventory and Operations Planning - Key Metrics (3/3)

Sales, inventory and operations planning FTE cost (%

Sales and operations planning cycle time (in days)
of total supply chain planning FTE Cost)

Cluster: Consumer, Industry: Consumer Products, N = 46 Cluster: Consumer, Industry: Consumer Products, N = 10

Recommendations

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Sales, Inventory and Operations Planning - Best Practices (1/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

1 The organization has an integrated sales, inventory and operations planning process to align its
strategic, financial, sales and operational goals

2 The organization performs what-if simulations by considering all supply chain constraints, with a
direct linkage to financial implications

3 The organization provides a collaboration framework for Sales and Operations Planning (S&OP)
and decision making

Peer Group: Global

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Sales, Inventory and Operations Planning - Best Practices (2/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

4 The organization's transactional and planning systems are tightly integrated to perform Sales and
Operations Planning (S&OP)

5 The organization is able to generate real-time insights/metrics for quick trade-off analysis as part of
the Sales and Operations Planning (S&OP) process

6 The organization runs a regular multi-stage inventory optimization process to achieve highest
service at lowest working capital investment

Peer Group: Global

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Sales, Inventory and Operations Planning - Best Practices (3/3)

Best Practice Company Performance

Current Desired
Gap
Maturity Maturity

7 The organization runs the inventory planning process as part of an established Sales and
Operations Planning (S&OP) process

8 The organization maintains right sized inventories and flow in the supply chain and drives
replenishment based on actual demand

Peer Group: Global

Recommendations

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Customers are Achieving Value From SAP

Company Company

Arla Foods Amba Continental AG

Industry Industry
Agribusiness Automotive

SAP Solution SAP Solution

SAP Integrated Business SAP Integrated Business
Planning Planning

Customer Web Site Customer Web Site

[Link] [Link]

Arla Foods Amba Continental AG

• Increase overall forecast accuracy for its UK market from 82.43% to 84.85% • Established a single system for easier worldwide access to equipment
(a 2.42% increase) for all relevant SKUs and for other markets in whole capacity information
categories by more than 5%, achieved while reducing time spent on manual, • Enabled calculations for a 24-month planning horizon based on SAP ERP
repetitive forecasting tasks by well over 10%
application data
• Gained higher cost accuracy to help optimize investments
"SAP IBP is the future for us. The demand sensing component is the first step “SAP Integrated Business Planning helped us resolve short, temporary, and
on our journey to true end-to-end supply chain planning, and we are already long-term equipment capacity planning issues and save costs at the same
implementing multiple processes supported by SAP IBP.” time.”

Alfred Benny Christensen, Senior Solution Architect, Arla Foods Amba André Kunz, In-House Consultant SAP, Continental AG

Click here for Arla Foods Amba source reference Click here for Continental AG source reference

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Value Papers to Learn More: Intelligent Business Processes with SAP
Solutions

Objective: Links to LoB Value Papers:

 To articulate the value in moving from ERP software on a  Click here for 'Intelligent Procurement with SAP solutions' whitepape
traditional database to SAP’s Intelligent Enterprise r
including SAP S/4HANA, cloud line-of-business (LoB)
 Click here for ‘Intelligent Sales with SAP solutions’ whitepaper
applications, and other innovative technologies.
 Click here for 'Intelligent Service with SAP solutions' whitepaper

 Click here for 'Intelligent R&D and Engineering with SAP solutions' w
hitepaper

Key Focus Areas:  Click here for 'Intelligent Supply Chain with SAP solutions' whitepape
r
 Latest innovations enabled by S/4HANA and other SAP
solutions  Click here for 'Intelligent Manufacturing with SAP solutions' whitepap
er
 Intelligent processes based on digital technologies
 Value proposition  Click here for 'Transforming Asset Management with SAP' whitepape
r
 Customer references
 Click here for 'Intelligent Finance with SAP solutions' whitepaper

 Click here for 'Managing the Total Workforce with SAP' whitepaper
*All detailed LoB papers also available – see an SAP representative

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 Appendix

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Demand Management and Insights - Best Practices - Gap Analysis (1/2)

Best Practice Customer Current Maturity Customer Desired Maturity

The organization is able to develop short-, Statistical forecasts are generated based on internal Advanced forecasting algorithms are tested in pilot projects.
mid-, and long-term view of the expected data. There is no possibility of enriching this with Inclusion and analysis of large amount of external data is
1
demand and create an optimized demand 2 external data. Limited stakeholders participation via 4 tested. The process is open to all stakeholders via collaboration
plan excels or mails tools
Only a fraction of point-of-sales (POS) and online
The organization runs a 'Demand Sensing' Demand sensing tools based on big data technologies are
order data is used for short-term demand
2 process to create and adjust short-term 2 forecasting. This data needs to be loaded manually 4 tested in pilot projects. Proof of concepts are conducted to test
forecasts on a daily basis the usefulness and reliability of daily demand forecasts
into forecasting systems
System support to create forecast at any level of System support to create forecast at any level of detail.
The organization supports hierarchical
detail. Statistical models are used for hierarchal Automatic statistical models are used for hierarchal
3 planning and is able to plan at the most 3 forecasting. The models might need user inputs. 4 forecasting. However, planning at each node of the hierarchy is
detailed level
Planning supported for only first level of hierarchy currently being tested in pilot projects
Real-time visibility into customer demand only from Complete alignment with omnichannel sales strategy. Real-time
The organization has visibility into
traditional retail channels and emails/company visibility into customer demand across multiple channels.
customer demand coming from multiple
4
channels and can provide the same service 2 website. Order fulfillment time is long as the 3 However, service levels across each channel differ. The Direct
demand and supply networks are not well to Customer fulfillment capabilities are limited and there is no
across all channels
connected plan to establish these in full for now

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Demand Management and Insights - Best Practices - Gap Analysis (2/2)

Best Practice Customer Current Maturity Customer Desired Maturity

Personalization platform to capture the demand for
The organization has a strong No platform to capture the demand for
individualized products. Plan in near future to implement new
personalization strategy to cater to individualized products. Manual efforts to capture
5
individual needs of the customers and is 2 various configurations and customizations and cater 3 capabilities in Product Lifecycle Management (PLM) and
Manufacturing to serve the demand for customized products
able to fulfill this demand profitably to the high priority customers
profitably
Collaboration with selected supply chain partners.
Semi-automated approach to information storage Supply chain partners store and share information about
The organization has end-to-end visibility of
and sharing on a database. Little human processes or problems on a central database. Complete system
the supply chain in real-time, with an
6
integrated platform for analytics, 3 intervention to support data exchange. Excel 4 support for 'scenario planning and comparison' for better
spreadsheets for 'Scenario planning and decision making. Pre-defined alerts for selected activities and
simulations and alerts
comparison'. No ability to react to deviations in a real-time response to urgent actions
timely manner
The organization has the ability to carry out Performance measurement capabilities via highly Performance measurement capabilities via disaggregated
performance management to monitor aggregated supply chain KPI's (e.g. overall service supply chain KPI's along with root cause analysis only for out-
7
business performance across multiple 2 level). Ability to monitor business performance 3 of-range KPI's. Ability to monitor business performance based
locations based on standard KPIs only on standard KPIs only

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Response and Supply Planning - Best Practices - Gap Analysis (1/2)

Best Practice Customer Current Maturity Customer Desired Maturity

Excel spreadsheets to plan supply only at the
Homegrown tools for location level supply planning, taking in to
The organization produces a constrained location level. Consideration of the available
consideration the available capacities (resources, raw
1 supply plan - managing capacity and 2 capacities (resources, raw materials, transportation 3 materials, transportation etc.). Plan to implement advanced
sourcing supply across the network etc.) is a manual task. The result is suboptimal
optimization techniques for supply planning in the near future
purchasing, production and distribution decisions
The organization has what-if modeling Global planning systems based on heuristics and
Ability to re-plan production or purchase volumes within the
capability to evaluate multiple scenarios of optimizers. Needs integration with other local
2
supply planning during the day and create 2 systems in the network. Data quantity and 3 network based on heuristics and optimizers, but cannot
evaluate whether better solutions would have been in place
an optimized plan complexity is too high for an efficient analysis
Distribution planning with recommendations
The organization has advanced deployment Advanced deployment optimizers are tested in pilot projects.
between internal locations only. Strategies such as
3 strategies for stock deployment across the 3 fair share, pull deployment and push deployment 4 Strategies such as fair share, pull deployment and push
supply chain deployment are well established
are in use
Limited system support for advanced order
Separate system for advanced order promising. Information
The organization commits orders in real- promising. Decisions and commitments are based
transfer through an interface between the planning and
4 time, considering customer prioritization, 2 on information from disparate sources/ excel sheets. 3 transaction system. Backorder processing in batch jobs,
alternatives and constraints Backorder processing in batch jobs, catering to few
catering to few defined rules and priorities
defined rules and priorities

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Response and Supply Planning - Best Practices - Gap Analysis (2/2)

Best Practice Customer Current Maturity Customer Desired Maturity

Global, integrated supply network planning system
The organization understands the impact of which reports on the supply chain disruptions. User-friendly alert dashboard to inform supply planners about
5 supply chain disruptions and analyzes 3 However, data transfer between the planning and 4 problems in the supply network. The information is near real-
alternatives in real-time local transactional systems takes time, so problems time. At present, no ability to predict future supply chain issues
are identified with a delay
The organization collaborates on business Business networks are not used to collaborate with Cloud-based business networks only for indirect procurement.
decisions and share insights across its [Link] for few, major suppliers, Electronic Less number of suppliers are connected at the moment.
6
business networks (suppliers, contract 2 Data Interchange (EDI) connectivity is used for 3 Benefits in terms of superior collaboration are being realized
manufacturers etc.) collaboration purposes step by step

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Sales, Inventory and Operations Planning - Best Practices - Gap Analysis (1/2)

Best Practice Customer Current Maturity Customer Desired Maturity

Formal S&OP process with regular cadence but with Formal S&OP process with regular cadence and full
The organization has an integrated sales,
limited stakeholders representation. Disparate representation from the organization. Advanced S&OP tools as
inventory and operations planning process
1
to align its strategic, financial, sales and 3 planning tools/ in-house systems for S&OP process. 4 a system of differentiation (SOD) for complete alignment
S&OP process ensures alignment between financial between financial and operational plans. System of Intelligence
operational goals
and operational plans (IoT) is not used
Limited ability to simulate and understand the
What-if analysis is performed separately from the formal Sales
The organization performs what-if impact of demand-supply balancing decisions.
and Operations Planning (S&OP) process. It's a manual task to
simulations by considering all supply chain Correlation between planning decisions and
2
constraints, with a direct linkage to 2 financial implications is missing. Unlimited capacity 3 understand the financial implications of the planning decisions.
Unlimited capacity and limited supply chain constraints are
financial implications and limited supply chain constraints are considered
considered for scenario planning
for scenario planning
Complete system support for collaboration on S&OP. The
The organization provides a collaboration Collaboration on planning activities via e-mails/
system provides few standard alerts but does not have an
3 framework for Sales and Operations 2 phone calls. Limited system support for alerts, 3 integrated system of workflow and audit trails. Transparent
Planning (S&OP) and decision making workflow and audit trails
communication across the organization (only internal)
In-house tools to consolidate data from different
The organization's transactional and Interface between System of Differentiation (SOD) and SOR.
SORs before the start of the S&OP process. Decision
planning systems are tightly integrated to Decision making is based on near-real-time data from SOR.
4
perform Sales and Operations Planning 3 making is based on non-real time data. Data is 4 Consistent data is available for planning at any level of
available at an aggregate level and there is no
(S&OP) granularity & dimension
option to drill down further into details

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Sales, Inventory and Operations Planning - Best Practices - Gap Analysis (2/2)

Best Practice Customer Current Maturity Customer Desired Maturity

The organization is able to generate real-
There is no focus on either reporting or improving
time insights/metrics for quick trade-off S&OP process is treated as a reporting system as well with
5
analysis as part of the Sales and 2 financial and operational KPI's as part of the S&OP 3 focus on a few important KPI's
process
Operations Planning (S&OP) process
The organization runs a regular multi-stage No system support for harmonized inventory Company-wide single inventory planning tool with inventory
inventory optimization process to achieve planning process. There is no company-wide calculations performed on quarterly/ monthly basis. Achieving
6
highest service at lowest working capital 2 inventory planning solution. Long planning cycles 3 balance between inventory and service levels is a challenge.
investment exist for inventory target settings Capabilities for multi-stage inventory optimization do not exist
The organization runs the inventory Inventory planning is performed at monthly/ Inventory planning and S&OP processes are performed at
planning process as part of an established quarterly basis. It is not related to the cadence of regular cadence but separately from each other. The system
7
Sales and Operations Planning (S&OP) 3 S&OP. Financial/ working capital investment analysis 4 supports financial/ working capital investment analysis as a
process is not a priority secondary step after S&OP
The organization maintains right sized Forecast driven planning systems exist which are
Forecast driven Planning systems exist which are fully
inventories and flow in the supply chain fully integrated into the System of Record (SOR).
8
and drives replenishment based on actual 3 Manual workarounds are used for actual priority 4 integrated to the System of Record (SOR). Buffers are adjusted
dynamically based on the projected demand
demand determination

© 2023 SAP SE or an SAP affiliate company. All rights reserved. | CONFIDENTIAL 36