8/30/2012
Company: ABC Corporation
SAP Performance Benchmarking Enterprise Health Check - Manufacturing
© 2012 SAP AG. All rights reserved. 2 Confidential
Statement of Confidentiality and Exceptions
The information and analysis contained herein are the confidential and proprietary materials of SAP AG. No part of this publication may be reproduced
or transmitted in any form or for any purpose without the express written permission of SAP AG. The information contained herein may be changed
without prior notice.
The furnishing of this document shall not be construed as an offer or as constituting a binding agreement on the part of SAP AG and/or its affiliated
companies (“SAP”) to enter into any relationship. SAP provides this document as guidance only to illustrate estimated comparisons between the subject
Company and other companies with respect to certain key performance indicators and drivers.
These materials may be based upon information provided by the subject Company, information provided by other companies and assumptions that are
subject to change. These materials present illustrations of potential performance and cost savings, and do not guaranty future results, performance or
cost savings. The materials are provided solely for internal review and use by the subject Company. SAP makes no representation or warranties of any
kind with respect to these materials, and SAP shall not be liable for errors or omissions with respect to these materials.
© 2012 SAP AG. All rights reserved. 3 Confidential
Agenda
Study Background
Metrics Comparison and Best Practice Adoption
Study Background
© 2012 SAP AG. All rights reserved. 5 Confidential
Strategic service by SAP Value
Engineering, launched end of 2004 as a
forum to exchange metrics and best
practices
Program covers 30+ processes, with more
than 10,000 participants who leverage the
program to:
– Build a business case for change
– Compare performance to leading companies,
industry peers, and between regions/divisions
– Assess value realization, year-over year
– Prove success
EHC - MAN
SAP Performance Benchmarking: Designed to Get
Actionable Results
© 2012 SAP AG. All rights reserved. 6 Confidential
Profile Data - Company and Peer Set
Peer Group Size* Average number of organizations represented in each metric 134
Peer Group Coverage* Percent of metrics for which benchmarks can be calculated 100%
Company Information
Industry Consumer Products
Sub-Industry Consumer Durables and Home
Appliances (CD&HA)
Annual Revenue 1000000000
Regions/ Divisions
Included North America
Comparative Scope – Selected Peer Group
Industry Industry X
Sub Industry All
Revenue All
Region All
Participant Name ABC XYZ
Title Manager
Currency U.S.Dollar
Entire Company or
Division Entire Company/Division
Customized Filter
Question/KPI N/A
Question/KPI N/A
Question/KPI N/A
EHC - MAN
*We do not publish sample sizes as part of the survey validation process so you may receive a value of “0” for Peer Group Size and Peer Group
Coverage. Once validation is completed against the overall database, please request a custom peer group for a more accurate comparison.
© 2012 SAP AG. All rights reserved. 7 Confidential
Overall Database Profile
By Revenue By Industry
602 Number of Companies in EHC-M Overall Database :
Note: Several miscellaneous industries have been grouped under “Other”
37.1% 37.4%
11.1%14.4%
<1$B >=1$B, <5$B >=5$B, <10$B >=10$B
By COGS
Note: Totals may not add up to 100% due to responses not provided
EHC - MAN
Metrics Comparison and
Best Practice Adoption
© 2012 SAP AG. All rights reserved. 9 Confidential
Finance Metrics
Metric Company Value Peer Group
Average Top 25%
Overdue Accounts Receivable (in %) 15.0 9.4 3.0
Finance FTEs per 100 Million Revenue 8.70 9.61 4.13
Finance Cost As A % of Revenue 1.68 0.79 0.37
Audit Cost As A % of Revenue 0.07 0.05 0.02
Days To Close Annual Books (in days) 19.0 12.5 6.0
Days Sale Outstanding (in days) 56.2 43.6 28.0
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 10 Confidential
Order To Cash Metrics
Metric Company Value Peer Group
Average Top 25%
Orders Cancelled (% of orders backordered) 2.0 1.5 0.5
% Lost Orders (% of revenue) 0.300 1.308 0.500
Order to Ship Cycle Time (in days) 4.0 3.1 1.0
Ship to Invoice Cycle Time (in days) 0.5 1.2 1.0
Days Chargeback Outstanding (in days) 5.0 30.1 10.0
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 11 Confidential
Supply Chain Planning Metrics
Metric Company Value Peer Group
Average Top 25%
On-Time Delivery Performance (in %) 97.0 93.6 98.0
Order Fill Rate (in %) 98.0 94.6 98.2
Forecast Accuracy (in %) 93.0 79.1 90.0
Revenue Loss Due To Stock-outs (in %) 0.020 0.612 0.108
Inventory Accuracy (in %) 95.0 97.4 99.6
Order Pick Accuracy (in %) 100.0 98.7 99.8
Days in Inventory 19.9 57.9 29.5
Inventory Carrying Cost (% of revenue) 0.4 1.4 0.7
Order Fulfillment Lead Time – MTS (in days) 1.0 5.4 2.0
Order Fulfillment Lead Time – MTO (in days) 15.0 32.9 8.0
Transportation Spend (% of revenue) 0.6 3.5 1.8
Expedited Transportation Spend (% of revenue) 0.060 0.080 0.012
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 12 Confidential
Procurement Metrics
Metric Company Value Peer Group
Average Top 25%
Average Annual Savings-Direct (in %) 3.0 3.3 5.0
Average Annual Savings-Indirect (in %) 5.0 3.7 6.8
Average Annual Savings-Services (in %) 5.0 2.7 5.0
Spend Managed Strategically-Direct (in %) 90.0 89.0 100.0
Spend Managed Strategically-Indirect (in %) 40.0 52.6 80.0
Spend Managed Strategically-Services (in %) 50.0 53.2 85.0
Maverick Spend-Direct (in %) 3.0 3.0 1.0
Maverick Spend-Indirect (in %) 3.0 6.8 0.0
Maverick Spend-Services (in %) 3.0 5.6 0.0
Spend Under Contract-Direct (in %) 70.0 78.2 98.0
Spend Under Contract-Indirect (in %) 50.0 46.1 80.0
Spend Under Contract-Services (in %) 80.0 51.5 82.0
Procurement FTEs per 100 Million Spend 28.97 6.80 3.93
Procurement Cost as a % of Revenue 0.71 0.21 0.06
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 13 Confidential
Manufacturing Metrics
Metric Company Value Peer Group
Average Top 25%
Production Plan Adherence (in %) 87.0 87.7 95.0
Return On Assets (in %) 8.0 13.3 21.0
Manufacturing Cycle Time (in days) 24.0 7.9 2.0
Capacity Utilization (in %) 85.0 76.3 86.0
Cost of Unplanned Overtime as a % of Mfg Cost 1.06 0.24 0.04
Asset Availability as a % of Uptime 85.0 87.5 95.0
Operating Equipment Effectiveness (in %) 65.0 73.7 85.0
Manufacturing Cost as a % of Revenue 19.4 59.6 40.9
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 14 Confidential
Human Capital Management Metrics
Metric Company Value Peer Group
Average Top 25%
Employee Turnover (in %) 13.0 9.2 4.0
Employees per HR FTE 99 107 140
HR Cost per Employee 2445 1152 440
Cost per Hire 2333 2320 660
HR Cost as a % of Revenue 0.92 0.34 0.12
Time to Hire (in days) 50 39 22
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 15 Confidential
Information Technology Metrics
Metric Company Value Peer Group
Average Top 25%
IT – % of Unplanned Downtime 0.0 0.9 0.3
IT Spend as % of Revenue 1.8 1.1 0.5
IT Support FTEs per 100 Active Users 1.3 3.0 1.3
IT Cost per Active User 8150.0 6762.7 3803.9
Performance Results –Metrics
First Quartile Between Average and First Quartile Below Average Outlier Ranking:
EHC - MAN
© 2012 SAP AG. All rights reserved. 16 Confidential
Best Practices Summary
2.2
3.03.2
2.72.4
1.2
2.4
4.4 4.3
4.8
4.3 4.3
3.9
4.6
0
1
2
3
4
5
6
Finance Order To Cash Supply Chain
Management
Procurement Manufacturing Human Capital
Management
Information
Technology
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 17 Confidential
Finance Best Practices
2.5
1.71.4
4.0
5.0
3.3
4.4
5.0
0
1
2
3
4
5
6
Finance Strategy And Leadership Compliance And Risk Management G/L And Financial Closing Accounts Receivable
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 18 Confidential
Finance Strategy And Leadership
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Finance leadership spends more than two-thirds of its time with
executive management on key risk and decision support activities
2
Finance leadership has access to a financial cockpit and/ or dashboard
that provides a timely view into pre-defined set of key metrics (such as
sales information on a daily basis)
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 19 Confidential
Compliance And Risk Management
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Compliance issues and status reports are regularly scheduled and are
automatically created for and sent to management, auditors and IT
2
All processes are well-documented and meet financial compliance
requirements - example, Sarbanes Oxley (SOX) Section 404
requirements, BilMoG, 8th EU Directive, JSOX, Clause 49 for India
3 Risk management system supports automated reporting and alerting to
facilitate risk management
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 20 Confidential
G/L And Financial Closing
0
1
2
3
4
5
6
1 2 3 4 5
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 The current General Ledger (G/L) Accounting system can handle
multiple accounting standards (e.g. US GAAP, IFRS)
2 Historical data can be easily accessed to facilitate year-to-year
comparisons
3
The financial system can support internal as well as external accounting
requirements (e.g. statutory, segment, regulatory and management
views)
4 A global chart of accounts is used across the entire company and local
accounts are required to be mapped to the global chart of accounts
5 The G/L and downstream financial systems are integrated in such a way
that account data is up-to-date and synchronized at all times
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 21 Confidential
Accounts Receivable
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 A/R system can handle multi-currency payments and is integrated with
credit, billing and collection applications to ensure full payment
2
A/R system is fully integrated to the billing system so that the
appropriate open item is immediately generated and at the same point in
time as the customer bill
3 A/R system automatically matches payments with A/R balances through
electronic interfaces to banks and customers
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 22 Confidential
Order To Cash Best Practices
1.7
3.83.5
4.3
4.0
5.0
0
1
2
3
4
5
6
Customer Billing, Credit And Collections Order Management, Fulfillment And Delivery Chargeback And Rebate Processing
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 23 Confidential
Customer Billing, Credit And Collections
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Customers are billed electronically and can view their account/ payment
status
2
Days Sales Outstanding (DSO) reports by product line and region are
automatically generated for management to identify trends and
performance
3 Disputes can be settled online; Dispute management system is
integrated into the collections system
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 24 Confidential
Order Management, Fulfillment And Delivery
0
1
2
3
4
5
6
1 2 3 4
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Capability exists for customers and business partners to place orders
without manual intervention
2 Access to real-time up-to-date order, delivery and billing information is
available via the web to customers and business partners
3
Access to real-time up-to-date order, delivery and billing information is
available to order fulfilment, delivery and shipping staff to ensure
seamless business process flow
4 Ability to automatically optimize orders, shipments and deliveries exists
to minimize logistics/ transportation costs
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 25 Confidential
Chargeback And Rebate Processing
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Chargeback and rebate claims can be submitted via electronic channels
2
Analytical capabilities exist to analyze large amounts of chargeback data
to answer questions such as agreement effectiveness, adherence to
quantity commitments etc.
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 26 Confidential
Supply Chain Planning Best Practices
4.0
3.5
3.0
2.5
4.0
2.8
5.0 5.0 5.0
4.5
5.0
4.5
0
1
2
3
4
5
6
Demand Planning And
Forecasting
Inventory Planning Production Planning And
Detailed Scheduling
Transportation Planning
And Vehicle Scheduling
Sales Order Promising Warehouse Management
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 27 Confidential
Demand Planning And Forecasting
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Forecasts are dynamic and updated frequently
2 Forecasting is performed for all combinations of SKUs and inventory
locations
3 Forecasting system incorporates demand history and automatic
adjustments for bad data and past promotions/ events
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 28 Confidential
Inventory Planning
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Safety stock can be recalculated multiple times as and when needed
2 Safety stock planning is performed for different combinations of SKUs
and inventory locations
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 29 Confidential
Production Planning And Detailed Scheduling
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 (MPS/ MRP) Concurrent material and capacity constraint plan is
generated multiple times in a day
2 Detailed scheduling can be performed multiple times in a day
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 30 Confidential
Transportation Planning And Vehicle Scheduling
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Transportation planning process can be performed on a timely basis
with considerations of other supply chain constraints in the network
2 All processes and systems are integrated with key carriers, freight
forwarders, 3PL's, etc
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 31 Confidential
Sales Order Promising
0
1
2
3
4
5
6
1
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1
When product is in limited quantity, able to prioritize customers, commit
an allocation quantity and then honor that commitment as product
becomes available
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 32 Confidential
Warehouse Management
0
1
2
3
4
5
6
1 2 3 4 5 6
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 'Cross Docking' is enabled to accelerate the flow of goods and avoid
unnecessary storage of goods in the warehouse
2 The system directs and optimizes stock put-away based on real-time
information about the status of bin utilization
3 Organization has real time enterprise wide visibility to inventory
4 Warehousing analytics is used to directly improve productivity and gross
margins
5 Orders are consolidated at an item level into waves for picking
6 Warehouse process is optimized based on ship times
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 33 Confidential
Procurement Best Practices
2.32.5 2.5
1.0
4.0
3.0
4.34.5
4.0 4.0
5.0
4.0
0
1
2
3
4
5
6
Category Mgmt. &
Supplier Performance
Mgmt.
Compliance Contract Management Order Processing Material Receipt Financial Settlement
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 34 Confidential
Category Mgmt. & Supplier Performance Mgmt.
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Organization conducts regular spend reviews to identify new areas of
contract opportunity
2 System has ability to aggregate purchases across all business units for
accurate global analysis of supplier spend data
3 Suppliers' performances are measured on a regular basis to review if
they are meeting contract terms and to gain leverage in negotiation
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 35 Confidential
Compliance
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Contract compliance is directed, or even mandated, by system controls
2
System provides various analyses and reports to monitor purchasing
and provides an analysis of compliance-related purchasing activities and
processes
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 36 Confidential
Contract Management
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Organization has a single, centralized repository of supplier contracts
2
Organization has ability to monitor supplier compliance with contract
terms; and performs regular reviews of contracts to insure terms and
conditions are being met
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 37 Confidential
Order Processing
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 System processes POs automatically (no intervention necessary) and
submits them electronically to suppliers
2 Buyers have online access to PO status
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 38 Confidential
Material Receipt
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Receiving system is highly integrated with other systems such as
purchasing and inventory systems
2 'Evaluated receipt settlement' is utilized to take advantage of early
payment discount
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 39 Confidential
Financial Settlement
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Tools to support electronic invoicing, online supplier invoice inquiries
and dispute resolution are in place and used frequently
2
The AP system automatically alerts and does not accept receipt of
goods when it finds differences between invoice, order and receipt
(within defined tolerances)
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 40 Confidential
Manufacturing Best Practices
2.5 2.52.7
2.0
4.5
4.0 4.0
4.7
0
1
2
3
4
5
6
Production Planning and Scheduling Manufacturing Execution Lean Manufacturing/ Efficiency Plant Maintenance
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 41 Confidential
Production Planning and Scheduling
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Individual plans and production schedules are pegged to actual sales
order
2
Customer delivery dates are integrated with material availability and
real-time manufacturing conditions to generate schedules that optimize
machine and labor capacity
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 42 Confidential
Manufacturing Execution
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1
Equipment/ machinery and tools are allocated to operations correctly
and their status and usage is tracked in real-time to ensure that planned
production targets are met
2 Actual production costs and variances are automatically documented
and these variances against plan and budget are monitored in real-time
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 43 Confidential
Lean Manufacturing/ Efficiency
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1
Flow manufacturing functions for line design, line balancing, demand
management, mixed-model planning, lean execution, and kanban
management are automated via system
2 Control of processes is managed by monitoring throughput as opposed
to managing variance reports
3 IT systems support the design, measure, analysis, improvement, and
control (DMAIC) cycle and resource and portfolio management
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 44 Confidential
Plant Maintenance
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 A majority of maintenance work orders are generated from the
preventive and predictive maintenance inspections
2 Maintenance planning takes into account skill required, material
required, tools required, and specific job instructions
3 Maintenance costs are clearly and accurately tracked for all assets
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 45 Confidential
Human Capital Management Best Practices
1.0 1.0
2.0
1.0
4.0
3.5 3.5
4.3
0
1
2
3
4
5
6
Recruitment And Staffing Benefits Administration Payroll Administration Time And Attendance
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 46 Confidential
Recruitment And Staffing
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 External and internal applicants are able to place themselves in a talent
pipeline according to their own interests or goals
2
Hiring managers have comprehensive recruiting self-service, incl. the
ability to submit job requirement profiles; use of approval workflows;
view of candidate short lists and data
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 47 Confidential
Benefits Administration
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1
Benefits system enables employees to enroll online, to modify details of
the benefits plan and to update information regarding dependents and
beneficiaries, including tests for eligibility
2 Benefits system enables employees to check current enrollment in
benefits plans, and print confirmation statements and forms online
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 48 Confidential
Payroll Administration
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1
Payroll system supports legal regulations for a large number of
countries, ensuring compliance with regulatory requirements for
reporting purposes
2 Payroll system supports multiple currencies, multiple languages,
collective agreements, and reporting
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 49 Confidential
Time And Attendance
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 Web enabled time administrator tool is in place
2
Time and attendance system has automated analysis and reporting
capabilities to analyze KPIs such as lost time, productivity, cost of
absence, overtime or illness
3 Online and offline time entry is available
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 50 Confidential
Information Technology Best Practices
2.52.3
5.0
4.3
0
1
2
3
4
5
6
IT Strategy And Business Alignment Solutions/IT Portfolio Management
TOP 25% Average Company Coverage Company Importance
Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 51 Confidential
IT Strategy And Business Alignment
0
1
2
3
4
5
6
1 2
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 The Company's IT performance management is linked with the business
outcomes
2 The company has established common, simple and streamlined IT and
business process standards across the organization
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 52 Confidential
Solutions/IT Portfolio Management
0
1
2
3
4
5
6
1 2 3
TOP 25% Average
Company Coverage Company Importance
Best Practice Ranking 1 The company has and enforces a no-modification strategy for vendor
applications
2 The company has a master data strategy to drive common definitions
and standards
3 The company has a strategy in place for a single solution/ platform
landscape consolidation
Best Practice Listing
1 = No Coverage 5 = Full Coverage
EHC - MAN
© 2012 SAP AG. All rights reserved. 53 Confidential
Recommended Improvement Strategies
Strategies to focus: below average performance for
supporting best practices, KPIs Between average and top 25% performance for
supporting best practices and KPIs
Top 25% performance for supporting best practices
and KPIs
Drive efficient and
effective HR organization
Develop a high performing organization HR Cost as a % of Revenue
Align workforce with business needs
Streamline, automate and integrate HR processes
Drive profitable and
customer centric sales
organization
Transform Order to Cash in a fully automated and integrated end to end
process Days Sale Outstanding (in days)
Extend customer fulfillment offerings
Reduce Revenue and Margin Leakage
Drive responsive, lean and
integrated manufacturing
networks
Integrate and align manufacturing support operations (EAM & Quality) Operating Equipment Effectiveness
(in %)
Leverage lean principles to improve operational efficiencies
Improvement Strategies Sub Strategies Impacted KPI’s
EHC - MAN
© 2012 SAP AG. All rights reserved. 54 Confidential
Recommended Improvement Strategies
Strategies to focus: below average performance for
supporting best practices, KPIs Between average and top 25% performance for
supporting best practices and KPIs
Top 25% performance for supporting best practices
and KPIs
Drive responsive, lean and
integrated manufacturing
networks
Integrate and align manufacturing processes across the network
Improve purchasing
effectiveness and
efficiency
Drive best price (e.g. e-auctions, global sourcing, new suppliers) Average Annual Savings-Overall (in
%)
Consolidate buying categories and optimize supplier base
Increase purchasing control on spend categories
Strengthen spend controls and measure/enforce compliance
Streamline and automate sourcing and procurement processes
Improve responsiveness,
agility and integration of
supply chain operations
Integrate and align upstream and downstream planning processes Days in Inventory
Reduce Variability in Execution
Improvement Strategies Sub Strategies Impacted KPI’s
EHC - MAN
© 2012 SAP AG. All rights reserved. 55 Confidential
Recommended Improvement Strategies
Strategies to focus: below average performance for
supporting best practices, KPIs Between average and top 25% performance for
supporting best practices and KPIs
Top 25% performance for supporting best practices
and KPIs
Improve responsiveness,
agility and integration of
supply chain operations
Implement a Collaborative Demand Planning Process
Implement agile supply chain operations
Ensure supply, distribution and production plans are consistent in short-term
Transform Finance into
high performing, compliant
and efficient organization
Drive enterprise performance Finance Cost As A % of Revenue
Optimize cash leverage
Drive compliance & risk management
Streamline, automate & integrate core finance processes
Transform IT into business
partner and innovator
Streamline & automate operational processes IT Spend as % of Revenue
Improvement Strategies Sub Strategies Impacted KPI’s
EHC - MAN
© 2012 SAP AG. All rights reserved. 56 Confidential
Recommended Improvement Strategies
Strategies to focus: below average performance for
supporting best practices, KPIs Between average and top 25% performance for
supporting best practices and KPIs
Top 25% performance for supporting best practices
and KPIs
Transform IT into business
partner and innovator
Partner with business to optimize performance
Improvement Strategies Sub Strategies Impacted KPI’s
EHC - MAN
© 2012 SAP AG. All rights reserved. 57 Confidential
Benchmarking Results and Value Potential
KPI Benchmark Performance Potential Benefit (in millions)
Finance Cost As A % of Revenue
Days Sale Outstanding (in days)
Days in Inventory
Top25%
Average Annual Savings-Overall (in %)
Better than Average
Operating Equipment Effectiveness (in %)
Driving Business Value
Benefit of Closing Gap to Top 25% Benefit of Closing Gap to Average
1.10 0.79 0.37
1.68
60.0 43.6 28.0
56.2
80.5 57.9 29.5
19.9
1.0 3.2 5.0
3.4
85.0
65.0
65.0 73.7
Performance of Primary KPIs and Potential Benefits (in millions of selected currency)
8.86
13.08
34.4
77.3
5.2
EHC - MAN
© 2012 SAP AG. All rights reserved. 58 Confidential
Benchmarking Results and Value Potential
KPI Benchmark Performance Potential Benefit (in millions)
HR Cost as a % of Revenue
IT Spend as % of Revenue
Benefit of Closing Gap to Top 25% Benefit of Closing Gap to Average
0.53 0.34 0.12
0.92
1.6 1.1 0.5
1.8
Performance of Primary KPIs and Potential Benefits (in millions of selected currency)
5.79
7.99
7.5
13.6
EHC - MAN
© 2012 SAP AG. All rights reserved. 59 Confidential
EHC Adoption Maturity Model
No Adoption Low Adoption Intermediate Adoption High Adoption Full Adoption
Majority of the organization has
well defined and executed finance
strategy. Most functions cross-site
integration enabled by common
systems. Risk is managed
centrally with few exceptions.
Finance strategy is not defined.
Functions like AR, AP, GL
Costing, etc. are not integrated or
interfaced. Systems/ tools are
stand alone. Planning is done
annually. There is no formal risk
management process.
Finance strategy is focused on
efficiencies, functions interfaced
but require manual edits with
limited integration. Planning is
done quarterly, and risk
management is location based
Finance strategy is location
specific. Functions integrated
within locations but nor across
sites. Monthly planning process
across locations. Risk is
managed locally and not
standardize across locations.
Finance and Cash Management
Organization has well defined
and executed finance strategy.
All functions are integrated and
there is also cross-site
integration enabled by common
systems. Risk is managed
centrally.
There is no formal supply
chain planning. Financial
annual plan/ budget is used
as the only planning tool.
Local sales forecasts are used
as annual plan and are broken
down to product family and
regional levels. Detail supply
chain plans are developed in
some location but not reconcile
with the annual plan.
Supply Chain Planning
Global S&OP process is
implemented which incorporates all
functions and partners and drives
supply, manufacturing and logistics
plans. Local plans are derived form
the S&OP and adjusted for local
demand and supply
Majority of the organization
implemented global S&OP
process which incorporates all
functions, partners and drives
supply chain plans. Local plans
are derived form the S&OP and
adjusted for local demand and
supply
Some local sales forecasts are
used as input to a local sales and
operations plan, then broken
down to local executable plans
and reconciled up to the running
monthly, quarterly and annual
plans.
Some location procurement is
integrated with manufacturing and
distribution. Performance measured
based on balanced score card .
Close collaboration with few
selected suppliers through web-
based applications
Procurement function is
inward focused and driven by
local, short horizon priorities.
There is no formal supply
strategy and suppliers
evaluation.
Suppliers evaluation on-time
deliveries and cost is limited to
few locations. No strategic
management of key categories
and no initiative to improvement
savings in spend.
Integrated with manufacturing and
distribution for many locations.
Performance measured through
balanced scorecard. Close collaboration
with majority of suppliers through two-
way web-based applications
Procurement is closely integrated with
manufacturing and distribution. Their
performance is measured based on
balanced score card. Close
collaboration with majority of
suppliers through two-way web-based
applications
Procurement
Organization does not operate
manufacturing plants as a
networks. Production planning
and execution is plant specific
and cannot be re-planned
easily. Plant maintenance is
reactionary.
Organization does not operate
manufacturing plants as a
networks. Local weekly
production plans which can be
re-planned overnight. Have few
maintenance schedules.
Organizations' plants operate as a
network. Production planning is
sensitive to network situations and
are flexible to be re-planned as
needed. Plants use preventive and
predictive maintenance schedules.
Majority of plants operate as a
network. Production planning is
agile to network situations and are
flexible to re-planning. Plants use
preventive and predictive
maintenance schedules.
Manufacturing Network/ Operations
Adoption of best practices varies at each stage of maturity
Manually (spreadsheets) are
used without advanced
systems. Data collection is
manual and entered into MRP/
Inventory systems next day.
There is no integration of
systems.
Some plants use MRP weekly
report for scheduling. There is no
integration between functions.
Manufacturing schedules, Order
Management and Inventory
systems are updated in batch.
There are some plants with
integrated MRP, Inventory and
Sale and Distribution systems.
There is no integration with plant
maintenance.
Organization's all manufacturing
processes can automatically collect
production count, quality and
machine operation data, re-plan if
needed and communicate with the
rest of enterprise systems
In Majority of plants, for manufacturing
processes, capability exist to
automatically collect production count,
quality and machine operation data,
re-plan if needed and communicate
with the rest of enterprise systems.
IT
EHC - MAN
Few plants operated and are
planned as a network. Network
specific production plans and are
flexible to be re-planned overnight.
Some plants have preventive
maintenance schedules.
Human Resources
Common HCM Platform for core
HR transactional processes and
some talent management
processes and analytics talent
and analytics. ESS fully adopted,
MSS partly
Many systems in place for
managing HR processes. No
usage of benchmarking
Common HCM platform for
personnel data, additional
applications for talent &
analytics. Employee self-service
(ESS) partly used
Common HCM Platform for core
HR transactional processes,
additional applications for talent
and analytics processes. ESS &
MSS partly adopted
All human resources processes
on a single, integrated HCM
system which leverages
common master data
framework. ESS and MSS fully
adopted
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