EMPRESAS POLAR

SUPPORTING RAPID EXPANSION WITH SAP ADVANCED PLANNING & OPTIMIZATION

QUICK FACTS

Before we implemented SAP Advanced Planning & Optimization, each plant used to do its own planning. Now, the planning process is integrated and standardized. . . .
Edgar Parra, Corporate Applications Manager, Empresas Polar

Company Name: Empresas Polar Location: Caracas, Venezuela Industry: Consumer products Products and services: Food, beer and malt beverages, and soft drinks Revenue: More than US$3 billion Employees: More than 30,000 Web site: www.empresas-polar.com Implementation partner: Accenture

Implementation Highlights Implemented transportation planning and vehicle scheduling, demand planning, and supply network planning software in 9 months Involved teamwork between 3 business leaders, 3 IT experts, and 6 external consultants

Why SAP Comprehensive planning and optimization functionality Challenges and Opportunities Improve fleet utilization Ease of integration with existing SAP solutions Enable centralized planning and scheduling Optimize shipping processes for high-margin The softwares ability to handle restricproducts tions on product shipments Objectives Reduce costs associated with transportation planning and vehicle scheduling Improve productivity of transport fleet Automate and standardize transport processes across manufacturing plants and distribution centers Support hierarchical distribution of products SAP Solutions and Services SAP Advanced Planning & Optimization component, a part of the SAP Supply Chain Management application ASAP methodology Benets 30% improvement in fleet productivity at food business unit 40% reduction in time needed to create transportation plan No increase in shipping rates from 3rdparty providers Enterprise-wide visibility of transportation and scheduling plans Accurate, integrated transport planning, due to elimination of error-prone, manually created spreadsheet Existing Environment SAP software for enterprise resource planning Third-Party Integration Database: Oracle Hardware: HP Operating system: HP-UX

SAP Customer Success Story Consumer Products

As the largest private industrial company in Venezuela, Caracasbased Empresas Polar has enjoyed dramatic growth since its founding as a small brewery in 1941. To support expansion into new markets in the Americas, the company is currently focused on reducing operating costs, increasing supply chain efficiency, and achieving synergies between its food, beer, and soft drink business units. As part of this effort, Empresas Polar implemented the SAP Advanced Planning & Optimization (SAP APO) component to streamline transportation planning and vehicle scheduling.

Putting Products on the Shelves

With an enviable market share and the near-iconic status of the polar bear found on many of its labels, Empresas Polar ranks as one of the top-five consumer goods corporations in Latin America. Despite this prominence, the company operates in a challenging market environment characterized by escalating customer demand and fierce competition. Determined to maintain its market leadership while also capitalizing on international growth opportunities, Empresas Polar has embarked on a long-term strategic plan that includes development of an integrated supply chain. As early as 2002, the company concluded that reaching this goal would depend on making substantial improvements in transport processes. Like virtually all food and beverage companies, Empresas Polar relies on independent carriers to move products from manufacturing plants to distribu-

tion centers, and then on to retailers. Powered by organic growth and major acquisitions, the company has added a substantial number of new products, factories, and warehouses in recent years. The food business unit, for example, encompasses nearly 600 SKUs, 80 distribution centers, and 17 manufacturing plants a complex network of locations between which goods have to be moved efficiently and cost-effectively. This distribution network was being serviced by some 430 vehicles operated by independent carriers.

on their projected output during a given week. These documents would be laboriously aggregated into a long and complicated spreadsheet, then staffers would determine how to route loads by truck from various plants to a specific distribution center. As a result of the cumbersome planning processes and constant reentry of data, the spreadsheets were often inaccurate and outof-date. This typically resulted in partially filled trucks, shortages at the warehouses, and inefficient travel patterns. In addition, drivers would frequently arrive at a plant without knowing whether a shipment could be loaded that day. The situation was rather hard to handle, says Edgar Parra, corporate applications manager at Empresas Polar. At some plants, trucks would wait a whole day and load nothing, while at other plants, where shipments were ready, we would have no trucks at all, adds Victor Garcia, former supply chain planning manager at the Empresas Polar food business unit.

A Plan for Better Planning

To automate and streamline transportation processes, Empresas Polar selected the SAP Advanced Planning & Optimization component. An integral part of the SAP Supply Chain Management application, SAP APO enables detailed planning, optimization, and scheduling, helping users gain greater control and visibility of supply chain activities. Empresas Polar, a longtime user of SAP business solutions, considered a number of competitive applications to manage transport processes, but ulti-

Potholes in the Transportation Network

To manage the flow of goods throughout this network and over similar ones serving its beer and soft drink business units Empresas Polar relied on manual processes to handle transportation planning and vehicle scheduling. Individual manufacturing plants would create transportation plans based

Our fleet productivity has risen substantially. We have fuller trucks and more efficient trips.

Victor Garca, Former Supply Chain Planning Manager, Food Business Unit, Empresas Polar

mately selected SAP APO because of the components robust functionality and the ease with which it could be integrated into other SAP applications. We were looking for an automated tool that would help us manage our distribution network more easily and costeffectively, says Parra. A key reason why we chose SAP APO was because we needed a secure, problem-free interface with our SAP ERP application. Another reason for selecting the SAP APO component was the softwares potential to help Empresas Polar optimize distribution processes. With our old application, we had limited capacity to handle restrictions associated with warehouse costs, plant outputs, and truck capacity, says Garca. We couldnt create routing plans for distribution of products according to their priority; they had to move at the same speed as all our other products.

set of step-by-step tools and bestpractice templates that help streamline deployment of SAP software.

Shaping Up Shipping Processes

With the SAP APO component supporting its transportation planning and vehicle scheduling activities, Empresas Polar has made significant improvements to its transport network. Thanks to the integration of information from linked production and storage facilities, planners can now match output with demand far more precisely. And, the time needed to create a weekly transport plan has been reduced by 40%; the job can now be done in less than 8 hours, which was impossible before. In addition, daily updates take only minutes. Another important benefit is the elimination of ad hoc planning and scheduling processes at different facilities. Before we implemented SAP Advanced Plan-

formed in a systematic, organized way by centralized teams. In the case of the beer unit, planning is done at each manufacturing location, but all information is shared real time with the rest of the business and centrally coordinated. Due to the highly visible and accurate planning information, worker productivity has increased substantially. Plant and distribution center personnel know exactly when to be ready to load goods, and supervisors can assign crews with a high degree of flexibility so that the workers can cover multiple loading or unloading assignments throughout the day. Empresas Polars transportation partners have also realized benefits from the new software. Carriers now receive schedules a week in advance and are able to arrive at manufacturing plants precisely when a shipment is ready, instead of waiting for up to an entire day. In many cases, trucks have been able to serve multiple distribution centers in

Creating an Implementation Strategy

Parra and his multidisciplinary team were thankful for high levels of support from SAP and from Accenture, the implementation partner that spearheaded the transportation planning and vehicle scheduling project. Implementation at the food business unit which also included deployment of demand planning and supply network planning functionality lasted approximately 12 months. Parra notes that cooperation between business and IT specialists was a key component to the projects overall success, as was use of the ASAP methodology a comprehensive

With our old application, we had limited capacity to handle restrictions associated with warehouse costs, plant outputs, and truck capacity. We couldnt create routing plans for distribution of products according to their priority; they had to move at the same speed as all our other products.
Victor Garca, Former Supply Chain Planning Manager, Food Business Unit, Empresas Polar

ning & Optimization, each plant used to do its own planning, says Parra. Now, the planning process is integrated and standardized at the soft drink and food business units, and transportation planning and vehicle scheduling can be per-

a single day, dropping off a second shipment after completing the first delivery. Overall, the carriers who service the food business unit have been able to reduce the number of trucks needed by 30%, while the use of each truck has

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increased by 20%. Our fleet productivity has risen substantially, says Garcia. We have fuller trucks and more efficient trips. While this does not have a direct impact on Empresas Polars expenses, since shipping is negotiated at a flat rate, improved fleet utilization makes a big difference during ongoing rate negotiations with the independent carriers. As a result, Empresas Polar has been able to keep its transportation costs from substantially increasing, despite rising prices for maintenance and labor.

ning and vehicle scheduling functionality in SAP APO at Empresas Polars soft drink business unit and upgrading to the latest release of the SAP ERP application. Looking down the road, Parra says that while Empresas Polar is

We intend to hit some very aggressive growth targets at Empresas Polar. And thats why were looking to SAP APO to help us fine-tune our planning, Looking Ahead keep expenses in check, and build a world-class supply chain. Shortly after implementing SAP APO to
handle transportation planning and vehicle scheduling at its food business unit, Empresas Polar rolled the component out to its beer business unit, which currently handles a demanding schedule of more than 3,500 truck shipments per week. The beer business unit also experienced benefits from the planning and scheduling software, notching significant gains in fleet productivity, process efficiencies, and cost savings. Future plans for the company include implementing the transportation planEdgar Parra, Corporate Applications Manager, Empresas Polar

pleased with the improvements in transportation planning and vehicle scheduling, the company is not about to rest on its laurels. We intend to hit some very aggressive growth targets at Empresas Polar, says Parra. And thats why were looking to SAP APO to help us fine-tune our planning, keep expenses in check, and build a worldclass supply chain.

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