SAP Customer Success StoryConsumer Products

EMPRESAS POLARSUPPORTING RAPID EXPANSION WITH SAP® ADVANCED PLANNING & OPTIMIZATION

“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

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 • Ease of integration with existing SAP

solutions• The software’s ability to handle restric-

tions on product shipments

Benefi ts• 30% improvement in fleet productivity at

food business unit• 40% reduction in time needed to create

transportation plan • No increase in shipping rates from 3rd-

party 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

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

Challenges and Opportunities • Improve fleet utilization • Enable centralized planning and scheduling • Optimize shipping processes for high-margin

products

Objectives• Reduce costs associated with transporta-

tion planning and vehicle scheduling• Improve productivity of transport fleet• Automate and standardize transport pro-

cesses 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

QUICK FACTS

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 environ-ment characterized by escalating cus-tomer demand and fierce competition. Determined to maintain its market leader-ship while also capitalizing on interna-tional growth opportunities, Empresas Polar has embarked on a long-term strategic plan that includes develop-ment 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 ex-ample, encompasses nearly 600 SKUs, 80 distribution centers, and 17 manu-facturing plants – a complex network of locations between which goods have to be moved efficiently and cost-effective-ly. This distribution network was being serviced by some 430 vehicles operat-ed by independent carriers.

Potholes in the Transportation Network

To manage the flow of goods through-out this network – and over similar ones serving its beer and soft drink business units – Empresas Polar relied on manual processes to handle trans-portation planning and vehicle schedul-ing. Individual manufacturing plants would create transportation plans based

on their projected output during a given week. These documents would be labo-riously aggregated into a long and com-plicated 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 spread-sheets were often inaccurate and out-of-date. This typically resulted in partially filled trucks, shortages at the ware-houses, 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 applica-tions 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 plan-ning manager at the Empresas Polar food business unit.

A Plan for Better Planning

To automate and streamline transporta-tion processes, Empresas Polar selected the SAP Advanced Planning & Optimi-zation 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-

As the largest private industrial company in Venezuela, Caracas-based Empresas Polar has enjoyed dramatic growth since its found-ing as a small brewery in 1941. To support expansion into new markets in the Americas, the company is currently focused on reducing oper-ating 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.

mately selected SAP APO because of the component’s 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 dis-tribution network more easily and cost-effectively,” says Parra. “A key reason why we chose SAP APO was because we needed a secure, problem-free inter-face with our SAP ERP application.” Another reason for selecting the SAP APO component was the software’s potential to help Empresas Polar opti-mize distribution processes. “With our old application, we had limited capacity to handle restrictions associated with warehouse costs, plant outputs, and truck capacity,” says García. “We couldn’t create routing plans for distri-bution of products according to their priority; they had to move at the same speed as all our other products.”

Creating an Implementation Strategy

Parra and his multidisciplinary team were thankful for high levels of support from SAP and from Accenture, the imple-mentation 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 project’s overall success, as was use of the ASAP methodology – a comprehensive

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

Shaping Up Shipping Processes

With the SAP APO component sup-porting 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, plan-ners 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 elimina-tion of ad hoc planning and scheduling processes at different facilities. “Before we implemented SAP Advanced Plan-

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 plan-ning and vehicle scheduling can be per-

“Our fleet productivity has risen

substantially. We have fuller

trucks and more efficient trips.”

formed in a systematic, organized way by centralized teams. In the case of the beer unit, planning is done at each manu-facturing 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 Polar’s transportation part-ners 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, in-stead of waiting for up to an entire day. In many cases, trucks have been able to serve multiple distribution centers in

a single day, dropping off a second shipment after completing the first de-livery. 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

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

“With our old application, we had limited capacity to handle restrictions

associated with warehouse costs, plant outputs, and truck capacity. We couldn’t

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 García, Former Supply Chain Planning Manager, Food Business Unit, Empresas Polar

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All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifi cations may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affi liated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

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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 Polar’s expenses, since shipping is negotiated at a flat rate, improved fleet utilization makes a big difference during ongoing rate negotiations with the independent carri-ers. As a result, Empresas Polar has been able to keep its transportation costs from substantially increasing, despite rising prices for maintenance and labor.

Looking Ahead

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 cur-rently handles a demanding schedule of more than 3,500 truck shipments per week. The beer business unit also ex-perienced benefits from the planning and scheduling software, notching sig-nificant gains in fleet productivity, pro-cess efficiencies, and cost savings. Future plans for the company include implementing the transportation plan-

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

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 that’s why we’re looking to SAP APO to help us fine-tune our planning, keep expenses in check, and build a world-class supply chain.”

50 091 250 (09/04) ©2009 by SAP AG. All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.

Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company.

All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifi cations may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affi liated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

“We intend to hit some very aggressive

growth targets at Empresas Polar. And

that’s why we’re looking to SAP APO

to help us fine-tune our planning,

keep expenses in check, and build a

world-class supply chain.”

Edgar Parra, Corporate Applications Manager, Empresas Polar