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SAP Customer Success StoryHigh Tech

SHARP CORPORATION

CREATING ONE VIRTUAL COMPANY WITHAN SOA-BASED LARGE-SCALE SUPPLYCHAIN MANAGEMENT SYSTEM

To stay competitive, we focused on

knowledge and technology to help

us integrate operations, improve the

efficiency of logistics, and simplify

work processes. As a result, we can

achieve significant cost savings beyond

what was thought possible.

Tatsuhiko Hatabou, Vice President and DivisionGeneral Manager of IT System Planning and

Development Center, Sharp Corporation

SAP Solutions and Services SAP Business Suite applications,

including SAP ERP SAP NetWeaver Process Integration

offering SAPs approach to service-oriented

architecture (SOA)

Implementation Highlights Revolutionized the production planning

process through digital convergence Used a single virtual process to eliminate

orders, order forms, and deliverystatements

Reduced software development effortand cost by reusing enterprise servicesto support business processes

Constructed a networked system thatenables collaboration with partnercompanies

Why SAP Reliability proven by operating SAP ERP

globally since 1994 Technology platform to support future

growth and agility to adapt to changethrough SOA

Benefits Greater ability to quickly and efficiently

modify processes through SOA Significant improvement in speed and

efficiency through concurrent designdrafts, automatic order handling, andautomatic cost calculation made possibleby intercompany cooperation

Streamlined, collaborative supply chainprocesses

Company Name: Sharp Corporation Location: Osaka, Japan Industry: High tech Products and services: R & D, sales, and

manufacturing of consumer electronics,information systems, semiconductors,liquid crystals, and electronic parts

Revenue: 2,847 billion for consolidatedas of March 2009 (US$30 billion)

Employees: 22,500 (54,500 for

consolidated as of November 2009) Web site: www.sharp.co.jp Implementation partners: SI Solutions

Co. Ltd., IBM Japan Ltd., IBM BusinessConsulting Services KK, Toyo BusinessEngineering Corporation, SAP JapanCo. Ltd.

Challenges and Opportunities Strengthen price competitiveness with a

highly efficient manufacturing system thatsurpasses that of other enterprises andthe industry

Merge business process know-how

developed through using the SAP ERPapplication with the latest service-orientedarchitecture (SOA)

Access and understand real-time results

Objectives Construct a supply chain management

(SCM) system to realize a single virtualcompany

Move beyond human systems innovationto business innovation that uses IT tothe fullest

QUICK FACTS

Dotted lines indicate construction of new facilities with solar panels.

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Facing the Challenge of aLarge-Scale SCM System

Such an extended business network re-quired a scalable and agile supply chainmanagement (SCM) software solution.The facilitys supply chain managementsystem is comprised of SAP BusinessSuite applications, including the SAPERP application, and the SAPNetWeaver Process Integration (SAPNetWeaver PI) offering. TatsuhikoHatabou, vice president and divisiongeneral manager of IT system planningand development center, explains theconstruction of this SCM system and

the role of service-oriented architecture(SOA) in helping the facility integrate itsbusiness processes.

Sharps philosophy is not numberone, but one of a kind. As such, weare always looking to the future withregard to our IT environment, and weheld discussions about SOA from theearly stages. When we established

Green Front Sakai, we were giventhe direction from top management toinclude cutting-edge IT systems in the

Sakai factory. In other words, we weredirected to take maximum advantage ofour physical proximity and to use IT toincrease management precision. As theevolutionary step that connects SAPsolutions, process innovation, and asustainable technology platform, SOAwas a perfect fit for the goals of thisproject to link multiple companies andcomplex processes.

Creating a Single Virtual Company

The Kameyama plant, a major sitein Sharps LCD panel production, hasorganized Crystal Valley, a collectionof related companies gathered aroundthe mother plant. However, there wasroom for improvement with regard tothe inefficiencies caused by systembarriers, time lags, and other issuesinvolving exchanges, such as thetransport of panels or the transfer

of production planning and order databetween the different companies. AtGreen Front Sakai, Sharp took anotherstep beyond the Kameyama businessmodel to establish a single virtualcompany with seamless coordination

between the processes. The goal ofthe SCM system is to achieve digitalconvergence between all companies.

Our biggest aim in sharing theinfrastructure is to improve costcompetitiveness, says Hatabou.To stay competitive, we focused onknowledge and technology to help usintegrate operations, improve the effi-ciency of logistics, and simplify workprocesses. As a result, we can achieve

significant cost savings beyond whatwas thought possible.

For example, all the LCD panelrelatedfactory buildings at Green Front Sakaiare connected by an interbuilding trans-port system capable of transportingpanels that are about 3 meters square.Transport is controlled by an electronickanban system. This enables the elimi-nation of duplicate processes, such asinspection, cleaning, packing, and un-packing, that accompany conventional

truck transport.

To take full advantage of the benefitsof physical proximity, the Green FrontSakai SCM system integrates the par-ticipating companies with an IT platformand drives efficiency and automationthrough the coordination of information.This SCM system is a giant step aheadfor the utilization of SOA in a Japaneseenterprise.

Sharp Corporation, which celebrates its 100th anniversary in 2012,

has two visions: Contribute to the world through environmentally

and health-conscious business, focusing on energy-saving and

energy-creating products, and Contribute to a ubiquitous society

with one-of-a-kind Liquid Crystal Display [LCD] panels. Nineteenparts makers and other companies, including Sharp, cooperated

to construct Green Front Sakai, a green factory located in Sakai

City, Osaka Prefecture, Japan, which began production of LCD

panels in October 2009.

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Reducing Planning Lead TimeThrough Digital Convergence

At Green Front Sakai, mechanisms areconstructed based on the concept ofdigital convergence, using IT to share

information between the participatingcompanies, enhance communication,and dramatically increase the speedat which decision-making consensuscan be achieved. Based on this wayof thinking, the lead time required inthe process of making a productionplan proposal, for instance, has beenreduced by two-thirds. In the conven-tional proposal process, manufacturingresults are collected into daily batches;plans for each process and customer

delivery information are gathered andpassed along in bucket-brigade fashion,

which takes a lot of time.

At Green Front Sakai, a concurrent(simultaneously parallel) proposalprocess is used, based on a high-speedengine. Results are gathered in realtime from a computer-integratedmanufacturing (CIM) system using anelectronic manufacturing execution

system (E-MES), and these results arereflected automatically in the planningsystem.

Further, the system uses a ground-breaking method of making the produc-

tion plans transparent for all participat-ing companies. By sharing informationin real time, such as part-inventorycounts and forecasts, the companiescan optimize production. They usevideo conferencing to communicatewith each other and take joint actionto address problems by adjustingproduction and supply plans.

Supply signals issued by the electronickanban system based on the plan

support an orderless workflow. Toachieve efficient parts and materials

management and just-in-time handling,the participating companies use anarrival and departure informationsystem that allows transport requestsand transport status for parts andmaterials to be shared in real timeon a single screen. In this way, thehorizontal coordination of panelproduction is integrated into asingle virtual process.

As the evolutionary step that connects SAP solutions, process innovation,

and a sustainable technology platform, SOA was a perfect fit for the goals

of this project to link multiple companies and complex processes.

Using SOA for Automation andReal-Time Coordination

The vertical coordination of processmanagement, enterprise resourceplanning (ERP), and production plan-

ning using results information obtainedfrom CIM is automated and handled inreal time through the use of SOA. Theresults data that comes into E-MESfrom CIM is pulled automaticallythrough SAP NetWeaver PI into theupstream SAP ERP application.

SAP NetWeaver PI is used as the com-mon technology to tie all the processestogether, while standard enterprise ser-vices related to SAP Business Suite

software support business processessuch as procurement and acceptanceinspections. Combined with company-specific enterprise services for reusein the SAP NetWeaver technologyplatform, only 82 enterprise serviceswere needed to implement 26 produc-tion, procurement, and sales processesin 206 locations. The number of ERPadd-ons for Green Front Sakai is justone-third of what it would have beenwithout the use of SOA.

Hatabou made the following pointsabout the system construction. Thisis a result of capitalizing on the meritsof SOA, which can deal flexibly witha variety of changes. For Green FrontSakai, we wanted to construct acompletely new configuration, andthe business and system requirementschanged throughout the processof bringing the plant online. The

Tatsuhiko Hatabou, Vice President and Division General Manager of IT System Planning and

Development Center, Sharp Corporation

The significance of using IT doesnt stop at process execution; we must build

systems that increase our competitiveness. IT must be able to design formless

business requirements and maintain an environment that can handle change.

Tatsuhiko Hatabou, Vice President and Division General Manager of IT System Planning and

Development Center, Sharp Corporation

LED illumination by solar batteries:Sharp uses 100,000 energy-savingLED lights in Green Front Sakai.

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significance of using IT doesnt stopat process execution; we must buildsystems that increase our competitive-ness. IT must be able to design form-less business requirements and main-tain an environment that can handle

change.

Rolling Out an IT-Led BusinessModel to Other Businesses

The SCM system project started inApril 2008 and reached cutover abouta year and a half later. Supporting busi-ness processes with enterprise servic-es using the latest SOA resulted in abusiness process platform capable ofnimbly reacting to business changes

beyond what was expected.

The key to success in the project wasreversing the standard approach theIT department took the lead and designedbusiness processes based on SOA.Another factor was the concentrationof technical capabilities from many ITpartner companies, spearheaded bySharps powerful leadership. Hatabounotes, Many partners endorsed thesignificance of supporting Green FrontSakai with IT. They put their pride on

the line to take on this project.

In the future, Sharp plans to use theGreen Front Sakai system as a modelcase and globally spread the IT know-how developed here. Its not enoughjust to apply SOA to one project, saysHatabou. We must completely master

SOA know-how, develop personnelthat can lead innovation in businessprocesses, and create a system thatallows us to think in SOA mode fromour heads to our toes. We will continueto improve business efficiency byincreasing usability through a SamuraiUI that incorporates the mind-set ofJapanese hospitality.

Sharp plans to continuously improvecompany competitiveness through

process innovation. At the root of thisgoal is the conviction that Japanesecompanies can take advantage of theirunique way of thinking to achievevictory in the global market.

50xxx xxx (10/06)2010 SAP AG. All rights reserved.

SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign,

SAP BusinessObjects Explorer, and other SAP products and servicesmentioned herein as well as their respective logos are trademarks orregistered trademarks of SAP AG in Germany and other countries.

Business Objects and the Business Objects logo, BusinessObjects,Crystal Reports, Cr ystal Decisions, Web Intelligence, Xcelsius, andother Business Objects products and services mentioned hereinas well as their respective logos are trademarks or registeredtrademarks of Business Objects software Ltd. in the United Statesand in other countries.

All other product and service names mentioned are the trademarks oftheir respective companies. Data contained in this document servesinformational purposes only. National product specifications may vary.

These materials are subject to change without notice. These materialsare provided by SAP AG and its affi liated companies (SAP Group )for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions

with respect to the materials. The only warranties for SAP Groupproducts and services are those that are set forth in the express

warranty statements accompanying such products and ser vices, ifany. Nothing herein should be construed as constituting an additional

warranty.