EXTENDING SAP INTEGRATED BUSINESS PLANNINGTO ENABLE COLLABORATIVE DEMAND MANAGEMENT WITH CUSTOMERS

ABOUT ALLERGAN

> Allergan is a global specialty pharmaceutical company serving 100+ countries

> 16,000+ committed employees

> 10K+ SKU’s across 50+ Brands and Generic products

> $15B revenue w/ ~10% projected growth rate

> 7 therapeutic areas

> $1B+ blockbuster brands – Restasis, Botox therapeutic, Botox cosmetic

ALLERGAN GLOBAL PLANNING SYSTEM INFRASTRUCTURE

> Allergan System Infrastructure is weak to support a $15bn+

business

> Limited usage of recognized Supply Chain Planning systems

• Demand Solutions, old system that doesn’t scale globally, requires a lot

of manual effort to run each month and only used in Europe/US

• Orchestr8 – used for replenishment planning for Europe Fillers product

• SAP APO – used for Forest Labs products

> All functions rely on Excel with manual data movements from

source systems like SAP ECC

• APAC uses 48 different spreadsheets to plan that business

• Europe has over 25 for demand planning + disti planning

• LATAM has multiple spreadsheets for each country and customer type

> Factory Scheduling performed using a combination of SAP

ECC & Excel

• Most planning is performed manually in Excel

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STRATEGIC GOALS

> Implement a Global Supply Chain planning process that is scalable to the needs of the business as it grows

> Deploy a systems infrastructure that enables the integrated supply chain from demand to order shipment

> Implement a performance management approach that drives continuous improvement across the supply chain

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SAP INTEGRATED BUSINESS PLANNING

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SAP IBP is a HANA Cloud Application Suite of products that enables Global Visibility, Promotes Supply Chain

Collaboration, Enables Operational Efficiency & Improved Financial Performance

Supply Chain Control Tower Allows for global alerting capability to monitor supply chain

performance

Sales & Operations Planning Brings together Demand, Inventory, Supply and Financial

visibility across the enterprise

Inventory Optimization

Determine Optimal Inventory levels by customer/product &

location if desired

Demand Planning

Supports a global collaborative demand planning process

Response & Supply Planning

Collaborative supply planning tool with advanced heuristics

& optimization algorithms built in

GLOBAL PLANNING & FACTORY SCHEDULING INFRASTRUCTURE

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Supply/Demand Matching

(Unconstrained Material & Capacity Requirements)

Global Sales & Operations Planning

(Align Global Commercial & Supply Chain Priorities, Regional Allocation)

APAC Regional

Planning

Forecasting

Inventory Planning

Replenishment

Allocation

Europe Regional

Planning

Forecasting

Inventory Planning

Replenishment

Allocation

US Regional

Planning

Forecasting

Inventory Planning

Replenishment

Allocation

LATCAM Regional

Planning

Forecasting

Inventory Planning

Replenishment

Allocation

Regional S&OP

Inventory Planning

Finite Scheduling (Daily Prioritized Scheduling of Manufacturing Plants)

Waco Westport Pringy Cincinnati

SAP Integrated Business Planning

All Other Plants(Treat as 3rd Party Purchase

Order Relationship)

SAP ECC• All Standing Data +

Transaction Data resides in

ECC

• Data extractors pull data

nightly into SAP BW

SAP BW• All data feeds planning

systems from BW (IBP &

Adexa)

• For missing data forms can

be produced to allow data

maintenance to be managed

SAP IBP Demand• All Forecasting & Demand

Planning performed within

IBP

SAP IBP Inventory/Supply• Produces FG Targets for all

Distribution locations globally

• Targets are approved and

loaded back to BW

• May be uploaded into SAP

(process to be determined

• Forecast + Inventory targets

exploded through BOM’s to

get Net Material & Capacity

Requirements

SAP

ECC

SAP

BW

Transactional

Systems

Plants w/Finite

Scheduling• Constraints are applied

and Factory Statement of

Supply passed back to

S&OP

• Daily scheduling for

maximum market

responsiveness

Plants Without Finite• Purchase Request sent to

Plants and Commit

received against PO’s

SAP IBP S&OP• All Supply & Demand

Consolidated centrally for

consumption globally

• Allocation decisions taken

based supply/demand

imbalances

• Global visibility to

business performance

• Drive S&OP processes

• One set of metrics for all

from one set of data held

in SAP ECC/BW

Regional S&OP Regional S&OP Regional S&OP

WHY ALLERGAN CHOSE SAP IBP?

> IBP brings together the algorithms required to run a complex global supply chain

• Statistical forecasting

• Inventory optimization

• Supply planning

> The cloud based architecture will allow us to collaborate with our extended supply chain suppliers and distributors from one system

> Dashboards, Analytics & Excel Templates will enable self-service reporting

> All our data in one place replacing 100’s of Excel spreadsheets – plan locally with global visibility

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FIVE CRITICAL ACTIVITIES FOR A GLOBAL SUPPLY CHAIN

> Consolidate Global Demand

> Develop Planning & Inventory Strategies to Drive the Global Supply Chain

> Ensure Demand, Inventory & Supply are Matched Weekly in the mid to long term (3 – 18 months)

> Drive & Synchronize capacity investments across the network to meet global demand

> Drive continuous improvement across the supply chain in the areas of:

• Customer delivery performance

• Inventory

• Lead time reduction

• Capacity utilization

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GLOBAL DEMAND PLANNING AND VISIBILITY

> Consolidates planner view to single system from previously disparate sources

• Commercial

• Financial

• Statistical

• Consensus

> Global standardization of hierarchy and processes

> Integration of approved forecast back into ECC

> Improved visibility of different granularities

> Insights on forecast accuracy and bias

> Enhanced visibility to movement types for complex consignment/returns supply chain

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COLLABORATIVE DISTRIBUTOR AND REVENUE MANAGEMENT

> Distributor Management

• Collaborative incorporation of indirect demand

• Current spreadsheet process with manual order creation

• Distributor logs into IBP with secure Log in and shares approved forecast

• Distributor can view prior year sales, recent bookings, and a statistical forecast to guide submission

• Collaborative visibility and planning with automation of replenishment signals

> Revenue Management

• Gross and Net Average Sales Price

• Impact on revenue project and scenarios for market changes

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INVENTORY VISIBILITY

> Collaboration across regions and sites for:

• Availability of capacity

• Supplier material requirements at all levels of

Bill of Material

> Global inventory projections

• Excess

• Shortage

• Short dating/shelf-life/material expiration

> Enables insights on:

• Proper use of production capacity

• Allocation of bulk material to a region

• Allocation of packaging capacity

• Response to raw and pack shortages

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ABOUT WCS CONSULTING

Working Capital Services is a specialty consulting firm focused on working capital reduction, supply chain process improvement and performance management.

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Our people help unravel supply chain complexity and improve end-to-end visibility

Our best practice transformation approach has released over $250 million from inventory to cash without any loss in end-customer service levels

We help you drive the operational and systems changes needed for your company to outperform its competition

Reduce Inventory & Cost Improve Profitability & ServiceStreamline end-to-end

Supply Chain

processes

Drive operational

performance

FIVE CORE PRINCIPLES

> Global Supply Chain coordinates activity across the Extended network to meet organizational & commercial goals

> Global visibility across extended supply chain to demand, inventory, capacity & supply is critical for rapid decision making & customer responsiveness

• Ability to make fast allocation decisions

• Visibility to distributors and extended locations

> Apply core segmented planning strategies to end items based upon Market & Manufacturing characteristics

> Planning strategies drives planning frequency, level of detail and inventory risk & responsiveness profile

• Target monthly process with weekly net change and planning as required

> Increase process maturity across the extended global supply chain by increasing our people’s knowledge and capability

• Standardization, documentation, best practice sharing

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Keenan GangewereAssociate DirectorGlobal Supply Chain Planning, Process & Analytics at Allergan

Keenan.Gangewere@Allergan.com