” The Project of Year the International Consumer Consumer International “ & SAP Award of 2005 Excellence Global Business Synchronization Global Business Synchronization Group Products, who played a central role in the Project, explains as follows: “Before the ABS project was initi- ated, self-contained business op- erations were administered in each as things such and country, Asian business methods, processes, codes, rules and KPI (Key Performance Indicators) were not synchronized. As an example, the definition for ‘sales’ differed from country to together with differences in country, accounting standards, and these all interfered with our global expan- sion. In addition, changes occurred in the business environment as well. After the Asian currency collapse in 1996 - 97, European global retail- market. Asian enter the began to ers Due to this, the distribution and - October, 2002 to February, 2005 2002 to February, October, Approximately 80 (Kao) 120 (ABeam) (Both during peak periods) Synchronization and improvement ofAsian business area. in the SAP R/3 4.6C SAP 85.4 billion yen 936.8 billion yen. including all Consolidated Subsidiaries: 19,143) 5,600 (Total Kao Corporation Japan Tokyo, Kayaba-cho 1-14-10, Nihonbashi, Chuo-ku, 1940 May, products, beauty Manufacturing/sales of household products, industrial chemical products and business products. in all twenty-two Aims Period Staff Software Company name Headquarters Established Business Description Capital Consolidated Net Sales Employees Mr. Hiroyuki Kowase Mr. President, Vice Information Systems Division, Global Business Synchronization Group & International Consumer Products, Kao Corporation Manufacturing Solutions Integrated Client Data Profile Profile Project Project Company Company ment of the ABS Project? Mr. ment of the ABS Project? Mr. President, Vice Kowase, Hiroyuki of Information Systems Division, gradually installed process in a two-step Asian bases 2005. lasting until February, establish Kao’s behind lay What Vice President, Vice Global Information Systems Kao Corporation Mr. Takashi Matsuzaka Takashi Mr. installation program installation program

Confusing Evaluation In - Evaluation Confusing Wide with Interferes dices Operations Area

was undertaken first in Thailand and was undertaken was Hong Kong, and from then, SAP The goal of the “Kao ABS Project” The goal of the “Kao ABS Project” (hereinafter ABS Project) was to standardize and optimize business operations by the installation of the ERP package, with the ultimate SAP goal of a broader expansion of busi- ness throughout the countries and acronym an is ABS Asia. of regions for “Asian Business Synchroniza- tion,” describing how the “syn- chronization” (standardization) of business operations was viewed as factor in Kao’s expansion in a key the Asian area. The initiation of SAP installation began from December, 2002. A pilot Mr. Akio Tsuruoka Mr. President, Executive Vice Member of the Board, Global Procurement Kao Corporation As a consumer products manufacturer, Kao has been a front runner since 1964 in expanding its marketing to the has been a front runner since Kao its marketing to the 1964 in expanding manufacturer, As a consumer products from items range of a and sales operations for manufacturing currently expanding its is region, and it Asian greater household products includinguse areas of personal care, household feminine sanitary needs to cosmet- goods, and Asian the within of business performance advancement further Foreseeing ics and industrial chemical products. the promote 2000 to in October, ABS Project” “KAO commenced its Kao global expansion, its crucial to countries The project was one of enormous scale, extending over standardization and optimization of its business operations. a period of four years and five months and involving implementation Asian at business twenty-two centers, with SAP package of choice. as the ERP With SAP Installation, With Bases 22 Asian at Operation Standardized Global in Asia Expansion KAO’s Enforced Kao Corporation, The ABS Project ABS The Kao Corporation,

Manufacturing / Integrated Solutions Case Study Case 2 2 2 2005

2005/ 2005/ Network ) okyo / Japan Data center okyo / Japan T T 12 HH ( Monitoring center

2004/12

9 ) 10 Philippines CH

2004/ ( Shanghai Philippines ) iwan

6 Ta CH ( Shanghai 68 Indonesia

2004/

4

4

3 ) Malaysia covered five areas; the introduc- tion of a new supply planning method, the synchronizing of the standardization/ companies, related business basic of optimization operations, the installation of an optimum production method, and - standard The management. budget ization of business operations took place in six areas (chemical sales, household product sales, material purchasing manufacturing, flow, and accounting), and included a 1,300 indi- total of approximately vidual standardized business items, ranging from processes to codes, rules and KPI. These projects were documented and collected in Kao’s “Business Standardization Manual.” the in greatly contributed What standardization of operations and became the foundation for creat- ing the “Business Standardization Manual” was the “Industry Frame- work,” an original industry-specific template created by ABeam. The “Industry Framework” is an industry-specific template reformu-

2004/

2004/ HH (

2004/

China 24 Hong Kong 2004 AMO Malaysia Thailand 12 Malaysia Singapore Helpdesk Taiwan Indonesia ABeam Singapore Wave 2 Shanghai / China 10

8 ABS Project Operation Structure Project Operation ABS

7 ■ Distribution), MM

2003/

2003/ 68 Optimizer), BW (Busi- Optimizer), BW Wave 1 & iwan Philippines Ta Thailand Hong Kong 24 Go-live support ness Information Warehouse), SEM SEM ness Information Warehouse), (Strategic Enterprise Management), Relationship (Customer and CRM were created Management). Add-ons for individual countries where statu- tory requirements were difficult to - Exception cover with the basic SAP. al localizing also took place in cases when customers had special needs for items such as ledger sheets. The business optimization project (Materiel Management), PP (Pro- duction Planning), APO (Advanced Planning accumulation of expertise at SAP accumulation of expertise at SAP long and projects implementation experience at business process de- sign, was chosen as the consulting firm for the Project. Project members included fifteen ABeam members on-site and addi- tional members arranged locally by ABeam, and in Japan, thirty ABeam members, and at peak periods, thirty Kao members. Other than human resources, the package included al- modules, including FI most all SAP CO (Control- (Financial Accounting), ling), SD (Sales & 2003 Hong Kong Indonesia Malaysia China 2 ve1 ve2 Thailand 01 Singapore Pilot Wa Wa Asian Business Synchronization = Asian Business Project period ABS Pilot 81 : Japan proj- uniform the optimize business a standardized on and Asia, Preparation 46 based wide-range Asian countries implement throughout operations to ABeam Consulting growing business Go-Live aims oject Goal : oject Goal le of 12 ward “Industry Framework®” “Industry Framework®” Action Into Brought Schedule The ABS ABS The Project 2002 business ect overall Ro ■Standardizing Business (Processes, codes, rules, KPI) ■System design and development ■Pilot installation ■Rollout to ■Support following installation ■Maintenance and operation support Pr To operations package (SAP). ■ ■ Since this was Kao’s first experi- package, ERP an installing at ence ABeam Consulting, with its great sales methods changed dramatically, sales methods changed dramatically, and Kao’s business model was re- quired to change in response.” These changes in the style of Asian distribution and sales represented a driving force behind Kao’s deci- sion to introduce a new information using was Kao time, that At system. an in-house-developed software; the prototype was created in Japan, and the source code was made open so that it could be subcontracted for localization to local companies to However, region. Asian each in change rapid the to try and respond in business environment by con- tinuously updating the in-house- developed program resulted in tremendous costs in labor and time. towards move to decided thus Kao the installation of the ERP package.

Manufacturing / Integrated Solutions Manufacturing / Integrated Solutions

- KPIKPI RulesRules Shared CodesCodes Service Finance Process Business Division Masaki Tomida Mr. Senior Manager Manufacturing/Consumer Business Division Mr. Akira Akaishi Mr. Senior Manager Manufacturing/Consumer

Infrastructure Upgrade IT KPIKPI RulesRules CodesCodes Process Procurement Planning

Manufacturing Manufacturing Core ABeam members es: Success Project to Key Securing and Effectively Securing and Effectively Human Resourc Assigning Mr. Koh Watanabe Mr. Senior Manager Strategic Business Transformation Division ■ Toshinori Iwasawa Mr. Principal Manufacturing/Consumer Business Division How did such a large-scale endeav- or as the ABS Project succeed in the Asian regions, where languages and cultural backgrounds are so diverse? was in securing and effec- The key tively posting the required human resources. Iwasawa, principal Toshinori Mr. Manufacturing/ the ABeam, with Consumer Business division explains as follows: “Although ordinary good use of this difficult experience in Thailand, thus making the instal- lation in the other Asian countries go more smoothly. KPIKPI RulesRules CodesCodes Process Manufacturing Demand Pull ,APO,CRM and SEM Systems KPIKPI RulesRules CodesCodes Process Logistics Support Organization Design, echnology Enabler Implementation & Outsourcing IT T R/3,BW A SAP Demand KPIKPI Sales RulesRules CodesCodes Management Process Household KPIKPI with local representatives became a with local representatives became a Kowase reflects, “Al- problem. Mr. even and codified, was nothing most when it was, we encountered many situations in which the implementa- tion differed between departments. had we codes, standardizing When to identify each master name, but the master names were all different as well, and it was not unusual for us to have to check with the local supervisors.” The ABS Project was first com- menced in Thailand. This was based - instal on the estimation that if SAP lation were successful in Thailand, the installation would go smoothly in other Asian countries and regions as well, due to the fact that all of were business processes Asian Kao’s present in Kao’s local Thai branch. however, there, installation The originally than difficult more was planned. Although a system per- formance test was run before the installation, order receipts and ship- ping were stopped for a few days in as date; go-live the for preparation a result, when the program actually ac- of days several that went online, cumulated data were suddenly input thus causing in a concentrated way, a rapid increase in the number of transactions, and ultimately hinder- ing the system so that the expected performance was not attained. This necessitated prolonging the support after the go-live date in order to modify certain programs, and also led to certain situations such as the temporary interruption of shipping. able to make we were However, RulesRules Sales CodesCodes Process Chemical Data Center Design, Account

Management - Implementation & Outsourcing Business Organization echnical Standards for the Future Driving Benefits Establishes the IT chnology Projects and T

Establishes Core Business Infrastructure and Support Infrastructure and Support Te ABS Standardization

Improvement Projects Improvement

Project Coverage Project Thailand’s Pilot Installa- Pilot Thailand’s - Proj For Touchstone tion: ect Rollout

■

said that the process of negotiating said that the process of negotiating from one country to the next, it was it next, the to country one from As statutory requirements differ As statutory requirements differ dardization of rules, codes and KPI. encountered in the process of stan- Even so, great difficulties were Even so, great difficulties were scope of the project”. (Mr. Kowase) scope of the project”. (Mr. that we were able to determine the that we were able to determine the with the same units of measure of units same the with nesses in Asia; it was on that basis response, we grasped the situation response, we grasped the situation - weak and strengths overall Kao’s fers from country to country. So in in So country. to country from fers and operation business of each represented by a stock cycle dif- by a stock represented ment, thus locating the weak points ‘reduced stock,’ the number of days with such a simple expression as with such a simple expression as processes, rules and KPI differ. “Even differ. KPI and rules processes, elements of business as methods, methods, as business of elements countries and regions, where such countries and regions, where such fore introducing SAP to the Asian to the Asian fore introducing SAP standardizing business operations.” In-depth research was required be- proved to be a powerful weapon for proved to be a powerful weapon for the scope of business processes, and the scope of business processes, and “It was very useful in determining “It was very useful in determining in the high appraisal of Mr. Kowase, Kowase, in the high appraisal of Mr. users of different languages, as seen users of different languages, as seen processes unique to each country and became possible to support business became possible to support business template in each Asian country, it it template in each Asian country, manufacturers. By using the same manufacturers. By using the same ness processes for consumer goods ness processes for consumer goods condensation of high-quality busi- past projects; its key feature is its its is feature key its projects; past lating the methodology gleaned from Manufacturing / Integrated Solutions - - www.abeam.com Printed in September 2005. PR Group, Marketing Tel : +81-3-3501-8355 Tel of this project was not simply to to simply not was project this of use the system, but to change the to innovate business new system are supporting Kao processes. We of SAP, even after the installation role of Kao’s contributing in the For Kao’s part, continuing BPR.” ongoing link- in order to provide has established a age to the BPR, it center data center and monitoring desk in and a help in Japan (Tokyo), part of its stan- China (Shanghai) as ABeam is dardization infrastructure. currently handling operation of the help desk in Shanghai, a situation that well symbolizes ABeam’s ongo- ing BPR contribution to its client. ABeam’s performance in the ABS and evaluated highly was Project the of “Project SAP the awarded re be long will This Award. Year” membered as a great achievement membered as a great achievement brought about by ABeam and Kao’s strong determination and shared perception toward successful com- pletion. 2005 (a record high in Japan). (a record Reasons for Success Awarded SAP “Project of of “Project SAP Awarded Award the Year” Regarding factors behind the successful completion of the ABS Project, Mr. Iwasawa from ABS Project, Mr. Regarding factors behind the successful completion of the ABeam points out the following three points: “an organization led by the local team,” “keen governance of business standardization from Japan,” and “creating an organization struc- Kao Kowase from Mr. ture that would maintain standardization the installation SAP.” after of points out “the strong will of top management for the promotion of the project” as a reason for success, together with the fact that the team included more members from business divisions than from an information systems division. “The participation of the final users in addition, the company held broad-based In success. the installation project was crucial to meetings once a month in which the head and director of the related divisions would partici- pate, thus providing us with information regarding the approval of standardization, pointing out problems and giving us advice, all of which helped us as well.” busi- by its exhibited advantages great the for high grades ABeam gave Kowase Mr. Finally, the utiliza secure personnel, and for global ability to its designmethodology, ness process tion of its original template “Industry Framework.” Mr. Iwasawa comments, “The goal Iwasawa comments, “The goal Mr. there is no point in having it. Even point in having there is no process business if a standardized un- if the users don’t is introduced, are to opti- derstand that the aims its effect mize business operations, ABeam took the will be weakened.” training a establishing of measure levels, training program with six after measuring each individual user such in proficiencies basic her or his communication English as areas then check- and computer handling, achievement at ing them for their each level of training, providing supplemental training when the desired level has not been achieved, the users to the raise order to in all It demands. project the that level should be noted that the final step the ac- was program training this in operation skills. quirement of SAP

Case Study Manufacturing Integrated Solutions

“Project of the Year”: Bridgestone Sports (2001), TEAC (2002), KaoTEAC (2005) Sports Bridgestone (2001), Year”: of the “Project (2004) Nissan Chemical IndustriesWest (2003), Otsuka Award”: “Project (2004), JR Pharmaceutical In addition, ABeam has been awarded the “project of the year” award for three projects, an award reflecting the highest level award in the in award reflecting the highest level an award projects, three for award of the year” “project the In addition, ABeam has been awarded for an additional and award” “Project difficultyaccomplishment; and project the size, the rating awarded it has also been category” “project of outstanding performance. achievement successful for awarded projects, three The SAP Award of Excellence is awarded to companies with a high level of customer satisfaction, based on SAP’s customer satisfaction study. satisfaction customer study. satisfaction, of customer based on SAP’s with a high level companies to is awarded of Excellence SAP Award The in 1998 its founding since in a row years eight “Service Award” Partner the has been awarded ABeam consulting Record Awards of SAP Award of Excellence Award of SAP Awards Record great a system is, if it’s not utilized, timization project. No matter how timization project. No matter how important factor in the business op- Kowase comments, “Training is an Kowase comments, “Training is an phasized in the ABS Project. Mr. phasized in the ABS Project. Mr. “User Training” was strongly em- ties in Asia. ABeam’s exhibiting its full capabili- full its exhibiting ABeam’s tion of know-how is evidence of tion of know-how is evidence of before a flight.” This accumula- not being able to obtain a visa right in which the people involved might country, so as to avoid situations to avoid situations so as country, regarding who would go to which regarding who would go to which ning a few months ahead of time ning a few months ahead of time worked on the project while plan- worked as in cases of obtaining visas, we as in cases of obtaining visas, we proactively avoid problems, such proactively avoid problems, such countries and regions. We tried to tried to countries and regions. We project was deployed in seven Asian As Mr. Iwasawa continues, “The continues, “The Iwasawa As Mr. Project members.” them their full potential as ABS them their full potential as ABS ness relations, and we drew from ness relations, and we drew from venders with whom we have busi- tors with personal connections, and connections, tors with personal was known as “Deloitte”, contrac- was known as “Deloitte”, contacts back from the time ABeam contacts back from these human resources, including including these human resources, used all possible channels to secure used all possible channels ers and improve the results. ABeam ers and improve the - us local train requirements, local background, in order to compile to compile background, in order lish and who have the same cultural same the who have and lish the local language as well as Eng- the local language effectively post personnel who speakeffectively post personnel it was also necessary to secure and and to secure also necessary it was members was carried out in English, was carried out in members communication between project project between communication