efficient sales and scm -...

Solution Overview

Supplying Mines

and Customers

Mining

Efficient Sales and SCM

Executive

Summary

SAP Solutions SAP Innovations References

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© 2013 SAP AG or an SAP affiliate company. All rights reserved.

2 / 27 © 2013 SAP AG or an SAP affiliate company.

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Selling commodities ‒ where prices are very volatile and managing financial risk

is key ‒ requires efficient supply chain processes to keep profitability high.

Bulk shipments represent a large percentage of overall costs and a significant

amount is spent on operational supplies.

As commodity pricing is market-driven, it is

essential for mining companies to provide flaw-

less execution of sales contracts. This includes

handling quality-based pricing adjustments as

well as providing pricing flexibility. Calculations

are often still performed manually and price-risk

mitigation processes are often poorly defined

and incomplete.

Shipment costs and spending on operational

supplies represent a large portion of operation-

al costs for mining companies and have a direct

impact on profitability. In challenging markets,

streamlined procurement and full visibility into

global contracts with suppliers help companies

to manage shipments efficiently. In this way,

they can still offer a high level of flexibility, while

reducing overall cost and increasing

profitability.

The High-Profit Mining Company

Streamlined Supply Chain

Processes

The High-Profit Mining

Company

SAP Innovations

Competitive Advantage

Supplying Mines

and Customers

Executive

Summary


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Streamlining supply chain processes within sales, transportation, and procurement

is driven by the need to keep flexibility high and costs low. Best-run companies

eliminate manual processes and have full visibility into risk, revenues, and global

procurement costs.

Make Supply Chain Processes Efficient

Efficient sales and supply chain management

integrates logistics with finance management.

Best-run mining companies automate

commodity-price calculations from contract to

billing. They also integrate directly with their

finance operations for full visibility of exposure

as a basis for hedging strategies.

Collaboration with various partners and

automated shipping execution increase on-time

shipments and reduce overall shipment costs.

Managing procurement contracts on a global

level improves overall visibility of money spent

on operational supply. It also allows different

mine sites to benefit from negotiated prices.

Supplying Mines

and Customers

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Processes


Company

SAP Innovations




65%

Competitive advantage can be gained in tough markets when price risks are

mitigated, operational costs for shipments and spending are kept low, profitability

is higher than for the competition, and customer satisfaction is high.

Deliver a Market-Beating Edge

Fewer errors in sales quotes

when orders are accurately

priced in real time using

matrix-based rules to provide

consistent invoice results to

the customer

Source: SAP Performance

Benchmarking

Effective price-risk mitigation strategies are

based on full visibility of commodity-price

exposures and a defined, well-executed

hedging strategy.

Automating pricing rules can help to ensure

flawless sales execution. Efficient collaboration

between all parties during the shipping process

and a high level of process automation result in

high customer-service levels.

Spend analytics, global contract management,

and efficient execution of procurement

processes reduce manual labor and provide

cost-saving opportunities.

Supplying Mines

and Customers

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Summary


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Processes


Company

SAP Innovations


https://valuemanagement.sap.com/disclaimer/



Technology innovation allows data access anywhere, anytime. Advances in data-

base and analytic tools provide insights that were not available before. This helps

you deploy solutions faster with lower costs and at lower risk.

Database and technology solutions, including

the SAP HANA platform, enable you to monitor

high volumes of data.

Analytic solutions enable you to monitor

financial risk and measure supplier and

contract performance, including shipment

quality.

Mobile solutions give you access to status

reporting and purchasing approval, and let

you capture events and ship-loading details.

Cloud-based communities such as Ariba

Network allow you to collaborate and procure

through business networks.

SAP Innovations

Supplying Mines

and Customers

Executive

Summary


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Processes


Company

SAP Innovations




Efficient sales and supply chain management fulfills customer commitments,

mitigates financial risk associated with commodity sales, and provides operating

sites with supplies.

Fulfill Contracts and Mitigate Risk

From contracts and spot sales to differential billing, commercial departments must

calculate formula-based prices using quality information. Managing commodity risk

is essential in volatile markets, where there is a time lag between the purchase and

sale of a commodity.

Plan and Execute Shipments

Efficiently plan, collaborate on, and execute shipments for bulk and non-bulk

materials.

Help Ensure Efficient Supply

Supply operating sites efficiently and collaborate across business networks.

Supplying Mines and Customers

Fulfill Contracts and

Mitigate Risk

Supplying Mines and

Customers

Optimize Operational

Spending

Plan and Execute Efficient

Shipments

Supplying Mines

and Customers

Executive

Summary


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Creating sales contracts is just the first step. Adding

automated pricing formulas helps ensure efficiency and

improve customer relations.

Successful mining companies have deep insights into

commodity price risk and use this information to apply

mitigation strategies.

Customers often commit to buying commodities

over long periods of time. The commitment is

fixed for the time period, the quality, and the

quantity of the order. The way in which prices

are determined for individual shipments is also

fixed.

These pricing rules account for the volatility

of the commodity markets, with any deviation

between the original contract and the delivery,

product quality, and billing translated into price

adjustments.

At the end of the sales process, multiple

invoices based on quotational periods and

quality assays are created, using the pricing

rules for automatic price calculation.

Successful companies even outprice volatility

and ensure a more stable revenue stream by

applying risk mitigation strategies. These are

based on real-time visibility of exposure levels,

with ongoing updates on commitments made

in sales documents.

11%

Fulfill Contracts and Mitigate Risk

Of companies follow

innovative hedging practices

to protect against volatility in

supply markets


Benchmarking

Supplying Mines

and Customers

Executive

Summary


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Mitigate Risk

Supplying Mines and

Customers


Spending


Shipments




Successful and cost-efficient shipping involves collabo-

ration with involved parties. In this way, you can plan and

book necessary transportation and track shipments during

transport, while automating execution documents as

much as possible.

Early visibility of transportation demands

enables you to secure the necessary transport

capacity, while electronic collaboration and

information exchange with carriers keeps

planning data as accurate as possible.

All necessary information is kept in one place –

from carriers to routes and stages. This sup-

ports automation of the execution process and

enables flexibility if plans change.

Event tracking provides full status visibility and

integrates with procurement processes for

shipping cost calculation. Capturing load and

unload quantity with weight and quality adjust-

ments provides accurate information for rapid

bill settlement.

14%

Plan and Execute Efficient Shipments

Lower outbound shipments

expedited when shipments

get dynamically replanned

during order changes, based

on real-time integration with

the sales order software


Benchmarking

Supplying Mines

and Customers

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Mitigate Risk

Supplying Mines and

Customers


Spending


Shipments




Manage the complete procure-to-pay process across all

areas of spend – and integrate sourcing and procurement

to maximize cost savings.

Contract visibility allows you to proactively

manage business relationships. Purchasing

managers know when agreements will expire

and can renegotiate those contracts ahead of

time. They also see how much of the company

spend is covered by agreements and which

spend categories require strategic sourcing

activity.

You can increase productivity by standardizing

and automating the entire procure-to-pay

process, including support for requisitions,

operational sourcing and contracts, purchasing,

order processing, supplier collaboration, and

settlement

Supplier enablement and collaboration

functionality automates and accelerates the

procurement order cycle, and helps reduce

supplier risk. It also enables you to participate

in the networked economy through cloud-based

procurement solutions.

43%

Optimizing Operational Spending

Higher average annual

savings when procurement

plays a strategic role within

the organization and

contributes to decision

making


Benchmarking

Supplying Mines

and Customers

Executive

Summary


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Mitigate Risk

Supplying Mines and

Customers


Spending


Shipments




Efficient Sales and Supply Chain Value Map

SAP solutions address key requirements of efficient sales and supply chain

management.

Supplying Mines

and Customers

Effective Commodity

Management

SAP Solutions

Transportation Management

Operational Procurement and

Supply

Executive

Summary


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Commodity Sales

and Price Risk

Mitigation

Bulk and

Nonbulk

Transportation

Mgmt

Procurement and Order

Collaboration Analyze Source Contract

Operational

Procurement and

Supply Network

Bulk Transportation Transportation Management

Commodity Sales Commodity Risk Management



26%

Effective Commodity Management

Higher average annual

savings when system tracks

and communicates key

performance indicators to

suppliers


Benchmarking

Manage pricing, profitability, and risk.

Create contracts based on market quotes and fully automated price

calculations. Understand and limit the impact of commodity price

volatility and streamline invoicing.

Identify, quantify, monitor, and reduce exposure to commodity price

changes and foreign exchange risk in real time.

Supplying Mines

and Customers

Executive

Summary


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Commodity

Sales and

Procurement

Price commodities based on quotes from exchanges and automatic price

calculations. Streamline invoicing and manage risk effectively in commodity

procurement and sales processes.

Commodity Risk

Management

In real time, identify, quantify, monitor, and reduce exposure to commodity

price changes and foreign exchange risk.

SAP Solutions

Effective Commodity

Management



Supply




22%


Less spend if transportation

integrated with enterprise

planning functions, trading

partners, and key carriers


Benchmarking

Enable efficient shipping planning and execution.

SAP software for managing bulk transportation supports scheduling,

planning, and execution of inbound and outbound bulk shipments.

The SAP Transportation Management application supports the

complete transportation management lifecycle.

Supplying Mines

and Customers

Executive

Summary


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Bulk

Transportation

The transportation management process integrates order processing with

order-to-cash and order-to-pay processes, providing early visibility into

requirements for planning purposes.

Companies can plan bulk and non-bulk shipments.

Transportation

Management

The transportation management solution enables companies to tender a

freight order to one or more carriers using an automated, business rules-

driven process.

Nominations and carrier booking functionality enables companies to

collaborate with carriers when booking ocean and train capacity for domestic

or international shipments.

SAP Solutions

Effective Commodity

Management



Supply




40%

Operational Procurement and Supply

Lower purchase order error

rate when changes are

controlled and communicated

to suppliers electronically


Benchmarking

Manage global contracts and procure collaboratively.

Manage contracts from negotiation through to finalization and

integrate into day-to-day procurement activities.

Fully understand and classify spend, cleanse and normalize spend

data from multiple sources, and normalize and enrich supplier

information.

.

Supplying Mines

and Customers

Executive

Summary


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Procurement

and Order

Collaboration

Generate, negotiate, and manage contracts using contract management

features and a single, searchable repository. Gain a full view of all supplier-

relevant information and activities.

Analysis of

Source Contract

Use spend analysis to help reduce costs, identify supplier risk, and unlock

new revenue opportunities. Gain visibility into strategic and transactional

information from a single source that integrates with existing software

systems.

Exchange electronic communications relating to a purchase order, such

as acknowledgements and confirmations – and utilize business networks

through cloud-based applications.

SAP Solutions

Effective Commodity

Management



Supply




Breakthrough technologies plus sales and supply chain–

related data equal unprecedented opportunity. Best-run

companies will make faster decisions, improve efficiency,

gain more visibility into their sales and supply chain

operations, and create flexible procurement networks.

SAP Innovations

SAP HANA

Gain the ability to make fast decisions based on enormous quantities of real-time data.

Mobile

Improve productivity and empower employees with access to information in the field – whether

approving purchasing requests on the go, capturing load data at the port, or viewing the latest

sales numbers.

Analytics

Gain the ability to make fast decisions based on enormous quantities of real-time data. Provide

visibility into contract status and profitability, take proactive steps to avoid delays, and effectively

manage supplies.

Cloud

Enhance flexible supplier networks.

36% Higher operating margin when

organizations use IT to enable

strategic and competitive

advantages


Benchmarking

Supplying Mines

and Customers

Executive

Summary


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SAP HANA

SAP Innovations

Mobile

Analytics

Cloud




SAP Business Suite Powered by SAP HANA

53% Of organizations report a big

gap between the availability

of Big Data and their ability to

analyze it for insights


Benchmarking

The current economic climate forces companies to make

difficult operational and business decisions quickly. SAP

Business Suite software powered by the SAP HANA

platform enables mining companies to plan rapidly, work

faster, and reduce risk.

Efficient Sales

and Supply Chain

Management

Assess the risk profile of your company based on the latest market prices

and exposure to find the optimal hedging strategy.

Improve decisions in spare parts planning and purchasing based on

real-time, accurate information. Move to automated reordering. Lower

stock levels of spare parts, maintenance, and production consumables

with enhanced materials resource planning functionality, resulting in

improvements in working capital.

Supplying Mines

and Customers

Executive

Summary


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SAP HANA

SAP Innovations

Mobile

Analytics

Cloud




Mobile

24% Higher operating margins

when enterprise mobility is

embedded in all business

processes


Benchmarking

Empower managers and increase productivity by

approving workflows for purchasing requests on mobile

devices and enabling workers at loading facilities to

capture loaded quantities using mobile devices.

Supplying Mines

and Customers

Executive

Summary


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Efficient Sales

and Supply Chain

Management

Receive the latest status updates on your shipments on your mobile device

or let workers capture load tickets directly at the loading port.

Receive workflows for approval requests of operating supplies directly on

your mobile device for immediate approval.

Support mobile devices through a proven, scalable platform that includes

built-in support for enterprise-class security. Make it easier to deploy,

support, and manage multiple mobile devices and apps, allowing the

enterprise to future-proof its mobile strategy.

SAP HANA

SAP Innovations

Mobile

Analytics

Cloud




Analytics

20% Higher revenue per employee

in organizations that use

information to identify

strategic and competitive

advantages


Benchmarking

Mining companies with global mine and supplier networks

need powerful analytic applications that give insights into

supply chain performance and spending to allow fast

decisions based on real facts.

Supplying Mines

and Customers

Executive

Summary


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Efficient Sales

and Supply Chain

Management

Supply Chain Performance Management

With a holistic view of the entire supply chain and insight into specific

activities and interrelationships between planning, sourcing, operations, and

logistics, supply chain executives can improve performance by making

decisions based on fact. The SAP Supply Chain Performance Management

analytic application allows organizations to measure and monitor various

supply chain metrics, looking at how changing each factor impacts others.

By understanding this correlation, supply chain executives can improve key

performance indicators.

Spend Performance Management

Enterprise-wide visibility into spend and buying patterns enables you to

control your spend based on complete, accurate, and trustworthy data.

SAP HANA

SAP Innovations

Mobile

Analytics

Cloud




Cloud

65% Expect the greater flexibility

and agility afforded by cloud

computing to be a source of

business advantage


Benchmarking

On-demand working is all about fast and flexible

deployment of both critical and complementary solutions.

Best-run companies deploy cloud-based solutions to

achieve this, with flexible business networks for service

procurement and spare parts management.

Supplying Mines

and Customers

Executive

Summary


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Efficient Sales

and Supply Chain

Management

Service Procurement

Based on the procurement solution from Ariba, an SAP company, to create

service requests using supplier relationship management or enterprise

resource planning applications. Ariba Network is a business process

collaboration solution with supplier catalog integration and purchase order

and invoice management functionality.

Spare Parts Management

Process spare-parts requests as part of maintenance orders within Ariba

Network. This helps ensure efficient spare parts management by automating

the process in the cloud.

SAP HANA

SAP Innovations

Mobile

Analytics

Cloud




Best-Run Customers

7 of the top 10 mining companies run SAP.

9 of the top 10 copper producers run SAP.

8 of the top 10 zinc producers run SAP.

7 of the top 10 aluminum producers run SAP.

6 of the top 10 nickel producers run SAP.

Supplying Mines

and Customers

Abhijeet

Best-Run Customers

Samarco Mineração

Konkola Copper Mines

Why SAP?

Singareni Collieries

Executive

Summary


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SAP co-innovates with leading mining companies, with the Industry Advisory

Council for Mining setting the priorities. Council members lead co-innovation

and support continual incremental enhancements across the value chain.

Customer Co-Innovation

Industry Advisory Council

Chief information officers of leading mining

companies come together to discuss business

innovations and technology requirements and

to share best practices.

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


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Abhijeet

Samarco Mineração


Why SAP?




“SAP SRM provides a 360-degree view of our procurement and supply

functions. It has significantly improved system transparency both internally

and externally.”

Vijay Singh, General Manager – IT, Abhijeet Group

Abhijeet Group is a diverse collection of companies engaged in

the power, steel, mining, roads, cement, and ferro alloys

business. It is one of India’s fastest-growing corporations and

has set itself ambitious growth targets in all areas of operation.

For Abhijeet, growth demanded operational streamlining while presenting

the opportunity for economies of scale. This meant centralizing

procurement processes through one resource center. The Abhijeet

Group picked the SAP Supplier Relationship Management and

SAP Supplier Lifecycle Management applications because the software’

provides full transparency and vendor collaboration functionality.

Key Benefits

Lower material and service costs through increased purchasing

efficiencies

Better supplier performance visibility and more insight into divisional

spends

Reduced contract creation cycle time using relevant information and

more collaboration

-30% Contract bid process cycle time

-60% Purchase order creation cost

+30% Spend under management

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


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Abhijeet

Samarco Mineração


Why SAP?




“Our visibility of, and access to, information on mining production,

engineering, and all business functions across Konkola Copper Mines

has improved significantly with SAP ERP software.”

Arun Phadke, CIO, Konkola Copper Mines plc

Konkola Copper Mines plc (KCM) is the largest copper mining

and smelting company in Zambia and is a subsidiary of metals

and mining group giant Vedanta Resources plc. KCM’s

operations span the mining value chain along Zambia’s

Copperbelt Province and consists of underground mines,

open-pit mines, a tailings leach plant, a smelter, and a refinery.

Konkola Copper needed a system to support the growing business

demands across the entire business. Konkola Copper choose the SAP

ERP application to enable company-wide visibility and the ability to scale

the business for growth.

Key Benefits

Single and consistent view of the business from one data source

Accurate and real-time metal accounting

Improved data quality, allowing faster, more accurate decision making

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


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Abhijeet

Samarco Mineração


Why SAP?


-$20M Reduction in store inventory

>75% Less time from purchase order to requisition

>75% Overall equipment effectiveness of assets



“We achieved a significant maturity on segregation of duties and an effective

access risk control in our environment. That would not have been possible

without SAP BusinessObjects Access Control, a truly valuable application.”

Celso Kovalek, IT Process and Application Manager, Samarco Mineração

Samarco Mineração is a private Brazilian company engaged in

the mining, beneficiation, pelletizing, and exportation of iron

ore. Established in 1977, it ranks first in the overseas pellet

market, selling its products in over 15 countries.

Samarco was facing risks due to poor control over its segregation of

duties (SoD). To resolve the lack of standardized procedures and be able

to grant access to or execute changes in the company’s SAP software

environment, Samarco implemented the SAP Access Control application.

This software enables all corporate compliance stakeholders to

collaboratively enforce proper control of SoD on a continuous basis.

Key Benefits

Cultural change in SoD

Integration of internal controls and IT

Traceability of approvals risk of SoD

Regular use of solution by top executives, reinforcing commitment

-83% SoD risk reduction

-50% Users with violation issues

-70% Reduced time for access approvals

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


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Abhijeet

Samarco Mineração


Why SAP?




“Today, SCCL is a truly integrated enterprise. As we continue this journey,

we hope to leverage other functionalities and develop a robust business

intelligence platform that will further enhance decision making.”

J. V. Dattatreyulu, Director of Operations, Singareni Collieries Company

Limited

Singareni Collieries Company Limited (SCCL) currently operates

13 open-cast and 42 underground mines in 4 districts.

SCCL was facing data integrity issues in areas of purchasing, sales and

distribution, finance, and inventory and payroll management due to

manual integration and data duplication errors. To handle these

challenges, SCCL chose to implement financial, controlling, materials

management, quality management, payroll and sales and distribution

software in the SAP ERP application. Key to this choice were strong SAP

references from comparable public sector enterprises in India and the

mining-focused functionality.

Key Benefits

Real-time information for more effective decision making

Better materials management to help meet annual production targets

Less time to settle sales orders and improve customer satisfaction

Central management of business continuity initiatives via IT disaster

recovery mechanism

-50% Time to process sales orders

-95% Time to generate coal bills

-40% Time to settle advance payments

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


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Abhijeet

Samarco Mineração


Why SAP?




Streamline sales and procurement processes, collaborate using supplier networks,

and gain real-time visibility of contract profitability. Access data on premise, on

mobile devices, and from the cloud to build a “digital mining enterprise.”

Why SAP?

Tightly Integrated, End-to-End Solutions

To enable efficient processes and strategic sourcing, SAP offers a comprehensive portfolio of

solutions for commodity management and transportation, and for procurement for operational

supplies. The software is integrated and supports collaboration.

Breakthrough Innovations

The SAP software portfolio combines database and analytic solutions and cloud-based

deployment options to enable efficient sales and supply chain processes.

Reduced Time to Value in Large-Scale Implementations

The world’s leading mining companies across every major segment of the industry worldwide

continue to rely on SAP to enable them to manage commodities with optimized sourcing solutions.

Best-Run Customers

Supplying Mines

and Customers

Executive

Summary


Contact Us

Abhijeet

Samarco Mineração


Why SAP?




Find Out More About How Your Organization Can

Become Best-Run

Visit valuemanagement.sap.com >>

Visit sap.com/solutions/rds >>

Visit scn.sap.com >>

Supplying Mines

and Customers

Executive

Summary


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Benchmark Your Performance

Position your organization for dominance in this new economy with the business performance

benchmarking program from SAP – available free to SAP customers and select prospects.

The SAP benchmarking program has helped more than 3,000 organizations assess their

strengths, uncover areas for improvement, and identify best practices and IT strategies that

generate clear, tangible value – not someday, but today.

Go Live in Weeks

Here’s the fastest way to run your business better: our rapid-deployment solutions. In one

package, you get everything you need to be up and running quickly – including preconfigured

software and implementation services – in just weeks. With a defined scope and predictable

costs, there are no surprises.

Join Your Community of Practices

Every day, SAP Community Network (SCN) changes the way that thousands of SAP users work.

It lets members help one another solve problems, learn, and invent new ways to get things

done – faster. Find out how to connect with people, content, and resources.

https://valuemanagement.sap.com/

http://www.sap.com/solutions/rds

http://www.sdn.sap.com/irj/scn

https://websmp105.sap-ag.de/solutionpackages

Solution Overview

For more information, please visit us at:

http://scn.sap.com/community/mining-and-mill-products

http://www.linkedin.com/groups?home=&gid=4532949&trk=anet_ug_hm

http://www.facebook.com/SAPMillProductsandMining

https://twitter.com/SAPMillMining

Mining Supplying Mines

and Customers

Executive

Summary


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CMP 23589 (13/02)

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