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Consol Energy (Mining) Business Transformation Study - SAP Supplier Relationship Management


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CONSOL Energy Inc. is the largest producer of high-BTU bituminous coal in the United States. Based near Pittsburgh, Pennsylvania, CONSOL Energy has 17 coal-mining complexes in 6 states and produces coal, gas, and electricity that help fuel U.S. power generation.

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Consol Energy (Mining) Business Transformation Study - SAP Supplier Relationship Management

  1. 1. CONSOL ENERGY STREAMLINING PROCUREMENT: INTEGRATION REPLACES CUSTOMIZATION QUICK FACTS Key Challenges Why SAP Was Selected Industry • Control maverick procurement • Integration with the SAP NetWeaver® Mining • Improve inventory and spend visibility Business Warehouse component for Revenue across CONSOL reporting US$4.7 billion • Reduce total procurement costs • User familiarity with the SAP® ERP • Enable pricing updates and budget application Employees checking • Leveraging of existing IT investments 8,000 • Enable strategic sourcing and collabora- • Easy integration with existing software Headquarters tion with buyers, suppliers, and end users to enable procurement processes Canonsburg, Pennsylvania • Reduce administrative costs by auto- mating invoice processing and reporting Web Site: Implementation Best Practices Low Total Cost of Ownership SAP® Solution and Services • Alignment of business-driven implemen- • Elimination of customized legacy system SAP® Supplier Relationship tation project with strategic company • Leveraging of existing IT infrastructure Management application objectives to increase value to the enterprise • Strong executive steering team with • Lower training costs due to intuitive Implementation Partner monthly scope, budget, and functionality interface for purchases Internal CONSOL Energy resources meetings • Rapid implementation supplemented by the SAP Consulting • Clear and frequent communications organization with buyers, suppliers, and end users • Delivery of initial training by SAP Consulting, with ongoing support CONSOL Energy Inc. is the provided internally largest producer of high-BTU bituminous coal in the United States. Financial and Strategic Benefits Operational Benefits • Better-informed financial decisions and • US$25 million delivered value in material Based near Pittsburgh, Pennsylvania, collaboration with suppliers resulting from and service spend* CONSOL Energy has 17 coal-mining visibility of procurement and inventory • 40% reduction in paper invoices* data • 25% reduction in invoice errors due complexes in 6 states and produces • Fact-based purchasing based on approved to e-procurement process (procure coal, gas, and electricity that help fuel commodities from corporate-authorized to pay) U.S. power generation. To control catalogs • 40% reduction in buyer-transacted • Lower total procurement costs through purchase orders* maverick spending and increase automation and improved controls • Fully electronic bidding process* inventory visibility for reporting and • Reduction in spend by tying purchasing • Improved purchasing and material to budget checking management invoicing, the company replaced its • Greater spend visibility customized legacy system with the SAP® Supplier Relationship Manage- ment (SAP SRM) application. * Within 36 months of implementation SAP Business Transformation Study Mining
  2. 2. “The ability to deliver sustainable value to buyers, suppliers, and end users /contactsap can be achieved only through the availability of good data. We implemented SAP software so that we could achieve this goal.” Darryl M. Husenits, Vice President, Material and Supply Chain Management, CONSOL Energy Inc. Modest Beginnings Grow into to provide a high level of service and to applications to enable transaction auto- a Powerhouse deliver value to its buyers, suppliers, and mation, which would help lower pro- end users. curement and administration costs. Throughout nearly 150 years of acquisi- The SAP Consulting organization tions and expansion, CONSOL Energy A Familiar Name Fuels Benefits helped integrate SAP SRM, SAP ERP, Inc. has evolved from a single-fuel mining and Hubwoo applications to automate company into a multienergy producer of CONSOL’s management was familiar with the procurement process and then pro- coal, gas, and electricity. To support its SAP because the company was already vided initial training. The intuitive user growth, CONSOL purchased large fixed using the SAP ERP application. After interface makes it easy for CONSOL assets as mining technology advanced, deciding to replace a customized legacy to provide ongoing training and support. but procurement processes for smaller procurement system, CONSOL chose an items needed to be improved. Employ- SAP solution because no other software “SAP helped integrate our enterprise ees had no corporate-approved catalogs, offered options for integration with item resource planning solution with procure- suppliers, or price lists to use when matching, data entry control, and workflow ment and reporting solutions so we making procurement decisions. CONSOL balancing. As an “SAP shop,” CONSOL have all of our data in one repository,” wanted to streamline the procure-to-pay wanted to leverage its IT investment from explains George Rosato, vice president process to help eliminate the pay-on- a business process perspective rather than of Information Technology at CONSOL. signature prerequisite, which required just an IT perspective. “Now we can monitor how much we’re a much more manual and time-consuming spending and leverage our buying effort. Analytics on these types of Material and Supply Chain Management, power – and that’s a big benefit for us.” transactions was also very difficult. with the support of Information Systems and Technology, authored the implemen- Empowering the Future Operational Success Depends tation project plan and led an executive on Visibility and Automation steering team to ensure successful adop- With a solid procurement process tion of SAP SRM by all CONSOL in place, CONSOL plans to upgrade Without clear visibility and automation employees. The implementation began to the next release of SAP SRM to in the following areas, inefficiencies with the creation of corporate-approved further improve their sourcing and were created that impacted operational catalogs. Procurement workflow is now negotiation processes. The procure- success: based on spend, with purchase orders ment solution enables the company • Inventory issued to suppliers automatically and to streamline transactional processes • Invoice processing expensive items escalated for manage- so it can concentrate on its core • Purchase order processing ment approval. An upgrade of the SAP business – fueling the country. • End-to-end transaction processing NetWeaver® Business Warehouse com- speed ponent enabled the creation of spending • Spend visibility reports to give visibility into procurement • Cost reporting and inventory data. Access to this data • Data management allows the company to check purchases against budget and makes available the With the implementation of the SAP® paperwork needed for warranty repairs. Supplier Relationship Management (SAP SRM) application and the available CONSOL then worked with Hubwoo, an reporting structure, automation of the SAP partner, to integrate Hubwoo’s elec- above areas allowed CONSOL Energy tronic purchasing applications with SAP 50 096 291 (09/07) ©2009 by SAP AG. All other product and service names mentioned are the trademarks of their All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, respective companies. Data contained in this document serves informational SAP Business ByDesign, and other SAP products and services mentioned herein purposes only. National product specifications may vary. as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. These materials are subject to change without notice. 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