SAP Best Run Awards for SEA 2021:

Hoa Phat SAC & BW: Enable The Smart Learning Factory
 Company Information
Hoa Phat Dung Quat Steel Joint Stock Company
Headquarter Dung Quat Economic Zone, Binh Dong Commune, Binh Son District, Quang Ngai Province

Industry Manufacturing: construction steel, high quality rolled steel and hot rolled coil

Website https://www.hoaphat.com.vn/en

Hoa Phat Group is a multidisciplinary business group, in which steel and related products such as coke coal and iron ore is the main
business and account for 80% of the revenue of the Group.

With nearly-20-year experience, Hoa Phat's construction steel production activities are concentrated on Hung Yen, Hai Duong and Quang
Ngai provinces. The Hoa Phat Dung Quat Steel Integrated Complex is operated by Hoa Phat Dung Quat Joint Stock Company, which
was established in February 2017, a charter capital of VND 30,000 billion. This is a vital strategic project, the completed Complex will
reinforce the leading steel manufacturer position in Southeast Asia of Hoa Phat Group.

Hoa Phat Dung Quat Iron and Steel Integrated Complex has a total investment of VND 52,000 billion, designed with a capacity of 4 million
tons per year, the main products are construction steel, high quality rolled steel and hot rolled coil. This is an advanced, modern and
environmentally friendly technology, producing coke coal by stamping dry coke, completely recovering heat and exhaust gas, making full
use of by-products to generate electricity for production. The entire source of produced water is also circulated, not disposed into the
environment.

Hoa Phat Group currently occupies the largest market share in the country with the proportion of over 25%. With the capacity of 8 million
tons of crude steel per year, Hoa Phat is the largest steel producer in the Southeast Asia and No. 1 market share in Vietnam for
construction steel, steel pipes and Australian beef.

Currently, Hoa Phat Group is in the Top 10 largest private enterprises in Vietnam, Top 10 profit enterprises, Top 5 listed companies with the
largest charter capital in Vietnam stock market. HPG's market capitalization reaches USD11 billion, among the top 15 largest steel
companies by market capitalization.

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Hoa Phat SAC & BW: Enable Smart Learning Factory
Hoa Phat Dung Quat Steel JSC. The Small & Mighty (Emerging Frontier Market Award)
Customers that are driving excellent business results. Not only that, these organisations also
show the potential to scale up their operations towards other parts of ASEAN and wider Asia.
“Quote” Challenge
As a largest steel maker in VN, Hoa Phat Group and Hoa Phat Dung Quat Steel Integrated Complex (HPDQ) in particular, which accounts for
“The Smart Digital the largest production output of the group, requires real-time visibility and control over cost, inventory, available to promise inventory, line
Transformation utilization, etc. to meet customers’ demand and committed quality. Prior to implementing SAC and SAP BW, it was a struggle for all LOBs to pull
project is an operational data, report KPIs to BOD quickly for strategic decision as well as integrate management systems SAP and Non SAP system. As
data was recorded in multiple systems, log books, and excel sheets from many different departments, it was time-consuming, ineffective to
important project in Solution
collect, compare, and generate real-time reports not to mention inaccuracy along the process.
developing Hoa Phat
Dung Quat’s strategy, Solution
which will have the SAP Analytics Cloud (SAC) & SAP Business Warehouse
participation of Outcome
HPDQ's Board of SAP Analytics Cloud helps HPDQ generate data modelling and track KPIs across operations effectively by significant reducing time to prepare
Outcome
Directors, heads of and number of reports for each department. More importantly, it helps improve on-time delivery and service quality as the tool reports real time
inventory level for customer order promising and provide information to act quickly for on time delivery.
all departments, and SAC project has a long-term objective of forming Big Data and data mining with advanced technology applications such as artificial intelligence
Digital (AI), Machine Learning to analyse, forecast, recommend, make operating and management activities smarter, create competitive advantages
Transformation and grow sustainably.
Department of Hoa
Phat Group”
Establish standardize KPIs for HPG
-Mr Mai Van Ha, Hoa 176 detailed KPIs, 61 KPI Groups Real time monitoring KPIs, reporting Improve data mining
Phat Dung Quat CEO- and 20 Stories for C-Levels, 5X faster 4X more effectiveness
Directors and Managers

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 Business Challenge and Objectives
❖ Challenge in Industry:
• Value chains in the steel and metal industry are extremely complex. Companies must contend with a large number of interconnected volatile assets, a vast amount
of product units, a diverse customer base with varying service and quality requirements, and complicated distribution channels with different margin implications.
• Asset utilization is often considered a priority and incentives are structured accordingly, yet these decisions often don’t factor in all business drivers influencing
profit margin, service levels, or working capital.
• Plants and assets often operate in silos, rather than being integrated to meet a larger strategic objective. Supply chain executives have little access to real-time
information, leaving them unable to anticipate changes in the market. As a result, companies perpetually act defensively, without the ability to anticipate and
mitigate risk or jump on short-term opportunities, which leads to significant value losses.
❖ Challenge in the company:
• After Covid 19, Hoa Phat is directed by the leaders to continue Digital Transformation to reach their highest productivity at manufacturing and management. Hoa
Phat has implemented S/4 HANA at HPDQ Factory but not the other factories and group level. Then they see the difficulty to consolidate and manage at group
level in management which is related to manufacturing with supply chain management, finance, reporting, human resource management etc.
• Before the project, IT departments has stressed at how to support Hoa Phat to form an integrated management systems SAP and Non SAP system. Data and
information recorded in multiple systems, log books, and excel sheets of many different departments. It takes a lot of time and effort to collect and compare the
information. Besides, all relevant in-process information is not available in real-time and incorrectly. And, mostly analysis is manual process.

In September, Hoa Phat Group's crude steel production reached 686,000 tonnes, up 20 per cent over the same period last year. Sales volume of steel products reached
738,000 tonnes, representing 22 per cent year-on-year increase. Hoa Phat's exports of finished steel products last month grew strongly. Specifically, the export volume of Hoa
Phat’s construction steel reached a record of 120,000 tonnes, nearly double compared to the same period last year. The main export markets are Australia, Canada, Hong Kong,
South Korea, and some countries in Southeast Asia. Hoa Phat Dung Quat is contributing more than 50% of the total for the steel quantity export. With a crude steel capacity of 8
million tonnes a year, Hoa Phat is the largest steel producer in Vietnam as well as in Southeast Asia. In which, The Hoa Phat Dung Quat Steel Joint Stock Company is the largest with
a production capacity reached 5,2 million tonnes a year.

Investors appreciated the progress of Dung Quat project (3 Billions USD) - Mr. Nguyen Viet Thang - and the BOD of Hoa Phat Dung Quat Steel Joint Stock Company gave an
overview of the scale, schedule and measures to protect the environment of the project. With the scale of 4 million tons / year, Hoa Phat Dung Quat Integrated Iron and Steel Complex
is being put all resources deployed in 2017 on the basis of inheriting Quang Lian steel project (Taiwan) after more than 10 years postponed. In early 2022, Hoa Phat will deploy the
Hoa Phat Dung Quat 2 Iron and Steel Complex project with a capacity of 5.6 million tonnes of Hot Rolled Coiled (HRC) a year, bringing the total annual HRC capacity to 8.6 million
tonnes from 2025.
To achieve the strategy, the management team expected the project could obtain below objectives:
▪ Enable real-time analytics and support self-service operational reporting directly.
▪ Support driver-based planning to understand and model underlying drivers of financial, sales & production performance.
▪ Support for multi-dimensional profitability analysis to identify most profitable customers and products.
▪ Track organizational KPIs in real-time with interactive dashboards. Use real-time planning forecasting and simulation capabilities for different business scenarios.

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 Benefits & Outcomes
BUSINESS / SOCIAL IT HUMAN EMPOWERMENT
Governance: Product-as-a-service
Target to become a smart learning factory in steel industry in • Improve the effectiveness for the whole organization.
• Enhancing corporate governance, building a set of 61
SEA, Hoa Phat has applied below technology: When the departments work smoothly with reports, it
group KPIs, complete and across departments,
support BOD to give exact and fast decision.
departments and 20 Stories for management, helping • Cloud Adoption
to measure the governance effectiveness of Hoa
Phat Dung Quat Steel • AI, Machine Learning
• Upskill for employees of business insight analysis.
• Big Data: Centralized Data Warehouse Dung Quat people is improving knowledge and
• Increasing data mining efficiency 4 times. Serving
experience.
the operational efficiency of departments: The Sales
Department increases the ability to meet orders
according to the company's production performance. The SAC & B/W 4 HANA project is a warm up for the long
• Increase employees’ satisfaction and engagement by
The production department improves attrition journey of Hoa Phat Dung Quat to be a smart learning
build their trust in applying new technology to improve
indicators and increases production efficiency. factory. IT team gained a lot of experience through the
productivity (e.g. OEE)
Warehouse Department reduces inventory project and be able to define the road map to go.

• Reduce the time and resources for manual reporting,

help increase the work performance of departments And this is not only for data analysis from ERP but also to
and departments of Hoa Phat Dung Quat, with 5 connect data from different systems, departments, factory to
times faster reporting speed form a BIG DATA in the future.
Work and environment safety IT team is to form an integrated system SAP & Non SAP
• Integrating the data of energy management from
EMS to SAC BI to optimize the energy consumption in
manufacturing and mitigating process emissions could
contribute to CO2 emission reductions.
• Generate insights to predict factory risk areas.
Operational dashboards overseeing all related
processes and incidents.
Promote the next success
• Build trust for investors, leaders and employees to
run
for next succes in coming projects
• Dung Quat is a Case Study to help Hoa Phat Group
evaluate the system effectiveness, towards applying
scale to group level companies.
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 Project / Use Case Details

Hoa Phat Dung Quat Iron and Steel Integrated Complex (HPDQ) is the largest project of Hoa Phat Group and is currently operating at full
capacity with 11 factories and a seaport with an output of more than 5 million tons/year. In the coming years, the factory size is expected to double.
Thus, HPDQ needs a total solution to build Data Warehouse with centralized data connection from systems such as SAP S/4HANA, MES,
SCADA, quality management system, other systems to standardize, enrich data, build management indicators (KPIs) with multi-dimensional
analysis reports and Dashboards to serve the operation smoothly, quickly, and accurately. The Smart Digital Transformation project is an important
project in developing Hoa Phat Dung Quat’s strategy, which will have the participation of HPDQ's Board of Directors, heads of all departments, and
Digital Transformation Department of Hoa Phat Group.

SAP Analysis Cloud project has a long-term objective of forming Big Data and data mining with advanced technology applications such as artificial
intelligence (AI), machine learning (Machine Learning). ) to analyse, forecast, recommend, make operating and management activities smarter,
and create more differences and competitive advantages. Thereby, it helps businesses develop sustainably. In this project, HPDQ built many
dashboards and 176 KPIs related to Finance, Sales, Manufacturing and Warehouse.

HPDQ has reached an output of more than 5 million tons/year, and the future is more than 10 million tons/year. So, the amount of data from ERP
is very large. It leads to a demand to be standardized, to build Data warehouse, to have business indicators (KPIs) as well as build administrative
and operational dashboards. Using SAP Analytics Cloud (SAC) solution not only stops to analyse business indicators from the ERP system, but in
the long run, HPDQ can also connect data from many other systems, from departments and factories. SAC serves to analyse the overall
performance of HPDQ in an efficient and timely manner.

In the future, Hoa Phat Dung Quat will apply SAC Planning serving for the overall planning activities of the company. This is also a key milestone
for Hoa Phat to complete the Analytics Cloud tools from SAP

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 Project / Use Case Details

SAP Journey of Hoa Phat Dung Quat Steel

01/2019 07/2021 2022 and Beyond 2022 and Beyond

Go-live SAP Kick-off SAP SAP S/4HANA More development for
S/4HANA Analytics Cloud & expanding for Hoa Phat Purchasing KPIs
BW/4HANA Dung Quat Steel 2

06/2018 07/2021 2022 and Beyond 2022 and Beyond 2022 and Beyond
Kick-off SAP Go-live SAP Analytics Cloud - Expanding module PM - Deploy KPIs analytic
S/4HANA SAP PS Planning expanding OEE to headquarter and
Project companies on the
group

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 Additional Information
Hoa Phat Group listed in the world’s Top 15 largest steel
companies by market capitalization

On October 6, 2021, British financial data firm, Refinitiv Eikon (formerly Thomson Reuters Data)
announced the Top 30 largest steel companies by market capitalization in the world. Hoa Phat
Group (HPG) ranks 15th in this list with a market capitalization of US$11 billion, larger than that
of Japan's leading Steel Corporation, JFE Holdings.

The leading steel producer in Japan, JFE Holdings has a market capitalization of $8.9 billion,
taking 19th position in the ranking. A major Australian steel company, BlueScope Steel, is also
listed in the 23rd position in the ranking with a market capitalization of $7.3 billion.

With a crude steel capacity of 8 million tonnes a year, Hoa Phat Group is the largest steel
producer in Vietnam as well as in Southeast Asia. The group is equivalent to the world's Top 50
steel producer.

Hoa Phat Group (HPG) has a charter capital of VND44.7 trillion, the fourth largest among
enterprises listed on the Vietnam Stock Exchange. In the trading session on October 6, HPG
shares officially set a new peak when closing at VND56,100 per share. With a total of 4.4 billion
shares outstanding, HPG's market capitalization reached VND250 trillion ($11 billion).

In the first 9 months of the year, Hoa Phat Group achieved crude steel output of 6.1 million
tonnes, up 50 per cent over the same period last year. Steel sales volume reached 6.3 million
tonnes, posting 43 per cent year-on-year increase. In which, construction steel was 2.8 million
tonnes, up 12 per cent over the same period last year. Hot rolled coil (HRC) output reached
nearly 2 million tonnes. Hoa Phat Steel Sheet Company Ltd recorded 273,000 tonnes, 2.6 times
higher than the same period last year.

Link: https://www.hoaphat.com.vn/news/hoa-phat-group-listed-in-the-world--s-top-15-largest-steel-
companies-by-market-capitalization.html

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 Additional Information

BW/4HANA & SAP Analytics Cloud Kick-off Ceremony (online) Hoa Phat Dung Quat Steel ‘s factory

“Hoa Phat Dung Quat (HPDQ) iron and steel production complex is the largest project of the Group and is now operating at full capacity with 11 factories, a seaport with an output of
more than 5 million tons per year. In the coming years, it is expected that the factory size will double, so HPDQ needs an overall solution to build Data Warehouse with centralized
connection data from systems such as SAP S/4HANA, MES, SCADA, quality management systems, others to standardize, Enriching data, building governance indicators (KPIs) with
multidigional analytics reports and dashboards to serve the operation smoothly, quickly and accurately. The Smart Digital Transformation project is an important project in Hoa Phat
Dung Quat’s development strategy”.

Mr. Mai Van Ha, Director of Hoa Phat Dung Quat Steel Joint Stock

More Infomations: https://www.citek.vn/en/hoa-phat-dung-quat-steel-and-citek-sign-smart-digital-enterprise-implementation-consultancy-project/

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