Leveraging SAP Leonardo To Streamline Fresh Food Production

Leveraging SAP Leonardo to StreamlineFresh Food ProductionTommy Hughes, AGMM – Director of Bakery and Food Court, Costco

Costco WholesaleCostco is a membership warehouse club,dedicated to bringing our members the bestpossible prices on quality brand-namemerchandise. With hundreds of locations( 700) worldwide, Costco provides a wideselection of merchandise, plus theconvenience of specialty departments andexclusive member services, all designed tomake your shopping experience apleasurable one. 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL2

A refresher on the original initiative 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL3

The Original ProblemStatement:How can SAPtechnologies reducewaste in the bakerydepartment whileincreasing sales? 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL4

SAP Leonardo Engagement Approach

SAP Leonardo Engagement ApproachDeliver SAP Leonardo Innovation Use Cases by involving Real End UsersDiscoverExploreIdentify top 1-2 use casesfit / gap analysis toLeonardo offeringsDesign DeliverPrototypeOnsite UserResearchto collect deepinsights from endusersHands-onWorkshop,show-as-is process,create personas,storyboard, createIdeas for to beprocess, feedback inBUILD, createinformationarchitecture 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIALCreate clickable designprototype in BUILDUse Fiori UX where applicableValidate prototype iteratively withend users via BUILDDevelop Proof of concept ofcustomer use caseValidated proof of concept with demodata by end users involvedparticipants (e.g. designers) – approx. 1hour remoteValue assessment6

Design Workshop

2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL8

Final UX Design Prototype 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL10

Machine Learning for Demand ForecastingExtract patterns and trends from the past and generalize for the futureInputOutputTrainmodelSales dataPromotionsPreparedataApplymodelPredictfuture salesWeatherSports eventsCapturefeedbackTraining & Testing DataData ScienceAnalysis 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIALMachineLearningModels11

Let’s take a look 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL12

San Jose BakeryResults YTD10% Improvement on D&D vs Peer Group11% Improvement on Hidden Shrink vs PeerGroup7% Improvement in Productivity8% Improvement in Hours vs Peer Group 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL13

TestimonialsAbel Zuniga AGM #148“Holly Baker #06”“The numbers are a lot more dialed in. Ittakes out the guesswork. Our D&D usedto be two full carts and now we are lessthan one. It is Awesome!”“ The tablet is Bakery Manager friendly.The program allows for myself to gointo the department and review theforecast with the Bakery Manager andSupervisor. The program allows us tofocus on driving top line sales with theright items and the right time. This hasbeen proven through the historical databuilt into the program. “Merced Bakery MGR #06“When we first got it I was skeptical withthe lower production numbers. We ran outof product a lot but kept trusting andadjusting the inputs. Now that it's gatheringdata it is extremely accurate. We havegood carryover and are in business tilclosing on everything while improving onD&D. I’m very excited about it! “ 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL“Steve Alexander GM #148”“I love this tool; it allows my manager tofocus on the most important thing -Top-line sales, and at the same timeprotects our margin with more efficientand accurate data to control D&D This is it!”14

The Road Ahead9 Locations On Boarded Easy Adoption Results are in line with initial pilot locationsPhase Two of DevelopmentInitiatedDeployment over the next year 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL15

How Costco has become anInnovation Based OrganizationAI-based forecastingAutomationRobotics 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL16

Other areas Costco is focusing onInnovationFood Court forecastingeCom Planning & FulfillmentPoultry PlantGreenhousesTire Center 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIAL17

How Costco embraced a “Why Not SAP?” approachIt is our shared DNA 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ CONFIDENTIALThe Perfect Marriage Costco’s Culture of Innovationand Business Challengespaired with SAP’s InnovativeBusiness TechnologiesDesign Thinking Approach toproblem solving18

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Q&A

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Thank you.Tommy HughesAGMM – Director of Bakery and Food Court

SAP Leonardo Engagement Approach Deliver SAP Leonardo Innovation Use Cases by involving Real End Users Identify top 1-2 use cases fit / gap analysis to Leonardo offerings Onsite User Research to collect deep insights from end users Hands-on Workshop, show-as-is process, create personas,