SAP Mining and Metals Forum

Suresh Shaddarsanam,

Peabody Energy

September 11-12, 2012

Implementation of SAP-Environmental Compliance (EC) at Peabody

Peabody: 127+ Years Strong

● Headquarters: USA (St. Louis, MO)

● 8,300 employees worldwide with mines in U.S. and Australia

● World's largest private-sector coal company, with 2011 sales of 251 million tons and $8 billion in revenue

● Serves customers in more than 25 countries on six continents

● One of the largest coal trading companies in the world

● Global leader in clean coal solutions

● Earned recognition for safety, environmental and social responsibility; achieved more than 30 major honors around the world in 2011

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SAP Applications at Peabody

● Went live August 2007

– Followed “big bang” implementation strategy- covered all functions, mine

locations and the corporate office

– Extended the global designs to Australia in 2010

– Operates a single instance of SAP

– Number of users: 3,500

– Integration of the acquired operations is in progress

● Functionality implemented

– ECC: FI, HR, SD, QM, PP, LE, TSW, PM, MM, FSCM

– Portal: ESS & MSS

– BI: Integrated Planning and Reporting

– SRM

– Environment Compliance

– GRC

– MII

– SAP Sourcing/CLM

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Non-SAP Operations at Peabody

● Key non-SAP applications that are integrated with SAP

– Kronos

– Open Text

– Redwood

● Several custom applications to support processes in the

Resource Management, Geology and Environment

functions

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SAP Environmental Compliance

Before SAP-EC Implementation

● Environmental processes were not included in the scope for initial

SAP implementation

– No SAP functionality was available

● Environmental processes were supported by:

– Excel based applications (person dependent, error prone, different

applications in different regions) – Examples:

– Permit tracking

– Greenhouse gas emission calculations

– Custom applications (limited functionality, not scalable) – Examples:

– Custom application to track violations against permits

– Custom application to forecast open bonds placed on tracts of land

that require reclamation

– Vendor applications (for special needs) – Examples:

– Vendor application to store water sampling results and provide

reporting and analysis

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Journey towards Standardization

● Journey started in 2010

● Approached various vendors (including SAP) for off-the-shelf solutions for

permit tracking and greenhouse gas emission calculation solutions

– Engaged SAP to implement Carbon Impact (SaaS solution) for greenhouse gas

emission calculation

– Purchased EC to implement permit tracking functionality. Factors that influenced

this decision were

– Promise of backward integration with other SAP applications (ECC, BI)

– Significant investments made in implementing SAP applications and

availability of key SAP resources within Peabody IT

● Spent four months implementing the Carbon Impact (CI) solution and

discontinued the implementation

– Being a SaaS solution CI did not give the required flexibility to implement changes

– Business team found that certain calculations related to the mining business are

not easily configurable in SAP-CI

– Purchased SAP-EC during the implementation period. Since EC has the

functionality to calculate greenhouse gas emissions, Peabody team decided to

cancel the CI project and focus on EC implementation

– SAP consulting team helped Peabody in the implementation

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SAP- EC Implementation: Phase1

● Business Need

– Business needed to obtain and renew several permits before the mining starts,

and during reclamation. The process was manual, person dependent and results

were inconsistent

● Project Scope

– Implemented SAP-EC’s “Permit and Certificate Management” module to track

SMCRA (Surface Mining Control and Reclamation Act), Air and Water permits

● Business Benefit

– One system to track expiry of permits. This was a manual spreadsheet based

process before. The system notifies the appropriate user(s) when one of the

permits is about to expire

– Easily add a permit to the system for tracking purposes. Peabody’s plan is to

track all permits using this application

– Use the system to track other activities (not just renewals) related to permits

– Ability for one or more administrators to temporarily or permanently substitute

users globally in case of a personnel temporary leave or change in responsibility

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SAP- EC Implementation: Phase2

● Business Need

– Business needed an application to calculate and manage greenhouse gas

emission calculation. Before this implementation, the process was manual (using

multiple spreadsheets) and person dependent

● Project Scope

– Implemented SAP-EC’s “Air Emissions Management” module with emphasis on

Emissions Inventory and Monitoring (Criteria Pollutants) and GHG management

to track power usage (KWH), methane and other fuels. The system uses this

information to compute greenhouse gas emissions and criteria pollutants

(commonly found pollutants - Ozone, Particulate Matter, Carbon Monoxide,

Nitrogen Oxides, Sulfur Dioxide, Lead), for reporting purposes. Developed the

GHG report in SAP-BW

● Business Benefit

– Uses EC system to calculate greenhouse emissions. Eliminated the spreadsheet

based process

– Audit trail capability to track all changes in the application and changes are time

stamped

– Automated reminder for field data collection and automated greenhouse gas

emission and criteria pollutants emissions calculations 10

SAP- EC Implementation: Phase3

● Business Need

– Business needed to track permits and violations in the same application. Before

this implementation, the violations and permits were recorded and tracked in a

custom application

● Project Scope

– Extended “Permit and Certificate Management” module to enable recording of

various types of regulatory violations received

● Business benefit

– Use the EC system to record various types of regulatory violations received

– Eliminated a custom application

– Key metric reports are build in BI which all business users can access. Previously

business users had to contact the environment team for information

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SAP- EC Implementation: Phase4

● Business Need

– Business needs capture notice of violations and waste management and

reclamation KPIs (e.g., pounds of scrap metal recycled, or amount of tree

planted) in the same system

● Project Scope

– Project is in the planning stage

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SAP- EC: Overall Assessment

● EC is a key application for Peabody’s environment team.

− Instead of using multiple spreadsheets and custom applications, they can now rely

on EC for tracking permits, calculating greenhouse gas emissions and enter

notices of violations

● EC has the potential to be a One Source application for all

compliance needs of mining companies.

● There are several areas where the EC application needs to be

strengthened

− Lacks key functionality that is needed by mining companies in the USA (e.g. bond

tracking)

− Integration with ECC

− Integration with BI

− Loading of data into EC

− Flexibility to customize the application

− Special handling needed to migrate transports