Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
THIRD AEGEAN INTERNATIONAL CONFERENCE
on
DESIGN AND ANALYSIS OF MANUFACTURING SYSTEMS
MAY 19-22, 2001TINOS ISLAND, GREECE
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
a traditional Greek household appliance manufacturer
founded in 1865 and named PITSOS
which was acquired in 1977 by B/S/H/ (Bosch und Siemens Hausgeraete GmbH)
and has been renamed BSPwhich means:
Who are we ?Who are we ?
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
BSP has become a modern competence centre for the development and production of cookers and
refrigerators for several brands, such as:
What are we producing?What are we producing?
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
• Our 62K m2 production facility is located in Piraeus
• we produce more than 500.000 appliances per year
• we employ more than 1000 people• we are holding more than 40% of the Greek
market• we export 60% of our production to nearly 20
countries in Europe and overseas• we were able to constantly increase our annual
turnover and PBT • we deploy modern Quality Management systems
such as: ISO9001, ISO14001, and Total Quality Management
• and are committed to achieve outstanding performance thanks to the “diligence of the individual and excellent management”.
Some inf.'s about us:Some inf.'s about us:
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
B/S/H/ Corporate LogisticsB/S/H/ Corporate Logistics
Customer Order
Order ConfirmationDelivery NoteInvoice
Customers
Order for products,Order for imported goodsDistribution order
Order Confirmation,Invoice,Inventory
Order,Direct loading to Regions
Production Plan,Delivery schedule
FactoriesSuppliers
E GR
D TR
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
BSP LogisticsBSP LogisticsMaterial masters, BOMs,
work centers with availability capacity, work plans
Material masters, BOMs, work centers with availability capacity, work plans
GR CentralProduction plan
• Weekly reqs planning for products • Net requirements determination
• Capacity leveling
• Transfer of reqs to factory
Factory MPS: finished product
• Weekly reqs planning for products
• Monitoring MPS result
• Production Orders
Factory MRP:Semi-finished
• Spare parts customer reqs
• Monitoring MRP result
• Requirement planning
• Production Orders
Factory MRP:Purchased parts
• Spare parts customer reqs
• Consumption controlled mater.
• Monitoring MRP result
• Requirement planning
• Purchase Orders
• Delivery Schedules
•For final products•For semi-finished products•For purchased parts
•For final products•For semi-finished products•For purchased parts
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Production quality alone is no longer a decisive competitive advantage. Success is also based on the ability to meet customer requirements for:
• time• volume• responsiveness• service level
Customer requirements in the future will only be met by collaborate relationships among trading partners on joint planning and execution
Competitive CriteriaCompetitive Criteria
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
The Virtual CooperationThe Virtual Cooperation
P M S
SupplierP M S
Customer
Purchasing Manufacturing Sales/distrib.
Contracts
InternetElectronic catalog
Check customer's credit andavailability of goods
Electronic invoice
Contracts
• Business Infrastructure in multiple vendor environment
• high transaction volumes
• real-time decisions across the supply chain
Improve ...
Electronic catalogCheck customer's credit and
availability of goodsElectronic invoice
Intranet
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
• boost organizational effectiveness and efficiency• improve level of decision making (quality!)• flexibility (internal and external)• integration of all organizational processes• cost reduction along the entire Supply Chain• operational data integrity and consistency• increase business value added• decrease the operation’s “time to market”• enhance business control and awareness• deploy basic infrastructure for extended
enterprise and e-business• comply with corporate policy and strategy (SAP)
Why ERP?Why ERP?
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Which ERP (SAP) modulesWhich ERP (SAP) modules
R/3R/3Client / ServerClient / Server
ABAP/4ABAP/4
FIFIFinancialFinancial
AccountingAccounting
COCOControllingControlling
AMAMFixed AssetsFixed Assets
Mgmt.Mgmt.
PSPSProjectProjectSystemSystem
WFWFWorkflowWorkflow
ISISIndustryIndustry
SolutionsSolutions
MMMMMaterialsMaterials
Mgmt.Mgmt.
HRHRHumanHuman
ResourcesResources
SDSDSales &Sales &
DistributionDistribution
PPPPProductionProductionPlanningPlanning
QMQMQualityQuality
Manage-Manage-mentment PMPM
Plant Main-Plant Main-tenancetenance
Introduced:• Sales & Distribution• Materials Management• Production Planning• Financial & Accounting• Controlling• Workflow• Quality Management (incoming materiel only)• Fixed Asset Management
Under Introduction:• Human Resources Open: • Warehouse Management • Plant Maintenance
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Application PreconditionsApplication Preconditions1. Full, unrestricted commitment of the
management
2. Financial funds availability
3. Business Processes Reengineering
4. Effective and efficient project management
5. Cooperation with the system provider (supplier)
6. Selection of efficient external consultants
7. Enterprise data reliability
8. Appropriate IS/IT infrastructure (internal)
9. Effective user training
10. Willingness to change culture
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Why do Greek enterprises not adopt Why do Greek enterprises not adopt ERP systemsERP systems
64%
55% 55%
45%
36%
9%
0%
10%
20%
30%
40%
50%
60%
70%
Lack of information
k
InvestmentInsufficientHRs for administration
Small sizeof the enterprise
Lack in the organizationof processes
Insufficienttechnological infrastructure
SOURCE: PLANT MGT MAGAZIN, FEBR.-MARCH 2001
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Introduction time influence Introduction time influence factorsfactors
coordinationwith the management
SOURCE: PLANT MGT MAGAZIN, FEBR.-MARCH 2001
82% 82%
64%
55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
AppropriateHRs
Link to other systems
BPR
52%
48%
Less than6 months52%
6 - 12 months48%
12 - 18
months BSP0%
more than 18 months0%
Average Introduction time Average Introduction time of ERP systemsof ERP systems
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues1. Technological:
• Data transfer from the old system • Adaptation to operational requirements (customizing)
• Adaptation to Greek legal requirements (customizing)
• System’s response time (load)• Integration with other subsystems (interfaces)• Hardware Upgrade• Job scheduling to avoid lock entries and gain performance
• Hellenisation • User Access Authorizations
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues2. Financial:Introduction cost mainly resulting from : • hardware• software• consulting services• intensive user training• installation• maintenance • data transfer and • customizing
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues
26%
74%
No
Yes (BSP)
User TrainingSuppliers include user training
in installation cost
11%
89%
Yes (BSP)
No
System MaintenanceSuppliers include maintenance
in installation cost
SOURCE: PLANT MGT MAGAZIN, FEBR.-MARCH 2001
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues3. Organizational:• Cultural shock• The organization was not prepared to deal with the high
degree of interdepartmental process integration • Adaptation and redefinition of several operational
processes (Business Process Reengineering)• Adaptation and redefinition of organizational schemes
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues4. Operational:• Error frequency in data entering/processing
during the introduction period was extremely high
• Continuous comparison between physical and system stocks was necessary
• New material numbering was a source for confusion.
• Definition & parameterization of master data cannot be taught, but only experienced.
• No matter how good the level of training, it can not prepare someone for the productive start of the system
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
Critical Introduction IssuesCritical Introduction Issues5. Human Resources:• It became extremely difficult and costly to find
and hire personnel with (ERP/SAP) related professional experience and expertise.
• Great percentage of the existing personnel didn’t have any IT system familiarization/competency.
• Special care had to be taken for these people, to ensure their quick adaptation and utilization in the context of the new system
• The competency profile of the personnel had to be drastically upgraded.
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
The bottom lineThe bottom line• organization• communication• Information• scheduling• forecasting• unification• soundness• transparency• control• online inf.s• direct access on
data• integration
• excellent reporting• fun • motivation• personal
improvement • order• discipline• know how • upgraded services • coordination • quality • speed
Th. Modestou May 2001
ERP system applications on BSP’sSupply Chain Management
The bottom lineThe bottom lineAfter almost 2 1/2 years of operation with our ERP
system, we do not doubt about the correctness of our decision.
The successful introduction and ERP-based operation of the company became possible because of :
• the management’s commitment to change culture• excellent project management, which was a
corporate joint effort• the continuously improving user support by our IT
department specialists (business analysts ) • and last but not least, because of the
extraordinary personal efforts and dedication of the key users