SSI Schäfer Peem improves flexibility through IT systems integration
There is considerable disparity in the use of integrated IT systems in mechanical and plant engineering. While optimisation has largely been achieved at the level of production, the business processes in many companies are still waiting to be roused from their electronic slumber. This is because, although company-wide planning and controlling systems have been part of the basics in other industries for years, they still play only a minor role in make-to-order manufacturing. Instead, custom manufacturers tend to rely on a mish-mash of self-developed, stand-alone solutions to cover the countless industry specifics with tailor-made solutions.
However, the number of mechanical engineers looking to cut off their old IT tresses is gradually increasing. Their heterogeneous and proprietary systems deprive them of adequate flexibility to map the increasingly rapid and frequent market changes. And there is certainly no shortage of challenges facing the industry. On the one hand, it has become a buyer’s market where customers increasingly have the confidence to ask for customised products, push down prices and demand ever shorter delivery times. On the other, many competitors have begun to focus on their core competencies, establishing effective supply chains for them while simultaneously rediscovering the Eastern European market.
In 2002, in light of these changes, SSI Schäfer Peem, a plant engineering company, took the strategic decision to set up an end-to-end information and communication platform. “It was clear to us at the time that we could only achieve the flexibility demanded by the market if we were able to plan and control all of our business processes on a company-wide basis,” recalls Michael Stancer, who was responsible for preparing for and supervising the subsequent implementation of an integrated ERP system. “Because as long as the left hand doesn’t know what the right hand is doing, lead times remain far too long and cost structures remain opaque, particularly in the area of projects.”
Inefficiencies
The company from Graz, Austria, which specialises in storage, conveyance and picking technology, realised that accelerating processes and increasing cost transparency were the key to securing the future of the business. However, the company’s existing system infrastructure was simply not up to the job. At the time, the various company departments were each using their own independent software systems. Based on Access and D-Base, they had developed applications that they could use to manage their own operations but were not suitable for providing an economical exchange of information with upstream and downstream departments.
For example, the order management system used by sales and distribution was completely separate from project planning. This meant that project management had to create every project again from scratch for each new order. Besides the considerable manual effort involved, this repeat data entry also resulted in significant data losses and inefficiencies. Similar system disparities also occurred during the course of the process between production engineering, construction, purchasing and production. The stand-alone solutions also led to considerable wait times at points of transfer. “For these reasons, we wanted a system that would allow all employees to sing from the same hymn sheet,” says Stancer, explaining the motivation behind the migration to integrated information processing.
Industry solution
Before starting its search for a suitable ERP provider in mid-2002, SSI Schäfer Peem spent three months conducting a process analysis. Project management worked with all specialised areas to concentrate on defining target processes. “We put our entire process organisation to the test and considered the practical meaning of integrated work process step by process step,” Stancer explains.
Once completed, the project team used this background work to create system specifications, which they distributed to selected providers. Their selection was based on the practical experience that both project managers had acquired at previous companies. In addition, there were other providers that SSI Schäfer Peem knew from the market or that external consultants had recommended. The SAP application used by the entire Group was discounted after a brief analysis.
After closely scrutinising all of the tenders, the mechanical and plant engineering company eventually opted for the component-supported industry solution ams (at the time still AMS++) of ERP/PPS provider ams.Solution. The main reason behind this decision was the comprehensive functionality the solution offered specifically for make-to-order and assemble-to-order manufacturing. Other factors that helped sway the decision included the four to six month implementation times for reference customers and the provider’s extensive industry expertise.
The implementation stage was completed along the same lines as the target process analysis that had been conducted at the beginning of the selection process. “By working through each target process in a step-by-step manner, we always knew exactly where we were,” recalls Stancer. “At the same time, we didn’t allow ourselves to become confined by restrictions. If it made more sense, we opted for a different process on a case-by-case basis.”
The implementation fell into two overlapping main phases; the first was completed in four months, the second in five. The procedure was successive because certain data for BOMs and routings were not available at the start of the project. Consequently, SSI Schäfer Peem first concentrated on modules for quotation and order management, rough planning, time recording and plant data collection. Purchasing, materials and production management, calculations and workflow also went live three months later.
Information advantage
Since August 2003, the mechanical and plant engineering company has been using an integrated total system that fully maps its project lifecycles. All project information, from sales and distribution, product design and production right through to accounting, is now available in real time. Michael Stancer sums up, saying, “During the implementation, we stuck to the industry software standard up to 95% of the time and utilised many Best Practices already in the system. Our customisations were restricted to additional dialog box fields that our employees needed here and there.”
Stancer’s mention of Best Practices primarily refers to the now fully integrated information management system, which has replaced informal communication. BOMs are a good management example. Because BOMs are now created at just one central location and then securely transferred to production engineering in the production areas, previous time and information losses can be reduced significantly.
The integration of engineering brought similar multiple benefits. Design drawings are entered in a product data management system (PDM), which serves as a bi-directional interface to ams. While BOM data were once stored one to two weeks before being newly created in the production systems, data are now transferred automatically in real time. The same applies to net requirement data collection, which promptly initiates materials management and purchasing activities.
Time-to-market was also reduced in the early stages of the project. The ability to control new projects as promptly as possible is particularly critical for the success of make-to order manufacturers like SSI Schäfer Peem. Unlike with standard production, however, vast amounts of product information are not available at this early stage. In order to conduct consistent total planning regardless, the company needs a rough planning system to calculate future capacity loads according to quotations and existing orders.
“We’re now using the rough planning function of the new ERP system. The system allows us to predict whether orders will pay off and how they will affect our capacities much earlier. Our management now has a much more transparent basis for making decisions than before,” explains Stancer. “Because individual projects can tie up considerable resources, this information advantage is extremely valuable. Among other things, we now have considerably faster access to the information we need to secure preliminary financing for a project.”
About SSI Schäfer Peem
SSI Schäfer Peem is one of the world’s leading specialists in providing economical solutions for storage, conveyor and picking technology. The company focuses on the production of conveyor systems and automatic picking systems as well as the necessary controlling software. SSI Schäfer Peem has 400 employees. They became a member of the international SSI Schäfer Group in September 2001. The consortium employs 8,000 people and has 53 branches worldwide.
For more information, visit: www.ssi-schaefer-peem.com