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Norbert Kytka, Headquarters PlattlingContact
For many years, Erfurt & Sohn handled its ERP and PPS processes, financial accounting, maintenance, rebate settlements, and production data acquisition using separate software solutions. No more: The wallpaper manufacturer has now merged its data and processes in SAP ERP and is using MES CAT to integrate its shop floor and operational environments.
Achim Nikolic, Erfurt & Sohn KG’s CFO, smiles with satisfaction. The company, which makes wallpapers, has just finished putting the final touches on its SAP ERP implementation, which includes SAP developer T.CON’s MES CAT Suite, a manufacturing solution that is fully integrated into the ERP system. And, just as expected, both systems are running perfectly. With the move, the company has replaced a total of 15 separate systems in one fell swoop, consolidating its IT environment and data management system in the process. “Now we have a foundation that will allow us to map information flows, process flows, and value streams all the way from order receipts, through our shop floors, to our financial accounting and controlling operations in a completely integrated manner with the help of our IT infrastructure,” Nikolic explains.
Disparate IT kept impeding growth
Erfurt & Sohn KG, which is headquartered in Wuppertal, realized that the mix of IT solutions it was using simply could not keep up with the business’ expansion. While the family-run company had originally devoted its entire manufacturing capacity to the production of ingrain wallpaper, its current range of products was much more diversified and now included items such as nonwoven wallpaper and embossed wallpaper. And, perhaps more importantly, the company had become a full-service provider of paintable wall coverings. For example, it had developed its energy-saving KlimaTec thermal nonwoven wall system and a patented façade system specifically for renovations and energy efficiency upgrades on old buildings – a growth market. In fact, it was selling its quality products to several thousand distributors, i.e., hardware stores, home improvement stores, and painting supply wholesalers, which in turn would sell them to painters and end consumers.
“We were finding it difficult, if not outright impossible, to implement new IT processes that would incorporate our new products and services,” Nikolic explains. “Several of the IT systems, which ran on an IBM iSeries machine, had simply become obsolete and reached the limit of their capacity.” This included not only the company’s central ERP/PPS system, for which the corresponding vendor had already discontinued support, but also its financial accounting solutions and various subsystems, such as those used for production data acquisition, maintenance, customer relationship management, material requirements forecasts, and customer rebate settlements.
Fear of an outright system failure
Not only that, but the operating system running on the IBM machine was also up there in years and needed to be replaced. This was a daunting prospect, as it carried the risk of the ERP/PPS core system failing outright – with unforeseeable consequences. Quite understandably, management was wary of taking this risk, and instead decided on switching to an integrated ERP solution that would be installed on a modern, scalable, and high-availability hardware platform.
“From the very beginning, everyone involved was perfectly aware of the fact that this strategically important IT project would only be successful if every step was clearly laid out and then carried out precisely as planned,” Nikolic clarifies. This, of course, entailed organizing the project down to the smallest detail, including set tasks, responsibilities, and communication processes. It also helped that management took a proactive role in supporting the IT project from the start!
Four steps to a new ERP system
Given the importance of the undertaking, it is not surprising that Erfurt & Sohn adhered to the proposed approach and carefully laid out its four-step strategy for selecting and implementing a new ERP system. First, the company defined its process requirements with the help of an external consulting firm, after which it proceeded to prepare a performance specification for the vendor presentations that would follow. Out of seven pre-selected ERP systems that were benchmarked, only three made it to the last round, with SAP ERP included in this final group thanks to Plattling-based T.CON’s presentation.
After the final tests, the company decided on SAP and T.CON. “SAP’s standard functionalities by themselves allowed us to cover a large number of business processes already, and the fact that the ERP application is multi-site-capable was also a big plus. But the detailed process know-how shown by T.CON’s consultants is what really sealed the deal,” Nikolic says when explaining the decision. Another important factor was the fact that Erfurt & Sohn would be able to seamlessly integrate its production-related systems with its ERP environment by using T.CON’s MES CAT Suite.
New SAP users learn the ropes early on
As part of the third step, the project partners prepared a prototype of what would eventually become the final ERP solution in order to make it possible to fine-tune and define all required processes based on the functional descriptions already available. This also provided an opportunity not just to provide future users with training for the software that was just around the corner, but also to identify any undetected issues that would require unnecessary time-consuming work and eliminate them before the implementation stage.
The last step was then to implement the ERP system, which took a mere nine months thanks to the excellent preparation work carried out by everyone and the use of tried-and-true methods. Once all was said and done, the system went live at the beginning of July 2012, just as scheduled and with everything running smoothly.
Customer information is now just a mouse click away
Today, the seamless integration between the various individual SAP modules is making the day-to-day work of the system’s 120 users much easier. In fact, the sales team only needs a single mouse click to access customer master data and look at a customer’s pending receivables, payment terms, payment history, creditworthiness, and discount and rebate agreements.
Rebates and freight charges are stored in the ERP system as factors that decrease revenue and are automatically used in the system’s multi-level customer contribution accounting calculations. In fact, the decreases in revenue and the net-net prices calculated by the ERP system using retrograde calculations are used as a basis to show customer-specific and product-specific contribution margins in a transparent manner.
Shipping prices are now calculated automatically
Shipment cost settlements have also become much easier: The shipping and vendor rates stored in the ERP system make it possible to automatically calculate shipping prices in advance. “This really makes our work much easier, especially when you take into account the fact that we have hundreds of incoming and outgoing deliveries every day. It’s hard to believe we used to calculate these prices by hand,” Nikolic comments.
In addition, SAP Business Workflows ensure end-to-end electronic workflows for product master data creation and management, invoice receipt processing, and the release of requisition orders and purchase orders. And since incoming invoices can be accurately tracked at any moment, transparency has increased tremendously.
Directly connected ERP and shop floor
Operators at the company’s shop floors can now access T.CON’s MES solution on special terminals and access the SAP work orders for their systems at the touch of a button. Moreover, the MES system is also connected to the machines’ controllers, meaning that parameters such as the weight, diameter, and length of paper rolls; machine malfunctions; quantities; times; and quality data are all acquired automatically and transferred directly to SAP ERP, where the corresponding updates are made. In addition, the MES solution is installed on its own servers, increasing the availability of the company’s production systems. And to top it all off, the production data acquired by MES CAT is stored temporarily while the SAP system is offline, only to be automatically sent as soon as the ERP solution is back online.
The company has also migrated all its servicing and maintenance processes to SAP, eliminating the need to run several systems at the same time and doing away with six interfaces in the process. Not only that, but things have also been simplified by the fact that user departments are now able to do more things without having to get someone from IT involved, as key users can now run their own queries and analyses, for example. Add to that the fact that the SAP NetWeaver Business Warehouse (SAP NetWeaver BW) application will enable the company to have more accurate cost and budget planning and more useful data analyses in the future, and the future looks bright indeed.
Continuous process improvement
“We’re only just starting, but our goal of continuously enhancing and improving our processes is definitely something that we won’t be forgetting any time soon,” says Nikolic. For example, the company wants to use SAP’s BW solution to make its sales figures and sales volume planning more efficient all the way down to the customer and product levels, as well as to analyze actual/plan variances with greater precision. And in order to automate its intercompany processes, a SAP roll-out is already in the works for distribution companies in Poland, Hungary, and Russia and for a production location in Great Britain. Finally, the company is planning to integrate a web store into its ERP solution in order to enable end customers to order custom digital wallpaper or smooth nonwovens.
Keywords: SAP, new implementation, MES, EDI, rebate, commission, terms ( discount ), planning tool, consumer, wholesale, CDC processing: cross-docking center, rolling sales planning, strategic planning, kit products.