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Universal Robina Corporation tastes sweet success with IBM and SAP

Published on 10 Feb 2010

Validated on 02 May 2012

"The SAP solution and the IBM Power Systems platform have helped URC make dramatic cost reductions, improve efficiency and enhance customer service, which offers us a great competitive advantage throughout the region." - Boonsong Asawaphat, Project Manager and MIS Manager, URC (Thailand) Co., Ltd.

Customer:
Universal Robina Corporation (URC)

Industry:
Consumer Products (US)

Deployment country:
Thailand

Solution:
Business Intelligence (US), Business Performance Transformation, Energy Efficiency, Enterprise Resource Planning, High Availability , Information Integration, Optimizing IT, Optimizing IT, Supply Chain Management

IBM Business Partner:
SAP, Electra

Overview

A subsidiary of JG Summit Holdings, Inc. of the Philippines, Universal Robina Corporation (URC) produces beverages, baked goods, snacks, wafers, biscuits, candies and chocolates. The company has affiliated operations in Hong Kong, Indonesia, Malaysia, Republic of China, Singapore, Vietnam and Thailand. Activities include research and development, manufacturing, warehousing, logistics, marketing and sales for both domestic and international customers.

Business need:
Universal Robina Corporation manufactures and sells its foods throughout south-east Asia. Previously, its legacy systems were unable to manage sales, production and logistics operations for the company's complex demand cycle, which required each location to use its own software. Central warehouse management was a manual process and was prone to error; it was not possible to control complex order conditions or to understand the true end-to-end costs of production and sales.

Solution:
Implemented Elocity for Consumer Products in all URC (Thailand) Co., Ltd. locations. This solution, created by Electra, an SAP Business All-in-One Partner and IBM Business Partner, is based on the SAP Business All-in-One solution. This template methodology reduces implementation time and ensures application of standardized best practices across all locations, at a fraction of the price of tailored implementations.

Benefits:
Shared, centralized sales order and warehouse management has increased customer fulfillment rates to nearly 100 percent. Central order forecasting and planning allows production to be optimized with less chance of under- and over-production. Standardized charts of accounts allow costs to be analyzed, allowing manufacturing efficiency to be compared and improved. Wastage and costs are reduced, customer service is improved, and group profitability is increased.

Case Study

A subsidiary of JG Summit Holdings, Inc. of the Philippines, Universal Robina Corporation (URC) produces beverages, baked goods, snacks, wafers, biscuits, candies and chocolates. The company has affiliated operations in Hong Kong, Indonesia, Malaysia, Republic of China, Singapore, Vietnam and Thailand. Activities include research and development, manufacturing, warehousing, logistics, marketing and sales for both domestic and international customers.

From its affiliate company in Thailand, URC (Thailand) Co., Ltd. has been driving annual growth of more than 20 percent, based on capital investment in production capacity and on constant product innovation.

Understanding the challenge
Each of the URC (Thailand) Co., Ltd. locations used self-developed software or vendor packages of varying types, separate from the central legacy system. The result was that there were multiple order management solutions, with separate warehouse control systems, production planning spreadsheets, and local sales information databases.

The lack of standardized information formats meant that maintaining a current, accurate inventory position was an almost impossible task, based entirely on manual consolidation of figures. Without that data, to ensure that the company could fulfill very large customer orders it was common practice to over-produce. Stored food products with declining remaining shelf-life would frequently go to waste or have to be sold at a significant discount, damaging group profitability.

Even so, on some occasions, there would be stock shortages and customer orders could not be fulfilled. To remedy the situation and to make up the shortfall, a site would be asked to switch production, an expensive and time-consuming task. In many cases, the unit chosen might not be best-suited to produce that particular item, which could also reduce group profitability.

Mr. Boonsong Asawaphat, URC Project Manager and MIS Manager, says, "Production costs varied enormously from country to country. The prices of raw materials through operations to the final delivery charges were held locally, and there was no automated way to share and compare the data. Without this central capability, it was not possible to determine and compare the true fulfillment costs of an order at each location, and we were unable to optimize our production decisions."

Selecting SAP and IBM
The URC headquarters office had been following an IT roadmap based around SAP software for some time, and appreciated its reliability and extensive functionality. It was clear that implementing SAP solutions throughout the group would offer considerable business advantages, and would address the data integration and sharing issues.

With a small IT department of four people, the company was hesitant to commit to a large ERP implementation program. Electra, an IBM and SAP Business Partner, proposed Elocity, a lightweight industrial solution based on the SAP ERP platform. Elocity incorporated SAP Business All-in-One functionality, based on industry best practices for consumer products. This template proved to offer a more than 70 percent match to URC's requirements.

Boonsong Asawaphat says, "Electra was selected as its Elocity for Consumer Products template fitted so well with our requirements. Around 60 percent of the template was a perfect match, while the remaining 40 percent was largely composed of customizations to our Warehouse Management System. We are happy with Elocity's proven methodology, its short implementation timeframe, and, most of all, the competitive pricing. IBM has always been our chosen hardware and it is our preferred brand. With its reliable performance, it is the only natural choice to go with IBM in this implementation."

Elocity for Consumer Products methodology reduces the implementation time by pre-configuring SAP Business All-in-One with standardized charts of accounts, business processes and structures. The remaining configuration work largely focuses on the specific needs of each manufacturing site, without affecting the data integration capabilities between locations and with head office. Electra created a demonstration solution based on the template, showing how URC could gain access to the full range and functionality of SAP applications at an attractive price-point.

The SAP Business All-in-One solution was implemented at the URC (Thailand) Co., Ltd. head office in Bangkok and at the factory and main warehouse in Samutsakorn. This included SAP ERP 6.0, SAP Console for Integration with RF handheld devices, a Telnet server application for connecting the handhelds through the SAP Console, and Oracle database.

URC chose two IBM Power Systems p5-550 servers, featuring POWER5+ processors, linked using PowerHA to provide failover protection. Should one server fail or be taken out of service, PowerHA automatically shifts the workload to the remaining system to allow production to continue without interruption. As well as protecting the business in a way not possible with individual servers at multiple locations, the IBM Power Systems server capacity can be updated with additional processors or with the latest POWER processor, preserving the original investment.

Data is stored on an IBM Systems Storage DS4700 Model 70 system, with an IBM Systems Storage TS3100 tape autoloader mounting LTO tapes for automated data backup. The DS4700 offers high-performance 4Gbps Fibre Channel connections, with up to 33.6TB of Fibre Channel or 112TB of SATA physical storage capacity. Powerful system management and data protection features allow URC to be confident that the centralized storage will meet both present and future demands, making the DS4700 an excellent strategic choice for this expanding business.

Enhanced service, optimized production
The single instance of the Elocity solution supports all the local manufacturing, sales and warehouse operations for the entire URC locations in Thailand. From this single reference point for all orders, inventory and logistics data, the company has been able to automate many of the previously manual tasks, improving accuracy by eliminating human error and increasing its total fulfillment percentages.

Inventory data is now generated directly from manufacturing data and stock picking lists are automatically created from customer sales orders. The result is that goods are no longer need to be over-produced to avoid stock-outs because the exact customer order data can be matched with precise inventory data to determine the quantities and shelf-life required. This improvement in accuracy reduces manufacturing costs and cuts waste, as well as ensuring that customer orders are always completed.

By connecting the originating sales order to the delivery chain, the automatically generated picking lists have eliminated incorrect deliveries and have sped up the picking process. The quantities and types of goods first entered as a confirmed order are reproduced exactly for the warehouse stock pickers and for the drivers, with no re-keying errors or expensive reverse-logistics.

At the group level, it is now possible to examine production costs in great detail, comparing each manufacturing site on a like-for-like basis. From raw materials through to delivery, URC can now track the individual cost components as well as the total manufacturing cost of any product, with these figures captured in the Elocity system. All sites use the same chart of accounts, so it is possible to complete a valid analysis of, for example, chocolate wafer production at sites in Vietnam and Thailand.

Managers are able to examine the price of raw materials, production efficiency, warehousing costs and delivery expenses and choose the most cost-efficient manufacturing location for each order. For example, it may be more profitable to move very large volume orders to more distant, economical sites. It is now possible to analyze the balance of factors to optimize manufacturing efficiency on a group-wide basis.

Flexible, efficient manufacturing
With the integrated SAP Business All-in-One solution, URC (Thailand) Co., Ltd. has created a flexible, highly efficient manufacturing system for its entire south-east Asian operations.

Mr. Premchai Navarasuchitr, General Manager, says, "In many ways, we completed this strategic transformation at exactly the right moment. The current economic climate places great stress on low-cost, flexible production and avoiding costly wastage. The SAP solution and the IBM Power Sytems platform have helped URC make dramatic cost reductions, improve efficiency and enhance customer service, which offers us a great competitive advantage throughout the region.

"The partnership with Electra, SAP and IBM has helped us transform the way we do business to become an integrated enterprise, focused on manufacturing excellence and outstanding customer service."

Components

IBM products and services that were used in this case study.

Hardware:
Storage: DS4700 Express, System p (US), System p: Power 550

Service:
IBM-SAP Alliance (US)

Legal Information

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