Uratex drives profitability with SAP Business All-in-One on IBM technology

Published on 03-Dec-2009

Validated on 03 Dec 2013

"We consider the SAP and IBM solution to be an investment for the future, able to expand as we grow and help us manage the business more efficiently." - Peachy Medina, Managing Director, Uratex

Customer:
Uratex

Industry:
Industrial Products

Deployment country:
Philippines

IBM Business Partner:
SAP

Overview

Family-owned business Uratex in Manila, Philippines, specializes in foam, plastic and metal products for the automotive, industrial and domestic consumer markets. The company operates 11 sites, and employs some 1,600 people, producing and selling components for the automotive sector, such as car seats and fascia components, as well as for the industrial marketplace and for consumers, such as mattresses and other bedding products, in domestic markets.

Business need:
With 11 sites producing thousands of different products, co-ordinating manufacturing, sales and finances was proving to be a complex challenge for Uratex. It was common to over-produce to ensure sales orders could be fulfilled, resulting in over-stocked inventories, and there was no link between goods returned and refund credits, making it hard to identify the true profitability of each customer.

Solution:
Worked with SAP Value Added Reseller BayanTrade to implement an SAP Business All-in-One solution, initially at two sites and ultimately across the group, based on an IBM System x server, IBM System Storage and IBM DB2.

Benefits:
Finished goods inventory cut by 90 percent from two months to five days, releasing cash to the business. Integrated order-to-cash process ensures production volumes match sales orders, reducing waste and increasing efficiency. To allow for demand fluctuation, previously Uratex held four months’ raw materials inventory, now reduced by 75 percent to one month. Credits for returned goods are authorized only when the Uratex warehouse has accepted safe delivery, improving cash control.

Case Study

Family-owned business Uratex in Manila, Philippines, specializes in foam, plastic and metal products for the automotive, industrial and domestic consumer markets. The company operates 11 sites, and employs some 1,600 people, producing and selling components for the automotive sector, such as car seats and fascia components, as well as for the industrial marketplace and for consumers, such as mattresses and other bedding products, in domestic markets.

Each manufacturing site has developed its own business systems, and even between locations there were difficulties in exchanging information. Sales order information would frequently be re-keyed several times into different production systems, and each unit operated its own general ledger, inventory, point of sale and order handling system.

Peachy Medina, Managing Director, comments, “We have literally tens of thousands of products, and a large order might be manufactured across several sites. Multiple data entry was a waste of effort and it tended to introduce errors, so sites would often over-produce ‘just to be on the safe side,’ so to speak.

“Additionally, there was no embedded process control. For example, when an under-pressure sales person could not find the correct product code, it was quicker simply to enter a new code in the relevant field in order to process the order. Or again, if a customer returned an order, it was easier to generate a credit and sort out whether the goods had actually arrived at a later stage. In both cases, although we offered speedy and helpful customer service, our lack of discipline made it very hard to identify true profitability and improve our business processes.”

Finding a cost-effective solution
While Uratex management knew that integrated ERP solutions were designed to address these kinds of issue, the initial perception was that they would be out of reach financially, both in the per-user cost and the implementation expense. SAP Value Added Reseller BayanTrade proposed SAP Business All-in-One as a cost-effective solution, able to meet all of Uratex’s business management challenges at a very attractive price-point.

“Developing our own solution would divert us from core activities, and we had assumed that the complexity of our business would put an ERP solution beyond our reach,” says Peachy Medina. “BayanTrade showed us that SAP Business All-in-One would offer business process best practice as well as hugely reliable, integrated software that was right for Uratex.”

SAP Business All-in-One provides a single configurable solution that helps manage financials, human resources, procurement, inventory, manufacturing, logistics, product development, and corporate services, customer service, sales, and marketing from within a single environment. BayanTrade, the leading supply chain management IT services specialist in the Philippines, pre-configured the solution using its own templates to minimize the implementation time and ensure a close fit for Uratex.

The first implementation, at two sites, took just 21 weeks, and full group-wide rollout is under way. The SAP software runs on an IBM System x3650 server, more than capable of handling the workload of the entire Uratex group. Designed for enterprise applications such as SAP, the x3650 M2 rack-optimized server offers four- and six-core Intel processor options, and the server itself can be upgraded to meet the most extreme workloads.

Uratex selected IBM DB2 to provide information management, and data is stored on an IBM System Storage DS3400. DB2 offers advanced data compression, which helps Uratex to exploit its DS3400 and avoid over-investing in capacity as the SAP data store expands. DB2 offers very close integration with SAP applications, with an integrated management cockpit that offers easy database administration to help reduce costs and boost efficiency. DB2 is offered at commercially attractive license terms, too, which makes DB2 a compelling proposition for the SAP application environment.

The DS3400 provides up to 12TB of storage capacity, expandable to an enormous 48TB, with enterprise-class RAID data protection acting as a centralized, consolidated and cost-effective information repository.

“We selected SAP Business All-in-One very largely for the embedded business practices, and chose to run it on IBM technology because of its excellent reputation for quality and reliability,” says Peachy Medina. “We consider the SAP and IBM solution to be an investment for the future, able to expand as we grow and help us manage the business more efficiently.

“The built-in Job Scheduler and Planning Calendar gives us the ease of ensuring and protecting our data. For example, by defining tasks in advance such as back-ups, table reorgs and diagnostics, we can reduce the manual DBA workload and ensure that essential administration is completed. Additionally, the built-in performance monitoring tools help us to identify areas that need to be tuned to ensure we exploit the system to its maximum.”

Uratex worked with IBM to specify and size the server capacity, and BayanTrade provided the SAP Business All-in-One pre-configuration services and the consultants for the implementation itself, which was completed on-time and on-budget.

Centralization brings business control
The benefits of the SAP Business All-in-One are already becoming clear at Uratex, with defined processes and clearer analysis of production, logistics and finance.

“SAP Business All-in-One has immediately resulted in better process controls and a simpler way of working that will make it easier for us to build the business,” says Peachy Medina. “For example, because sales orders and production requests are managed within the SAP applications, there is no need to over-produce in case of error, with consequently lower wastage and improved profits. Errors and duplicated keying of data have been eliminated, with savings on administration and less re-work of incorrect orders.

“Again, previously if a customer returned a product there was no simple way to match this against their original order or the refund payment. The SAP Business All-in-One solution insists that the returned goods must first be accepted into the warehouse and matched with the correct customer order, before the credit is issued. This allows us to gain real insight into customer profitability in a way that was not possible before.”

Driving the automotive business
The automotive and industrial distribution channels, which send sales order forecasts on a regular basis and which order specific components in set quantities in advance, have already seen direct benefits derived from the SAP and IBM solution.

“Finished goods inventories have come down from two months to just five days,” says Peachy Medina. “Because the automotive customers share planning figures with us, we are now able to control our production processes by generating our own raw materials requirements in advance. To allow for demand fluctuation, previously we held four months’ raw materials inventory, now reduced to one month.

“This reduction in stocks has released capital to the business and at the same time helped us to ensure that we serve our automotive customers with reliable capacity and delivery. SAP Business All-in-One has imposed process disciplines on us that ensure that we work with accurate information, which in turn allows us to run a leaner, more efficient business.”

On the consumer side, Uratex has been able to reduce its Work in Process inventory through adherence to the embedded best practices within SAP Business All-in-One.

“We no longer over-produce, because we cannot order materials from the warehouse without a production order that agrees with the Bill of Materials. We also expect to achieve lower finished goods and raw materials inventories, and the SAP applications provide a blueprint on how to do it,” says Peachy Medina. “The SAP solution allows us to obtain accurate historical movement data, apply inventory policy levels, and will complete the materials replenishment planning automatically.

“We are now working on a project to develop accurate forecasts of our 20,000 SKUs in the consumer business, which we need to input into SAP for automatic replenishment. When we have solved the internal business process challenges, we will be able to unleash the power of SAP materials replenishment planning capabilities. For the automotive business, where customers provide forecasts for us, SAP paid back immediately.”

Looking to the future
As Uratex implements SAP Business All-in-One across the group the IBM technology will come into its own as a cost-effective, long-term platform. The IBM System x3650 M2 server can be upgraded to meet the rising workload, and disk capacity can be added to the DS3400, offering a stable and reliable solution for continuing operations.

“The integrated approach embedded within SAP Business All-in-One is transforming the business, and has broken what you might call the silo mentality,” comments Peachy Medina. “The flexibility of SAP Business All-in-One has allowed us to capture our unique business processes, such as variant product mix and matches with multiple pricing schemes, while maintaining enterprise-wide standards.

“The SAP solution demands a more rigorous appoach to managing business data – which means that we can now rely on the quality of information reporting. We have real-time data from a single source reaching decision-makers more quickly, which in turn has helped us to reduce inventories, release precious cash to the business, and understand the profitability of each customer account. With that information, we intend to support the next phase of our company’s growth.”

Products and services used

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

Hardware:
Storage: DS3400, Storage: SAN24B-4, System x: System x3650, System x: System x3650 M2

Software:
DB2 for Linux

Operating system:
Linux

Legal Information

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