Agriauto Industries drives towards better business success with SAP and IBM

Published on 08-Jan-2013

"The solution from IBM and SAP has enabled us to enhance production planning accuracy by 60 percent, while automated calculation of raw materials requirements has helped to cut wastage by 30 percent." - Aqeel Loon, Chief Financial Officer and Company Secretary, Agriauto Industries Limited

Customer:
Agriauto Industries

Industry:
Industrial Products

Deployment country:
Pakistan

Solution:
Business Resiliency, Energy Efficiency, Enterprise Resource Planning, High Availability , Server Consolidation

Overview

Incorporated in 1981, Agriauto Industries Limited in Pakistan is a leading automotive components manufacturer, supplying parts to both original equipment manufacturers (OEMs) and aftermarket clients such as Toyota, Suzuki and Honda Atlas. The company’s products include shock absorbers, struts, pipe forks, cylinder sleeves, gaskets, door locks and steering boxes. Owned by the House of Habib, Agriauto Industries employs more than 600 people and has its headquarters in Karachi, Pakistan.

Business need:
Agriauto Industries Limited wanted to get closer to its customers with integrated just-in-time deliveries. Curiously, the place to start was by getting closer to its own suppliers by creating shared access to real time data and production reports. Relying on custom-built systems and spreadsheets for materials management was proving time-consuming and error-prone.

Solution:
Agriauto deployed SAP ERP, SAP ERP Financials and SAP ERP Human Capital Management applications. Choosing IBM Global Business Services as its implementation partner to deploy the Express Automotive Supplier solution, a qualified SAP All-in-One solution, the implementation was completed well within schedule in seven months. Agriauto replaced its existing infrastructure with IBM BladeCenter HS22 blades within an IBM BladeCenter H Chassis and deployed two IBM System x3650 class servers at its disaster recovery to protect business-critical data.

Benefits:
The solution helps Agriauto increase production planning accuracy by 60 percent and cut wastage by 30 percent, increasing efficiency and helping to ensure that customers’ just-in-time orders are always fulfilled. Production reports that formerly took up to three days to generate can now be created in just one minute, an improvement of more than 99 percent. Monthly reporting that formerly took up to ten days can be completed in just a day, an improvement of 90 percent. Moving to IBM hardware enables the company to raise uptime levels from 90 percent to 99.999 percent.

Case Study

Incorporated in 1981, Agriauto Industries Limited in Pakistan is a leading automotive components manufacturer, supplying parts to both original equipment manufacturers (OEMs) and aftermarket clients such as Toyota, Suzuki and Honda Atlas. The company’s products include shock absorbers, struts, pipe forks, cylinder sleeves, gaskets, door locks and steering boxes. Owned by the House of Habib, Agriauto Industries employs more than 600 people and has its headquarters in Karachi, Pakistan.

Identifying the challenge
Aiming to provide just-in-time manufacturing, Agriauto aligns its manufacturing processes with its suppliers, and ships completed products to its customers at least five times a day.

To make this possible, Agriauto had built a complex web of custom-made software applications, supported by a deluge of manually-created spreadsheets designed to control materials management.

Aqeel Loon, Chief Financial Officer and Company Secretary at Agriauto Industries Limited explains: “We currently operate five sub-plants and our operations are growing all the time, making the spreadsheet approach increasingly complex, error-prone and time-consuming.

“Gaining an overview of company operations called for collating and merging reports from multiple systems, a process that took at least ten days each month, meaning key decision-makers could be denied access to information they needed. We knew that taking steps to resolve these issues could offer us a key competitive advantage.”

With the spreadsheet-based approach, raw materials requirements were calculated manually by extracting data from customer sales entry solutions. Manual data transfer carried the risk of introducing errors, leading to under- and over-orders, wastage and costs. In some cases, materials or components could take up to three months to arrive from overseas. If the wrong parts were ordered, it would take three months to recognize this, and another three months for the correct part to arrive, resulting in a six-month delay to production.

Similarly, changes to the production line sequence had to be propagated across the company manually, entered to each isolated system and recorded on spreadsheets. This process severely limited Agriauto Industries’ ability to respond rapidly to changed production requirements.

Choosing SAP and IBM
To eliminate the cost and delay caused by manual data transfer between systems, Agriauto decided to follow the ERP path, and, after comparing offerings from SAP, Oracle and Micorsoft, selected SAP® ERP.

Syed Nasr, Senior Manager IT, comments, “The success a number of House of Habib companies had experienced with SAP solutions convinced us that this was the right option for us. The challenge was finding an implementation partner that could meet our ambitious target of deploying six modules within just six months. As a Pakistani company with strong Japanese influences, the partner we selected needed to understand our culture and adapt to this.”

Ultimately, Agriauto chose to work with IBM, based on the global track record of successful SAP implementations on a similar scale. The company implemented modules for finance, controlling, production planning, quality management, plant management, sales and distribution, materials management and SAP ERP Human Capital Management (HCM).

IBM Global Business Services® provided 12 consultants with in-depth expertise in the automotive industry to help ensure the implementation was handled efficiently and effectively. Using the IBM® Express Automotive Supplier solution, a qualified SAP All-in-One solution, IBM was able to accelerate implementation. IBM Express Solutions can be deployed extremely quickly as they are delivered pre-configured, rely on tried-and-tested accelerators to speed up typical tasks and activities, and offer simple and effective implementation tools designed to be used without additional non-consulting resources.

“The IBM Global Business Services team met the timelines we were expecting, delivering the solution in just seven months, which we understand is an unusually short timeframe for this sort of project,” says Aqeel Loon. “This included one month of on-site support, helping our employees quickly become familiar with the new solution.”

At Agriauto, the IBM Global Business Services team relied extensively on SAP Next Generation Tools developed by IBM to create client value to differentiate the IBM offering from the competition. For example, the project at Agriauto was significantly streamlined with the use of a reusable asset library and a hierarchy wizard, helping automate parts of the configuration process.

Transforming performance and resilience
Agriauto’s existing infrastructure lacked the processing power and capacity to support the new SAP landscape.

“Our existing infrastructure simply would not have been able to cope with the demands of the new SAP systems,” comments Nasr. “Since we had chosen to rely on ongoing maintenance from IBM for the SAP environment, it made sense to us to move to IBM server and storage solutions as well.”

Agriauto replaced its existing infrastructure with IBM BladeCenter® HS22 blades, featuring the Intel Xeon processor 5600 family, within an IBM BladeCenter H Chassis to run the SAP ERP applications.

The Intel Xeon processor 5600 family automatically regulates power consumption and intelligently adjusts server performance according to application needs, maximizing both energy efficiency and performance for Agriauto.

Fully redundant components within the BladeCenter solution ensure resiliency in the event of a disaster, helping to prevent interruptions to the manufacturing line. Prior to implementation, Agriauto reviewed its IT infrastructure in terms of reliability and scalability. With the former systems, there was no standard, enterprise-wide backup solution in place, and Agriauto ran the risk of losing valuable data in the event of a serious hardware failure. Centralizing to SAP ERP software presented the opportunity to introduce a formal backup procedure.

Two IBM System x® 3650 class servers, also based on the Intel Xeon processor 5600 family, were deployed at Agriauto’s disaster recovery site, ensuring that business-critical data is protected at all times and further reducing business risk. An IBM System Storage® DS3500 Express disk system and IBM System Storage TS3200 Tape Library provide ultra-reliable, high-performance storage.

“Moving to IBM hardware has increased our uptime levels from 90 percent to 99.999 percent, helping to support 24/7 operations,” says Nasr. “The low maintenance requirements of the IBM solution help save the Agriauto Industries IT team time that can now be spent on higher-value tasks, while consolidating to IBM BladeCenter provides significant savings in terms of energy and floor space, providing a lower total cost of ownership than the previous solution.”

Gaining a comprehensive view
With the SAP solutions in place, Agriauto can now measure stock and activity levels across all the company’s sub-plants, enabling the identification of bottlenecks and opportunities to boost output. This is the first step towards tightly synchronizing inventory and production with dependent suppliers, greatly enhancing customer satisfaction. Changes can be easily and accurately propagated across all systems, offering Agriauto Industries greater agility and flexibility to fluctuating market demand.

By eliminating the manual data collation and consolidation processes, Agriauto is now able to provide daily production reports, as Aqeel Loon explains: “Production reports used to take up to three days to generate, but can now be created in just one minute, an improvement of over 99 percent. The result is that monthly reporting that formerly took up to ten days can be completed in just a day, an improvement of 90 percent.”

“Using in-built SAP reporting tools, we now have access to a company-wide view that updates every few seconds, providing an accurate basis for better decision-making,” says Aqeel Loon. “Employees can run ad-hoc reporting as needed without contacting IT teams, saving time and delivering important information faster.”

With help from IBM, Agriauto Industries has succeeded in replacing disconnected systems and processes with an end-to-end, standardized solution based on sophisticated SAP software. Tasks that were managed manually in the past are now automated, saving the company’s employees huge amounts of time and thereby boosting productivity considerably. Customers are now notified when their orders will be completed, allowing for precise production scheduling and optimal use of time.

Aqeel Loon concludes: “The solution from IBM and SAP has enabled us to enhance production planning accuracy by 60 percent, while automated calculation of raw materials requirements has helped to cut wastage by 30 percent. As a result, we save a lot of money on our inventory cycle and can serve customers more efficiently and effectively, increasing efficiency and helping to ensure that customers’ just-in-time orders are always fulfilled. Working with IBM and SAP has given us the ideal platform to pursue further success, offering us an edge against the competition.”

Products and services used

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

Hardware:
BladeCenter, BladeCenter H Chassis, BladeCenter HS22, Storage, Storage: DS3500 Express, Storage: TS3200 Tape Library, System x, System x: System x3650 M3

Software:
Linux

Service:
GBS ISV Community: SAP, IBM-SAP Alliance

Legal Information

IBM Deutschland GmbH, D-71137 Ehningen. ibm.com/solutions/sap. IBM, the IBM logo, ibm.com, BladeCenter, Global Business Services, System Storage and System x are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at http://www.ibm.com/legal/copytrade.shtml. Intel, Intel logo, Intel Inside, Intel Inside logo, Intel Centrino, Intel Centrino logo, Celeron, Intel Xeon, Intel SpeedStep, Itanium, and Pentium are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. Linux is a registered trademark of Linus Torvalds in the United States, other countries, or both. Other company, product or service names may be trademarks, or service marks of others. This case study illustrates how one IBM customer uses IBM and/or IBM Business Partner technologies/services. Many factors have contributed to the results and benefits described. IBM does not guarantee comparable results. All information contained herein was provided by the featured customer and/or IBM Business Partner. IBM does not attest to its accuracy. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. This publication is for general guidance only. Photographs may show design models. © Copyright IBM Corp. 2013. All rights reserved.