Shiseido supports global development with IBM and SAP

Published on 13-Feb-2013

"Bringing in ERP globally is a huge project, so we needed not only a solution, but also support for project implementation and management, and we began discussing this with IBM." - Mr. Masashi Sagehashi, General Manager of Information Planning, Shiseido Co., Ltd.

Customer:
Shiseido Co., Ltd.

Industry:
Consumer Products

Deployment country:
Japan

Solution:
IGF, IGF: IT Financing - IBM HW, IGF: IT Financing - IBM SW, Business Integration, Business Process Management (BPM), Enterprise Resource Planning, Information Integration, Information Management Foundation, Transforming Business

IBM Business Partner:
SAP

Overview

Shiseido Co., Ltd. (Shiseido) is a global manufacturer and retailer operating in Japan, as well as international markets such as Asia, Europe and North America. Shiseido produces and markets cosmetics, toiletries and products for beauticians and hairdressers around the world under the corporate motto: “This moment. This life. Beautifully.”

Business need:
Shiseido’s strategic “10-year Roadmap” describes the 10-year period from 2007 and seeks to make Shiseido a global player in Asia by 2017. To achieve these goals, work is underway to create a core system for global standards using SAP ERP. This system is called OneModel.

Solution:
IBM was selected to be a partner in this large-scale project to integrate SAP ERP globally. With its wealth of ERP experience in global enterprise, IBM will contribute to the implementation and management of the project. Integration of SAP ERP has already begun, starting in Europe and then moving to China, through the creation of templates to standardize business processes, data and systems.

Benefits:
Enhanced numerical visibility through the use of globally-shared KPIs, and process visibility by reforming business processes. Enabled swift development of global business strategies. Expected to provide benefits for human resource training by encouraging personnel exchange.

Case Study

To read a Japanese version of this case study, click here.

Shiseido Co., Ltd. (Shiseido) is a global manufacturer and retailer operating in Japan, as well as international markets such as Asia, Europe and North America. Shiseido produces and markets cosmetics, toiletries and products for beauticians and hairdressers around the world under the corporate motto: “This moment. This life. Beautifully.”

Shiseido set out its business strategy in its “10-year Roadmap” which describes the 10-year period from 2007. It states that by 2017, Shiseido should be the global player in Asia, with sales of at least 1 trillion yen, an operating margin of at least 12 percent, and an overseas sales ratio of at least 50 percent.

To achieve these goals, IT is being leveraged to provide business reforms such as business standardization and integration. As a foundation to implement this, work is underway to create a core system for global standards using SAP® ERP. This system is called “OneModel.”

OneModel was first put into operation in Europe in July 2010, with China following in July 2011, and introduction in Asia in the planning.

Shiseido expects OneModel to provide standardization and administrative visibility to their global business, as well as to act as a driver for global business development.

Driving business reform
The IT infrastructure supporting Shiseido’s global strategy is managed by the company’s Information Planning Department, and the department’s mission has changed significantly with the creation of the “10-year Roadmap” business strategy.

Mr. Masashi Sagehashi, General Manager of Information Planning, explains how that mission has changed: “We have moved from the conventional role of creating and maintaining simple systems to the role of driving business reforms through IT. In other words, it is as though the mission of information planning is to drive business reforms at a global level and support global business overall through the application of IT.”

Shiseido’s existing systems landscape had grown to be bulky and complex as a result of the constant addition of new business systems to the company’s IT architecture. Implementing a new ERP package was examined as a route towards reforming this architecture.

“What is important is not to ask how to replace systems, but how best to develop a system which brings out the added value of infrastructure and IT investment,” states Mr. Masashi Sagehashi.

“This will enable us to make IT a driver for business reform and reach our two goals of enhancing business support through IT and providing an IT infrastructure which reforms and better contributes to operations.”

To achieve these goals, Shiseido decided to adopt SAP ERP based on an investigation of the solution and the extensive number of successful implementations in thousands of companies worldwide.

Domestic and international rollouts
Shiseido began the reform of its main Japanese systems in 2007, and moved on to domestic group companies in April 2008. The next step was to introduce a uniform system globally, and attention turned to achieving business reform and administrative visibility.

Templates were created to standardize business processes, data and systems, and projects were implemented in Europe, China and Taiwan, with the rest of Asia to follow.

Several companies competed to act as a partner for template design for the new OneModel system, and after examining proposals, Shiseido decided on IBM, for its extensive experience with ERP in global enterprise.

According to Mr. Masashi Sagehashi: “Bringing in ERP globally is a huge project, so we needed not only a solution, but also support for project implementation and management, and we began discussing this with IBM.”

To improve visibility and standardization of Shiseido’s business processes, IBM® Global Business Services® held discussions to formulate the business direction to be deployed at a global level, and put it together in a guideline.

Based on the guideline, IBM created SAP-based system templates – called OneModel – to implement SAP ERP at each of the company’s subsidiaries. IBM helped Shiseido develop a global integrated system, based on the IBM Globally Integrated Enterprise (GIE) business model.

The solution included SAP ERP with applications for financials (FI), functions such as general ledger, accounts receivable, accounts payable, cost accounting, managerial accounting, and SAP BusinessObjects™ Business Intelligence (BI), which was used to generate and make available the key performance indicators (KPIs) that the company decided to implement for the project.

An IBM Power Systems™ server running the IBM AIX® operating system was adopted to run SAP ERP with applications for financials and SAP BusinessObjects BI platforms. Financial accounting, sales and logistics, inventory management, procurement, and manufacturing processes are supported by this solution.

An IBM System Storage® DS8100 device is being used as enterprise storage for the SAP system, and IBM Storage Area Network (SAN) switches were adopted for optimized infrastructure performance.

Overcoming global project challenges
While Europe is often regarded as one region, in reality business processes vary country by country. A series of issues arose as the project progressed, such as the issue of communication between different languages and cultures, as well as governance issues such as information transfer and sharing, and resource allocation issues. To overcome these challenges, three initiatives were implemented.

“The first initiative was to share the project goals through a shared purpose and to clarify the decision-making process,” explains Mr. Masashi Sagehashi. “The second was to create policies. For this we built on the guidelines prepared when the OneModel was established. The third was maintenance and management. Creating the system is not the aim in itself; it should be maintained thereafter to ensure reliable results.”

As a result of these initiatives, work on establishing the OneModel in Europe was completed in June 2010, and the solution went into operation in July 2010.

Ensuring compliance with European systems
The system in Europe was implemented at distributors only, but in China it was to cover three types of companies: distributors, manufacturers, and joint manufacturers/distributors. This meant that for the Chinese project, business systems and processes used by manufacturers and manufacturer/distributors had to be integrated with the OneModel template introduced in Europe.

Further, due to the importance of standardization, the project was handled jointly where operations were shared by these three groups. The project involved continuous activity to maintain and manage standardization to unify the project as a whole, such as ensuring compliance with the existing European system and to confirm any impact of differing Chinese requirements on Europe.

In China, the system went into operation for distributors and manufacturers in July 2011, and for joint manufacturers/distributors in January 2012.

Swifter business strategy and personnel exchange
Introducing SAP ERP provides numerical visibility through globally-shared KPIs, as well as process visibility by reforming global business processes. It is thought that future consolidation of servers and systems will lead to reductions in operational and management costs.

Mr. Masashi Sagehashi remarks: “In the past, we requested a monthly report from each country, but visibility improvements have increased the frequency of reporting. This enables us to acquire data with greater analytical granularity, such as detailing breakdowns by brand and channel, using standardized data and uniform indices.

“The unity of the Shiseido group has been strengthened through joint projects with overseas subsidiaries. By further standardizing operations and encouraging personnel exchange, we hope to see uniform improvements to personnel quality and other personnel development benefits.”

Thus, Shiseido is seeing real progress towards realizing its “10-year Roadmap” for 2017.

Growth as a global enterprise
“We will be splitting the global strategy into two paths,” says Mr. Masashi Sagehashi. “The first will seek to constrain indirect costs by making operations more efficient. The second will seek to develop speed in the system. We are currently seeing a remarkable increase in sales in China and growth in emerging economies. Traditionally, it might take about a year or so to establish a local system, but we think that OneModel will enable us to do this much more quickly.

“To achieve this we need to continue to develop our IT and our operations. Pushing ahead with the current initiatives will allow us to move further ahead of the game in global business.”

By placing an IT strategy based on OneModel at the heart of its efforts for operational reform and visibility as well as personnel development, Shiseido is set to achieve further growth as a global enterprise.

Products and services used

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

Hardware:
Power Systems, Storage, Storage: DS8100, System Networking, System Networking: SAN Fibre Channel Switches

Software:
AIX

Operating system:
AIX

Service:
GBS ISV Community: SAP, GBS Strategy and Change: Business Strategy, GBS S&T: Business and Customer Strategy - Business Strategy, GBS S&T: Finance and Risk - Finance Transformation, IBM-SAP Alliance, IBM Global Business Services

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