Eisai gains real-time control of global subsidiaries with IBM and SAP

Published on 04-Feb-2013

"Working with IBM Global Business Services to exploit our SAP applications helps our parent company to reduce the cost of finished products, thereby giving us an edge over the competition." - Sanjit Singh Lamba, Managing Director, Eisai Pharmatechnology and Manufacturing Pvt. Ltd.

Customer:
Eisai Pharmatechnology and Manufacturing Pvt. Ltd

Industry:
Life Sciences

Deployment country:
India

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

IBM Business Partner:
SAP

Overview

Eisai Co., Ltd. (Eisai) manufactures pharmaceutical ingredients, and ranks among the sector’s global top 25 by revenue. The company is headquartered in Tokyo, Japan, employs approximately 10,000 people and has operations in North and South America, Europe and Asia.

Business need:
Eisai Co., Ltd. sought a more effective way to evaluate and plan business activities on an international level. With global manufacturing sites operating as independent businesses, comparing performance and cost-efficiency was a challenging task. Eisai wanted to gain enhanced insight into product costing across its entire manufacturing network. The aim was to understand every stage of the process, so that the company could effectively plan global production by distributing work to its most cost-efficient units.

Solution:
Eisai launched the Global E-DREAM project in 2006, part of which involved standardizing worldwide operations on a single SAP ERP system through a Global Standard SAP (GSS) template. Following the implementation of SAP ERP at its headquarters in Japan, Eisai worked to extend the solution to its international locations, starting with its subsidiary in India, Eisai Pharmatechnology and Manufacturing Pvt. Ltd. (EPM). The company engaged IBM Global Business Services to manage the SAP ERP implementation.

Benefits:
Enhanced insight into product costing enables Eisai Co., Ltd. to plan more cost-effective production activities and helps reduce the cost of finished products, thereby providing the company with a greater edge over the competition. Reduced the time taken to close month-end financial processes to two to three days. This allows EPM to deliver key figures to its parent company more quickly, helping to ensure that Eisai Co., Ltd. works with the most up-to-date information.

Case Study

Eisai Co., Ltd. (Eisai) manufactures pharmaceutical ingredients, and ranks among the sector’s global top 25 by revenue. The company is headquartered in Tokyo, Japan, employs approximately 10,000 people and has operations in North and South America, Europe and Asia.

With manufacturing sites operating as independent businesses, comparing performance and cost-efficiency was a challenging task. Reporting models and accounting systems were different, and gathering comparable data that would enable Eisai to plan global production by distributing work to the most cost-efficient units was a time-consuming and difficult process.

Creating a truly global business

To support its endeavor to become a truly world-class health care company, Eisai wanted to gain complete insight into its global operations and act as a single, unified enterprise.

If the company was unable to effectively compare the cost of manufacturing different products at individual manufacturing locations, it could not establish the most cost-effective plan for producing a specific formulation or drug. The lack of cost data meant that the company could be overlooking manufacturing facilities that were capable of producing pharmaceuticals more efficiently. Without this information, Eisai found it challenging to properly evaluate and plan business activities globally.

One of the company’s top priorities was to gain enhanced insight into product costing across its entire manufacturing network, and determine the costs incurred in producing every single drug and formulation.

The aim was to understand every stage of the process, from raw materials purchases to expenses associated with transporting the final products.

To address these challenges, Eisai created its Global E-DREAM project in 2006, aimed at bringing all of the company’s global business functions onto a common platform. In 2008, the company completed an implementation of a broad suite of SAP® ERP software at its headquarters in Japan and, since then, has focused on extending the solution to its subsidiaries worldwide.

Gaining real-time global control

Eisai chose to launch its global SAP solution program at its subsidiary in India, Eisai Pharmatechnology and Manufacturing Pvt. Ltd. (EPM). Founded in 2007, EPM is the result of a more than $50 million investment. A state of the art integrated manufacturing and research complex, EPM is located in Visakhapatnam, a fast-developing pharmatechnology hub and a Special Economic Zone (SEZ).

Eisai sought to integrate operational systems at EPM with its own SAP ERP platform, and introduce greater levels of standardization.

Sanjit Singh Lamba, Managing Director of Eisai Pharmatechnology and Manufacturing Pvt. Ltd., states: “In the past, it was difficult for our parent company to gain a good understanding of exactly what was happening on a day-to-day basis at operations in India. Improving asset visibility would enhance insight into key profitability and cost drivers. Better inventory control and planning would also help to support more efficient, cost-effective operations.”

To implement a standardized SAP ERP solution at EPM, Eisai launched Project Hayato in September 2011. The company engaged IBM® Global Business Services® to manage the SAP ERP deployment, which followed a Global Standard SAP (GSS) solution implementation as outlined by Eisai.

The project scope was extensive, and included the deployment of multiple SAP ERP applications, including Sales and Distribution, Materials Management, Finance & Controlling, and Production Planning, which were implemented as part of Eisai’s standard GSS solution.

SAP ERP applications for Quality Management, Warehouse Management, Plant Maintenance, Project Systems and SAP Document Management System were also deployed as part of an extended project scope for EPM.

Becoming an integrated enterprise

The implementation of the SAP applications is designed both to enhance the local business processes at EPM and to provide consistent, accurate data to Eisai. For example, to ensure timely, effective processing of products, EPM wanted to obtain a more accurate overview and tighter control of stock levels. The company deployed SAP Warehouse Management to deliver automated support for processing all goods movements and in maintaining current stock inventories.

The SAP solution covered warehouse inventory management, so that EPM can know exactly where a particular material is located in its warehousing complex at all times.

Sanjit Singh Lamba says: “We have a complex production environment, and SAP Warehouse Management helps us to automate and streamline a number of processes involved in managing our inventory. It is now quick and easy to process stock, and material flow has been optimized using advanced placement and picking techniques.”

As EPM places a strong focus on research activities, the company wanted to find a way to better track research project activities, costs and resources. It chose to implement SAP Project System to improve control over research and development projects and reporting. The solution guides the company through every phase of research and development project implementation, providing better management and faster fulfillment of the project deliverables.

SAP Document Management System rounds out EPM’s suite of SAP ERP applications, providing effective electronic document management capabilities across the company’s quality assurance and logistics processes. This enables EPM to easily and quickly deliver more consistent information to its parent company, helping Eisai to maintain a close record of all subsidiary activities.

Sanjit Singh Lamba remarks: “These additional SAP solution components were originally intended to be rolled out at EPM alone, in order to meet some of our unique needs as a combined manufacturing and research complex. They have proved to be so successful that they are now included as an integral part of Eisai’s overall GSS solution template for all global roll-outs.”

IBM Global Business Services also helped to develop the EXIMTA solution – a proprietary Export & Import solution integrated with the company’s SAP systems – for managing SEZ taxation and statutory requirements. As a SEZ unit, EPM must comply with a specific set of import and export regulations, which include exemption from a number of customs duties, sales taxes and other excise fees. The solution enables EPM to track all export forms and letters of credit, and helps the company to meet SEZ regulations.

Building secure foundations

To support the landscape of SAP applications, Eisai reviewed its IT infrastructure, looking for a cost-effective platform that would scale up to meet future needs.

Eisai chose to run the SAP applications in a VMware virtual server environment, supported by IBM System x® 3650 class servers and IBM BladeCenter® HS22 blade servers. The IBM servers provide scalable capacity for both large database and growing application workloads.

IBM System x3650 class servers feature intelligent Intel Xeon 5600 series processors, which automatically regulate power consumption and intelligently adjust server performance according to application demand, maximizing both energy cost savings and performance.

Tackling project challenges

The SAP implementation project represented a major business transformation for EPM and required the project team to undertake a significant change management effort to align the business to standard SAP processes and harmonize workflows.

Eisai enforced rigorous process controls and stringent requirements for integrating existing company systems with the new SAP environment.

IBM Global Business Services tackled these challenges by pursuing a strong collaborative strategy, working side-by-side with EPM to bring the business on board and create the culture change that led to project success.

The project team was also required to adhere to a strict implementation deadline of just six months, and needed to manage cross-cultural and time zone differences with the stakeholders at Eisai’s headquarters in Japan. IBM Global Business Services consultants rose to the challenge, drawing on extensive project management experience and deep technical expertise to guarantee that the project was delivered on time.

The new SAP system went live in April 2012 and was followed by a two-month post go-live support phase, during which IBM Global Business Services worked with EPM to smooth out any issues and resolve questions.

Following the implementation, the company awarded IBM Global Business Services with a five-year contract for the provision of application management services. This will ensure that SAP systems at EPM are maintained at the optimum level of availability and manageability.

Improving operational insight

With the integrated SAP solutions in place, Eisai is able to gain an up-to-date view of all aspects of operations at its subsidiary, EPM.

Sanjit Singh Lamba comments: “We can now access near real-time data on purchasing, production, logistics and costing at the touch of a button. In addition to providing more accurate information for decision-making, this increased data availability has allowed us to significantly reduce the time taken to close month-end financial processes, from 15 to 20 days to between two and three days. This means that we can deliver key figures to our parent company more quickly, helping to ensure that they work with the most up-to-date information.”

Comprehensive cost comparison

Eisai has gained deeper insight into product costing, and can now model various cost drivers forming a direct or indirect part of the overall product costs.

As a result, the company benefits from a more accurate overview of cost and productivity margins at EPM, helping it to better plan production activities. Enhanced insight also enables the company to keep a tight control on overhead costs, reducing wastage by a significant percentage.

Sanjit Singh Lamba explains: “SAP applications deliver much better visibility of our costs, and have allowed us to establish a very well-defined costing process. We can now map every single cost incurred in manufacturing our products and quickly report accurate figures to Eisai headquarters. By keeping a close track on production costs we can target areas for improvement and work on better procurement practices. Ultimately, working with IBM Global Business Services to exploit our SAP applications helps our parent company to reduce the cost of finished products, thereby giving us an edge over the competition.”

With integrated SAP ERP applications providing enhanced insight into business processes, EPM can also ensure that it fully complies with stringent accounting requirements set out by its parent company, such as adherence to International Financial Reporting Standards (IFRS).

Sanjit Singh Lamba concludes: “IBM Global Business Services has helped us to deliver a robust SAP ERP solution, which will help us to meet strict quality control and regulatory requirements. In this way, we can continue to support our parent company in developing and manufacturing quality pharmaceutical products that will contribute to the well-being of people all over the world.”

Products and services used

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

Hardware:
BladeCenter, BladeCenter HS22, System x, System x: System x3650 M3

Service:
AIS: Application Development, GBS ISV Community: SAP, IBM-SAP Alliance

Legal Information

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