SAP technologies will help Ferroni expand its network of regional warehouses from 30 to 150 in 2-3 years

2022: SAP S/4HANA Implementation

On February 17, 2022, SAP CIS (SAP CIS) announced that Ferroni LLC, using SAP technologies, plans to increase production volumes, improve management efficiency and customer service quality. The company plans to expand the federal network of regional warehouses from 30 to 150 by 2025, as well as scale business outside the Russian Federation.

By the time the transformation program began, the company already had two plants, but the existing infrastructure constrained business development. It did not have end-to-end automation of business processes and the ability to implement the necessary accounting processes. Management decided to use a more technological IT system at the Togliatti plant to maintain high business growth dynamics, geographical expansion of the company and a customer-centric approach.

The key in IT transformation for the company was to improve the efficiency of sales planning and forecasting in order to reduce turnover. It was necessary to ensure that no more than 2 weeks passed from the moment of receipt to the sale of goods from the warehouse. This reduces the amount of borrowed funds, reduces the stock of components and reduces the risk of so-called "frozen" illiquid stocks. In addition, warehouse capacity is used more efficiently, since it is known exactly what, when and in what amount may be required.

All of the above in the complex leads to an increase in the level of service and satisfaction of end customers. There is an opportunity to invest more resources and funds in business development: expanding the product line and entering other markets.

As a result of the implementation of end-to-end business processes based on SAP S/4HANA, multi-transfer production accounting, integrated quality and cost management, and requirements planning are implemented. SAP Transportation Management (TM) functionality has been launched.

It became possible to draw up a production program and evaluate the implementation of the plan for any period. The movement of material and technical resources is monitored in real time with a reflection on the accounting accounts. The system allows you to calculate the actual cost of manufactured semi-finished products and finished products, keep records of balances. You can monitor contract execution, analyze capacity utilization, and optimize inventory levels. The management of the company makes decisions based on transparent integrated information on the main business processes.

Due to the use of these tools, it is planned to increase the turnover rate for imported components from 3 months to 1 month, and for Russian raw materials - from a month to two weeks. Optimal construction of delivery routes, accurate cost calculation can reduce transportation costs by 5%. The cost of reimbursement of claims on the quality of finished products has halved due to timely detection of defects in the production process. The workload associated with accepting orders also halved. With the implementation of SAP S/4HANA, the warehouse inventory tracking process was set up in the plant, which reduced them by half.

The successful completion of the first stages of the digital transformation program allowed you to start implementing other SAP systems to increase customer loyalty and increase sales.

Ferroni LLC plans to replicate the solution to existing and new plants.

Also, the plant in Togliatti is actively implementing SAP IBP to improve planning accuracy and operational efficiency. The company boldly transforms business processes, makes the necessary organizational changes as part of the implementation of the best practices of integrated business planning, as well as sales planning and operations from SAP. One of the success factors in the implementation of SAP IBP was the early acquaintance of planners with the system - a prototype of planning processes based on SAP IBP was provided in the first month of the project, which made it possible to more accurately understand the necessary points of transformation and work to ensure the necessary quality of implementation of new planning and forecasting processes.

The emergence of the SAP platform allowed the company to create a transparent management system based on the best world practices, shift the focus of work to the client, reduce production costs and open up opportunities for development. We see positive changes in the achievement of strategic goals - an increase in the share of our products in the world market. In addition, the introduction of SAP technologies has accelerated the launch of new models on the market. We will continue to build a targeted IT architecture of the company, based on the landscape and capabilities of SAP products, - said Marina Pavlova, General Director of Ferroni LLC.