SAP implementation of ERP at the Belebey plant "Avtonormal" (BELZAN)

Information on the customer

JSC Belebey Plant Avtonormal (Belebey, Bashkortostan) is one of leading enterprises in Russia and the CIS on production of fasteners by method of cold stamping and springs for automotive industry. The product range of the plant makes more than 3500 standard sizes and names. Number working at the enterprise exceeds 6500 people. The main consumers of products of the plant are AVTOVAZ, Izhavto and "KAMAZ" (more than 50% of total amount). Among large customers – "Dzhi Em AVTOVAZ", "SEAZ", UAZ. Products of JSC BELZAN are also delivered and abroad: to Hungary, Yugoslavia, Kazakhstan, Belarus, Ukraine and the countries of the Baltics.

Prerequisites of the Project

In living conditions in competitive environment of the enterprise should develop constantly, expanding the range, improving product quality and service, raising a delivery reliability, selecting and developing the key advantages before competitors. Were determined by the management of BELZAN as ways of development of key advantages of the plant: reduction of time of an output of new products to the market, increase in efficiency of interaction with the automobile building enterprises, high-quality providing products, certification on the ISO/TU 16949 standard.

For implementation of the tasks the enterprise needed to create the modern unified information system allowing to control, manage and plan production, to predict the future, to select and make the objective and weighed management decisions.

However at that moment the unified information system at the enterprise was not. According to the head of information technology of the enterprise, Valentina Ivanova, at the beginning of 2000 the existing ASUP of the plant was constructed on technical and technology base of fifteen-year prescription. The last large upgrade of computer aids and technology of processing on computer center took place in the end the 80th beginning of 90 years – "We had a scrappy automation of the main business processes, different platforms were applied, there was no centralized database, and contents of two different bases quite often contradicted each other".

Specialists of the plant especially note the serious moments which collected on production. Weak control of raw material stocks could lead to the fact that in the fullness of time there were just not enough raw materials. There was no cost accounting of the made products. Serious problems arose also in accounting: many production operations had to be traced and controlled manually. Production planning was performed only on volumes, scheduling was not, the system of continuous operational planning was obsolete, accounting was automated only partially.

All these facts formed a basis and, partly, motive for making decision on the beginning of the complex project of control automation by the enterprise.

Project Goals and Objectives

The project objective answered the purpose of the enterprise – to completely satisfy requests of consumers, corresponding to world achievements in the quality standards. Having defined in what measure implementation of this purpose can be reached by means of automation, the management of BELZAN for a project team set the following tasks:

• review and optimize the business processes existing at the enterprise;
• implement full automation of accounting (from balance to forms of the external reporting);
• improve schedule system and the cost accounting;
• systematize and optimize information flows;
• implement calculation of ponomenklaturny cost value;
• implement the MRPII standard in production management.

Implementation of similar projects, usually, lasts about 2-2.5 years, however market situation did not allow to spend so much time for automation. The additional organizational task – to perform all project works during one 2005 and to bring a management system into commercial operation on January 1, 2006 was as a result set.

ERP system choice

Own department of information technologies of the plant was engaged in the analysis of options of the choice of a software platform. Among the considered drawing ERP systems were: "1C: Manufacturing Enterprise Management 8.0", MAX, Axapta, Oracle E-Business Suite, SAP ERP. Also, also management systems for PHOBOS and Fancheyn workshop were studied. During assessment of a possibility of application of these information systems IT specialists of the plant, including, visited the enterprises at which the specified solutions were implemented. After the analysis of all previously selected options the enterprise stopped on the offer of SAP AG company. According to representatives of BELZAN, the Russian systems such as Galaktika, 1C enterprise, Parus, "BOSS Corporation" were not considered by them in view of the fact that there are no implementations of these systems at the JSC BELZAN enterprises. Axapta was discarded because implementers did not undertake the project which needs to be executed in only one year, and the solution of Oracle was very expensive.

As note at the plant, the choice of the SAP solution was influenced by the following factors:

• the broad functionality of the solution supporting all key business processes of the enterprise;
• existence of standard methodology for accomplishment of separate business processes;
• possibility of completion of functional modules under features of the enterprise;
• possibility of preparation in SAP training centers of specialists in SAP solutions for own command of the enterprise;
• existence of positive experience of implementing solutions of SAP in Russia and CIS countries.

The experience of the company integrator which allowed to implement the project in one year also affected the choice of the solution.

Implementation project course

Before ERP system implementation began actually, forces of staff of IT service of BELZAN performed big preparatory work which, according to project participants, made rather notable contribution to reduction of an implementation time. Valentina Ivanova noted: "The Preproject analysis was made in advance to define what is necessary to us a system as it will cope with our tasks and how to minimize costs (such task was set initially). We carried out the careful analysis of all existing business processes and on the basis of these data made the technical project in which the main requirements of the plant were described. At the same time the company integrator it is reasoned insisted on the maximum use of standard functionality of SAP ERP and about a solution binding to conditions of the enterprise by its setup, but not change of the code. We as the customer, agreed with it and in the subsequent consistently maintained it".

The project started in January, 2005. Its implementation was executed on the implementation methodology developed by ASAP Consulting company and consisted of eight stages. At the first stage the project office was formed, the project charter according to which the organization structure of project management was defined is developed. The chairman of the board of directors of the Belebey plant "Avtonormal" Alexey Vladislavovich Sabadash was a sponsor of the project, and Svetlana Stepanovna Skvortsova, the director of economics and finance became his deputy. In parallel she headed committee on entering of structural, organizational, functional changes into the project. The committee included heads of the main divisions (owners of business processes), in particular the chief accountant, the head of the economic department, the director of production, experts-consultants.

The Management board was also created. All directors of productions were a part of Management board. From ASAP Consulting in Management Board Valery Anatolyevich Vorobyov – the CEO of ASAP Consulting LLC worked. Besides, six groups according to the implemented functional modules were formed. Heads of departments – as owners business of processes were a part of these groups. They bore responsibility for implementation of the corresponding process in a system from the strategic point of view.

The following level of a project team are an IT staff and programmers of the plant. They were engaged in settings of a system and application development. The separate group of two people worked on creation of base of the normative reference information – input of specifications, documents, etc.

The ASAP Consulting company in return selected about ten consultants and three developers. In general about fifty people (owners of business processes, key users, internal IT specialists, consultants and developers) worked on the project.

At the second stage of project implementation the detailed description was made and the analysis of more than 250 business processes is carried out, the architecture of solutions of the integrated management system by imposing of schemes "is designed as is" and "as should be" in compliance with standards of SAP.

The third stage was devoted to development of specific project solutions of implementation of future system. During this period at working meetings of groups of implementation of functional modules decisions on implementation of management processes were discussed and made.

At the fourth and fifth stages according to the approved conceptual project setup of a system (at first the prototype was configured, then there was its integration operational development) was made, basic data formed, primary testing of separate functional modules, check of compatibility of processes was made and integration testing was performed.

At the sixth stage final operational development of a system and data migration from legacy applications were carried out. During this period data analysis was performed, instructions are created and standards of workflows within a new information system are entered. Training of staff of project office and enterprise was in parallel conducted.

The last two stages 7 and 8 were devoted to commissioning of the project and stabilization of system operation.

Before start of a system the competent commission of owners of business processes – heads of the leading divisions was organized. The commissions were provided for testing of 122 major business processes. Testing of processes was held by programmers and key users of divisions of the enterprise. Based on work of the commission the decision on delivery of a system in commercial operation since January 1, 2006 was made.

Functional characteristics of the implemented solution

Proceeding from the main objectives of the enterprise, during the project the following functional units were consistently implemented: "Is sold" (SD), "Management of material flows" (MM), "Planning and management of the main production" (PP), "Controlling and the cost accounting" (CO), Finance (FI) and also the module "Technical and System Support" (BC).

Sale

In focus of this part of the project – the solution of a task of improvement of interaction with the biggest customers, the plants "AVTOVAZ", "KAMAZ" and other buyers. The functionality Sale is created mainly on the basis of standard business processes of the ERP system. Function of loading of the orders arriving in electronic form from key clients that allows to reduce number of errors and time of processing of incoming orders is implemented. A number of the developments simplifying work of the services connected with sale is used. All necessary printed and report forms of service receive from a system.

Management of material flows

End-to-end accounting of inventory items is also based on standard processes of the ERP system. An opportunity to keep account in different units of measure, to automatically offer replacements, to keep material accounting on batches, to enter physical and chemical indicators purchased products/metal is implemented.

A number of automated workplaces is implemented (the planning panel, a workplace of the purchaser, etc.). Also via the module "Purchases" accounting of the services and works which are purchased by the enterprise on the party is implemented. All procurement process, storages and movements Inventories is implemented in the system of SAP. All necessary printed and report forms of service receive from a system. The SUS system (Warehouse control system) – WMS is implemented.

Planning and production management

Implementation of this functional unit allowed to automate:

• maintaining regulating documents (process charts, specifications, jobs) with making changes in documents (service of changes) and accounting of these changes in production planning;
• formation of route charts and different accompanying documents on the basis of which production and movement of the made materials is performed;
• accomplishment of volume production planning, according to the MRP standards, on the basis of sales plans, volume assessment of security of the production program with the existing capacities;
• long-term planning for year, quarter, month;
• scheduling, balancing of capacities and calculation of optimal number of machines for order fulfillment, for ensuring optimal loading of jobs;
• formation of the diagram of start release of production orders;
• operational accounting of accomplishment of production orders by means of their confirmation in a system;
• operational change of production orders according to the changed requirement;
• formation of materials requirement for accomplishment of orders by the set period;
• formation of all necessary report forms;
• the functionality PDT (Planned Daily Task) is implemented;

Controlling and cost accounting

In a system the following functions were implemented:

• accounting of direct and indirect costs in places of emergence of costs;
• accounting of direct and indirect costs on separate production and economic actions;
• formation of gross actual cost of products and support services and productions of services;
• value assessment of the implemented works (services) in actual cost;
• the cost accounting by economic elements;
• determination of actual cost of products and self-produced semi-finished products in multiconversion production taking into account actual cost of production and warehouse stocks of previous periods;
• assessment of an expense of semi-finished products for the following repartition on actual cost;
• assessment of warehouse stocks of products and semi-finished products on actual cost;
• assessment of cost of sales on actual cost;
• reduction of term of closing of the period.

Finance

In the field a system allows to solve such problems as:

• maintaining General ledger;
• accounting of income and expenses;
• accounting of the VAT;
• implementation of tax accounting according to 25 Chapter of the Tax Code and 18/2 PBU
• maintaining system of account correspondence;
• formation of external and internal accounting records;
• data exchange with external systems;
• financial management – cash management.

Results of Implementation

Implementing solution of SAP allowed to cover practically all economic and production business processes of JSC BELZAN. A system provides end-to-end processing of information – registration of primary documents on supply of materials and services – their write-off on cost value of the made products – document creation on shipment – invoicing and, finally, obtaining the balance sheet.

During an implementation project detailed testing of processes was executed, the analysis of the data used at the enterprise is carried out, instructions are created and standards and developments of workflows within a new information system are entered.

As a result of implementing solution the SAP enterprise reached the new level of informational content – now management decisions are made on the basis of operational and reliable information.

Results of the executed project can be considered:

• automation of material requirement planning;
• scheduling automation, including calculation of loading of capacities within the main production;
• automation of calculation and the analysis of product cost and also detailed cost analysis in the selected places of emergence of costs;
• providing management of the enterprise of complete and reliable information for stocks in real time;
• control automation by sale, each order aimed at timely accomplishment;
• ensuring operating control debit and creditor (including advanced) the debts on materials and products of the main production.
• ensuring automatic reflection in accounting of the movement of materials, semi-finished products and finished goods of production in quantitative and value term according to production process – from revenues to a warehouse before shipment to consumers;
• ensuring the centralized maintaining reference books of materials and services, specifications, process charts, jobs.

SAP implementation of ERP allowed the enterprise not only to qualitatively improve key business processes, but also to increase knowledge and interest of staff of divisions, to make their interaction approved and effective; responsibility of personnel of the main production for the end results of activity of the enterprise at the expense of authority delegation on the operational level of management increased; further development of an enterprise management system will happen in the direction of detailed mastering of already implemented functionality and implementation of new components.

After end of the first project phase, in parallel with commercial operation of the ERP system works on further development and implementation of the used functionality were conducted.

The implementation of "a planned daily task" which allowed BELZAN to plan production not only by a month, but also by day became one of large-scale subprojects in the main production. Now at the end of every day from a system the report on the turned-out products is issued and planned what nomenclature, in what quantity and in what workplace will be executed next day.

In 2007 the large project "Management of Instrumental Production" was brought into commercial operation. Instrumental production on BELZAN, small-scale, using expensive raw materials. At the same time, the array of instrumentation which production the plant performs is necessary for each of several thousand products (and several tens of thousands semi-finished products).

Thus, two main objectives of its automation were (???): providing a regular supply with required materials and automation of work with the nomenclature including hundreds of thousands of products and semi-finished products. Within the project the base of the normative reference information which was not earlier was created, and today management of instrumental production goes in the mySAP ERP system (purchase of raw materials and the ready tool, production, warehousing, a holiday in the main production, requirements planning of materials, it is sold on the party, the cost accounting, calculation of actual cost and so forth).

In 2006 and 2007 also the subsystem of WMS (management of a warehouse) in a warehouse of the ready tool is implemented and in a metal warehouse – cell-by-cell accounting of the stored materials is organized, the strategy of FIFO is implemented ("the first came, the first left").

At the enterprise the poperedelny cost accounting and formation of cost of products of instrumental production taking into account semi-finished products was implemented.

Account of products of instrumental production is also kept by cost elements. Implementation of the cost accounting in instrumental production allowed to create more precisely cost value of finished goods of the main production taking into account actual cost of the tool used in production.

Also, tax accounting according to Chapter 25 of the Tax Code of the Russian Federation and PBU 18/02 was implemented. Means of mySAP ERP implemented model of independent tax accounting in which tax registers form based on primary documents of accounting and tax accounting. Use of the ERP system simplified collecting and data purification, determination actual income tax taking into account requirements of PBU 18/02 and automatic formation of the tax declaration of the set sample.

Besides, was the subsystem "is implemented by SAP: Budget management" using which "The budget of cash flow for financial services" was implemented. Thanks to this solution there was an opportunity to quickly control and predict cash flows on the enterprise.