IT at work: ERP and Knowledge Management

ENTERPRISE RESOURCE PLANNING

GuinnessThe manufacturing and sales operation of the Guinness brewing empire is substantial, and spread across various European locations. The biggest constituent of the patchwork is the brewery at Park Royal in West London, with other key sites in Dublin and Northern Ireland.

In 1998 the company decided to review its manufacturing and sales processes in order to create greater efficiencies and achieve savings through co-ordinating production between plants. This was the moment, it decided, to extend its investment in SAP software to run alongside the intended business process reengineering.

Guinness had already tried out a limited rollout of some SAP financial management modules in 1996. While the technical part of the process was smooth, poor initial training of end users hampered the success of the initiative. Guinness had got around the problem by drafting in management consultancy DACG to handle the training issue. So when it came to looking for partners to make the full SAP rollout work in 1999, DACG was at the top of the list.

DACG UK operations director Paul Stevens recalls: “In 1996, users had simply not bought into the system, because they had not been made aware of its subtleties. R/3 is, if nothing else, a fairly complex piece of software. We were asked to improve on this, having won the training consultancy role against other bidders like Druid and Andersen Consulting.”

Stevens was involved in setting up a programme for the new rollout. The full SAP implementation was driven by a number of considerations. Stevens says: “There was the Y2K issue. The rollout needed to work in conjunction with an existing bug programme. Also, the whole operation, across Europe, was to fall in line under one set of practices and one unifying system.

This, it was thought, would bestow advantages like greater purchasing power across the group, better planning of manufacturing and better management reporting.” Before the reengineering project, different manufacturing sites had managed their own production, with no synergy at all, and consequent wasting of resources in a business that runs on fairly tight margins.

“The whole R/3 rollout came in on time and in budget, which is a rarity in itself,” says Stevens. “Our role, in particular, went smoothly, largely because we were able to learn from what had gone wrong the previous time, before we were involved.”

A key training issue concerned the medium of choice. Classroom-based training was the eventual chosen medium, using DACG’s own facilities.

“Their technical guys had no infrastructure for dealing with training.

For example, at the time, there was no company-wide intranet, says Stevens.

DACG added in lots of features to involve and engage trainees as fully as possible, such as a playpit for them to practice exercises in their spare time.

Twenty-five consultants were needed to familiarise over 2,500 Guinness personnel with the complex R/3 system. Stevens says: “The whole project took a year or so, and was one of the biggest we have ever been involved with. It was certainly a major logistical challenge.”

DACG had to work with other third parties on the project, such as configuration partner Druid, and SAP itself. The process of building and integrating the SAP software was largely handled by Guinness’s own in-house IT function.

Stevens says: “Our relationship with Guinness is ongoing. We continue to supply a mixture of training and support, and are involved in looking at ways of improving this. Learning and training is a continuous process, and change within a company of that size in constant.”

He does feel that Guinness is well beyond the initial training hurdles it encountered in 1996. “A lot of large companies tend to focus on how the system works, and forget to look at how people work with the system.And with a company that size, there are cultural issues to be overcome as well.”

Dyson Appliances

The legend of James Dyson and his designer, dual cyclone, bagless vacuum cleaner is well known throughout the UK business world. He has even made the crossover, rare in industrial circles, to become a household name as well.

Engineering and design talent wedded to excellent marketing has propelled Dyson Appliances, into the stratosphere, taking it from a value of £163;2m in 1994 to £163;149m by 1997, one of the fastest growth spurts in UK industrial history. The company now holds 55 percent of the UK’s floorcare market.

Growth and success of this proportion usually comes at some sort of cost, and in Dyson’s case this was in poor inventory control. The company’s accounting systems had long since ceased to be appropriate for a major corporate operation. By the late ’90s, it was recognised that a scalable and integrated IT system was needed, along with new procedures to control manufacturing and inventory operations.

Until two years ago, Dyson was running several disparate IT systems, of varying degrees of sophistication, making production planning difficult.

Component inventory was simply stockpiled to avoid falling short, leading to high inventory costs.

To gain control over things like procurement, inventory management and production processes, Dyson chose JBA’s System 21 ERP suite, running on IBM’s veteran but trustworthy AS/400 platform.

Head of IT Steve Edwards says: “We thought it was the best off-the-shelf ERP software package on the market. We were determined to have no software customisation in order to keep costs low. Although the package has not been designed specifically for Dyson, we are able to take JBA’s regular software upgrades, and receive the benefit of the new functionality they bring. For example, we were able to ensure compliance with Y2K and EMU in one step.”

An implementation team of Dyson and JBA personnel, backed up by independent advice from PricewaterhouseCoopers, identified the key business areas to tackle. It was also concerned with redesigning the business processes in line with best practice, as well as implementing the new information system.

Under the new system, the week’s production schedule is generated in seven minutes. Component requirements are sent to suppliers, together with proposed needs for following weeks. Thanks to “just in time” principles copied from other industries, materials are now delivered on the day they are needed, in some cases directly onto the production line.

Dyson uses JBA’s Automated Data Capture (ADC) system throughout its warehousing operations to provide visibility and accuracy of stocks. Incoming parts and finished goods are all barcoded.

There is now no need for safety stocks of components, and dramatic reductions have been achieved. Real time accurate information also allows Dyson to respond to changing production requirements and greatly helps the management decision making processes. Sales subsidiaries from Europe to Australia have been brought closer to the centre of operations. Dyson hopes that eventually all operations will be united on one web-enabled wide area network. As Edwards says: “We need to expand outside the UK and increase our exports. We plan to manage this by taking advantage of new technologies, especially extranet and Internet functions which JBA can supply us with. I think System 21 will be able to sustain our growth.”

In search of ERP …

www.sellmorenow.com/
An independent review of erp software

www.erpfans.com/erpfans/erpdefinition/erp001.html
An erp slideshow – takes you through the basics

www.outsourcing-erp.com/
Good news site

members.tripod.com/~saurabh_s/
More or less an ERP resource centre with some useful links.

KNOWLEDGE MANAGEMENT

Whitbread Beer Company

The UK beer market is very competitive, with large national distributors vying with local specialist suppliers and importers for the same fickle customer base. Fashions are continually changing and there is a growing demand for a wider range of beer products. Suppliers need to support their sales force in every way possible, and implementing knowledge management solutions is becoming a popular method of achieving this.

The Whitbread Beer Company, brewer of the UK’s most popular take home drinks brand, Stella Artois, and other favourites like Boddingtons, Heineken and Murphy’s, is a case in point. Last year, the company decided to implement a solution to enable it to analyse its sales and marketing data and generate market forecasts more accurately.

A Cognos-based knowledge management solution was installed, as part of a project to re-engineer its whole management reporting system from the ground up. Anita Hall, project manager of the project, named Samson, at Whitbread, explains: “During a big event like the football and cricket World Cups, we have to be aware of shifting sales patterns between pubs and the take-home sector. With the sales trend data, for example, we can create market forecasts and make sure the supermarkets are stocked up when we see an upturn in take-home sales.”

The KM solution replaced a 15 year-old system written using obscure and obsolete programming languages. The new system had to meet Y2K requirements, and create an infrastructure for data manipulation to deliver business intelligence, and provide up-to-date information to senior management.

Whitbread’s long term aim with Samson is to lay the foundation for a major, company-wide data warehouse. This, it believes, will let it create a repository of business intelligence which it can use to exploit competitive knowledge to improve overall sales performance. “We tried to create a platform to move the company forward,” explains Andy Palmer, business process development and IT director with Whitbread.

In the past, sales and marketing information was delivered as voluminous reports, itemising everything from sales by region and product, to customer buying patterns. Inevitably, much of this information was unnecessary and hard to read. In the new system, Cognos consultants recommended the creation of data formats that made access easy for non technical managers, and the use of an intranet as the delivery mechanism, accessible anywhere in the company.

The new Web-enabled database resides on an IBM RS/6000 using an Informix database management system. The special data formats or “cubes” are created using Cognos tools PowerPlay and Cognos Impromptu. Staff use laptop computers running Windows NT to access the data through the web.

“What is exciting is that we are probably now one of the most advanced users of Cognos web server tools in the UK. The Cognos tools came at exactly the right time because they had most of the facilities we needed to meet our requirements,” explains Claude Tonna-Barthet, Samson project consultant.

“Cognos tools offered the facilities that no other product offered – specifically the ability to send out ‘cubes’ from the web server and cope with the large volumes of data that we needed to create the ‘cubes’.”

Says Palmer: “We want our sales people to be able to think for themselves when they are out on the road. So we need to give them the information they need to manage their customer base. With the new system they have up-to-date information on sales performance and trends and we have a foundation for future systems. This application has meant a significant cultural change and we expect that it will take some time for this to settle down: we have created 100 new ‘cubes’ of sales and marketing information and the business needs to catch up. But we now have a robust technical infrastructure.”

Oxford Asymmetry International

Oxford Asymmetry International (OAI) is a chemical services provider to the life sciences industry. It provides chemistry expertise to a variety of companies, and central to providing these services is the ability to manage the masses of information relating to the synthesis and analysis of hundreds of thousands of new chemical structures. OAI seeks not only to meet this challenge but to gain competitive advantage by doing it better than anyone else.

As well as being a leader in its specialised field, OAI is a high growth company. Over the past three years it has experienced compound annual growth in sales and operating profit of 91 percent and 256 percent respectively.

In 1998 it achieved sales of £163;14.9m. Six years ago, OAI had six staff, entered 1998 with 150, and now employs over 230 people. The company has in fact doubled in size every 18 months. Not surprisingly, this has been matched by an exponential growth in the amount of information it generates.

The company wanted to retain the qualities it had thrived on as a start-up, based on six chemists and one laboratory, where everyone was aware of everything that was going on. It needed to achieve these benefits in a company now 40 times its original size.

By the beginning of last year, cracks were showing. Physical growth into multiple laboratory sites meant that it was taking anything up to a week to locate details of particular experiments, and as a result 10 to 15 percent of experiments were being repeated unnecessarily. For assistance in solving what was becoming a more and more serious problem, OAI approached Cap Gemini’s Life Sciences Group.

Christine Burns, senior consultant at Cap Gemini, comments: “The challenge was to eliminate this wasteful repetition and enable scientists to plan their work with easy access to the knowledge acquired by their contemporaries. This is particularly important in fast-growth companies.”

The aim of the project was to support further growth through improved re-use and accessibility of stored data, automating laborious manual processes where possible. Though day-to-day efficiency and effectiveness stood to be improved, bigger potential gains lay in the business opportunities that could be unlocked if new ways could be found for using the knowledge already held within the organisation, alongside its products and services.

Dr Mario Polywka, chief operating officer at OAI, says: “We started working with Cap Gemini Life Sciences Group in February 1999, and had successfully completed the project by June.”

The project involved the implementation of an enterprise-wide knowledge management programme called Okami. As part of its work, Cap Gemini developed the Laboratory Notebook System, which brought operational benefits and cost savings to OAI through effective sharing and re-use of information.

This particular part of the project won the Document Management Project Award at the 1999 Information Management Awards.

The project is ongoing, and looks set to evolve from a straight knowledge management rollout into a full ERP system, providing project and resource management, but also covering financial accounting, purchasing, and invoicing functionality. This will allow improved monitoring and scheduling of projects, from ordering through to delivery. Once the internal KM programme is completed, OAI will set its sights on working with suppliers and customers in what it describes as “an increasingly holistic fashion”.

Guy Matthews is a freelance journalist

FOR MORE KNOWLEDGE …

users.powernet.co.uk/rawlins/aih/km.htm
Links that lead onto links that lead to more links.

www.soc.titech.ac.jp/info-sys/km/kmgmt.html
A great site full of reports and data

www.ec2.edu/kworld/knowledge/
Valuable resources including case studies.

www.kmresource.com/
Includes online bookstore with over a 100 KM titles.

www.brint.com/km/
White papers, articles, interviews, think tanks.cles, interviews, think tanks.