Volvo Construction Equipment Korea Business Information System · Volvo Construction Equipment Korea File Name : SAP Report.ppt - 6 - Implementation strategy of SAP R/3 •Global

Volvo Construction Equipment Korea

File Name : SAP Report.ppt - 1 -

Volvo IT Korea

2008. 06. 04

Business Information System- SAP R/3 Implementation -



SAP R/3 Implementation



SAP R/3 Implementation Contents

• Objectives of new information system

• Summary of old environment

• Implementation strategy of SAP R/3

• ERP (SAP / R3)

• Milestones(Phase1,2)

• Project structure

• Staffing

• Lessons learned



Objectives of New Information system

SalesProduct

Service

Cost

Finance

DesignService

1. Replacement of Samsung Common System

2. Process Innovation through ERP package

3. Integration of all business areas & Functions

4. Supporting Corporate Strategy

5. Enhancing Employees and ManagementProductivity

6. Increasing the Quality of Product andService



• Information System History

Sales

Production

Service

HIFI

TOBIS

TOPIS

TOSIS

SPEED

PDSS

‟90 ‟95 ‟98

Finance/Accounting

Administration

Communication

Human Resources

Summary of Old Environment

(Total Production Information System)

(Total Business Information System)

(Total Service Information System)

(High Fidelity Financial Information)

(E-Mail System)

ERP



Implementation strategy of SAP R/3

• Global Standard Package (ERP) for Multi-National Company

• Full Implementation of SAP by Big Bang Approach

- Kick-off: April 01, ‟98. Open: August 09, ‟99

• Decentralized and Centralized Support for Overall Business

• Linked with Shop Floor Control System

• E-Business through EDI, Internet & Satellite

- Vendor, Supplier, Bank, Customs

• Keep up the SAP R/3 standard function

• Y2K Free



ERP(SAP / R3)SAP

Non-SAP

Internet

VIVA

Supplier

Sales to Order

Order to Delivery Delivery to Re-Purchase

SD

PP

MM

PM

QM

CO FI

Tax Return

WM

SM

PDSS(HR)

AM

SFCS

SAP R/3

EDI

Business Administration

ProductDevelopm‟t

Phase 1

• Solving Y2K• Replacing Samsung system• Supporting new requirement

Apr. 1998 ∼ Aug. 1999

• Optimizing business process

• Changing mindset

• Enhancing supporting

technology

Sep. 6 1999 ∼Jan.31.2001

Phase 2

PS

BW

VICS

Dealer



Milestones(Phase1)

Period

Activity 1/4 2/4 3/4 4/4 1/4 2/4 3/4 4/4

1998 1999

FI/CO

SD,SM

(Seoul)

PP,MM,QM,PM

(Plant)

SFCS

Change

Management

AS-IS Analysis &

TO-BE Design & Mapping

Configura

-tion

Test &

Implement

Domestic Dealer / Parts Agency

Sales Order

Service / Overseas Service / Export System

Interface with TOBIS-Ⅱ

UnitSystem Prepare Master Data / Data Conversion

Foreign Material System /Integration W. SAP

Test &

Implement

AS-IS

Analysis

Development /

Rule Define

Test &

Implement

Stabili-

zation

PI/ITTraining

W/Group ITTraining

- SAP R/3 User Manual/User Training- Work Rule

- CATV- Kick Off

TO-BEProcessAnalysis

DeployP.R

PI Campaign / P.R Excellent PI Case / Spread of Change Management

DefineNew JobManual

New Organi-zation SystemDesign

Change Organization andApply New Business Process

Data

Migration

Open



Milestones(Phase2)

09 10 11 12 01 02 03 04 06 07 08 09 4Q 012000

Kick off

VPM vs. SAP mismatch cleanup

05

Product

Development

Salesto

Order

Order

to

Delivery

Delivery to

Repurchasing

Biz administration

Finance,HR,IS/IT

QA

Charter

Utilize Flexible planning-Pilot test

Improvement of MRP process

Improvement of back flush

Single company BOM environment set up

PS module (1st)

Redesign purchasing process

Control Group Cycle Count On-going Cycle Count

Level3process Map

PS module (2nd)

BOM accuracy audit

Single company BOMfor component

DefineKPIs

Level4+5process mapping

NPD process health check

Implement full scale

Improvement of 476 issues

Improve procurement process

MAS & SAP interface(Europe, NAFTA, S/A, Int.)

Process development

Modify process

2001

Wrap upProcess

Management



SAP Project Owner

CEO/CFO

CIO

PM

•Project coordination / Scheduling•Education ,Training & Publicity

•Managing resource

PwC Consulting Group

( Working Group)

SDS Integration,Data Migration,Interfacing

SDS Configuration

Area Leader (C.W. / Seoul / G.P.)

PI

SD SM MM

KSC SFSD MM SM

CSFI/CO

B/Office BCSFCS PP QM MM PM SD

PC

SDS PMConsulting PMPM Group

-PC : Production Company

-KSC : Korea Sales Company

-SF : Sales Financing

-CS : Customer Support

-BC : Basic Component

SteeringCommittee

SteeringGroup

Project Structure



Division 98.7 98.8 98.9 98.10 98.11 98.12 99.1 99.2 99.3 99.4 99.5 99.6 99.7 99.8

SDS 78 80 97 105 107 107 109 113 107 108 108 84 76 69

PWC 0 0 0 0 0 0 0 0 0 6 6 3 3 3

PI (VOLVO) 25 25 25 25 26 25 25 25 25 21 21 21 20 20

Total 103 105 122 130 133 132 134 138 132 135 135 108 99 92

0

20

40

60

80

100

120

98.7 98.8 98.9 98.10 98.11 98.12 99.1 99.2 99.3 99.4 99.5 99.6 99.7 99.8

SDS

PWC

PI(VOLVO)

Staffing

•Status of Man Power Change

* SDS = SM+SI+Outsourced

<Man>



Lessons Learned (Continue)

Good Things

We can do

- World biggest by our hand

- World shortest by our hand

- Confidence in success

Teamwork is only way for success

- Heterogeneous member but Homogeneous direction

- Strong Involvement & Commitment of TOP Management is CSF

- Participation and Contribution of Project Members & Working Group



Lessons Learned (Continue)

Bad Things

Unstable circumstance to system implementation

- Ownership change (from Samsung to Volvo)

- New Management Policy and Strategy

Late Involvement of Key functions

- Consulting

- Key Management

Short time span to Y2K

- 18 Months to Year 2000



Bad Things

Cultural & Process conflict between Current System

& New ERP

Incorrect or Mismatching of basic data/process/ownership

Process is more important than System Implementation

Lessons Learned



Start to the e-Business (Continue)

• Process Management Concept

• Development of Single Company BOM

• Streamline parts development processes

• Flexible planning

• Improvement of MRP run time

• Improvement of MRP exception message

• Improve IRA through daily cycle counting



• System Interface

• Implementation of BW

• Shop Floor Control System

• V I V A

• V I C S

• ERP System Server Configuration

• Results

• Volvo CE Korea System To Be

Start to the e-Business



Start to the e-Business

The beginning of a journey for e-Business accomplishment

toward the destination of growth and profitability

The Tool

ERP

Phase 1,2

SAP Implementation

Process Optimization

Process

management

Accomplishment

of

e-Business

The

Destination

Growth

Profitability

THE JOURNEY for “e-Business accomplishment”



MANAGEMENT PROCESS

SUPPORT PROCESS

MAIN PROCESS

CU

ST

OM

ER

NE

ED

S

AN

D E

XP

EC

TIO

NS

Product Development

Delivery to Repurchase

CU

ST

OM

ER

SA

TIS

FA

CT

ION

Fin

an

cia

lP

rocess

Hu

man

Reso

urc

es

Info

rmati

on

Tech

no

log

y

Order toDelivery

Sales toOrder

STRATEGY PROCESS

Qu

ality

Process Management Concept



Development of Single Company BOM



• High accuracy for process BOM accuracy : 88.2 --> 94.2%

• High accuracy for parts catalog BOM accuracy

• Reduced preparation time of option kit manual : 200M/H

• BOM consistency : 95% -> 100%

Major Activities

Results

• E-BOM & M-BOM mismatch clean-up (19Models)

• E-BOM Vs Assembly process mismatch clean-up

• Standard process sheet publishing program development

• VPM Vs SAP interface program development

• Process establishment for single BOM

Development of Single Company BOM



Streamline parts development processes

RFQ/DWGReceive

Quotation

Report

Cost analysis Negotiation

Info.source

listP/O Approval

Development

information

Supplier infosys(VIVA)

Web-based

SAPVCEK sys

Inter-face

Re-designed process

Major Activities Results

• Streamlined process thru eliminating non

value activities.

-manual work such as Request For Quotation, DWG,

contract,NEGO,Price approval.

• Reduced lead time for parts

development : 26days ---->17days

• Paperless



Forecasting and planning option variation thru “flexible planning”

Re-designed process


Sales & OperationsPlanning

Rough Cut Capacity PlanningMaster Scheduling by Family

Master Scheduling by Option Option over planning

Planning by Plant & supplier

Sequence & activity control Daily delivery instruction/Kanban

Safety time & stock control

Production Procurement Supplier

Sales company

• Implemented S&OP process

• Implemented 2 level Master production

scheduling process

• Option over planning & rescheduling

• Implemented ATP process

• Organizational change

- Restructure Order desk in marketing

- Creation of Planning team in Manufacturing

Forecast

• Reduce ready to shipment lead time

- 7 weeks -> 4 weeks

• Available to promise within 48 hours

MAD

Order(RDD)

ATP



Improvement of MRP run time


Improvement Trend

• MRP run time: 21HR ----->1.5HR

• Weekly->Daily MRP run

- Production plan timely reflects customer`s

requirements & changes thru daily MRP

running.

• Adjustment & improvement of MRP parameters

- Planning mode change :”3”--->”1”

- MRP parameter change :“NETCH”----> “NEUPL”

• Improvement of MRP exception messages

15.87

1.55

4.20

6.14

1.28

3.20

6.25

1.05

2.24

3.28

0.32

1.22

3.25

0.24

1.25

3.14

0.251.23

3.10

0.220.87

2.38

0.130.35

2.62

0.120.32

2.37

0.100.25

1.80

0.150.35

0.98

0.130.35

0.98

0.120.30

0.00

5.00

10.00

15.00

20.00

'99.10.28

'99.11.17

'00.01.05

'00.01.13

'00.02.02

'00.03.26

'00.04.19

'00.05.15

'00.05.20

'00.05.23

'00.05.30

'00.06.02

'00.06.08

Plant1000 Plant3000 Plant2000



53,435

45,513

34,456

22,207

14,309

10,254 7,092

3,859 4,829 4,926

-

10,000

20,000

30,000

40,000

50,000

60,000

09W 12W 15W 18W 22W 29W 36W 49W 52W 2W

58=Uncovered reqmt after effective-out date

15=Reschedule out

5=Opening date in the past

6=Start date in the past

7=Finish date in the past

96=Stock fallen below safety stock level

30=Plan process according to schedule

10=Reschedule in

20=Cancel process

Improvement of MRP exception message


• Reduced MRP exception messages by 88 %

: 53,000 ----->4,000

• planners & buyers gained time to do additional

proactive parameter maintenance.

• The increased scheduling stability yielded

improvement of suppliers and shop on-time

deliveries.

• Implementation of mandatory weekly

review –purge- reset of all purchase

& production open order status.

- Clean up past due data

- Application of tolerance of reschedule in/out

- Adjustment & improvement of MRP

parameters

- Improve low value items(BULK)

Improvement Trend



• Backflushing Improvement

• Improvement of BOM accuracy

- Consistency check between VPM & SAP

- BOM & Routing check

• Establishment of guidelines for cycle count

- Low value item

• Application of scrap rate

• Improvement of handling process for

option kit44

62

96

9392

89

88

8682

9193

88

40

50

60

70

80

90

100

On-going Control groupStart Nov Dec Jan Feb Mar Apr May Jun Aug Nov Dec

• Setting up process to keepconsistently inventory accuracy(95%>)


Improve IRA through daily cycle counting

Classify(ABCD)

Countphysicalinventory

Select itemsto be counted

in a day

MaintainC/C

master

Inventory counting list

Input resultof physicalinventory

Correctrecord

inventory(SAP)

Follow upcountermeasure

Analyze error causesand work out a

countermeasure toprevent reoccur

Difference ≥201MKRW

Review &agree

(Finance team)

Yes

No

Countresult

Inventory accuracy

NO

Yes

Re-designed process



VCOMInternet

Web with Dealers & Suppliers

EDI with Banksand customs

Shop Floor Control System

R/3R/3Client / ServerClient / Server

ABAP/4ABAP/4

COCOControllingControlling

AMAMFixed AssetsFixed Assets

Mgmt.Mgmt.

PSPSProjectProjectSystemSystem

WFWFWorkflowWorkflow

ISISIndustryIndustry

SolutionsSolutions

MMMMMaterialsMaterials

Mgmt.Mgmt.

HRHRHumanHuman

ResourcesResources

SDSDSales &Sales &

DistributionDistribution

PPPPProductionProductionPlanningPlanning

QMQMQualityQualityMgmt.Mgmt.

FIFIFinancial Financial

AccountingAccounting

PMPMPlantPlant

MaintenanceMaintenance

Global

Standard

(ERP)

Business Data Warehouse

Consolidated

& Individual

B/S & P/L,

JIT, Kanban

R & D

Interface withSales Companies

VIVA

Supplierinformationsystem

VICS

Parts BIZsystem inC/S

COLS

Parts CatalogOnline System in C/S

System Interface

SFCS

VPM

MAS, WAS,

DIAMOND

Phase2

Phase2

Phase2 : Interface ofVPM W/ SAP

Phase2:Enhancing SAP



Business Info.

Reengineering

SAP Other VCE SystemsCorporate or

Organizational Data

External

Information

• SEM, KMS

• KPIs

• Value added work

• CRM

• SCM

Data Warehouse

Implementation of BW



Bex - CS Consolidated Sales (Actual vs Plan)



Web Reporting - CS Consolidated Sales (Actual vs Plan)



[Sequence Planning]

Previous Problem

- Daily Ordering- Manual Data gathering

& Productivity Mgmt. - Partial L/Stop Mgmt.

Improving Concept

- One Unit Ordering- Real Time & Auto.

Data gathering- Total L/Stop Mgmt.

[Working Progress Monitoring-ALC Room] [WIP Checking]

[ Effect ]- Reduce WIP

- Real Time confirmfor Work progress

-Improve DataAccuracy

OutPut

Work in Process

Productivity Mgmt.

Line Stop Mgmt.

Prod. Vol. Record

Real Time

Control

Shop Floor Control System

-24-


File Name : SAP Report.ppt - 31 -ITS Server

Production

Line control(SFCS)

Warehouse

SAP R/3

(Volvo CE Korea‟s Integrated VAn system )

Firm banking

VCEK

Web browser

Vendor

1. Interface to SAP and Internet

- Directly interface to SAP Server through Internet (ITS Function)

- Quotation through Internet

- Search a drawing and real time information with Web Browser

- 350 domestic/oversea venders & suppliers

2. Main service Functions

- PO, Delivery, Assembly sequence plan, KANBAN status,

Forecasting, Quality information, Invoice status etc.

V I V A



VCEK SAP R/3

생 산(PP)

영 업(SD)

서비스(SM)부 품(MM)

회 계(FI)

부품청구

부품마스타재고정보입금정보진행현황

Dealer Interface

.부품정보 .진행관리

.부품청구 .부품반납

.직송청구 .B/O납기

.발송현황 .채권현황

Service support

.부품 카다로그

.서비스 회보

.장비제원

.T.S.I .T/SHOOTING

Internet

Dealer Inventory

.입고관리

.출고관리

.재고관리

.장기재고현황

출고실적

VICS (Volvo Internet Customer Support)

VCE Sales Company &

Dealer

Domestic DealerVolvo Users



ERP System Server Configuration

SAP ESS

DISK 1.6T

SAP

R/3

V25004 CPUMem 4G

vceksap0 vceksap2 vceksap3 vceksap4 vceksap6

K4602 CPUMem 2G

K2603 CPUMem 2G

K3602 CPUMem 2G

K4602 CPUMem 2G

vceksap5vceksap7 vceksap1

K5704 CPUMem 4G

K3602 CPUMem 1.75G

VCE VCDVCQ,VCX

TSM Server

DISK

400G

3494

Library

vcekalc2vcekalc1

SFCS Server

Speed

Mail Server

DNS Server

vcekmis2

PDSS

Communication Server

vcekmis1

Etc Server

Tobisk

Sales Server, EDI Server

V25002 CPUMem 4G

BW ESS

DISK 1.2T

BW

R/3

vcekbw0vcekbw1

BWPBWD

vcekbw2SD

SD

S8012 CPUMem 6G

SD

M804 CPUMem 2G

F802 CPUMem 2G

SD

Tobish

Firewall

internet



Products / Inventory / Inventory days

50days -

60days -

40days -

30days -

20days -

10days -

„98 „99 „2000 „2001

100

75 %

52 % 47%

○ Results

100

159%

176%

106%

Products

Days

Amount● ● ● ●100 104% 101% 100%



Modularized & Standardized Operative System

Data Warehouse

CRM SCM SEM KMS BI

e-Business

SAP R/3, SFCS

BW

2005 ~

„2002~ „2003

„99~‟2000

WEB Collaboration

Mobile Office

Management& Strategy

Sales Force Automation

Volvo CE Korea System To Be



Maintenance Team Organization

Asheville Konz Amsteldam

Changwon ShanghaiLyni

Regional FM Support

NA

VIT US

Regional FM Support

Asia

VIT Korea / VIT China

Regional FM Support

Europe

VIT Poland / Sweden

VIT Korea Central Maintenance Team

Factory Master Excellence Team

Main

ten

an

ce T

eam



Q1 ‘09‘07Q4 Q4Q3Q2 Q1Q4Q2 Q4Q3Q2Q1 Q3‘06 ‘08 ‘10

Phase 1 Phase 2 Phase 3 Phase 4

* ARV rollout

* BRA rollout

* ASH rollout

* ESK rollout

* HAL rollout

GOD

Q1

* WRO

* Confirmed

* BEL

* India RAM

*WUXI

* PED rollout

BNG

SHP

HML

Evolution to Factory Master for Global



Thank you.

Volvo IT Korea

Volvo Construction Equipment Korea Business Information System · Volvo Construction Equipment Korea File Name : SAP Report.ppt - 6 - Implementation strategy of SAP R/3 •Global

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