Summary
Logistics is an important part of the economic activity of any modern company. The presence of computers in everyday life requires companies to react instantane-ously to various changes, and make reliable strategic decisions. In order to meet these challenges, employing a well-designed and properly working information system, which enables the smooth flow of information is essential [14].
Last decades saw a considerable increase in the number of information systems supporting business. One of the most complex and advanced, in terms of technology and content, is the module-based ERP (Enterprise Resource Planning) system. How-ever, one could ask if it is merely the company that benefits from using the system? The paper investigates the introduction of the ERP system in the Bydgoszcz branch of “TELE-FONIKA Kable Ltd. Group”.
Keywords: ERP system, logistics, production, IT technology 1. IT support for the logistics processes Thanks to the development of the IT technology, most of processes in logistics have been made virtual – with the natural exception of transport. Businesses have to adapt to the changing environ-ment in order to meet market requireenviron-ments. On one hand, they should react quickly to customers’ demands, and integrate with business partners on the other.
Supporting logistics by electronic means is known as “e-logistics”. CAL (Computer Aided Lo-gistics) systems are becoming increasingly popular in various companies. Their basic functions in-clude planning, communication, coordination, control, simulation and visualization of logistic pro-cesses. The most important logistics-support systems are WMS, SCM and the integrated ERP [6, 256–257].
WMS (Warehouse Management System) enables effective and complex management of ware-houses, including stock listing and placement. It allows for planning and supervising processes within the warehouse-production-reception-dispatch scheme. It increases warehouse efficiency, guarantees higher quality of customer service, helps to optimize logistic processes and supervise work along the whole logistic chain [6, 320–321].
SCM (Supply Chain Management) allows to obtain maximum profits by optimizing the price of raw materials, sub-products, final products, and maintaining sufficient stock levels.
This can only be achieved by having the proper tools and methods to realize processes such as supplying, production and distribution [3, 67], [13].
Practical solutions often permit to increase the work effectiveness [11]. Information technology systems supervise the work and allow to do the work quicker, without decreasing the quality of correctly-performed processes. Choosing the appropriate method of material requirements planning (MRP) in a typical ERP system, as well as selecting its parameters might reduce the excessive amount of materials, and as a result they may influence on reducing the costs. [12]
An important part of the system is correlation with other business processes taking place in the company, including managing the contacts with customers and goods providers, managing technical support, controlling product demand, dealing with production flow, complaints, order completion, developing and selling products [3, 67–71].
The ERP system guarantees the complex support of logistics processes. Basic logistic opera-tions such as maintaining goods flow and managing materials, production, sales, distribution, and quality are coordinated in the system by means of specially designed modules.
Integrated information technology systems of ERP type help to obtain and to process the appro-priate information and to keep the coherence. [9]
The software can be integrated, which means that it is possible to coordinate the work of both SCM and WMS systems under the ERP, which is often used as a database for other systems. There-fore beThere-fore introducing logistics management solutions, a complex system managing the whole com-pany must be implemented in the first place [1], [7].
Equally important in the supply chain management are the Electronic Data Interchange systems (EDIs) and the automatic identification technology [2], [15].
2. Research method
The survey was carried out in two periods: 3 to 21 October 2011 and 9 to 11 January 2012 and included three stages. The aim of first stage was to establish how logistics is functioning in the facility in Bydgoszcz and in the whole group so that it would be possible to assess how implementing of the ERP system would influence the overall logistic performance. Researchers used the undis-guised observation and the free-form interview techniques.
In the next stage, the type of the new integrated system, its functioning, and time required for its introduction were estimated. A free-form interview was conducted among the staff from the IT department, which included information about similar systems from the software manufacturer’s website.
The use of the ERP system and its influence on the company’s logistic performance was carried out using the following techniques: documentation analysis, undisguised observation and question-naire. The documentation consisted of instruction manuals of the integrated system logistics mod-ules prepared by professionals from the IT systems department. The staff provided feedback on how the new system was used.
The undisguised observation was performed on the warehouse staff using the ERP. The ques-tionnaire was designed to obtain information about different aspects of the logistic performance the company, and to collect workers’ opinion about the system and its functionality. The survey included 10 questions, five of which were the open type, and the remaining five were the closed- type ques-tions.
3. The new system and its features
The facility in Bydgoszcz is one of the seven branches of “TELE-FONIKA Kable Ltd.” group. The company was established in 1992 as “Zakłady Kablowe TELE-FONIKA s.c.” In 1999 the com-pany took over the cable manufacturing plant in Kraków, and in 2003 it formed a a joint-venture company with “ELEKTRIM Kable S.A.” (the owner of “Bydgoska Fabryka Kabli”, “Fabryka Kabli Załom” i “Fabryka Kabli O arów”). Currently, the group owns five production plants in Poland (two
in Kraków, one in Szczecin, Bydgoszcz, and My lenice) and two abroad (Ukraine, Serbia) [6, 115– 116]. It also has subsidiaries in the Chech Republic, France, Germany, Lithuania, Serbia, Sweden, Ukraine, the UK, and the USA.
The seven factories, which belong to the group, offer almost 25 thousand types of cable and wire products. Depending on the kind and purpose, they can be divided into power cables and in-stallation wires, halogen-free, telecom, mining, signalling, steering, high voltage, and car wires. The main activity of the plant in Bydgoszcz is production. It specializes in manufacturing of cables used in electricity transmission, either low, medium or high voltage (up to 400 kV). Renowned for the high quality of its products, the company was awarded the ISO 9002 certificate in 1992, and the ISO 1400 certificate in 1998 [5], [8], [10].
Another important activity of the plant is distribution. Products are sold on the domestic market, and exported to Europe and overseas – to Asia, Africa, and the Americas.
In all its facilities, the waste cable recycling plant in Bukowno and eleven subsidiaries, the group employs 4 700 people, out of which 3 395 work in Poland. The branch in Bydgoszcz employs about 600 staff.
The group is structured into divisions. The top managing position in “TELE-FONIKA Kable” is occupied by the Management Board. The board chooses the CEO who coordinates the work of several vice-presidents responsible for different divisions. The CEO also supervises the work of the Marketing Department, the Quality Management Department and two plants overseas. Other depart-ments in the company are managed by vice-presidents. The plant in Bydgoszcz reports directly to the Production Vice President.
4. Research findings
All staff from the Logistics Department, including line managers, report directly to the Vice President of Commerce. Combining the logistics and commercial activities of the company results in numerous advantages: logistic support of the distribution process, movement of goods from the production area to the warehouse, in-plant transport system and supplying products to customers are performed faster thanks to the union. As a result, the whole process from the moment of purchase to delivery is done more efficiently, which results in increased customer satisfaction.
The Logistics Department is made up of three units: Passenger Transport, Goods Transport and Export Dispatch. “TELE-FONIKA Kable Ltd” does not have its own transport fleet. Instead, orders are completed using the outsourced transport from specialist haulers. Because many raw materials required for the production of cables have to be shipped from abroad, the road, air and sea transport have to be organized. The group does have a fleet of passenger vehicles, which are used by the employees, especially the executive staff. Also, each facility has the in-plant vehicles used for the transport of goods. These include electric forklift trucks, pallet trucks, etc. The Export Forwarding Unit works closely with the Export Division, whose employees are responsible for different regions. The staff deals with orders from abroad, choose the correct product, determine the quantity and delivery date. The instructions are then passed on to the Logistics Department, who assemble orders, prepare documentation and organize transport.
Each facility belonging to the “TELE-FONIKA Kable Ltd.” group, including the plant in Byd-goszcz, has got its own warehouse system, which is responsible for all logistic actions within a par-ticular plant. Because of the structure of the whole organization, logistic activities in the facility in Bydgoszcz consist of warehouse management. Production does not start until a customer order for
a particular type of cable has been placed. Customer orders are taken in three trading offices in Poland, located in Bydgoszcz, Kraków and Szczecin, where customers can specify their require-ments and are given the estimated delivery date. Depending on the cable type, whether it is standard or special-purpose, delivery times can vary. Customer orders are forwarded to the Sales and Ware-housing Departments, which decide which plant is going to manufacture the cable and, if necessary, sends an order for the required raw materials to be purchased.
The Purchasing Department provides plants with all necessary materials for cable manufacture, packaging, and spools for cable storage, which are shipped to a warehouse in a particular plant. The raw materials are then used in the production area. The finished product undergoes strict quality control and, finally, it is transported to the warehouse.
Figure 1. The supply chain in “TELE-FONIKA Kable” Bydgoszcz Source: own research.
After that, the Domestic Trading Department decides how the finished product is going to be delivered to the customer. Products can be transported either directly, from a plant to a customer, or via the distribution centre in O arów. Customers can also collect the product from the plant (figure 1). In Bydgoszcz, about 35 percent of products are delivered directly to customers. Production waste or faulty products are sold or recycled in the cabe waste facility in Bukowno.
4.1. The ERP system in the facility in Bydgoszcz
In 2005 the board of “TELE-FONIKA Kable Ltd.” decided to introduce the ERP system in the facility in Bydgoszcz. After careful monitoring of the market of integrated systems, the group chose the software developed by “SAP A.G.” in Germany. A Polish company called “Prokom Software” (“Asseco Poland” since 2008) was appointed to implement the system in commercial partnerships
and production plants belonging to the group. Originally, the system introduction would end by the end of 2006.
Actually, the introduction of the new system In the facility in Bydgoszcz started as late as 1st
January 2010. The project included: − choosing the correct system, − system introduction analysis, − planning data migration, − scheduling,
− choosing human resources, − task assignment,
− organization of technical infrastructure, − organization of network infrastructure, − preparing of the server room,
− server installation, − arranging workplace
− putting the system into operation,
− installing application- and database servers, − adjusting the system to the plant’s requirements, − testing,
− entering test data,
− performing singular, function and recipient tests, − actual data migration,
− system configuration, − end user training,
− launching the system for production.
With the help from Asseco Poland S.A. the system was installed in three months and was offi-cially launched at the end of March 2010. The new integrated system replaced all previously used applications. The SAP Business Suite contains the following elements:
− SAP ERP, which is the database for all other applications. The suite contains the full range of IT tools necessary for efficient and integrated management of a company (transaction module, data warehouse, programming and integration tools);
− SAP CRM – an integrated suite for managing customer contacts;
− SAP SCM – a set of complex integrated tools which support planning and performing the supply chain tasks;
− SAP SRM – a suite for managing relations with suppliers;
− SAP PLM – an application supporting management of the product life cycle.
The tools also allow for computer management of the project, quality and component life cycles.
4.2. The system and its use
In the facility in Bydgoszcz, there are 41 employees who work in the material and finished- product warehouses. Twenty of them (14 men and 6 women) work directly with the system (they hold the SAP licence). Also, each of the warehouse staff carries a scanner, which improves basic operations such as stock-taking, dispatching, receiving, and locating goods etc.
The survey included all the staff working in the Finished Product Warehouse and the material warehouse who use the ERP system.
The group included members from different age groups: 5 people were between 18–30 years old, 12 people were between 31–45, and one person only was from the 46–60 age group. There were no employees older than 60. The majority of respondents have a university degree (11 people) and high-school education background (8 people), and one person declared vocational education.
There was little discrepancy as far as seniority of the staff is concerned. Only one person had worked shorter than a year, five people had worked between 1 to 3 years, seven people between three to six years, and another seven people had been employed for more than 6 years.
In the facility in Bydgoszcz the SAP system is operated by means of the SAP Easy Access application, which works as the graphical user interface. As a result, system administrators can freely split tools and functionality of the integrated system into function groups. This enables a quick ac-cess to the most popular tools.
The staff from the finished-product and material warehouses mainly use tools from the “Mate-rial management” group. Few tasks require the use of other available functions of the SAP Business Suite (usually from the „Sales and Distribution” group). The “SAP for Mill Products” line suite is hardly ever used. Probably the only function used by staff is the one allowing precise calculation of the correct length of cable to be cut in the warehouse.
Tasks which can be executed using the integrated IT management system include: − choosing appropriate materials and packaging for production,
− reception of finished products, − reception of goods,
− dealing with returns,
− goods movement between warehouses, − goods movement to be done by subcontractors, − material scrapping,
− allocating funds for new investments, − creating stock reports,
− creating material document listings and balance sheets, − taking production waste,
− cutting cables in the warehouse for customer orders.
4.3. Practical application – receiving the finished product from the production
One of the basic logistics activities performed using the SAP Business Suite is receiving the finished product from the production area. Having undergone quality control, the finished product is secured, labelled, moved to goods inventory and received by the Finished Product Warehouse. An employee from the production area moves the product to the temporary goods inventory, and indicates the target inventory.
In the next stage the SAP system automatically generates the re-entry document, which can be accessed by the staff in the warehouse. The re-entered goods, including the packaging, are labelled as “goods in transit / warehouse movement”. The product label contains all the necessary infor-mation about the product (material type, batch number, etc.), the facility of origin, and the storage
area to which the product is being moved. A member of the warehouse staff can check the inventory using the automatically generated report.
Next, the product is transported to the Finished Product Warehouse. The movement is con-firmed by an employee by clicking the “movement type” button. The product must be re-entered to the warehouse and the product movement has to be confirmed. It can be done easily by pressing the “accept” button in and choosing the appropriate movement type from the list. All fields in the “target re-entry” tab have to be completed (Material Type, Production Facility, Storage Facility, Batch Number, Quantity). The data is then copied to the “re-entry source” tab as the goods movement has taken place.
After that, the warehouse staff determines the characteristics of the received batch, chooses storage space, completes storage information for each item on the register, and confirms the opera-tion.
Prior to booking, the document has to be checked using the “verify” option. If the document has not been completed correctly or some data is missing, a warning message will be displayed. If the verification has been successful, the “book product” and “save” options will appear. If ticked, the finished product will appear in the inventory.
4.4. Survey results
The research into the use of the SAP software in the Bydgoszcz branch of “TELE-FONIKA Kable Ltd.” proved that working with the system increases efficiency and improves work quality. The system users claimed that the SAP system had a positive influence on work efficiency (60 per-cent of the answers) and the quality of work (65 perper-cent of the answers). Only a fraction of the respondents could not give a definite answer or believed that the new system had little influence on their work.
No negative responses were recorded, but it should be noted that the majority of staff (85%) who took part in the survey had had little experience working with similar systems. Unfortunately, fifty percent of the employees complained about having problems using the program interface, which they deemed too complicated. Only twenty percent of staff did not experience similar diffi-culty. Surprisingly, no one observed that the program was easy to use and its interface was intuitive. The user feedback on the training in using the integrated IT management system brought the follow-ing results: the majority of the respondents (65%) thought the trainfollow-ing was sufficient, while 30% of the employees decided that it was insufficient and should be continued.
The employee opinions about the introduction of the system and its influence on the organiza-tion of warehousing operaorganiza-tions have been presented in Table 1.
The collected results prove unequivocally that the introduction of the integrated ERP system directly improves the work of staff and the performance of the warehouses.
Table 1. The influence of the SAP Business Suite on the organization of warehousing operations – the employees’ opinion.
The
new system and the recording processes − more paperwork− more goods movements
− linking documents in the logistics chain − no lost / incorrect documents
− standarized paperwork
−
error-free documentsThe new
systemand reporting
− automatic report generation − easier report analysis
− invreased number of documents allowing for creating more detailed reports
−
goods movements are linked to exact places where costs are generatedThe new
systemand resource management
− the new report generating tools allow for automatic planning and stock control − making decisions regarding resource management is easier
− automatic orders option
− quicker order processing and limiting delivery times − quick access to the supplier database and product offer − recording stock movements
− checking stock levels and availability − monitoring storage locations
− warehouse re-arrangement into separate storage areas
−
defining basic material data such as the measurement unit, contents, weight, producer, etc.The new system and unit organization and functioning
− faster information exchange within and between units − better work organization due to standarized documents − more specialzed unit workers
−
speeding up processes due to automatic data entryThe new system and warehouse efficiency
− more logical layout and better organization of warehouses limit the amout of time required to obtain materials and finished products
− all procedures are strictly observed
− warehouse activities are more transparent owing to easier access to information
−
warehouse processes are more synchronized5. Conclusions
As the research findings clearly illustrate, replacing previous applications with the new SAP Business Suite including the “SAP for Mill Products” line suite has considerably facilitated the man-agement of the company resources. Using the integrated software suite offers considerable econo-mies as employees save time and work more efficiently.
Almost half of the warehouse staff in the facility in Bydgoszcz are licenced to use the new software. The cost of buying a single licence from “SAP Polska” varies between 10 to 14 thousand PLN. In order to lower high purchase costs, full licences have been given only to those employees, who can fully exercise the program’s capabilities. Others hold limited licences, which guarantee access to several basic functions such as reading barcodes for example. In practice, the main tools of the SAP Business Suite are popular with the warehouse staff, while the “SAP for Mill Products” line tools are used occasionally in production.
In the facility in Bydgoszcz, the majority of staff believe that they received sufficient training to work with the new software. However, they gave negative comments about the software being too sophisticated and difficult to use. To overcome these shortcomings, instruction manuals for sep-arate modules of the system have been prepared. An alternative solution would be to conduct a series of workshops and appointing a qualified consultant who would be able to assist the users and offer professional advice.
The research proved that using the new integrated system brings the following advantages for the company: improved decision making processes, quicker information exchange between line managers and employees, improving resource management by using the automatic registry tools, report tools, and instruments for checking stock inventory and availability. Generally, the organiza-tion of warehouse operaorganiza-tions in the facility in Bydgoszcz has been upgraded. One of the necessary consequences of introducing the SAP system was making some employees redundant, but it was also possible to increase the expertise of the remaining staff, which is important from the economic point of view. However, one has to remember that replacing skilled employees during a time of absence can be difficult.
The management stress to the operational benefits such as increasing the work quality and effi-ciency of the warehouses resulting from better logic and organization of raw materials and finished products. Many processes are now synchronized and all necessary procedures are carefully ob-served. It was also possible to lower the cost of recording inventory and generating reports. While the amount of paperwork and goods movements has actually increased, they have been all standarized and correlated, which makes the lost or incorrect documentation cases obsolete.
The strategic benefits result from closer co-operation between the facility in Bydgoszcz and the remaining branches of TELE-FONIKA. The integrated system assures using the same procedures in all the group’s branches and linking up business processes. The extensive supplier database en-sures effective purchasing of raw materials.
The introduction of the new system has also a considerable effect on the warehouse personnel. Thanks to the integrated system employees need less time to perform their duties, they have quicker access to data and do not make errors.
With regards to the system’s disadvantages, the managers pointed at high costs of introduction and buying the licences. What is more, the system is dedicated for corporate clients, which means that medium and smaller ones may not fully exhaust its potential (for example the “SAP for Mill Products” module). The system also requires qualified administrators and well-trained end-users, which is expensive.
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WPŁYW IMPLEMENTACJI SYSTEMU ERP NA DZIAŁALNO LOGISTYCZN Streszczenie
W artykule przedstawiono wpływ implementacji systemu klasy ERP na działal-noĞü logistyczną przedsiĊbiorstwa produkcyjnego. WdroĪenie oprogramowania przy-niosło korzyĞci strategiczne oraz organizacyjne, zaobserwowano istotny wpływ na pracĊ personelu logistycznego. Pozytywne wyniki wdroĪenia zaleĪą w duĪej mierze od sposobu implementacji, zakresu wykorzystania systemu oraz szkolenia przyszłych uĪytkowników pakietu.
Słowa kluczowe: system ERP, logistyka, produkcja, technologie informacyjne
Grzegorz Dzie a Marek Sikora
Faculty of Management
Department of Engineering Management
University of Science and Technology in Bydgoszcz e-mail: zis@utp.edu.pl
m.sikora@utp.edu.pl Aneta Nowak
TELE-FONIKA Kable Ltd. e-mail: aneta.nowak.89@o2.pl
