Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering Transport Technology
N.M. Lünnemann Blueprinting the new ERP-system for the Liquid Packaging division of Flint-Schmidt.
Engineering Assignment, Report 2005.TL.7014 (IO 05.042), Transport Engineering and Logistics / Industrial Organisation.
The company Flint-Schmidt has set its main goal in becoming a leader in the market segments it operates in. In order to support this growth a platform must be provided and business unit cost reductions must be enabled. However, due to the merger of Flint and Schmidt in 2002, business processes and information systems between the European plants differ. For example, two different Enterprise Resource Planning (ERP) packages and corresponding working methods are used. Therefore, one way to become a leader in their market segments is by integrating business units to enable an improvement in management information and transparency of material and information flows.
This thesis therefore concerns the set-up of the new ERP-system for the European Liquid Packaging (LP) division. Bikker introduced a model for the systematic approach of analysis and design of a production organisation [H. Bikker 'Analysis and Design of Production Organizations', lecture notes wb5413 Production Organisation (2001)]. This model is used as a framework for this research . The model contains two mainlines. The first mainline analysis focuses on the present (`IST') and future (`SOLL') objectives and policy. The second mainline analysis starts with the focus on the present situation of the organisation. The present situation is compared to objectives and policy in the future, which results in a tension field. This tension field is transformed into requirements, which are used to design a new and improved situation. The second mainline analysis is conducted according the Innovation model of In `t Veld [J. In 't Veld 'Analyse van Organisatieproblemen', Stenfert Kroese (2002)].
The European business goals derived, the to-be (SOLL) objectives and policy, are: the integration of business units into one single system, necessary due to inter-company information not being available, which directly shows in planning of inter-company processes. And the achieving of operating efficiency savings, made possible by the integration of the ERP-systems Movex and SAP into a single system.
The to-be objectives and policy imply an implementation / switch to a single ERP-system for all sites. With this switch possibilities are created to support company growth due to standardisation in information, transparency of information flows, automation of material planning and increased forecasting and the facilitation of better inter-company business processes and planning. Along comes the achievement of operating efficiency savings in the form of an IT cost reduction and an improvement in inter-company and operating efficiencies.
In order to get to the development of the new ERP-system, the second mainline analysis starts with analysing current working methods within the different LP-plants (Ruabon, Winschoten, Vienna and Frankfurt), especially in the area of material and information flows. Conclusions are drawn concerning differences / bottlenecks encountered in this analysis. On an inter-company level, the use of two ERP systems, Movex and SAP, is the main reason for the bottlenecks communication, planning and reporting. Looking at the business functions within the Liquid Packaging division on site level the same aspects come to concern. Most other differences are minor and will be solved during and after implementation of a single ERP system for all sites. These minor differences, or procedures, should partly be thought through in the blueprinting phase. Most of the details on this level however come to concern during configuration.
With this business process analysis, and with respect to the objectives and policy, requirements for blueprinting the division are defined. The requirement for blueprinting the LP division is stated as: `Integrated planning and scheduling'.
With this requirement, and for blueprinting the business control processes, a production structure is determined. The Customer Order Decoupling Point (CODP) is defined at the warehouse, separating the Make-to-Stock (MTS) production of intermediates, and Make-to-Order (MTO) finished ink preparation; blending. At inter-company level, Function Control and Supply Chain Management (SCM) are recommended functions for the to-be organisational structure. The company level business processes are defined as demand management, combined with capacity planning for finished inks, Material Requirement Planning (MRP) for intermediates, and transport planning. These processes are further elaborated for the `Perform' and `Operate' transformations. Furthermore, during ERP blueprinting, policy verification must take place and afterwards policy evaluation.
Master data harmonisation is necessary to avoid redundant data and to improve information visibility for the business control functions. Master data, to support the new ERP-system, is divided in (static) process data and (dynamic) progress data. Static process data is divided in item, customer and supplier data. With these three masters main data for the `Perform' transformation and the `Operate' transformation are covered.
Progress data, gathered with the help of time management in production and transport, provides the necessary information for demand management. Also can this information be used for, for example, Overall Equipment Efficiency (OEE) measurements.
For implementation of the SAP-system, the production structure on plant level should be defined Make-to-Stock. On item level however, a distinction must be made between MTO and MTS products. This division can partly be base for further investigation of the production structure.
The ROI for the SAP project is calculated at approximately 3 years and 4 months. For implementing the SCM-module, a maximum investment of 120 thousand Euros is justified over a 5-year period. However, it is recommended to first implement demand management, triggering demand on site level for MRP and capacity planning, and inter-company for MRP planning. After experience is gained in capacity planning, by performing time-management in combination with OEE measurements, on at least bottleneck production facilities, implementation of the SCM-module can commence.
For change management, especially good effort must be made in training staff and communicating the project, to gain / maintain the support of the users of the system.
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