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Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 1 -
Volvo IT Korea
2008. 06. 04
Business Information System- SAP R/3 Implementation -
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 2 -
SAP R/3 Implementation
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 3 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 4 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 5 -
• 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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 6 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 7 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 8 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 9 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 10 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 11 -
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>
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 12 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 13 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 14 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 15 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 16 -
• 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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 17 -
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”
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 18 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 19 -
Development of Single Company BOM
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 20 -
• 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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 21 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 22 -
Forecasting and planning option variation thru “flexible planning”
Re-designed process
Major Activities Results
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 23 -
Improvement of MRP run time
Major Activities Results
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 24 -
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
Major Activities Results
• 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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 25 -
• 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%>)
Major Activities Results
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 26 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 27 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 28 -
Bex - CS Consolidated Sales (Actual vs Plan)
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 29 -
Web Reporting - CS Consolidated Sales (Actual vs Plan)
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 30 -
[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-
Volvo Construction Equipment Korea
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 32 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 33 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 34 -
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%
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 35 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 36 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 37 -
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
Volvo Construction Equipment Korea
File Name : SAP Report.ppt - 38 -
Thank you.
Volvo IT Korea