Addition by Subtraction

Feature Article | December 14, 2009 by SAP News

Hager-Tehalit (Foto: Hager)

Hager offers electrical installation systems (photo: Hager)

The Hager Group is a leading international manufacturer of current distribution boards found in a variety of equipment in residential and industrial buildings, including meter boxes, modular devices such as fuses and breakers, control bus systems, cable conduits, and room connectivity systems. A family-owned group employing over 10,500 employees, Hager conducts its business all over the world: In recent years, it has established new production locations in China, Brazil, and India and acquired companies such as Polo (Poland), Weber and Amacher (Switzerland), and the Atral Group (France). Another of the group’s key developments occurred in 1996 with its takeover of the German manufacturer Tehalit.

Integrating this company’s products into the Hager brand augmented the group’s solution competency, particularly in electrical installations for offices and other commercial properties. Meanwhile, Hager has opened additional branches in the United Arab Emirates (Dubai), Singapore, Malaysia, Hong Kong, China, Australia, and New Zealand. Until recently, this meant that the group had 40 companies mapped across 10 clients within four different SAP systems. The master data in the individual clients was structurally heterogeneous, which made maintenance a time-consuming affair.

One system across all countries

Due to the tightly knit networking of its locations and the centralization of its warehouses in Europe, Hager resolved to merge its integrated logistics, controlling, and financial processes into a single system using the same master data and programs for all of its countries. Its goal? To achieve sustainable cost reductions in its IT, logistics, and financial departments and implement new functions.

Faster delivery to customers

Stefan Schorr, director of IT applications at the Hager Group and head of the overall project, explains the initial situation: “For example, when our location in Poland received an order from a Polish customer, our previous logistics organization still would have delivered from a central warehouse in Germany. As such, our master data, logistics processes, and invoice flows had to be automated and coordinated. If you have separate systems, this consumes an enormous amount of time and money.” Hager thus wanted to standardize its SAP systems throughout its group to increase its efficiency and accelerate all its business processes. “One characteristic of a future-proof system is the ability to get products from the point of production to the customer in the quickest way possible,” adds Schorr.

Hager_Group_Stromkasten

Hager_Group_Produktion

A natural convergence

Hager’s plans to harmonize its SAP systems all over the world proved to be no small task. The transition affected mainly corporate processes, such as finances and controlling, supply chain management and logistics, forecast and demand planning, sourcing, and purchasing management. Here, Hager committed to achieving full harmonization of its process flow and master data, which included data on materials, suppliers, and logistics. The group only permitted individual countries to deviate from its new standard processes when required by law.

Preserving local languages

This harmonization of both master data and concepts was a milestone in Hager’s implementation of its newly standardized system. The group also wanted to ensure that each location could continue to work with the system’s user interface in its local language. Meanwhile, Hager planned out a comprehensive data migration, including a backlog of all documentation. With all of the group’s information available in the new system, it could then take its legacy systems offline.

One of the greatest challenges the master data harmonization posed lay in the standardization of Hager’s accounting. To achieve this, the group first needed a uniform operative chart of accounts to specify fixed accounting rules in all languages and across national borders. At the same time, the chart had to be flexible enough to fulfill the group’s controlling requirements and accommodate the country-specific characteristics of all its locations.

“Standardizing all of Hager’s charts of accounts and mapping all of its controlling processes in one controlling area were two key prerequisites of advancing the group’s controlling systems throughout the world. Common controlling and a common chart of accounts provide the basis for comparing the margins of all products across all the group’s companies,” clarifies Ulrich Holzer, Hager’s director of corporate IT and controlling. The group also implemented the calculation of corporate standard costs, which automatically eliminate intercompany profits in product calculations for its numerous group-internal system deliveries. New functions such as optical character recognition (OCR) enable automated scanning of documents and subsequent posting in Hager’s SAP system.

Opting for ORBIS

The Hager Group commissioned ORBIS AG of Saarbrücken, Germany, to serve as its consultant and partner for the implementation. The two organizations have worked together for 15 years, seeing through SAP projects in enterprise resource planning, warehouse management, human resources, and business warehousing. “Our past collaboration had already given ORBIS’s consultants deep insights into Hager’s business processes, which complemented their experience from working on several international roll-outs for major companies,” says Stefan Schorr. In selecting its partner, Hager established four criteria: cost, competency, language skills, and employee availability in the countries in question. “In the end, ORBIS set itself apart with its language skills, knowledge of the French and Chinese markets – our most important markets aside from Germany – and its on-location consultants. The company’s specialists met our specific needs,” Schorr explains.

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Hager_Group_Verteiler

Migration in three phases

The Hager Group began to plan in earnest for its project in March 2006. Operating on a three-year schedule, the group carried out its global transition to a standardized SAP system in three phases:

  1. Creating a global blueprint describing the core processes and exactly how the harmonization would proceed. Meanwhile, Hager installed its new SAP system based on Unicode and the 2005 version of SAP ERP.
  2. Creating a template based on the blueprint’s specifications. The group customized the template to contain both standardized group processes and best practices for company-specific areas such as production or sales.
  3. Rolling out to companies and countries. In doing so, clients are always fully replaced.

Migrating the group’s entire data history was a unique undertaking: Rather than just its master data, Hager also transferred all of the documentation and legacy data in its previous system to its new data structure. As a result, the group has been able to take its legacy systems offline following verification by local auditors. In parallel to its migration, Hager has upgraded to SAP ERP and Unicode.

The first of these migrations took place in May 2007 in Poland, with Germany following in December and France in August 2008. Hager’s location in China moved to the new system in October 2008, and Italy was next in December of the same year. In the fall of 2009, the group planned to complete the bulk of its global harmonization project in the U.K., Belgium, the Netherlands, and Spain. “The most important step was getting through our core countries of Germany, France, and China,” says Schorr. Hager is planning further rollouts to its companies in Greece and Portugal in 2010.

A difficult transition made easy

The Hager Group’s managers are very pleased with how the project has proceeded so far. “Our overarching goal in this project – improving our efficiency and the potency of our internal processes – has been achieved,” says a delighted Ulrich Holzer. “The countries are interacting without any major problems.” In addition, Hager has constantly increased the availability of its products, implemented end-to-end logistics, and reduced the cost of its internal posting. Thanks to the harmonization, the group is now working with a centralized data management system for suppliers, accounts, products, and customer groups. Stefan Schorr is particularly impressed by how smoothly Hager was able to transfer its data. “The whole migration went off without a hitch,” he says. Meanwhile, the harmonization has also enabled the group to take advantage of all the benefits the European Union offers. As a result, products in German warehouses are the property of their respective Italian or French companies until their delivery to the end customer.

“We’re thrilled that we’ve been able to implement this system not only in central Europe, but in other markets that are also very important to us, such as Poland and China. We can now say that this project is the basis on which we will continue to grow and fully exploit the competitive advantages we’ve gained,” says Ulrich Holzer in summary.

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