SaarGummi manufactures seals and moldings for the automotive industry, covering around 1,000 products from window seals to exhaust suspension, in Europe, Asia, North America and South America. In order to secure a competitive edge on the hard-fought North American automotive market, SaarGummi decided to introduce SAP for Automotive in its Canadian plants. Up till now, the various departments of the manufacturing plants had each used their own, independent systems to control planning, production and logistics. A key project objective when introducing SAP, therefore, was to optimize all processes across all departments along the value-added chain. The industry solution was implemented in just eleven months with the help of the consultancy company Orbis. The solution now controls all seven plants and makes cost assignment transparent. It comprises the following SAP modules: Materials Management (MM), Production Planning and Control (PP), Sales (SD with EDI), Warehouse Management (WM), Controlling (CO), Finance (FI) and Asset Management (AM).
Since the start of production in April 2004, handling units (HU) have played a key role in the logistics of the Canadian SaarGummi plants. Handling units describe all the parts packed in individual boxes or palettes, delivered and processed throughout the whole production run and moved in the delivery chain. The SAP application manages and identifies each of these packages, records all relevant information about it and provides a barcode label so that it can be identified with a unique handling-unit number. This frees up the material flow by removing bureaucracy and paper. “Even the suppliers receive barcode labels from us in order to identify (for example) the bales of rubber that arrive at our plants as raw materials,” explains Markus Sührer, responsible for IT coordination of the international SaarGummi sites. Raw materials and components such as steel elements for reinforcing the seals are combined in the production process to produce semi-finished goods. Depending on the article, the manufacturing process undergoes three to four stages till the end product. Suppliers who work in close partnership with SaarGummi also have access to the system. They report the amount of goods produced along with their expected arrival date, print the HU labels and apply them to the packages.
All handling units are given a barcode which can be scanned throughout the plants using mobile and wireless data recording equipment and posted online in the SAP solution. This method allows every package to be located and tracked at all times. Materials-management, warehouse-management and dispatch postings can be made at any time using this recording equipment. To this end, Orbis joined forces with SaarGummi to implement radio frequency transactions within the standard that SAP supports with the SAP Console. “In our plants, we distinguish between around 2,000 types of finishing or value-added stages for our products,” says Markus Sührer. “We track each package individually. Every month a total of some 300,000 handling units pass through our production and supply chain.”
Whiplash effects reduced
Suppliers in the automotive industry need to keep their planning as flexible as possible in order to react quickly and efficiently to order variations and adapt the production program accordingly. In practice, the time between customer call-off of ordered goods and delivery usually takes a week at SaarGummi. Customers place their orders via the standardized electronic forms (EDI) used in the automotive industry. SaarGummi delivers just-in-sequence. This means the goods are delivered to small interim warehouses where stock levels have to be kept to a minimum. These are sited as close as possible to the automotive customers’ assembly lines and, unlike just-in-time, provide a time buffer between the delivery date and the time they are needed for the customer’s production.
Orbis has developed a production planning and control tool for SaarGummi called Demstab. Demstab stands for demand stabilization. This add-on is based on SAP Sales and Operations Planning (SAP SOP) and provides a link between sales planning and production planning. The Orbis developers have augmented and expanded the standard SAP functionality by adding some functions of their own. SaarGummi uses Demstab to automatically buffer the frequent substantial variations in the delivery call-offs and smooth them out. This helps prevent the disruptive whiplash effects that logistics and production managers always struggle with. These occur when variations in order behavior “build up” over the whole value-added chain. If the customer unexpectedly needs more goods, this leads to a dramatic increase in short-term capacity requirements in the plants, and equally, if the customer needs fewer goods, this can lead to excess capacity.
The Demstab solution reduces the whiplash effects. Staff check the production program and can still adapt it manually before passing it on to the production plants. “An error can be disastrous,” says IT coordinator Markus Sührer. “Articles that have been incorrectly scheduled just end up lying in storage and tie up capital. They reduce the capacity available for producing the goods that are really needed. This can lead to expensive extra shifts.” The new tools prevent this kind of planning error. The advantages are clear – SaarGummi has reduced its stock by 30 percent and is now able to reach its production goals with less outlay.
New cost and result calculation system
A further project goal was to set up a new cost and result calculation system so that analyses from individual articles to whole customer groups could be completely transparent. Markus Sührer: “While this project was being implemented, we took the opportunity to revise our cost center structure and coordinate it with jobs in the production sector. Deviations from the standard margins are now shown together with the reasons for them.” For example, staff can now determine which machine is proving too expensive to run or taking too long to produce the goods and why this is happening.
Seal and molding manufacturer SaarGummi’s experience of international roll-outs, combined with the specific industry know-how of Orbis consultants, enabled the target processes to be defined and implemented rapidly. This was particularly the case in the following areas: Integration between sales and production, EDI processing and expertise in handling-unit management. The fact that the project involved three languages presented a particular challenge. The project language was English, the language of Québec French, and the language of the parent company German. Orbis used a multilingual team for this project.
A great deal of importance was attached to the project work. Markus Sührer: “The employees of SaarGummi devised the solution together. They learnt how to use new tools better and make decisions more effectively. The important thing was to let the staff try out the new tools and motivate them to let go of the old ones.”