Bundling Volumes for Better Conditions

Infineon in Numbers
Infineon in Numbers

“Infineon annually procures goods and services valued between _3 and _4 billion. To increase transparency in purchasing and to gain additional savings, we’ve kicked off a project to analyze the procurement processes,” reports Peter Reischl, purchasing agent at Infineon, a manufacturer of semiconductors. It used to take a great deal of effort to obtain a monthly overview of the entire volume of purchasing in the Infineon Group. Although the semiconductor manufacturer had use SAP R/3 companywide, the systems were not integrated. Individual locations created reports with SAP R/3 tools and sent Microsoft Excel spreadsheets to Munich, where they were merged. “A worldwide report was the result of manually consolidated Excel files from nine local systems,” explains Thomas Uhlik, project leader of spend analysis at Infineon. That’s why the company decided to integrate and analyze purchasing data from its SAP R/3 Materials Management and Financial Accounting components used around the world into a single data warehouse.

Future-Proof Solution

Infineon chose SAP Business Information Warehouse (SAP BW) as its solution. “We decided on SAP BW because the SAP data warehouse is a future-proof solution that can be easily integrated using standard interfaces across different releases and forms,” says Uhlik. Another reason for SAP BW was its ability to include the Data Universal Numbering System (DUNS) from Dun & Bradstreet (D&B). DUNS allows identification and qualification of over 70 million businesses worldwide. It can be used to consolidate and update vendor data regularly and to identify the group to which a company belongs.
The user-friendly Web reporting feature in SAP BW offered another advantage. “Access to reports and analyses over the Internet was an important criterion for pragmatic reasons,” reports Uhlik. “It meant that we didn’t have to install an individual presentation interface on all the local PCs across the world. With Web reporting, users access reports simply with their own browser.”

Efficient Consulting Leads to Success

At the forefront of the spend analysis project, SAP Consulting (which had been engaged for the project) created a suggested implementation based upon the AcceleratedSAP (ASAP) methodology. The implementation methodology includes five phases. A short project preparation phase of six weeks was followed by the business blueprint phase, in which SAP Consulting and Infineon worked together to develop a feasibility study and a solution design. Several suggested ideas for process improvements and savings potentials served as proof of the cost-effectiveness of SAP BW. Technical realization of the solution design (the third phase) began in October 2002. This phase ended in January with the switch to the production environment and then with the go-live in February 2003, which was achieved after only four months. “The close collaboration with SAP Consulting enabled us to remain on schedule and significantly under the expected cost,” says Reischl as he describes the project’s success. Professional and tight project management enabled saving full-time labor days of about 30% – last but not least because the SAP consultants competently supported all phases of the project, partly with efficient remote consulting.
The spend analysis solution was implemented with the tried-and-tested methods and tools of SAP Consulting. Along with the use of SAP BW business content, which Infineon was able to use almost in its entirety, meant that the project could be completed smoothly and quickly. “The preconfigured report and analysis scenarios enabled us to convert our own needs into reports and analyses quickly,” reports Uhlik. Because the predefined reports at Infineon reach to the material level and the material master data differs at each location, the business content had to be tailored somewhat. Harmonized master data should be available in one to two years.

Everything in One Hat

Six Types of Reports Ensure Transparency
Six Types of Reports Ensure Transparency

“Fitting nine SAP R/3 systems, releases 4.0 to 4.6, in different languages, and with each needing to be customized, into one hat – that was not easy,” recalls Uhlik. During the project, Infineon also standardized about 450 groups of goods. Today, some 100 users work with SAP BW – including 25 core commodity managers (responsible for global purchasing), employees in purchasing controlling, and local purchasing agents.
Infineon loads data on all product goods from the Materials Management application – transaction data every week and master data every four weeks. Once a month, the data from about 30,000 vendors is synchronized with the D&B database. The overall data volume processed with SAP BW currently adds up to 20 gigabytes.

Real Business Value

“With SAP BW, we now have detailed information on the entire purchasing volume – in manageable form and at the push of a button, instead of working with Excel spreadsheets that were always difficult to consolidate,” says Martina Kamm, a power user at Infineon’s central purchasing office in Munich. Employees, who especially like the intuitive navigation and simple operation of the Web reporting function, also say that the overall performance of SAP BW is very good.
The company expects to realize the first quantifiable savings from SAP BW with the 2003/2004 fiscal year that began on October 1, 2003. “Because we now know exactly what we buy from whom and in what quantity, we’ll profit from the newly won transparency,” says Reischl. “We can bundle purchasing volumes at individual vendors more strongly and thus get better prices.” With volume bundling and reduced numbers of vendors, Infineon expects savings of 3% to 5%. “SAP BW will have amortized itself within one year, which means a fast return on investment – that’s real business value,” says Reischl with confidence.

Next Steps

After the successful implementation of SAP BW, Infineon now plans to implement additional tools from mySAP Supplier Relationship Management. For example, it plans to introduce an electronic, catalog-based procurement system for selected products based on SAP Enterprise Buyer.
The company also wants to extend the use of SAP BW to create and distribute consignment reports. In this approach, vendors deliver goods to an Infineon warehouse, but Infineon pays for them only when it actually removes them from storage. Infineon thus saves capital costs for the warehoused goods. To profit from this model even more, Infineon must know which groups of goods already operate within a consignment warehouse. The planned report will provide this information.

Udo Kessler