Confidently Moving to Sustainable IT

Whether in Germany, the United States, or Australia, anyone who enjoys a delicious Vienna sausage, hot dogs, or an Australian burger usually has no idea what these items have in common. It’s quite likely that vacuum fillers and portioning and separating machines from VEMAG Maschinenbau GmbH were used to manufacture the sausage and ground meat. The company supplies its products to well-known manufacturers of food products around the world – with increasing success.
For some years, producers of foodstuffs have demanded system solutions with a modular structure so they can be easily embedded in complex production lines and enable the manufacture of varied products – such as stuffed meat, fish, and potato pockets; noodles; and sausage. VEMAG Maschinenbau responded to this trend early on and has used innovative developments like its building block system to participate actively in the trend.
While the midsize company was continually expanding its product offering, its corporate IT was stagnating – until recently. The central production planning system was obsolete and had reached its limits.

Replacing the legacy software in one fell swoop

For Rainer Kammer, IT director at VEMAG Maschinenbau, the problem was obvious. “We needed up-to-date, integrated, and sustainable software that supported our long-term growth strategy,” he says. After a detailed examination of the market, the company implemented SPEED, a preconfigured, qualified SAP All-in-One partner solution from applied international informatics GmbH & Co. KG, an SAP channel partner and SAP All-in-One value-added reseller.
Several factors steered the decision toward SPEED. The preconfigured processes for engineering in the qualified SAP All-in-One partner solution already covered more than 90 percent of the business processes at VEMAG Maschinenbau. In addition, the solution is based on the latest SAP technology and is being continually developed.
For VEMAG, it was strategically significant that SPEED could run in the computer center of the project partner, ai informatics. “We’ve been building on the advantages of an outsourced system landscape for some years,” says Kammer. “That frees the IT department from maintenance work so that it can concentrate on the use of IT technologies and optimization of IT-supported processes,” he adds. The fixed price was another plus.

Exact planning

The advantages of the integrated partner solution were evident soon after it went into production. Kammer emphasizes that “with SPEED, we have bundled all information flows and have achieved transparency and manageability with comprehensive processing that we would never have believed.”
Because the new software does not permit negative stock levels, the midsize company now has a high level of security about its stock. “What’s in the warehouse is in the system and vice versa,” says Kammer. If production needs new material and the warehouse has reached a minimum level of stock, the industry solution automatically generates a suggested purchase for the required parts.

Knowing where the orders are

The implementation of SPEED has also enabled VEMAG to introduce a barcode system. Each component can be automatically and seamlessly traced with a uniquely identifiable material number. The code is scanned into the industry solution, the data is transferred directly to order management, and the item is immediately posted as stock in accounting. Employees in purchasing and production have a display of the current stock levels at all times, and they can compare the levels to the purchasing requests from production orders. Errors from manual data entry or transfer are practically impossible.
Even for complex production lines that require the procurement of several different kinds of material and that must be scheduled in advance, the system provides a complete overview of all inventory movements and the progress of work in production at all times. “We process orders more quickly, shorten throughput and delivery times, and improve the accuracy of our deliveries to customers,” says Kammer.
The situation was evident in a lack of transparency in production planning. Components and materials for machines were procured based on estimates and rules of thumb. One result was that more parts were often in stock than production actually needed to fill sales orders. Another result was that that too few parts for a machine were available for production because the legacy system displayed stock that was not really there.
Integrated service processes were unthinkable with the legacy software. Service employees manually entered the repair time or the parts used in routine service at customer sites into Microsoft Word documents or Microsoft Excel spreadsheets. The reason? Warranty contracts with customers and the related technical information, such as product data sheets, could not be managed digitally because they were still stored in paper files. Before service personnel could inform technicians on site about anything – in the case of a complaint, for example – they had to gather and compare the information on the customer and the product. That took a lot of effort, required a lot of time, and was prone to error. The same was true for internal information flows between the service and accounting departments. Data on repair times and the spare parts used was gathered manually at month-end.
With make-to-order production according to kanban, for example, processes from procurement from a vendor to customer delivery can be planned and controlled precisely. The purchase and provision of materials for production is now oriented to the actual requirements of sales orders. “With that ability, we can achieve smaller lot sizes in production, optimize production processes, and improve on-time deliveries to customers,” says Kammer.

Service information at a click

Supported by SPEED, VEMAG was also able to integrate service processes. Service employees receive all the information they need at the touch of a button. When customers require routine maintenance, the application sends service technicians a notification a few days early – and the notification eventually becomes a service order.
When a customer notifies the central service center at VEMAG about an unforeseen machine disruption or failure, the repair order is created directly in the SAP software. This approach reserves the required spare parts, organizes shipping (including the required shipping documents), schedules the technician’s on-site visit, and conveys all the information required by the order.
Today, data on scheduled maintenance and customer complaints flows automatically from the service department to the accounting department, where it is invoiced and posted in near real time.

Greater economy and lower IT operating costs

With the partner solution based on SAP software, the midsize engineering company also has more economical business processes. For example, the good situation with orders means that more documents flow into the sales and purchasing departments, which creates more work for the employees there. Thanks to the largely automated and rapid processing speed of the new ERP solution, VEMAG has been able to handle the increased workload without increasing personnel resources. In the sales department, the number of documents, such as invoices, delivery notes, and orders, increased from 50,000 in 2005 to 55,000 in 2006. In the same period, the number of items handled by the purchasing department increased from 28,500 to 30,300.
Even in terms of IT operating costs, the new solution pays for itself. IT director Kammer estimates, “that we have reduced the cost of each ERP workplace by an average of 10 percent when compared to the legacy software.”

Exchanging information more easily

Supported by SPEED, VEMAG Maschinenbau has decisively paved the road toward the future. The next step for the midsize company is to digitize, structure, organize by keywords, and store all SAP documents (incoming invoices and delivery notes) and drawings form CAD systems in an archive system that is linked to SPEED over a standard interface. In the future, employees and managers will also work with an intranet solution based on SAP NetWeaver Portal for even simpler and faster access to technical documentation or business figures.

Dr. Andreas Schaffry
Dr. Andreas Schaffry