The history of Karl E. Brinkmann GmbH began in 1972 with the idea of manufacturing and distributing electromagnetic clutches and brakes. With just six employees at the start, KEB has developed into a midsize company for modern solutions for industrial drive technology, and has sales and manufacturing operations around the world. Among other things, the company manufactures electromagnetic clutches and brakes, gear motors, and electronic regulators, called frequency inverters, which control rotary current motors. The KEB corporate group currently consists of 10 companies and offices in 17 countries, in Europe, the United States, China, Japan, and South Korea.
The challenge of globalization
“One of the key challenges facing our company is the growing globalization of the economy and thus of our customers,” explains KEB CEO Ralf Lutter. KEB is therefore pursuing a medium and long-term growth strategy in order to expand its international presence. The company is planning branches in Russia and the Czech Republic, for example, and has also started looking to India. “To implement our growth strategy successfully, we need uniform and transparent information and reporting across all locations and from all divisions of the company, such as development, production, sales, or accounting, which authorized employees and management are able to access easily at any time,” says Ralf Lutter.
The old heterogeneous IT landscape showed its limits here. The environment consisted of a custom development programmed on the basis of Cobol for logistics and software solutions for financial accounting, time recording, payroll, asset accounting, and controlling, each of which came from a different vendor.
All business processes under one IT roof
The individual systems were linked with each other by numerous interfaces, which could only be operated, maintained, and modified at considerable expense. Each time an application was updated, the interfaces to the other systems had to be modified. “If we performed a release upgrade in financial accounting, for example, the interface to payroll also had to be modified,” explains Bernhard Peuser, the IT project manager at KEB responsible for the global implementation of SAP. What was missing was a uniform platform for merging and evaluating the business results of the individual KEB subsidiaries. On top of this, KEB did not have any group-wide IT standards. The individual companies previously adapted the custom-developed logistics software to the country-specific requirements themselves, which made the central administration of data and information far more difficult.
To bring together all business processes under one IT roof, the company decided to implement an integrated and future-proof business software, and to this end researched the market and carried out a software selection. The choice was ultimately between solutions from SAP and Navision, and it quickly became clear that Navision could not cover the required number of users at KEB and at the time of the selection process was not able to run on the IBM System i5 (eServer iSeries) platform specified by KEB.
SAP with Unicode – one software for all languages
Another important factor was that the future software needed to be Unicode-enabled to ensure the smooth exchange of information between all companies in the group. This was particularly relevant with regard to the integration of the branches in Asia, but also affects the integration of future locations in Russia and the Czech Republic, for example. “For strategic reasons to support our international growth and create uniform standards across the group, the only candidate was an ERP solution from SAP,” says Ralf Lutter.
KEB therefore decided to implement SAP R/3 Enterprise with Unicode in the head office. The subsidiaries were to be connected to the mySAP All-in-One solution it.hightronics from implementation partner itelligence. “First, itelligence has experience in international SAP implementations, and second, the itelligence consultants speak the language of SMEs thanks to their local presence and they know what our particular requirements are,” states CEO Lutter.
Based on it.hightronics, the itelligence consultants implemented an enterprise template on August 1, 2005 initially in the Automotive area of the KEB group’s head office, and defined the group standards. In this template phase, the SAP industry solution was implemented in the KEB Shanghai branch and was then enhanced with the country-specific requirements. Modules for Financial Accounting (FI), Controlling (CO), Sales and Distribution (SD), Materials Management (MM), and parts of Production Planning and Control (PP) were introduced in China. The technical connection between the Shanghai branch and the German head office was achieved using a VPN data line.
Smooth implementation in China
According to Bernhard Peuser, “no major preparations were required” for implementation of the SAP software in China. While there are linguistic, cultural, and mentality differences between China and Germany, KEB has been represented in China for a long time, and this presence has been intensively supported from Germany and included the exchange of employees between the two countries. The KEB employees in Shanghai were already working with the new software at the start of September 2005, and the software has been supported by KEB’s IT department in Barntrup since going live.
“We chose the branch in China because it was a manageable subproject,” explains IT project manager Bernhard Peuser. At the same time, the SAP implementation in Shanghai was to serve as a model for the subsequent international rollout of the SAP software with the Unicode standard. IT project manager Peuser was impressed “by the positive experiences in China, and we will also benefit in the subsequent international projects.”
Unicode brings worlds together
If a SAP user in Barntrup logs on in Chinese today, all the Chinese characters are displayed correctly, even though the user is working with an operating system in German. Conversely, a SAP user in the Chinese branch who calls the system in German will see the German characters displayed correctly. “Thanks to Unicode, we will be able to display the characters of numerous languages from all cultural spheres in the SAP landscape, which will bring use a competitive edge in the global economy,” says Ralf Lutter.
The installation of the group standard in Shanghai also provides greater transparency to cross-company processes. For example, the German head office can view the orders on hand and the status of order processing or sales figures in the Shanghai branch at any time, and depending on the order situation can react quickly and flexibly to local requirements.
Ambitious targets with future-proof software
In parallel with the SAP implementation in China, KEB carried out the implementation in the German head office. The company activated financial accounting at the start of January 2006. “The improvements could be felt immediately, because the high integration of individual software modules such as financial accounting, HR accounting, and controlling means that accounting processes are now much faster and more efficient,” according to Ralf Lutter. In addition, the time-consuming and costly maintenance of interfaces is no longer required.
At the beginning of July 2006, KEB migrated to mySAP ERP 2005 because the current version of SAP’s ERP software offers greater functional scope than SAP R/3 Enterprise, even in the standard system. For example, in purchasing, the main vendor is assigned automatically, which accelerates procurement processes, and in production controlling, information on particular work steps can be made available on a workstation-specific basis. According to CEO Ralf Lutter, another advantage of von mySAP ERP 2005 is that “with it, we have created a modern IT infrastructure for the rollout in the other KEB companies and for the next 10 years can use modern developments from SAP based on a future-proof technology.”
At the moment, around 25 employees at KEB are working with SAP. This figure will rise to a total of 400 once all the companies have been connected. The productive startup of the complete SAP installation for logistics is planned in Barntrup for the start of January 2007. Particular challenges here include the integration of an automatic pallet high-rack warehouse from viastore systems, another high-rack warehouse, and test systems in production. The KEB companies in Schneeberg, Saxony and in the United States should go live with the SAP system at the start of 2008, followed by the locations in Italy, France, Austria, and Japan in 2990.