Picture it: A farm in Colombia wants to modernize its outdated milking equipment to increase productivity. So it contacts DeLaval’s Colombian sales subsidiary to order a complete solution that includes everything from milking equipment and feed management to milk cooling and storage systems. The software used by DeLaval’s Colombian employees to process this and all other customer orders is now SAP Business One.
After creating a sales document for the order, DeLaval staff in Colombia can copy the order data directly into a procurement document if the goods are not available locally. They then release this procurement document manually in SAP Business One, where it gets transferred to the central SAP ERP system of DeLaval Services GmbH, the global logistics and IT service provider of the DeLaval Group in Glinde, a city near Hamburg, Germany. This automatically triggers a purchase order as well as the shipment of the ordered equipment.
Delivery dates and business processes
Products in this case are delivered to Colombia directly from Germany. Using SAP Business One, staff at DeLaval headquarters can also determine the expected delivery date and inform its sales unit in Colombia, who in turn can then tell the customer exactly when to expect their order. The application has streamlined internal business processes at DeLaval’s Colombian sales subsidiary, which now run end-to-end with virtually no manual intervention necessary.
Next page: DeLaval’s rise to global player
SAP Business One saves 30 Minutes per order
All of DeLaval’s business processes, from order processing and shipping to invoicing and accounts receivable, are now much more transparent and traceable than before. “What’s more, we’ve also managed to shave 30 minutes off each order transaction thanks to the electronic ordering process alone. That saves us a lot of valuable working hours each month,” says Konstantin Reidel, IT architect at DeLaval Services GmbH.
Originally founded in 1883 by Gustaf de Laval, the creator of the cream separator, DeLaval today is an international conglomerate that operates in more than 100 markets. The company belongs to the Tetra Laval Group and has sixteen production plants as well as fifty sales subsidiaries and local sales organizations around the world. “End-to-end processes based on modern IT have become essential for a global enterprise like DeLaval,” says Reidel.
Compliance guidelines and risk management
An important part of DeLaval’s business strategy is harmonizing and standardizing its business processes across all locations and centralizing vital processes, such as export processing, so as to better meet compliance guidelines and minimize risk. Separating responsibilities from authorizations will also help the company reduce risk. To this end, the company plans to implement the processes defined at head office successively at its subsidiaries – as far as legally possible.
DeLaval has therefore adopted a two-tier ERP strategy that integrates its larger subsidiaries with the centralized SAP client at its data center in Hamburg. According to Reidel, the smaller sales and service units employ between five and forty people, so rolling out SAP ERP locally would have been too expensive and complex in terms of localization, customization, and setting up plants and company codes.
So DeLaval’s IT decision makers tested various solutions from different software manufacturers, including SAP Business One and SAP’s on-demand solution SAP Business ByDesign. “We ultimately went for SAP Business One because we can run it in our own data center and thus close to our ‘ERP mother ship,’” explains Reidel. The SAP solutions are connected via SAP’s “B1i” middleware.
Meeting strategic objectives: On-premise instead of on-demand
Reidel points out that this should not be interpreted as a vote of no-confidence in running an ERP application in the cloud: “It’s just that we can best meet our strategic objectives on an integrated IT landscape with the on-premise solution,” he says. Another advantage of SAP Business One is its user-friendly interface. The software can be learned in just two days, an important aspect given the frequent staffing changes at DeLaval’s smaller sales organizations. The rollout of the solution also ensures that employees only execute those processes for which they are authorized based on their role.
There are currently four other DeLaval sales affiliates connected to SAP ERP via the SAP Business One solution: In India, South Africa, Turkey, and Ukraine, 100 end users work with a special template solution created for the smaller subsidiaries. The template solution contains predefined print layouts and number ranges, and allow users to localize and adapt the solution to legal requirements where needed. The next go-live is planned for South Korea.
Thanks to these IT-supported processes, material master data is always up-to-date. For example, if headquarters sets the status of a product to “Discontinued” in SAP ERP, the affiliates using SAP Business One are updated immediately. Consequently, DeLaval’s sales offices now only order and sell products and materials that are actually available for delivery.
Eliminating past sources of error
In the past, DeLaval affiliates had to reconcile product numbers with headquarters’ data manually – this was a cumbersome and time-consuming task, and a significant source of error as well, especially when it came to orders for projects, which sometimes contained more than 500 individual items. “In some cases, affiliates were still using outdated product numbers for parts that had already been discontinued and could no longer be ordered,” explains Reidel.
DeLaval’s main catalog in the SAP system contains around 300,000 material master records. To help minimize the data volume in the sales and service affiliates, DeLaval replicated only the information for the products its respective subsidiaries actually sold and serviced. The company does this using an IDOC interface in conjunction with the “eCatalog” subscription function and “coresuite country package” add-on solution from coresystems, an SAP partner.
DeLaval headquarters benefits from this integration of subsidaries as well. Financial and logistics key figures entered in SAP Business One flow via SQL interface directly to the centralized SAP NetWeaver Business Warehouse. As a result, analysts can evaluate the data daily and drill down each product for detailed revenue analysis.
Analysis improves sales planning and stock reporting
This analysis helps the company identify market trends faster and plan sales more accurately. “Previously, the affiliates would send us their key figures once a month for financial reporting,” recalls Reidel. Thanks to this improved stock reporting, DeLaval can now make more precise inventory forecasts for its affiliates and manage the procurement processes in its central warehouses much more efficiently.