A human being can live for about four days without drinking anything. But of course, there are no statistics about how long Germans can last without their favorite drink. In fact, a study conducted by the association of German brewers put the per capita consumption of beer in 2004 at 111.8 liters. That number makes Germany the number two beer-drinking country in the world.
Like beer itself, the Krombacher Brewery can’t be taken out of the German brewing landscape. The success of the brewery, which has a market share of about 9 percent, is based upon tradition. The brewery and its 830 employees celebrated its 200th anniversary in 2003.
In the Beginning Was the Malt: Strategy and Planning
Krombacher implemented automated business and production processes early on with standard software and hardware from IBM. But in 2004, the IT specialists at Krombacher recognized that the IT system from Doktor Claus Wellenreuther (DCW) for materials management, financials, and controlling was showing its age and no longer met the company’s requirements. The goal was to handle as many business processes as possible with a central IT solution and still leave room for numerous integration options. The existing application could not meet these requirements.
“We quickly chose financials, controlling, and materials management software from SAP. Not the least because we had been working successfully with human resources and the SAP solution for business intelligence since 2004,” says Johannes Truttmann, CIO at Krombacher. The business intelligence solution promised Krombacher more exact sales planning, and human resources promised elegant processing of wages and salaries, retroactive accounting, and time management. Overall, the conversion to SAP R/3 software was to guarantee the future of IT. After all, many other companies in the brewing industry use the software. “Ultimately, the decisive factor for the choice of SAP R/3 was the controlling options the software offered for production and the SAP and industry knowledge available on the market,” adds Truttmann.
Brewing Preparations: Optimizing Business Processes
Six consulting firms bid for the project. Siemens Business Services was entrusted with the implementation in April 2004. To capture the business requirements of each user department, consultants from Siemens Business Services conducted two workshops at the Krombacher Brewery. Along with the consultants’ industry and SAP-specific knowledge, the proven analysis tool, Live Kit, helped capture the requirements. The experts used the tool to identify the required customizing activities quickly, create assignment reports for master data, estimate the effort required, and perform an exact functional analysis. “We have rather impatient employees,” relates Truttmann. “A blueprint phase of up to six months was out of the question. The Live Kit, along with the business concept, prototyping, and documentation, had us convinced from the very start.”
The results underwent further refinement in the business concept. The consultants focused on standard processes and on flows specific to the brewery. Project participants also evaluated the effort needed for the detailed concept and to realize the resulting organization, master data, processes, and interfaces.
From Hops to Beer: Mastering the Challenges
In addition to replacing the DCW software, the SAP solution also had to be connected to two external systems. Krombacher wanted to retain its Dogas billing system. The system now uses an interface to transfer postings to the financials and materials management software from SAP; the postings are also relevant for profitability accounting. Coupling the financials software with external customer financing from Branchware & Partner proved a special challenge. Krombacher uses Branchware to manage thousands of loans. The Branchware software posts the debit positions to the SAP software and receives payment confirmations from it.
The focus of controlling is on the requirements for overhead accounting, product costing, period accounting, profitability accounting, and market segment accounting. “The mapping of the production process with the controlling software from SAP is much better than that of the old solution. We can now access key figures from production much more elegantly and quickly. We couldn’t do that at all before,” explains Rolf Dörendahl, managing director at Krombacher. “And we now have an option to cleanse our customer master data,” says Truttmann, noting another advantage.
The Mix Must Mature: Going into Production in Two Phases
The consultants began with the actual conversion in September 2004; the new solution went into production on May 1, 2005. To exclude the possibility of any surprises, the IT consultants tested the new solution thoroughly as early as the start of the new year. For example, company codes for accounting were activated ahead of time.
“We switched on a small production company with accounting as a core function almost as a test object so that we could get some practical experience. By the time we began with “the Battleship Brewery,” we didn’t have any problems,” says Dörendahl.
The managing director is particularly happy that the project came in on schedule (nine months) and on budget. SAP applications today at Krombacher run on four Windows NT servers that are linked with a doubly designed storage area network.
New Beers: Investments in the Future
The brewers from Germany’s Siegerland have taken an important step along the way to their IT strategy with the new applications. At the end of 2005, Krombacher completed the conversion from SAP R/3 to mySAP ERP. “We now have all the functionality of the SAP Beverage application [part of SAP for Consumer Products] available,” says Johannes Truttmann as he explains why the company took the step. The brewery is even thinking about using the SAP solution for sales and distribution in the future and replacing the Dogas system.
“I have spoken with many experts from various departments in our company, and all of them are excited about the new opportunities, such as the increased transparency of data. Even those who are usually skeptics made friends with the new software right away,” says Dörendahl. Backed by modern software, Krombacher can once again concentrate on its core competence – brewing beer. And it does so with great enthusiasm. In 2005, it invested €70 million in the brand; €20 million went toward a new filling and logistics facility. And even new types of beer are being discussed.