Turning Up the Heat

August 13, 2008 by Christoph Zeidler

Things steam, hiss, and blare around me; high-pressure machines mold rubber compounds into shape; there’s a smell of tires and oil; the workers are running through the aisles, operating the production units and sizing me up – the pale, sweating stranger staring around him, touching the rubber and rolling the tires, while trying to keep his suit pristine.

This forcefully reminds me that tire manufacturing is hard work. Loadstar’s chairperson, Nihal Jinasena, confirms this later as I sit in his office, gratefully knocking back a glass of water. “Competition in the tire market is fierce and is becoming much fiercer due to new competitors from China,” says the economist. “As the market leader, we must remain a step ahead of the others – with new ideas, top-quality products, and a high level of efficiency and flexibility.”

Best practices are the best option

Loadstar

Located in Colombo, the capital of Sri Lanka, Loadstar was incorporated in 1984 as a joint venture between the Jinasena Group and Solideal of Belgium. Today it is the world’s largest manufacturer of solid tires. The company specializes in producing high-quality pneumatic and solid tires as well as rubber-covered tracks for industrial and heavy-duty applications. Catering to buyers around the globe, Loadstar turns out 6,500 tires daily for equipment manufacturers such as Caterpillar, John Deere, Komatsu, and Fiat.

Loadstar has managed that so far. With 7,000 employees, four production sites in Sri Lanka, a research and development center in Belgium, and sales offices in more than 60 countries, the company enjoys 25 percent annual growth and recently posted annual revenues of U.S.$300 million. Loadstar boasts a 26 percent share of the world market for solid tires.

To build on this success, the company opted for SAP software back in 2005. It replaced its legacy systems – based on Infor, Sideline, and Microsoft Access – with the SAP ERP application in an implementation project lasting just seven months. “Each area had its own, stand-alone system that wasn’t even integrated with the finance department’s system,” explains Samanjith Wickramasinha, general manager of information systems at Loadstar.

Initially, he and his colleagues had considered Oracle, because the U.S. company had a stronger presence in the Sri Lankan market. The two quotations were at a similar price level, but the decision went in favor of SAP, which offered a more flexible solution. “We wanted best practices, and SAP has the most experience,” stresses Ravi Tyronne, general manager of operations. “To be honest, there was a bit of gut feeling involved, too,” adds Wickramasinha. “We simply felt we’d be in better hands with SAP.” When Loadstar successfully implemented the SAP ERP Human Capital Management (SAP ERP HCM) solution recently, this hunch proved to be correct.

In good hands

“A partner had installed our core ERP system, but we weren’t completely satisfied,” reports Wickramasinha. This time, he turned directly to SAP India consultants for implementation. A team from Bangalore took on the task, and Loadstar is also considering engaging them for the next project, the implementation of plant maintenance functions. “We’re in good hands with SAP Consulting. Everything progresses quickly, and the direct channel to SAP has proved very helpful,” he says. This also provides confidence for the company’s planned upgrade to the latest release of SAP ERP.

Another positive aspect is SAP Enterprise Support services (formerly SAP Premium Support). They ensure faster response times and problem solving and provide a dedicated contact person. SAP offers just what Loadstar needs, as Sree Vidya Sekharan, SAP support advisor for Loadstar, confirms: “I’m in close contact with all my customers and have noticed that they really appreciate being able to contact their support advisors directly. If there’s a critical situation, the customers have service level agreements to back them up, and their support advisors to speed things up.” “Which she does,” says Wickramasinha. “We’re grateful for her support. Normal support would be adequate, but SAP Enterprise Support is a kind of safeguard that everything will always run smoothly. ”

Transparency and efficiency

So much harmony is slightly uncanny. “Weren’t there any problems?” I ask. “Well, the user interface is in urgent need of a revamp,” admits Wickramasinha. “But even Sree Vidya Sekharan can’t do anything there.” In other respects, he says that the challenges are mainly within his own company. Now that Loadstar can fully map all personnel data with SAP ERP HCM, speed up HR processes, and ensure a better flow of information, it needs greater awareness.

“Overall, the SAP software has been very well received among employees, but we need to ensure that managers make better use of it,” emphasizes CEO and joint managing director Tissa Jinasena. “We have mapped our business processes in the SAP software and have all relevant information at our fingertips. Managers can see what is going on in the company. This enables transparency, well-founded decision making, and further growth.”

A key figure in manufacturing, for example, is the worker minutes per kilogram of rubber. Shift managers can now access this information in the system and, if necessary, take corrective measures at the manufacturing level.

Just the thought of manufacturing makes me start to sweat again. Why did I wear this suit? I know – the award ceremony. Award ceremony? That’s another thing I’ve never seen before: Following the successful SAP ERP HCM implementation, Loadstar’s management has invited employees and managers to one of the training centers to celebrate their success and honor the project team.

“We want to thank all of the staff who helped us reach this milestone,” Wickramasinha explains to me. And because the video link to Europe is already broadcasting and the employees are waiting, he takes my arm and leads me to the meeting. “We’re all going to watch as our CEO completes the first employment contract using SAP ERP HCM – hopefully it’ll all go well,” he murmurs nervously. “But of course, Sree Vidya Sekharan is here,” I say reassuringly.

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