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Fitness programme for the automobile industry supplier ESA

Finance and logistics support through SAP R/3

In only four years, Einkaufsorganisation des Schweizerischen Auto- und Motorfahrzeuggewerbes, or ESA, renewed its IT infrastructure entirely and replaced it with SAP modules. In 2000, an outdated logistics solution was replaced by SAP R/3 Logistics. Together with the management consultancy The Information Management Group (IMG), ESA was able to increase its strong market position in the trade with automobile accessories and automobile service materials and to create the prerequisites for moving towards an e-business future.

Strong customer relations through a co-operative organisation

7,100 of these customers are also joint owners of ESA, which is run as a co-operative. With them, ESA associates wider business interests through customer relations. However, the Burgdorf business cannot rely on such close relationships alone in the face of stiffening competition. What is required is an optimal price-performance ratio. ESA run an efficient logistics department. The sales vehicles stop in front of the customers' doors up to twice a day. To deliver packages from about 30,000 stock items within 24 hours from one of the six business locations in Switzerland, high-performance IT support for logistics is a fundamental prerequisite.

Replacement of an old host system with SAP R/3

Until 1996, ESA used a host system with applications for payroll accounting, finance, logistics and sales. These host solutions were made accessible via around 100 terminals and via emulation for around 25 PCs. Before switching over to a client-server environment with logistics software in 1996, ESA, as a pilot user, had invested a lot of time in the development of this software business, without its requirements being considered accordingly. It soon became evident that the functionality for the complex logistics requirements was insufficient despite the intensive development co-operation. The years following the introduction of this software were, accordingly, marked by performance problems, severe functionality gaps and the certainty that the solution could never be integrated with reasonable expense and calculable risks in e-business processes.
Within the framework of a comprehensive evaluation of 13 software solutions, SAP's products emerged as the winner. The biggest advantages that SAP R/3 offered were the investment protection, comprehensive functionality, openness to third party products as well as its scalability for e-business in particular. For ESA, SAP R/3 offered flexibility and the possibility of reacting quickly to market changes. As ESA wanted to introduce SAP R/3 with the FI, CO and HR modules, it approached, with good reason, an external consultancy. "IMG won us over with its clean price-performance ratio and its culture of acting as a partner which always keeps in mind the whole solution", explains the project manager responsible for the project. After the three modules went live in January 1999, the wider roll-out of the SAP R/3 solution was planned to include the sales (SD), materials management (MM), warehouse management (WM) and technical service management (SM) modules. With a workload totalling 18,000 working hours on the part of ESA and IMG, the components for logistics and technical service management were modified to ESA's needs within a one-year project, were interwoven in the existing organisation, and were operational within the specified time in May 2000. This resulted in a company-wide integrated and consistent maintenance and logistics system which, in turn, led to improved management and coordination.

Benefits for customers and the business

The benefits of the new logistics support have been worthwhile for the business and, above all, for its customers. The integration of all processes in one system enables consistent online entries, transparent information and quicker completion of individual work processes as the degree of automation is higher. The IT department has noted a decrease in maintenance costs of about 30% compared with the previous solution. This can primarily be attributed to the fact that the performance problems have now been removed: "SAP simply ran without a hitch" said a member of the IT staff. The reduction of the systems from three to one means that there is no longer need to support interfaces to other system environments, and SAP has a comprehensive online support system in place for all the modules. That also means a significant reduction in maintenance costs.

Prepared for the future with electronic services

During the introduction of the SAP modules, it became evident that new electronic services such as e-business and electronic catalogues are components that cannot be ignored by ESA in the ever toughening competition. Again, SAP made such projects possible.

Thanks to the very successful start, ESA is not ruling out the possibility of tackling new IT projects soon. In the autumn of 2000, the software solution LAGO for electronic catalogue production was connected with the SAP modules. The software takes the relevant material data directly from SAP and puts it into the desired format based on templates. This means that the basic product data is only captured once but can be used over and over. The new interface reduces the lead time of a catalogue of around 200 pages from eight to about two months. In addition, the internal expenditure for data preparation can be reduced significantly and all the external pre-press costs can be eradicated. In 2001 the first EDI solutions with larger customers were achieved. In this way, several tens of thousands of line items which ESA previously received by fax and which had to be catalogued carefully by hand, can now be stored electronically via the customer system directly in the SAP system. As well as reducing the time to complete orders, this solution also reduces significantly sales costs and the risk of errors.