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Andritz-Group: iron ore and ERP

Graz-based technology pioneer undertakes global process harmonization

With more than 10000 employees on its payroll, sales revenues of €2.7 billion in 2006, 35 production and service facilities, and 120 subsidiaries and sales offices, the Andritz Group is one of the foremost manufacturers of plant, machinery and equipment for high-tech production systems. With a project volume of up to €400 million per plant, Andritz supplies turnkey factories to countries all over the world, including large-scale plants for cellulose and paper; rolling mills and strip processing lines for the production of cold-rolled stainless and carbon steel strip; water turbines for power generation; and machinery for feed and biomass fuel production. Being an international operator – more than 70 percent of its workforce is employed outside Austria –, the Andritz Group relies on a global divisional organizational structure and on ‘local’ management. Since the global divisions and their product homes are geographically dispersed over a range of countries, the nationalities represented in the company‘s workforce are many and varied. In short, Andritz operates with a truly global setup, combining a high degree of local knowhow with worldwide access to all relevant future-oriented technologies.

Heterogeneous IT and process arena as a result of rapid expansion

Unmatched for its engineering process, Andritz has had to contend in the past with one of the more tricky aspects of digital technology. Dr. Heinz Autischer, Chief Process Officer at Andritz, recalls the veritable acquisition marathon over the past few years: “We have been expanding powerfully, with the inevitable result that we have ended up with a large number of different ERP systems in the Group.” The takeover of Ahlstrom was followed by the acquisition of Universal Milling Technology, paving the way for international market leadership in the field of feed technology in 2000. Two years later, the company took over the industrial furnaces division for hot dip galvanizing lines and continuous annealing lines of the French-based SELAS SAS and acquired ABB‘s pulp and paper drying systems division. In 2003, Andritz improved this service offering still further with the takeover of IDEAS Simulation Inc., a dynamic process simulation specialist, and Acutest Oy, a vendor of industrial process monitoring systems. Andritz acquired the global fluidized bed business area of VA TECH WABAG, based in Ravensburg in southern Germany, in 2004. The following year Andritz took over complete ownership of Lenser Filtration GmbH+Co.KG, a manufacturer of filter plates made from thermoplastic materials. More recently, the Graz-based firm acquired the hydro power plant operations of VA TECH HYDRO, an investment which has made Andritz – almost overnight – the world‘s number one producer of water turbines. All in all, a massive international shopping expedition which created euphoria among the Group‘s engineers and technicians but which gradually caused furrowed brows among the business process and IT planning experts. In the course of time, the string of acquisitions – dating mostly from the 1990 to the present day – had resulted in a hotchpotch of local business processes, IT solutions and ERP systems in the various Andritz companies.

Summing up the situation in early 2003 together with his Chief Information Officer Klaus Glatz and the management team, Dr. Autischer notes that “we had an extremely diverse system arena with a huge variety of solutions, some of which had already passed their ‘sell-by-date’.”

Ready for globalization thanks to internationally unified ERP project

The company was also keen to gear its business processes systematically to the requirements of globalization. This included making full use of the synergetic effects within the Group: through the smooth processing of deliveries between the business units; the joint use of centralized specialist units such as Production, Procurement and Automation; and the sharing of international marketing and service facilities.

The company was also keen to gear its business processes systematically to the requirements of globalization. This included making full use of the synergetic effects within the Group: through the smooth processing of deliveries between the business units; the joint use of centralized specialist units such as Production, Procurement and Automation; and the sharing of international marketing and service facilities.

Global Andritz process model ensures clarity

All this was good reason for the Chief Process Officer and his team to look around for a consulting company with the necessary expertise in large-scale international projects. In mid-2003, Andritz opted for The Information Management Group (IMG), St. Gallen. “At that time we had undertaken a 10-day preliminary project with IMG. This experience convinced us that IMG was the ideal partner.” The next step for management of the machinery manufacturer was to draw up concepts for consolidation of the distributed systems and for the introduction of a global ERP. All this was good reason for the Chief Process Officer and his team to look around for a consulting company with the necessary expertise in large-scale international projects. In mid-2003, Andritz opted for The Information Management Group (IMG), St. Gallen. “At that time we had undertaken a 10-day preliminary project with IMG. This experience convinced us that IMG was the ideal partner.” The next step for management of the machinery manufacturer was to draw up concepts for consolidation of the distributed systems and for the introduction of a global ERP processes: finance; engineering and product lifecycle management; project and order processing; and after-sales servic.

ASAP template: the basis for global rollouts and the harmonization of all corporate processes

During the ‘Blueprint Preparation’ project phase, the methodology for the ASAP project was defined on the basis of IMG‘s proven Business Engineering principle and the project organization got under way. This included definition not only of the so-called macro processes, which roughly describe all Andritz‘s business operations, but also of the subprocesses and functions for business-specific procedures, such as order processing and operational procurement, logistics and production processes. Wolfgang Hornung, Chief Consultant at IMG, comments: “And in such a way that Andritz has the SAP project under control at all times and has a clear overview of the progress of the different tasks and functions.”

The ASAP template itself was developed during the ‘Blueprint Implementation’ phase. In the initial stage, lasting just under two All this was good reason for the Chief Process Officer and his team to look around for a consulting company with the necessary expertise in large-scale international projects. In mid-2003, Andritz opted for The Information Management Group (IMG), St. Gallen. “At that time we had undertaken a 10-day preliminary project with IMG. This experience convinced us that IMG was the ideal partner.” The next step for management of the machinery manufacturer was to draw up concepts for consolidation of the distributed systems and for the introduction of a global ERP.

All this was good reason for the Chief Process Officer and his team to look around for a consulting company with the necessary expertise in large-scale international projects. In mid-2003, Andritz opted for The Information Management Group (IMG), St. Gallen. “At that time we had undertaken a 10-day preliminary project with IMG. This experience convinced us that IMG was the ideal partner.” The next step for management of the machinery manufacturer was to draw up concepts for consolidation of the distributed systems and for the introduction of a global ERP processes: finance; engineering and product lifecycle management; project and order processing; and after-sales servic.

ASAP template: the basis for global rollouts and
the harmonization of all corporate processes

During the ‘Blueprint Preparation’ project phase, the methodology
for the ASAP project was defined on the basis of IMG‘s
proven Business Engineering principle and the project organization
got under way. This included definition not only of the
so-called macro processes, which roughly describe all Andritz‘s
business operations, but also of the subprocesses and functions
for business-specific procedures, such as order processing and
operational procurement, logistics and production processes.
Wolfgang Hornung, Chief Consultant at IMG, comments: “And
in such a way that Andritz has the SAP project under control at
all times and has a clear overview of the progress of the different
tasks and functions.”

The ASAP template itself was developed during the ‘Blueprint Implementation’ phase. In the initial stage, lasting just under two months, the processes were harmonized by IMG in close collaboration with Austrian consultants CNT and a number of specialists from various countries. This was followed by prototyping with regular test cycles and cross-company review workshops. The provisional result: a global template designated ASAP as the basis for worldwide rollout and the harmonization of all corporate processes. Dr. Autischer of Andritz comments: “During Blueprint Implementation, integration focused primarily on the branches and subsidiaries with large sales volumes.” These included the four Finnish locations where the first rollouts took place in stages in 2005, followed recently by the United States, Denmark and China, with Austria next on the list. The Andritz executive recalls: “Prior to going live in Finland, the time pressure was enormous. The whole project team was working extra shifts.”

Successful integration of special systems and data modeling

In Finland the project team had added local modifications to the global processes, data models and master data for the initial rollout.

The special systems either already in use with or additionally required by the technology group, including the EDM solution ‘Matrix1’ – an electronic data management system for engineering – were integrated into the overall ERP concept using a standard SAP interface, supplementary SAP programming, and the SAP XI 3.0 Exchange Infrastructure. Integration at the SAP end was taken care of by the IMG Software Factory on the basis of a nearshoring model.

The same applies to data modeling of the material masters, the bills of material and the specifications for process releases and changes; the purpose of this modeling is to support business requirements such as installation and production relocation or the bundling of purchasing volumes. The SAP-based material master and bill of material concept allows the use of multiple usage parts and assemblies on the one hand and simplifies project management on the other. Senior IMG Consultant Hornung: “One of the classic challenges of engineering is to incorporate the disparate CAD systems into the overall system and to collate and edit highly diverse data for smooth migration to or integration into a globally valid data model.”

Conclusion: globally prepared for future competitive challenges

With the new ERP strategy, Andritz is killing two birds with one stone: while the Group can take a more relaxed approach to future mergers and acquisitions thanks to its consolidated system milieu, much more efficient use can now be made of the synergetic effects of business processes across all international business units. At the same time, the commitment to ERP will also benefit Andritz‘s service business. That‘s because the Group is looking to the smooth interworking of the system environments to produce an improvement in customer support in connection with systems sold. Inhouse benefits are also anticipated, for example as a result of the greater transparency in project business and utilization of synergies in both procurement and logistics. At the beginning of the 21st century, Andritz is therefore ideally equipped for both the present and future challenges of global competition – ‘with iron ore and ERP’.