Daewoo Electronics SA has gone live after completing what it claims to be the fastest fixed price SAP R/3 implementation in South Africa. The implementation was done by Spearhead, SAP's logo partner and R/3 implementation specialist.
From decision time to going live took just five-and-a-half months, says operations manager Peter Brierley. "To the best of our knowledge that makes us the fastest R/3 site to date." In fact, Spearhead contracted upfront to hand over the project within the 51/2 months time frame and for a fixed price.
Daewoo chose to install four modules initially: sales and distribution, materials management, financials and controlling. "We intend to install further modules in time, as the business requires," says IS manager Philippe Jardin.
Daewoo, a joint venture between the Korean parent company and Anglo American Industrial Corporation, has been trading in South Africa for two years. The company represents the amalgamation of the formerly independent companies Rowa International and Supalek. Apart from distributing and assembling Daewoo electronic goods, it also represents Kenwood hi-fis and car sound systems and Pace satellite TV equipment. In total it has 5 000 customers, mainly in the form of dealers, and 600 product lines.
"We are operating under a very special set of pressures," notes Brierley. These include the decline in the value of the rand, pressure on margins, increasing competition, grey marketing, lead time to market and the short lifecycle of many of the products it distributes.
"We are ordering goods from South Korea, Japan and England, and from time of order to the arrival of the container it can take as long as seven months," notes Brierley.
Other challenges for Daewoo include the need to manage inventory tightly and to have equally tight control over debtors.
Daewoo identified the need to implement a business improvement solution in May 1996. "We looked at everything on the market," says Jardin, including Baan Triton, JBA and Mainstream. SAP's R/3 had the best fit, offered the greatest flexibility, and it fitted in with the plans of Daewoo in Korea, which has also embarked on an R/3 implementation.
"However, we are the first Daewoo site worldwide to complete implementation of R/3," notes Jardin.
Brierley says Daewoo had developed a "lot of coping mechanisms and bad practices, just to get the day-to-day job done. R/3 provided us with a set of the best business practices into which we were able to fit our existing systems and processes."
Jardin adds that Daewoo's need to change was so great that the company was not able to engage in a business process reengineering exercise beforehand. "Instead we had to BPR the company on the fly." Jardin says the company had three priorities:
To get SAP R/3 in and working
To train the staff in the efficient and effective use of R/3
Once the business was understood, to improve all processes
R/3 has been installed on a Compaq dual-Pentium Pro server running under Windows NT and against Microsoft SQL Server. This relatively low-cost platform underscores Jardin's view that it's not necessary to "break the bank to go the R/3 route."
In this regard Jardin says he was fully supported by Spearhead, which managed the project on a fixed period and fixed price basis. Jardin adds that Daewoo staff have been exceptionally receptive to the R/3 system. "Most of them have never even used a PC, so we had to train them from the ground up. However, everyone is happy in the knowledge that the new system is going to benefit them and make them more efficient."
Immediate benefits have been reduction of paper output ("We used to generate mountains of paper"), improved communication between the company's four branches (Johannesburg, Midrand, Cape Town and Durban), and better deployment and use of inventory.
An unexpected but welcome side benefit has been the rapid computerisation of Daewoo. "We now have a solid infrastructure. We have a WAN, many of the people are running Office 97 and are mail-enabled, and we can begin to add components on top of this, including the Internet," says Jardin.
Some 30 employees of Daewoo are using R/3 on a daily basis, with this number expected to rise to 200 eventually.
Brierley, who championed the cause of R/3 into Daewoo, says Daewoo and Spearhead worked very well together. "SAP R/3 implementation is all they do, so they had as much at stake in the rollout as we did. They understood our need for speed and brought great energy and urgency to the project."
Andy Eksteen, Spearhead director and Daewoo project manager, said that the spirit of the project team and their approach to achieving results through innovation and hard work were key elements in completing the project on time and within the fixed price contract. He also emphasised that Daewoo's willingness to embrace new technology contributed greatly to the project's success.
Spearhead, which specialises in R/3 implementation, has grown rapidly since it was founded in 1992 and is a logo partner of SAP, the highest accreditation available to partners. It currently employs over 75 highly skilled consultants in projects ranging from rapid implementations like Daewoo to large scale projects running over several years.
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