SAP IMPLENTATION AT P.T. KRAMA YUDHA TIGA BERLIAN

SAP IMPLENTATION AT P.T. KRAMA YUDHA TIGA BERLIAN
Gunawan Putrodjojo 1) , Herman Joseph 2 ', and Prateek Kathuria 3)
Abstract
In this era of globalization and immense competition, the corporate world must
ensure that all its processes are time efficient and cost effective to give them the
edge they need to stay as market leaders. Consolidating business processes into a
SAP system is one way to address that need.
This internship report will explain how P. T. Krama Yudha Tiga Berlian (KTB) was
facing this problem of disintegrated computer systems and loosing a lot of time and
resources in running their business. The present computer system is not fully
integrated either in itself or to the underlying business processes of the company.
Resulting in Lengthy month-end closing, inaccurate product costing information, and
less than integrated supply chain due to information gap between actual logistic
process and information in current computer system.
During this internship, a solution was being implemented in the form of SAP R/3
system with its Sales and Distribution (SD), Materials Management (MM), Financial
Accounting (Fl), and Controlling (CO) modules. IBM Business Consulting Services
was hired for this task by KTB. The new system will improve decision making
process in all business area by providing real-time and accurate information of actual
operations like timely cost analysis and Profit/Loss report. It will optimise the overall
supply chain through better management of production and material planning along
with procurement and inventory.
The new system will enable KTB provide better customer service by improving the
effectiveness and efficiency of "Order-to-Delivery" cycle, and provide foundation to
support Customer Relationship Management (CRM) activity.
1. INTRODUCTION
Computerization of business processes immensely assists global corporate giants
both in increasing efficiency and in accuracy of the flow of information generated by
business processes. P.T. Krama Yudha Tiga Berlian Motors, acronym KTB, felt the
need for up-to-date real-time data to maintain its niche in the competitive Indonesian
automotive market.
KTB who is the market leader in commercial vehicles and not far behind in
passenger vehicles automotive market of Indonesia decided that it needs to
consolidate and manage its distributed resources in real-time. To bring about these
new company wide beneficial changes, KTB hired the technical expertise of
consultancy companies to new paradigms backed with a committed support from all
its employees and managers.
Hence, KTB along with the world's largest consulting services organization namely
IBM Business Consulting Services, acronym IBM-BCS, embarked on its mission to
bring in the new computer system along with its new business process design. "The
new business process design will ensure efficient integration between companies in
Krama Yudha Group and its business partners. All this integration will work only with
support from new computer system, all these changes are unavoidable, because
1)
Gunawan Putrodjojo, Dosen Tetap pada Fakultas llmu Komputer, UPH
Herman Joseph, Dosen Tetap pada Fakultas llmu Komputer, UPH
3)
Prateek Kathuria, Alumni Jurusan Sistem Informasi Fakultas llmu Komputer, UPH
2)
SAP Implementation...(Gunawan P., Herman Joseph, Prateek Kathuria )
67
they are basic requirements in business transformation towards excellence."
President Director Krama Yudha Group on 20th December 2002.
The essence of consulting is to help a client obtain information and advice which
leads to real and lasting solution of a problem. Consultants think, analyze,
brainstorm, cajole and challenge good organizations to become even better by
adopting new ideas. Great consultants are able to step into ambiguous, sometimes
hostile situations and sense what changes need to be made. Great consultants are
driven by ideas and a strong desire to have a positive impact on clients.
Dealers
Import
PT Krama Yudha Tiga
Berlian Motors (KTB)
Direct Sales
Senopati
Sole Distributor of
Mitsubishi Motors
Export
' Source, www.ktb.co.id
Mitsubishi Krama
Yudha Motors &
H
Manufacturing (MKM)
MKM I Body & Frame
MKM (I Engine, Axle,
Sleenng
Braja Mukti Cakra
(BMC)
|_
Brake & Engine component
Karya Bahana Berlian |_
(KBB)
Krama Yudha Kesuma
Motors (KKM)
r
i
Berlian Abadua
Satu (BAS)
• Sedan
Minibus
• Jeep 4 x 4
i
MinatNet
Berlian System
Informasl (BSI)
Tiga Berlian Auto
Finance (TAF)
Krama Yudha Ratu
Motors (KRM)
Dipo Star Finance
- Truck Chasis
- Light Commercial Vehicle
(DSF)
TrlJaya Union (TJU)
• Large Bus
Seat component
Component
Manufactruing
Company
Assembling
Company
Used Car
Financing
Company
Information
Technology
Company
Figure 1. Organizational Structure of KTB and its Subsidiaries
Consultants identify new business/technology environment opportunities, align
processes to technology using world-class knowledge assets and experts, and stay
with customers through implementation and team with clients to provide lasting
value. Consultants are outsiders who are called by a company to help them better
perform their business. The clients whom the consultant works with would vary from
experience to experience so there is a tremendous need for the consultant to learn
the business environment of each client, understand their problems, contribute
expertise, and develop trust and confidence while avoiding political situations.
2. USER REQUIREMENTS
KTB currently using a system called Business Planning and Control System
(BPCS) based on IBM's AS/400 computer system, while the other group companies
are using various different systems along with a mix of many manual processes to
run its business model. "As of today, we are still facing some difficulties in using
current computer system due to various reasons" says the President Director of KTB
in his kick-off speech on 20th December 2002. President Director of KTB group in
his speech points out, that this inability of using the computers was hindering KTB
group's activities to make use of the opportunity and to achieve planned business
goals.
(a) From business operation in general:
68 Jurnal llmiah llmu Komputer, Vol. 2 No. 2 April 2004: 67 - 76
1) Lack of management control system to enforce compliance with defined
processes and procedures.
2) Lack of integration of current business processes.
(b) From financials perspective:
1) A lack of computerised system that prevents MKM from using leading
practice accounting method such as asset depreciation, product costing
calculation, inventory valuation, etc.
2) Lengthy month-end closing
3) Inaccurate product costing information due to unmanageable PPV
(Purchasing Price Variance)
4) Inadequate financial reporting system
(c) From production and logistic area:
1) Current manual inventory management results in insufficient inventory
information causing problem in material and production planning
2) Face a lot of production disruptions due to mismatch of production planning
and material planning between MKM and KTB, and their Vendors
3. THEORITICAL BACKGROUND
3.1. SUPPLY CHAIN MANAGEMENT
Supply chain management is as much a mindset as a practice. It involves looking
beyond one organization and imagining all the entities involved in manufacturing and
shipping a product or service, and then linking all of those entities so they can work
efficiently and seamlessly as a team. That means uniting customers, suppliers,
shippers, and more recently competitors, into a supply network for the most efficient
use of time and resources. There are several key functions that make up the supply
chain all functions have their own cycle times, which have to be addressed for cost
containment to be achieved.
a. Procurement of both raw materials, as well as components, is a good place to
start. Then there's the manufacturing process itself.
b. The warehousing and shipping aspects of the supply chain also referred to as
distribution or logistics - often 'third party logistics' as much of this work is now
outsourced to independent contractors.
c. Then there is the actual transport and delivery of goods and services, both the
finished product to customers and retail outlets as well as shipment of materials
required to both support a company and manufacture a product.
&M
*EL
Manufaotufw
Distribution^
Product / Servic
Information
Figure 2. Supply Chain Management Cycle
SAP Implementation...(Gunawan P., Herman Joseph, Prateek Kathuria )
69
3.2 ENTERPRISE RESOURCE PLANNING (ERP)
ERP is a form of practice for software solution used to integrate business practices
with its associated processes within organizational structure. A set of three or more
companies directly linked by one or more of the upstream and downstream of flows
of products, services, finances, and information form a source to a customer. SAP
R/3 infrastructure is implemented at KTB as the new system.
3.3 MATERIALS RESOURCE PLANNING OR MATERIALS REQUIREMENTS
PLANNING (MRP)
MRP is focused upon planning supply side of firms by computing net requirements
for each inventory item to schedule production, and determining when they should
be purchased and delivered to the plant to minimize inventory, transportation costs,
and warehousing requirements. Logistics a subpart of MRP is the combination of
warehousing and shipping. While this was effective, MRP failed to consider other
important factors, such as capacity, space, capital, engineering changes, and costs.
SAP R/3 system will help executives informed in real-time of the over-all aggregates
of the parent company and its subsidiaries
3.4. MANUFACTURING RESOURCE PLANNING (MPR II)
MPR II encompasses additional factors such as long range planning, high level
resource planning, master scheduling, rough cut capacity planning, detailed capacity
planning and shop floor control. One of the fundamental concepts of the MRP-II
model is that of providing a complete business process cycle, by providing feedback
to all business processes involved in corporate activities. By continuous monitoring
of what actually happened versus what was the initial plan, the executive committee
based its forecast in question. SAP R/3 automatically provides reports on each of its
transactions.
3.5. CHANGE MANAGEMENT
Change Management is the process of managing transition from existing
organization and processes to future organization and processes. It concentrates on
the organizational area that will incur maximum affect from the implemented solution
i.e. SAP R/3. Implementing SAP R/3 changes the business strategy of market,
customer, products and services, process and technology.
The objective of Organization Impact Analysis (OIA) is to capture the highly
impacted business process changes on the organization as a result of the project.
Organizational impacts of Change Management are changes in responsibility,
ownership/ accountability, role, workgroups, end to end process, and location. The
OIA can be done through preparing OIA strategy; facilitating the identification and
analysis of organizational and process changes from As-ls to To-Be processes;
investigating and confirming highly impacted areas through validation workshops;
developing OIA report; and recommending transition plan.
3.6. SAP
The SAP R/3 system architecture is constructed as a three-tier hierarchy, which is a
client/server architecture in which software systems are structured into three layers.
The database layer, the central computer houses the database, known as database
server. In terms of a distributed R/3 system, it is adequate to say that database is the
place where the data is stored.
70 Jurnal llmiah llmu Komputer, Vol. 2 No. 2 April 2004: 67 - 76
The application layer or the business logic layer is responsible for the administrative
functions of the system. This includes background processing, printing (spool
requests), and process request management. Multiple application servers can exist
in this R/3 design. Additional computers, or clients as they are called, display the
software and screens that would be of use to the user when they work with SAP.
This is what is referred to as the Graphical User Interface (GUI).
The presentation layer or the SAPGUI consists of graphic images called icons that
include buttons, pull-down menus, dialog boxes, and scroll bars, and are
manipulated with a mouse.
An SAP R/3 transaction is any logical process in the R/3 System. A simpler way to
define this is to day a transaction is a self-contained unit. Creating a new customer,
generating a list of existing customers, processing an order, and executing an order,
and executing a program are all examples of SAP Transactions.
4. IMPLEMENTATION OF SAP/R3
Technically it is possible to implement the SAP system in one big project for all
companies in the scope and for all functions, but it requires very big project team,
may cause disruptions to operations, and would impose massive organizational
change, which would put the project at a very high risk.
Phased implementation approach is used to reduce project risks by phasing into
several projects with manageable size & scope that would significantly increase the
likelihood of success.
However, a phased implementation requires strong project & program management
and comprehensive master plan that can be used as master guideline to all aspect
of the phased implementation. The implementation will be phased out and
sequenced based on legal entity (company), business process, and SAP system
functionality.
The objective of sequencing the implementation is to have manageable project size
at one time with optimum support from existing human resource, and also to have
manageable project risk with sufficient supervision and control from KTB Group
management that lead to have minimum disruption to company operation.
SAP lmplementation...(Gunawan P., Herman Joseph, Prateek Kathuria )
71
2002
NO
ACTIVITY
Nov
1 Dec
2003
Jen
Feb
Mar
Apr
Way
Jun
Jul
Sep
J Oct
Qo-iive & Support
Aug
Refine Business Blueprint
A
A 1 Issue Resolution
A 2 Define "KTB only" Scope
A 3 Define Temp Interlaces
B
8
B
B
B
1
2
3
4
5
B6
8 ?
B 6
B 9
B 10
B 11
a 12
B 13
B 14
B 15
c
C 1
C 2
c a
C 4
D
Configuration & Unit Testing
System Config Documentation
Development (RICE)
Organisational Transition Plan
User Authorisation
Dala Conversion Preparation
Infrastructure Preparation
Integration Test
Key User Training (for UAT)
User Acceptance Test (UAT)
"Train-lne-Trainer" Training
End User Training Preparation
Cutover Planning
Post Go-Live Support Preparation
Procedural Documentation (ISO)
continue before go-live
continue before g-o-iw
Final Preparation
Execute Org Transition Plan
End User Training (SAP & other)
Data Conversion Execution
Cutover Plan Execution
Go-Live ft Support
P i Go-Live
Posl Go-Live Support
^•Go-live
I
D2
Figure 3. Time Frame of Implementation
The following table shows SAP Functionality and Business Processes that will be
implemented during Phase-1A of this project.
Table 1. SAP Modules Implemented at KTB
SAP MODULES
Fl - Finance
Accounting
FI-GL
FI-AR
FI-AP
CO - Controlling
CO-Budget
CO-CCA
CO-PCA
CO-IO
CO-PC
CO-PA
AA - Asset
Accounting
TR - Treasury
Management
TR-CM
TR-TM
MM - Material
Management
MM-MRP
BUSINESS PROCESS / FUNCTION
General Ledger, Accounts Receivable,
Accounts Payable
BUSINESS
LINE
All
Budgeting, Cost Center Accounting (CCA),
Profit Center Accounting (PCA), Internal
Order (IO), Product Costing (PC), and
Profitability Analysis (PA)
All
Asset Accounting
All
Cash Management (CM), and Transaction
Management (TM) Foreign Exchange,
Derivatives, Money Market, Securities and
Loan Management
Material Requirement Planning (MRP),
Procurement (local and import), Inventory
Management (IM), Warehouse
All
72 Jurnal llmiah llmu Komputer, Vol. 2 No. 2 April 2004: 67 - 76
CBU, Spare
Parts
SAP MODULES
MM-Pur
MM-IM
MM-WM
SD - Sales and
Distribution
SD-Sales
SD-Pricing
SD-Billing
SD-Delivery
PP - Production
Planning
PP-Master Data
PP-MRP
PP-Prod. Planning
PP-Production
Order
PP-ECM
SM - Service
Management
SM-Equipment
SM-Notification
SM-Service Order
SAP-APO
APO-DP
BUSINESS
LINE
BUSINESS PROCESS / FUNCTION
Management (WM)
CBU, Spare
Parts
Sales Planning, Inquiry, Quotation, Sales
Order, Billing, Delivery
...
Material Requirement Planning (MRP), Bill
of Material (BOM), Production Planning,
Production Order Management,
Engineering Change Management
CBU
CBU Master Data, Claim Management
(Free service and Warranty), Optional
installation for Imported CBU
CBU, Spare
Parts,
Service
CBU Production Planning (Demand
Planning-DP) supported by advanced tools
using statistical forecasting techniques and
demand planning features that helps create
accurate forecasts and plans to produce
SASS report (Sales, Assembly, Stock,
Shipment).
CBU
Table 2. Software Platforms
Software
SAP R/3 Version
Database (RDBMS)
Server O.S. Version
Client-Server
User Interface
Network/Communication
Backup Software
Version
4.6C SR2
Oracle 9.2.0
AIX5.1
Physical 3 tier + PC front-end
SAPGUI 4.6D compilation 4 for windows.
TCP/IP
Tivoli with TDP
Table 3. Hardware Used and Its Scalability
Hardware
Type
pSeries 630
Model 6C4
Current
Development and QA: 2 CPU, 4 GB
Memory
Production DB: 2 CPU, 4 GB Memory
Production Application.: 4 CPU, 4 GB
Memory
SAP Implementation...(Gunawan P., Herman Joseph, Prateek Kathuria )
Scalability
4 CPU and
16 GB
Memory
73
FastT500
LFO
864 GB
2 drives and 20 cartridges
SAN Switch
16 port
1 Gigabit
16 TB
6 drives
and 72
cartridges
2 Gigabit
Table 4. Summary of One Time Investment
NO
ITEM
TOTAL COST /
ITEM (US$)
697,258
386,250
1,912,238
3,135,000
1
2
3
4
Hardware
Infrastructure
Software
Human
Resources
5
Project Cost *
110,817
6
7
Training
Human
Resources
(Oct)
41,100
132,000
Total
6,414,663
REMARK
*) Included expenses
during the project
Additional extension
for October-2002
Table 5. Summary of Running Cost (Yearly)
NO
ITEM
TOTAL COST /
ITEM (US$)
1
Hardware
92,051
2
Infrastructure
109,938
3
Software
323,723
Total
525,712
5. POST IMPLEMENTATION SUPPORT
The post implantation support is the chronological next phase of the project. On
September 1 2003 the SAP R/3 system at KTB went live as scheduled. A two year
project massive project is being used by the end users to every ones pleasure.
74 Jurnal llmiah llmu Komputer, Vol. 2 No. 2 April 2004: 67 - 76
Incident
Level 1 Support
Level 2 Support
Level 3 Support
Management Escalation
Figure 4. Flowchart of Support Flow Summary
Responsible Key
usei reviews
Problem
Sofvetj->
> — Y e s -*(
End
)
Escalate Problem
to BS1 (unclional
support
Figure 5. Flowchart for Problem Identification
Figure 6. Management Escalation Procedure
SAP Implementation...(Gunawan P., Herman Joseph, Prateek Kathuria )
75
6. CONCLUSION
(a) The developed application meets the user's needs and requirements.
1) P.T. Krama Yudha Tiga Berlian has already switched from their old BPCS
system to the new centralized SAP R/3 application developed by the IBM
Business Consultancy Services.
(b) KTB can now provide better customer service by improving the effectiveness and
efficiency of "Order to Delivery" cycle, because of the real-time and online
characteristics of the SAP R/3 system.
(c) The whole KTB group will improve business operations by having real-time and
accurate information with the use of SAP R/3 system.
(d) The use of SAP R/3 enables KTB to avoid lengthy month end closing by having
accurate and real-time data. The developed system, SAP R/3, is very modular in
its design so in the future the KTB group can add new features to the system
would be very like straight forward and beneficial. The modules they can add in
the future would be as follows.
1) SAP Advanced Planner and Optimizer (APO)
2) SAP-IS Automotive (IS-Auto)
3) SAP Customer Relationship Management (CRM)
REFERENCES
[KT 1998]
Keller Gerhard and Thomas Teufel, SAP R/3 Process Oriented
Implementation, Addison Wesley Publishing, Longman: 1998.
[Mpt 2001]
MITRA Project Team, As-ls-Analysis, KTB, 2001
[Amy 2002]
Amy Zuckerman, Supply Chain Management, Capstone Publishing,
United Kingdom: 2002.
[Mpt 2002]
MITRA Project Team, Project Strategy, KTB, 2002
[Dan 2003]
Danielle Larocca, Teach Yourself SAP R/3 in 24 Hours, Sams
Publishing, USA: 2003.
[Mpt 2003]
MITRA Project Team, To-Be-Process, KTB, 2003
Internet:
x
[1]
Christopher Solomon, "SAP Table Relations", http://www.erpcentral.com
[2]
University of Oldenburg. "SAP AG SAP FAQ", http://www.sapfaq.com
76 Jurnal llmiah llmu Komputer, Vol. 2 No. 2 April 2004: 67 - 76