To compete with a surge of foreign entrants to Pakistan’s auto market, Indus Motor Company wanted to improve the customer experience by delivering high-quality vehicles rapidly and at the lowest cost.
Indus Motor Company is transforming front-to-back operations with SAP® S/4HANA® on high-performance IBM® POWER8® servers—empowering its data-driven decision-makers to boost manufacturing efficiency.
95% fastermaterial requirements planning will reduce risk of supply-chain disruption
10% improvementin sales order accuracy will enable timely manufacturing to meet demand
20% reductionin defects per unit will accelerate manufacturing and boost satisfaction
Business Challenge Story
Driving growth in a competitive market
In recent years, the exploding popularity of e-commerce, social media and review aggregators means that consumers can make purchasing decisions more carefully than ever—especially for big ticket items like a new car.
For automotive manufacturers such as Indus Motor Company—a leading manufacturer of Toyota vehicles based in Pakistan—building high-quality products is essential to cultivate a strong brand image, nurture loyalty and inspire new customers to buy.
Faizan Mustafa, CIO/Head of IT at Indus Motor Company Ltd., takes up the story: “Over our 25 years serving Pakistan’s consumer and business market, we have driven very successful growth. In the early 1990s, we were producing around 20 vehicles per day—and that figure has now increased to 240 per day. In June 2016, we recorded our highest ever sales and profitability, and our goal is to continue that rapid growth.
“Legislation has now been introduced to further stimulate the automotive industry in Pakistan, which means that numerous foreign players are entering the market. Increased competition is extremely positive for domestic innovation and economic growth, but it also creates new challenges.
“With more choice available to consumers than ever before, it is essential that we differentiate ourselves by enhancing the quality of our products and services, while maintaining competitive prices.”
Like all major automotive manufacturers, Indus Motor Company operates a complex value chain. In total, the company receives parts from more than 60 suppliers across Pakistan, and key components from manufacturing plants in Japan and Thailand, all operating on a just-in-time basis.
Mustafa adds: “The cumulative lead time for procuring local and imported parts, manufacturing and delivering a new vehicle is around three months, which means accurate forecasting is essential to ensure that we have sufficient quantities of each model to meet demand on the dealership forecourt.
“In the past, our dealerships entered their forecasts manually into spreadsheets and sent them back to our planning team for further processing. However, because it was a time-consuming process, it was practically impossible to gain the insights we needed to optimize our manufacturing—leading to missed sales.
“Our previous way of working also made it very difficult to identify defects in parts from our suppliers quickly. If we detect issues downstream in the manufacturing process, we need to alert our supplier, remove the affected parts from all the vehicles on the factory floor and then replace them with functioning components—all of which drive up our operational costs and increase the risk of delaying our deliveries to customers.
“In order to deliver higher-quality vehicles to our customers fast enough to meet demand, we looked for a more efficient way of working.”
Transforming end-to-end operations
For more than a decade, Indus Motor Company has relied on SAP enterprise applications to manage its workflows for manufacturing, production planning, finance and controlling. To achieve its business goals, Indus Motor Company decided to build on its success with SAP solutions by seamlessly integrating its entire value chain using SAP S/4HANA.
“In the past, it took months to deliver reports to our managers about what was happening on the ground, which is simply too long to make competitive decisions,” recalls Mustafa. “We realized we needed to collect information about forecasting, manufacturing and suppliers faster, and—crucially—deliver reports to our decision-makers immediately.”
He continues: “One of the things that impressed us most about SAP S/4HANA was its built-in real-time analytics capabilities. We knew that achieving our goal would demand a full-scale digital transformation, and we were confident that the SAP solution would deliver the flexibility the business needs to make timely, proactive decisions.
“Collecting data is vital, and SAP S/4HANA offers fully integrated SAP Fiori® apps to help us capture, validate and deliver information to mobile users in real time across the business. Better still, SAP S/4HANA is a central aspect of SAP’s long-term product development roadmap, which offers us the security of a solution that can support our business growth for years to come.”
To deliver a high-performance platform to support the new SAP solution, Indus Motor Company selected IBM POWER8 processor-based systems virtualized with IBM PowerVM® for IBM PowerLinux™ and running SUSE Linux Enterprise Server for SAP Applications.
“We have been using IBM Power Systems™ as the basis for our SAP applications landscape for more than ten years, and Indus Motor Company was one of the first companies to implement Power technology in Pakistan,” comments Mustafa.
“Of all the infrastructure solutions we considered for the SAP S/4HANA software, IBM Power System S824L servers stood head and shoulders above the crowd in terms of high availability, flexibility, manageability and performance. What’s more, IBM offered us a level of local service and support that none of the other providers we considered could match.”
Indus Motor Company’s SAP S/4HANA environment is based on high-performance IBM Power System S824L servers connected to IBM Storwize® V5000 storage arrays. Built on IBM Spectrum Virtualize™ software, the IBM Storwize V5000 solution can automatically migrate hot and cold data between storage tiers based on real-time usage patterns. Combined with automated, intelligent backups to a resilient IBM TS3200 Tape Library managed by IBM Spectrum Protect™ software, Indus Motor Company has peace of mind that its mission-critical data is always protected.
To accelerate implementation and reduce its exposure to risk as it drove its digital transformation process, the company decided to partner with IBM Services to help size, deploy and configure its new SAP solutions.
“After our initial request for proposals, we created a cross-functional committee to quiz each vendor on their proposed scope and implementation plan, case studies of previous implementations and their team’s qualifications,” says Mustafa. “After we totaled up the scores, IBM Services was the clear leader of the quadrant for the quality of their work, expertise and global reach. We knew that our transformation effort was an envelope-pushing project, and we determined that the IBM team possessed the skills we needed to move to the new way of working successfully.”
To drive the implementation process, Indus Motor Company decided to mix the IBM Ascendant methodology with the SAP Activate framework—combining the structure of traditional waterfall-based processes with the responsiveness of agile development.
“For the most part, we are utilizing the IBM Ascendant methodology to steer the business through the planning, blueprinting, configuration and use acceptance stages of the deployment, which is a powerful way to ensure that each work stream is completed on time and within budget,” Mustafa explains. “However, because many parts of the business were already familiar with the way that SAP solutions work, we used the SAP Activate methodology to accelerate the blueprinting phase for our quality assurance and project system modules. By showing our users prototypes based on pre-defined SAP S/4HANA workflows, we could make minor tweaks to the underlying business logic quickly based on their feedback.”
Working together with IBM Services, Indus Motor Company is now deploying SAP S/4HANA with applications for materials management, production planning, materials requirement planning, finance and controlling, project management and quality assurance. The new platform leverages SAP Fiori to personalize and simplify the user experience, making it even easier for business users to consume and leverage real-time business insights.
“All of our business and technology projects stem from our goals to improve customer experience, drive up product quality and ensure timely delivery,” adds Mustafa. “Our collaboration with IBM and SAP is perfectly aligned with those three strategic pillars, and we are confident that we will start realizing the benefits as soon as our new SAP S/4HANA solution goes live.”
Racing ahead of competition
With SAP S/4HANA on IBM Power Systems servers at the heart of its new digital business processes, Indus Motor Company will be in a strong position to drive competitiveness as new players enter its domestic market.
“SAP S/4HANA will become the nervous system that collects and analyzes data from across the business, and transforms that data into actionable insight,” explains Mustafa. “Our decision-makers will have up-to-the-minute information at their fingertips to make better-informed strategic decisions.
“Currently, our quality management team inspects all new components and records the information manually, and later enters it into a standalone system in batches. Because our production volumes are so high and we work in a just-in-time environment, this manual approach limits our ability to detect patterns of defects that indicate a manufacturing fault at one of our suppliers.
“Soon, our team will record information on defects directly into a SAP Fiori app from a mobile device, enabling us to use real-time predictive analytics to detect and alert our suppliers to issues before the parts have time to move into our downstream manufacturing process. We see that closer collaboration with our suppliers will enable us to work together to help develop their capabilities, ultimately enabling them to improve their quality assurance processes, work more efficiently and reduce operating costs.
“On the Indus Motor Company side, we anticipate that real-time analytics will help us reduce our defects-per-unit metric by 20 percent—boosting quality, reducing the risk of delivery delays, and delighting our customers with more responsive services.”
By providing full integration across the value chain, Indus Motor Company will ensure greater accuracy in its forecasting process, enabling it to optimize manufacturing processes to capture every sales opportunity.
Mustafa comments: “In the future, our dealerships will enter their three-month sales forecasts straight into the SAP bolt-on solution—replacing today’s manual, spreadsheet-based processes. By having accurate, complete and up-to-date information at our disposal, we predict that we will improve the accuracy of our sales orders by 10 percent. Our procurement lead times are more than three months long and our manufacturing process is operating at almost full capacity, so accurate forecasting will be a key capability to capture sales.”
Additionally, the IBM and SAP solutions will enable Indus Motor Company to enhance its supplier management process, reducing its exposure to supply chain risks.
“In the past, it would take us almost half a working day to complete a materials requirement planning report,” says Mustafa. “The risk was that if demand fluctuated, we found it quite difficult to alter our production planning process. This ultimately resulted in missing delivery commitments to customers.
“In the new solution, we will be able to calculate our materials requirements in near-real time, and any changes we make will automatically flow through into dependent data in other systems, such as production planning. As a result, if one of our suppliers is disrupted or market demand fluctuates for any reason, we can adjust our materials requirements quickly to keep things moving—maximizing our manufacturing capacity utilization.”
Indus Motor Company plans to use the internet of things to drive further improvements to manufacturing efficiency.
“We are currently instrumenting our manufacturing plants with sensors to detect conditions such as humidity and temperature,” adds Mustafa. “Any downtime in our assembly lines—even if it’s only a few hours—can increase our operational spend significantly.
“By feeding data on the condition of our assets into SAP S/4HANA, we will be able to move towards a predictive maintenance model to maximize the availability of our assets and keep our operational costs lean.”
He continues: “Our internet of things strategy doesn’t stop at the factory gates. We also plan to use RFID tags on our vehicles to track how long our logistics network is taking to deliver them to our dealerships, which will enable us to ensure we are meeting our service-level agreements.
“Looking to the future, we see that our IBM and SAP solutions will put us in a strong position to embrace the emerging connected car paradigm.”
Mustafa concludes: “We are now living in a world where consumers are better-informed than ever. We see that the best way to win sales and nurture loyalty is by building a reputation as the most trusted, highest-quality automotive brand in the market. Thanks to our IBM and SAP solutions, we are achieving the digital transformation that will help us strengthen our competitiveness in a fast-moving marketplace.”
Indus Motor Company
Founded in 1989 as a joint venture between the House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation, Indus Motor Company is a manufacturer, assembler, distributor and importer of Toyota and Daihatsu vehicles, spare parts and accessories in Pakistan. Employing more than 2,300 people, the company operates a dealership network with 45 locations across the country, and generates gross annual revenues exceeding USD1 billion.
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