How could HORIBA strengthen synergistic collaboration within the group and smartly manage a diverse supply chain to boost a global business in constant growth?
The group joined forces with IBM and SAP to implement a standardized, integrated and agile business process management environment, with analytics capabilities provided by IBM® Watson Analytics™.
Integratesfive business segments, with different characteristics, and 18 companies across 13 countries
Unifiesdiverse supply chain models
Laysthe foundations for “matrix management”
Business Challenge Story
Unifying management through global integration of core systems
Established in 1953, HORIBA is an analytical and measuring device maker boasting a line-up of around 1,000 products. The group currently consists of 49 companies in 27 countries and employs approximately 7,000 people. In the spring of 2016, HORIBA completed the construction of a development and manufacturing site on the western shore of Lake Biwa in the Shiga Prefecture, Japan called “HORIBA BIWAKO E-HARBOR”, where it manages the development and manufacturing of its leading products.
Having set its sights on the overseas market from an early stage, HORIBA began expanding overseas with the establishment of a US company in the 1970s. Next, it set up subsidiaries in the US and Germany and, in the 1990s, embarked on a number of strategic mergers and acquisitions, buying two French measuring device makers in quick succession. Since 2000, more than half of its production, sales and employees are based outside of Japan, and strengthening collaboration across the HORIBA group became a management issue.
HORIBA decided to introduce a balanced company structure by pursuing a “matrix management” strategy that splits the business into five business segments (automotive, environmental, medical, semiconductors and scientific) and three regions (Asia, Europe and North and South America).
Recognizing that it would need to integrate its IT environment accordingly, the group decided to update systems that had been running on separate mainframes and install SAP ERP.
HORIBA had also planned to deploy SAP ERP in its overseas group, but faced difficulties. Different requirements in each country resulted in a huge system that would not have met SAP ERP standards. HORIBA is active in a wide range of business areas and operates many different types of business processes, with some sites engaged in made-to-order production and some specializing in mass production. Consequently, the company was unable to integrate the wide range of business processes into systems whose designs had been optimized for each individual site. The 2008 global financial crisis dealt another blow, so the expensive and time-consuming overseas deployment project was temporarily put on hold.
However, the group resumed the integration of its global systems infrastructure in 2011, because it decided that the standardization of its diverse business, data, and systems was essential to the success of on-going corporate expansion. Atsushi Nakamine, Corporate Officer and General Manager of the IT & BPR (Business Process Re-engineering) Center at HORIBA, says, “Using what we had learned in the past, we aimed to establish a core system that could cope flexibly with future business changes, as well as help us to manage our globally integrated business based on the SAP standard.”
Standardizing business, data and systems with IBM
The installation project, called “New GEO (Global ERP for One Company)”, started in autumn 2011. After considering proposals from several companies, HORIBA selected IBM as its installation partner. Junpei Hashimoto, Project Manager at the IT & BPR Center at HORIBA, explains the reasons for selecting IBM, “The proposed IBM solution could handle the business-critical processes by using a group-standard template, while also meeting all SAP requirements. Although we had considered only integrating the data environment if standardization of the global processes proved to be difficult, IBM was sure it would not be a problem.
“We were confident that the project would go smoothly thanks to the global installation and program management expertise of IBM Japan and the rest of the IBM group in North and South America, Europe, and Asia, and because of the extensive experience, and excellent communication and English language skills of their consultants.”
After completing the three-month analysis phase, the next step in the New GEO project was to design the global template. In order to assess feasibility, HORIBA sent questionnaires to the group’s sites in Asia, North and South America, and Europe, and recorded each company’s individual requirements. Key members from each country also attended meetings in Japan over a ten-week period, during which they discussed how to organize business processes and the scope of digitization with IBM consultants.
Junpei Hashimoto says, “The investigation phase, during which we gathered requests and requirements from different sites, took longer than expected. However, meeting key stakeholders from each country and discussing the project in person gave us a shared understanding. This enabled us to move forward together with a shared vision through all subsequent stages. All the meetings were held in English, so the support from the IBM’s multilingual consultants was also helpful.”
After completing the design and building the template, HORIBA started to roll out the solution to its overseas sites in April 2013. During the rollout, the group standardized the type of activities that would be required for installation, such as the extraction of customization requirements for the global template, evaluation of suitability, program creation, data migration, testing, operating processes and user education. With the exception of difficult cases, the installation period was uniformly set at eight months.
The rollout first started in Europe, where demand for digital transformation was high. Installations went underway at HORIBA’s five largest European sites simultaneously. The 11 SAP ERP modules were deployed in the Scientific, Automotive and Medical segments in Europe, as well as in South Korea, China, and India in Asia, and finally in North America and Canada. In total, the solution was deployed at 14 companies across 12 countries. HORIBA chose SAP BusinessObjects as its Business Intelligence solution. SAP Data Services, an ETL tool, was used to link with other systems.
A core team consisting of HORIBA’s IT division and IBM consultants carefully created the SAP ERP template and standardized everything according to the prescribed form for the deployment schedule.
This allowed IBM’s local teams (in US, France, Germany, South Korea, China, and India) to follow the framework and complete the installation in a short period of time.
Although installations were handled by the local teams, the core team had the final say over all system requirements – thereby maintaining a high level of standardization. The costs and schedule were managed with the help of on-site support.
To maintain some flexibility, the global template only covered common requirements between segments. HORIBA allowed the template to accommodate sites’ individual requirements during rollout, so they needed to minimize the impact on installation time when installing in group companies with non-standard business processes.
Atsushi Nakamine explains, “For example, there were a lot of requirements that could not be covered by the template from our French subsidiary that made medical testing devices.
“We had to comply with medical and drug-related laws and regulations, manage mass production of consumables and reagents, and also deal with local business customs.
“This led to more additions and alterations than we had expected, but the IBM Japan consultants in the core team helped us solve the problem by negotiating with the French subsidiary and local IBM team.”
Achieving unprecedented business integration
After completing the overseas deployment in April 2015, HORIBA started the project of rebuilding the SAP ERP system that was running in Japan. The domestic installation was led mainly by HORIBA’s IT division, but the group received project management advice from IBM at the beginning of the process. One person from IBM also remained as a project leader for the data migration, thereby ensuring a smooth go-live.
The global integration of 18 companies in 13 countries was completed with the launch of services in the Japanese site in January 2016.
Yoshiki Okuyama, Deputy Department Manager of the IT & BPR Department in the IT & BPR Center at HORIBA, comments, “We received a lot of requests for individual support from Japanese users who were used to the legacy system, but we took a firm stand for global standardization. During the installation, we utilized the skills that we had acquired from IBM during the overseas deployment, such as standardization methods, know-how for creating customized programs and consulting techniques. The fact that we managed the domestic installation by ourselves cut installation costs and also reduced running costs once we went live.”
The New GEO project oversaw the integration of 18 companies within HORIBA’s five business segments. This enables the group to manage its key supply chains (customized production, specification-based production, order-based production, built-to-order production, order-based production and make-to-stock production) with one system and integrate various service models. As a result, laying the foundations of “matrix management”, part of the group’s medium- and long-term business plan. HORIBA took a significant step forward.
Junpei Hashimoto comments, “We managed to complete a difficult project thanks to IBM’s advanced consultancy skills, ability to make suitable proposals for our business and global team strength, as well as their management capabilities to pull all of this together. I look forward to more high-level and seamless multi-regional support from them in the future.”
As part of a new medium- and long-term business plan for the five-year period from now until 2020, called “MLMAP2020”, HORIBA aims to achieve sales of JPY250 billion and operating profits of JPY30 billion to develop new business areas and markets, and to accelerate business growth. The group is promoting the use of IT to make a direct contribution to profitability across a wide range of business activities, such as development, design, production, marketing, retail, distribution and after-sales support.
One of the ways HORIBA hopes to achieve this is by improving its analytical capabilities. As part of this initiative, the group conducted some pilot tests with IBM Watson Analytics, a cloud-based tool that uses cognitive technology to enable data analysis.
By analyzing the project costs with IBM Watson Analytics, HORIBA managed to calculate factors, such as the decrease in costs and increase in profits that are attributable to the project, that it would not have spotted using its existing financial analysis techniques. The results have already been fed back to the business.
Atsushi Nakamine says, “I would like to increase the use of analytics in order to gain reliable insights that enables more elaborate CRM-based sales support and budgetary control. I would also like to enhance quality control by using analytics to calculate a product’s life expectancy, so that the person in charge of a business process can make an immediate decision and move to action.”
With New GEO as a foundation, the group continues to work on a project that harnesses the latest technologies, such as mobile or Internet of Things, to enable IT to contribute even more value to the business. HORIBA is looking forward to working with IBM in the future to solve new business challenges as it continues to grow.
HORIBA, Ltd. (HORIBA) manufactures analytical and measuring equipment, such as instruments that measure automobile exhaust gas – for which it boasts an 80 percent share of the global market – blood testing devices, and pH meters.
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