To establish itself in Pakistan, Hyundai Nishat Motor (Private) Limited aims to win market share with fast deliveries and highly competitive pricing. How could it create a nationwide automotive business from scratch?
Hyundai Nishat Motor (Private) Limited is using best-practice workflows in SAP S/4HANA on IBM Power Systems and IBM Storage to accelerate its rollout across Pakistan, at low cost and high efficiency.
Up to 66%faster new vehicle deliveries
Offers 50%lower total cost of ownership and maintenance
Up to 8xcapacity for future growth
Business challenge story
Targeting a competitive space
In the automotive sector, profit margins are razor-thin. Success depends on a critical mix of quality, engineering capability, and operational efficiency. As a brand-new venture in Pakistan, Hyundai Nishat Motor (Private) Limited must satisfy all these industry imperatives while at the same time building a nationwide business, and customer base, from the ground up.
Shuja ur Rahman, Head of IT at Hyundai Nishat Motor (Private) Limited, explains: “Crucially, as a greenfield company we wanted to rapidly capture and expand our market share. We knew that in Pakistan the average time between placing an order and receiving a vehicle was around nine months. If we could deliver faster than that, and compete effectively on price, we were confident that we could create a compelling proposition to win new business from private and corporate customers alike.”
Building from scratch
To achieve its goals, Hyundai Nishat Motor (Private) Limited targeted integrated business processes. The objective was to manage its end-to-end operations—from forecasting and planning to manufacturing and delivery—using a single system, based on industry best practices.
“We aim to strike an optimal balance between push- and pull-type manufacturing,” adds Shuja ur Rahman. “By combining data on actual customer orders from our dealers with our own order forecasts, we can ensure we have the optimal inventory available in our plant to manufacture to demand while minimizing our working capital requirements. These processes are far too intricate and complex to manage manually—and we looked for an enterprise-class ERP solution.”
To lay the foundation for its new business, Hyundai Nishat Motor (Private) Limited selected SAP S/4HANA for finance and controlling, human capital management, supply chain management, and more. Built for big data and deep analytics, SAP S/4HANA helps manufacturers gain actionable insights into their operations and drive high levels of efficiency.
“Of all the ERP solutions we evaluated, SAP S/4HANA was the clear winner,” recalls Shuja ur Rahman. “Not only are SAP solutions the platform of choice for many of Pakistan’s leading enterprises, they are also among of the most widely used business systems in the automotive industry as a whole. The company’s strong presence in our market gave us considerable confidence that SAP had the reach and responsiveness to ensure our deployment was a success, and we were very impressed by the credentials of the local SAP business partner recommended to us.”
Platform for growth
Because practically every part of its business would run on SAP S/4HANA, Hyundai Nishat Motor (Private) Limited aimed to ensure that its platform was always available and responsive for its business users. After comparing a number of x86-processor-based server platforms, the company decided to deploy SAP S/4HANA on three IBM Power System H922 for SAP HANA servers with IBM POWER9 processors, virtualized with IBM PowerVM® and running the SUSE Linux Enterprise Server for SAP Applications operating system.
“The key criteria for the new platform were reliability, efficiency, performance and scalability,” continues Shuja ur Rahman. “By selecting IBM Power Systems servers, we only needed three physical servers to support our entire SAP S/4HANA implementation, compared to more than 10 physical servers for a similar x86 configuration.
“As well as reducing our power and cooling requirements and data center footprint, the combination of IBM Power Systems and SUSE Linux Enterprise Server delivers a significant reduction in our licensing costs. As a result, we estimate we’ve achieved a total cost of ownership with the IBM POWER9 architecture that is 50 percent lower than the x86 solution we considered.”
To deliver reliable, low-latency storage for its new SAP environment, Hyundai Nishat Motor (Private) Limited selected two IBM Storwize® V7000 arrays (predecessor to IBM FlashSystem® 7200) with a mixture of hard-disk and solid-state storage. Built on IBM Spectrum® Virtualize technology, the solution enables the company to harness compression and thin provisioning to reduce its physical storage requirements by around 40 percent—and to scale out quickly and cost-effectively by adding new drives.
“The combination of IBM Power Systems and IBM Storwize V7000 (predecessor to IBM FlashSystem 7200) ensures that our infrastructure and our SAP S/4HANA environment will scale seamlessly as our business grows,” adds Shuja ur Rahman.
Working together with IBM, Hyundai Nishat Motor (Private) Limited deployed its new compute, server and networking environment, and engaged with its local SAP business partner to deploy and configure the SAP S/4HANA solution.
Shuja ur Rahman comments: “Working with IBM on our technology implementation was a very positive experience, and we were impressed by how smoothly the project went. We are now working with SAP to roll out SAP applications to support all of our business areas.”
Fast track to leadership
With IBM and SAP solutions supporting its business, Hyundai Nishat Motor (Private) Limited is on course to achieve its goal of disrupting Pakistan’s automotive market.
“One of the big challenges for automotive manufacturers in Pakistan is that they are vulnerable to currency fluctuations, which often causes significant increases in prices for the end customer,” explains Shuja ur Rahman. “Because Hyundai Nishat Motor (Private) Limited is also engaging with a global supplier base, we can’t eliminate the risk of currency fluctuations. However, by integrating operations in a reliable and cost-efficient manner, we can optimize our working capital and put ourselves in a stronger position to absorb adverse fluctuations compared with our competitors, allowing us to be more agile and responsive with our pricing strategies.”
Shuja ur Rahman adds: “Better still, we aren’t going to compete on price alone. By using SAP S/4HANA to coordinate our manufacturing processes, we predict that we will be able to deliver on orders in as little as a week, enabling us to deliver vehicles more quickly than our competition.”
Today, 100 employees actively use SAP S/4HANA to drive their day-to-day work. As the business continues to grow, the company predicts that it will be able to support an eight-fold increase in business users without making additional investments in IT infrastructure.
“By the end of the year, we plan to have five offices and double-digit nationwide dealership franchises up and running,” says Shuja ur Rahman. “By integrating our SAP S/4HANA platform with our dealerships’ own management systems, we aim to make it easy for them to share timely data on actual and forecasted customer orders. Our goal is to create rolling 15-day order forecasts with our SAP solution, and orchestrate our supply chain based on that data. Optimizing our inventory levels through just-in-time planning will help us keep our working capital requirements low, which is a big benefit for a new business.”
Looking to the future, Hyundai Nishat Motor (Private) Limited plans to harness more of the advanced capabilities of its SAP S/4HANA platform, including areas such as AI, machine learning and the Internet of Things (IoT).
“By instrumenting our manufacturing process, we think there will be opportunities to uncover the potential to further increase efficiency and reduce costs,” concludes Shuja ur Rahman. “Hyundai Nishat Motor (Private) Limited started in Pakistan at square one. Thanks to industry best practices from SAP and high-performance infrastructure from IBM, we’re ready to carve out a niche position in a very competitive market.”
About Hyundai Nishat Motor (Private) Limited
Founded in 2017 as joint venture between Nishat Group, Sojitz Corporation and Millat Tractors Limited, Hyundai Nishat Motor (Private) Limited is an automobile manufacturer headquartered in Lahore, Pakistan. From its plant in Faisalabad and a nationwide network of dealership franchises, the company will build and retail cars and commercial vehicles to private and corporate customers across the country.