To thrive despite growing pressure from new market entrants, the company focuses on operational excellence, delivering competitive cost and price advantages.
The company is transforming its business, launching shared services, embracing integration, digitization and automation, all designed to enhance productivity and unlock efficiencies.
Significantcost savings in procurement
Majorcuts in annual production planning costs
Business challenge story
Up against tough competition
Competition in the petrochemicals industry is heating up, and companies work relentlessly to retain and win market share, constantly seeking to improve business efficiency and customer service.
A spokesperson explains the challenges at their company: “In light of the intensifying cost pressure on the market, we took a long, hard look at our existing ways of working, and began searching for ways to boost efficiency across our organization. We identified several areas for improvement.”
The company knew that in many cases each function essentially resided in its own silo, and there was no end-to-end integration of core business processes. Additionally, the company operated subsidiary companies, again with their own business processes. To achieve economies of scale and to boost efficiency, the company decided to adopt a shared services model.
The company wanted to gain deeper real-time insight into factors such as manufacturing output, inventory value and costs, to enable prompt, well-informed business decisions. The management team realized that this presented an ideal opportunity to introduced automated, integrated solutions to provide the next level of information-based insight.
Finding the right fit
To enable its transformation program, the company designed a new model focused around shared services and best practices. Rather than expand existing ERP solutions, the company decided to switch to integrated SAP applications as the enabling foundation, taking advantage of embedded best practices to build end-to-end processes that would deliver operational excellence.
The company set out to find an integrator capable of cascading the target high-level processes and new shared-services model down to the SAP application level. After evaluating proposals from multiple vendors, the company engaged IBM® Services, selected because it demonstrated strong capabilities from the outset, and because the bid represented excellent value for money.
Working closely with IBM, the team implemented a broad set of SAP applications – including SAP Business Suite powered by SAP HANA®; SAP Business Planning and Consolidation; SAP BusinessObjects™; SAP Fiori®; SAP Ariba®; SAP Manufacturing Integration and Intelligence; SAP Solution Manager; SAP SuccessFactors®; SAP Environment, Health, and Safety; and SAP Governance, Risk and Compliance.
To deliver the required expertise for a rapid, successful implementation, IBM created a worldwide delivery team with experts from IBM Egypt, IBM India, IBM Pakistan and IBM United Arab Emirates. For specialist advice on best practices, IBM provided support from IBM Centers of Excellence based in India and the US. The combined IBM team successfully completed a challenging shop-floor to top-floor SAP implementation.
During implementation, IBM completed automated testing, including Integration Testing and User Acceptance Testing execution, monitoring and incident tracking, using a Component-Based Testing approach based on SAP Solution Manager.
The project marked the first end-to-end implementation of SAP Business Suite powered by SAP HANA with such a large scope, encompassing SAP Ariba, SAP SuccessFactors, SAP Manufacturing Integration and Intelligence, and SAP Fiori. The SAP Fiori deployment was remarkably broad – with more than 40 mobile apps introduced.
IBM demonstrated excellent project-management capabilities; rather than just trying to finish the project according to scope, the IBM team showed a great understanding of the project requirements and built new capabilities to help the company reap the maximum benefit from the SAP implementation. The project scope was enormous, and the first wave of the implementation (80 per cent of the entire scope) was completed in just a year and a few months – perfectly on schedule.
Embracing far-reaching transformation
Building on the foundation of the SAP solutions, the company is undergoing a major transformation affecting every part of its business – including people, processes and systems.
The SAP implementation is fully aligned with the company’s business and organization transformation objectives, automating many of the policies, procedures, and processes that have been defined by the business initiative.
The SAP solutions offer top-to-bottom integration and visibility, and are built around nine key end-to-end processes, including procure-to-pay, hire-to-retire, plan-to-build, order-to-cash and inventory-to-fulfilment.
The core SAP Business Suite offers much greater functionality than the previous solutions, including new modules for sales and distribution, procurement and warehouse management. The SAP Business Suite modules are supported by the SAP HANA database. To support end-to-end process integration, data flows seamlessly between the modules, with no need for manual intervention.
The company is experiencing substantial benefits. For example, with the new SAP Warehouse Management solution, the company aims to reach 100 percent utilization of available capacity, and achieve 99 percent inventory accuracy.
A further big win is the efficient management of employees’ timesheets. Previously, this process required manual updates to multiple systems. Now, it is managed by a SAP Fiori application that allows employees to obtain paperless absence approvals, with an automated workflow that adjusts payroll and attendance, saving time for employees, managers and the HR department.
To access solutions such as SAP SuccessFactors and SAP Ariba, users log in via a single interface in SAP Fiori. With single sign-on, employees no longer have to remember multiple sets of usernames and passwords – significantly reducing calls to the IT helpdesk regarding password resets.
For general business and financial management, the new solutions replace monthly spreadsheet-based reporting with real-time dashboards enabled by SAP BusinessObjects and SAP Business Planning and Consolidation. A designer from the IBM Design Studio created the look and feel for the new corporate dashboard, ensuring that managers had the KPIs they need for decision-making at their fingertips. IBM connected the dashboard to the data in SAP HANA for real-time insight. By automating data flows, managers will be able to view up-to-date KPIs at any time, rather than having to wait until the month-end report is released.
Some of the biggest improvements from the company’s digital transformation have been witnessed on the production line. Firstly, by replacing spreadsheet-based production planning with SAP Manufacturing Integration and Intelligence, the company has been able to reassign one full-time employee to more valuable tasks, cut annual production planning costs, and reduce dependence on the knowledge of individual employees. Staff can view manufacturing costs and outputs at any given time, scrutinize variances between expected figures and actual results, and identify the causes.
With detailed insight into which factors affect production costs, the company can now optimize processes and establish best practices to maximize operational efficiency. Even as increased market competition puts the company under pressure, the precise understanding of profitability is a huge advantage.
The company has also transformed its HR capabilities thanks to the IBM implementation of SAP SuccessFactors solutions, which run in the SAP cloud. The solutions include SAP SuccessFactors Recruiting, SAP SuccessFactors Onboarding, SAP SuccessFactors Learning, SAP SuccessFactors Performance & Goals, SAP SuccessFactors Compensation, and SAP SuccessFactors Succession & Development.
Paper-based performance evaluations have been replaced with a robust digitalized structure, with data held in SAP SuccessFactors Performance & Goals. As part of the implementation, IBM introduced a competency framework to measure employees against their own objectives and against the company’s targets to align both corporate and personal goals. Additionally, candidates for new vacancies submit applications directly into SAP SuccessFactors Recruiting, and the new resumé filter and review process cuts time-to-hire by 41 percent.
Manual onboarding of new staff has been replaced with automated workflows, and new employees complete documentation online; HR staff simply generate the individual’s personnel number, department three hours per new hire. Each new employee is assigned to the appropriate induction program, and the relevant department receives a notification to initiate the training, delivered via SAP SuccessFactors Learning.
To make sure that each employee can access only data relevant to their roles, the company has introduced SAP Governance, Risk and Compliance software. In future, the company plans to introduce process controls in areas such as finance.
The company has transformed its procurement processes based on SAP Ariba Sourcing, SAP Ariba Contract and SAP Ariba Supplier Information & Performance Management solutions delivered via the SAP cloud. For example, use of message boards enabled the company to establish significant cost savings on chemicals purchases, and reverse auctions conducted in SAP Ariba Sourcing have delivered immediate cost reductions.
Additionally, the company is using SAP Environment, Health, and Safety software to help manage incidents, waste and compliance efficiently and effectively – vital in the industry as manufacturers are under pressure to comply with global environmental standards.
The transformation program has significantly boosted efficiency across the organization, helping it compete effectively against new market players and laying the foundation for future success. For example, when the parent company announced a corporate integration with another company, the team knew that it would be well-prepared to onboard the new entity and scale up its shared services to support the increased workload.
In the highly competitive and complex petrochemicals industry, real-time technology is providing a new level of business competitiveness. With full inventory visibility, and automated reports on manufacturing and customer questions and insights, the company is experiencing faster decision-making and better understanding of current of production.
About Petrochemicals giant
This petrochemicals giant is based in the Arabian Gulf region, and sells to the international marketplace The company manufactures thermoplastics for use in food packaging, agricultural films, extrusion and coating lamination films, high-clarity films, injection molding, cables, wires, and foam.
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