Industry Production printing solutions and services
Key Challenges
Integrate business processes across supply chain
Increase inventory visibility and control
Eliminate redundant data maintenance
Reduce transaction costs and reduce time to market
Implementation Partner SAP Systems Integration (SAP SI)
Solution and Services
mySAP™ ERP
SAP SI’s MaxValu™ implementation service
Existing Environment SAP® R/3®
Implementation Highlights
Fully functional, low-cost implementation in 16 weeks
Number of users: 180
Key Benefits
Reduced ongoing annual operating costs by $1 million
Reduced system support costs by 30%
Reduced demand planning and MRP costs by 50%
Reduced order management costs by 33%
Gained real-time visibility of material flow
Increased operational efficiency and corporate competitiveness with best-practices model
SAP® SOFTWARE IMPLEMENTATION BASED ON SAP BEST PRACTICES FOR IM&C REDUCES OPERATING COSTS IN A MIDSIZE COMPANY BY MORE THAN $1 MILLION IN JUST 16 WEEKS
“We’re a medium-sized organization,” says Bob Scheidt, vice president of operations at NexPress. “For us there was a perception that SAP software would be overkill. But the fact is, SAP provided a state-of-the-art solution and a superior implementation methodology that solved our unique business problems – and it did it fast and within budget.”
As one of the world’s leading providers of collaborative business solutions, SAP is committed to solving the business problems facing small and medium-sized businesses – with low-cost, rapid implementations that deliver a quick, measurable return on investment (ROI). NexPress is a perfect example.
Formed in 1997 as a joint venture between Kodak and Heidelberg, NexPress was conceived as an organization that would develop and market a new portfolio of leading-edge on-demand digital color printing solutions. Each of the parent organizations would lend their unique expertise and experience to the enterprise – Kodak supplying industry leading know-how in the fields of color science and digital imaging, Heidelberg providing more than 150 years’ experience developing and manufacturing some of the world’s best printing equipment.
NexPress quickly grew from its humble beginnings as it added materials manufacturing processes and commenced integration with Heidelberg equipment manufacturing operations.
In addition, NexPress developed a global aftermarket sales and service business through existing Heidelberg operations worldwide. Having evolved into a full-fledged make-tostock/ make-to-order enterprise, NexPress needed to evolve into a global solutions provider and supply chain integrator, with responsibility extending through the complete value chain – from raw material through manufacturing to end-customer support.
MANY CHALLENGES As a joint venture, the obstacles facing NexPress were significant. Not only did it need to improve processes internally, it also needed to coordinate with both parent companies to achieve greater efficiency, material flow visibility, and more accurate cost accounting.
“Easier said than done,” Bob Scheidt remembers thinking. “One operating unit of Heidelberg’s served as our manufacturer, another Heidelberg unit served as our logistics provider, other units served as sales and service providers to end customers. Each was an SAP customer, but each had a slightly different business model. SAP SI helped us chart a course for integration through our complex supply chain to achieve the business results we required.”
Scheidt continues, “One thing I would advise other organizations to avoid is modifying SAP software for short-term needs. Each of our SAP projects has met its goals because we have always followed a principle to leverage standard SAP configurations without modification. In the long run, customizations rarely provide the business benefit they were intended to generate.”
A key challenge was the redundant and often-times conflicting master data in the various Heidelberg SAP installations around the world. As a result, data and process conflicts between NexPress and its Heidelberg supporting organizations impacted all areas of the business – from the design and engineering phase, to manufacturing and aftermarket service. With multiple inventory locations, NexPress had little visibility into the availability of stock. Transaction costs were high, errors were common, and cycle times were less than stellar. This all had an effect on the organization’s ability to drive costs down and bring new products to market in rapid fashion.
THREE AREAS REQUIRING IMMEDIATE ATTENTION With the help of systems integrator SAP SI, NexPress management identified three critical areas that needed immediate attention: (1) process integration – to improve the flow of information and processes for its global business operations; (2) master data management – to reduce operational inefficiencies due to redundant parts and vendor masters, material resource planning (MRP) information, and other critical data; and (3) purchasing and inventory control – to better track procurement and increase stock visibility in an intercompany context.
“What SAP offered,” says Scheidt, “was a best-practices approach to running our business – both from a financial accounting perspective, as well as from a core business processes perspective.” The overall goal was to reduce process costs by introducing efficiencies wherever possible.
JUST 16 WEEKS TO RETURN ON INVESTMENT A big part of what NexPress liked about SAP was its comprehensive yet speedy implementation methodology for industrial machinery and components (IM&C) companies, which is described in best-practices documentation from SAP. SAP Best Practices for IM&C documentation includes complete system configuration information, as well as information on accelerated assimilation, project management, data transformation, and organizational change management.
In fact, SAP SI’s MaxValu™ implementation service, which NexPress decided to use, is based on SAP Best Practices for IM&C – and is offered at a fixed price.
The implementation focused on cleaning existing data and implementing mySAP™ ERP. Among other things, this included functionality for financials, controlling, asset management, plant maintenance, materials and warehouse management, as well as production and MRP.
The mySAP ERP project kicked off in December 2002. NexPress went live with the solution at the beginning of April 2003. Along the way, the SAP SI team was tasked with managing tactical concerns such as data migration, integration tests, and user training. This allowed NexPress management to focus on strategic issues such as organizational alignment and how best to leverage new capabilities for competitive advantage.
The implementation proved to be a smooth one. Though executed at the detail level, the scope of the project was defined at a business level, which allowed NexPress to better control how the implementation would impact the enterprise. The team defined processes through cross-functional scenarios and managed integration through early functional testing with end-user engagement.
Would NexPress have done anything different? “We could have made even more productive use of the SAP SI implementation team had we started cleaning our master data before their arrival,” says Scheidt. As it happened, however, SAP SI tackled the data migration in a short time using preconfigured tools to manage the task. In fact, the implementation methodology enabled NexPress to address data issues in the first week and to spot and rectify errors early on to ensure an even smoother implementation.
THE RESULTS “Quite impressive” says Scheidt. “In just 16 weeks SAP SI really helped us turn things around. Now we have a robust, scalable solution based on SAP industry best practices that helps us compete better and keep costs down.”
With the implementation of mySAP ERP, NexPress has a consistent platform necessary to execute complex processes that span functional silos and organizational boundaries. With the old processes, NexPress engineers would design a new product, solicit quotes, and generate specs on the required parts. In the manufacturing phase, all the required parts information would need to be transformed into the numbering and pricing system used by the manufacturing organization. “Keeping these two worlds separate was a significant impediment to squeezing cost out of the organization,” says Sven Doerge, chief financial officer (CFO) at NexPress. “Now the processes are much more seamless. It’s much easier for us to move from one project phase to another, and get new products to market quicker.”
At the same time, new purchasing and inventory control capabilities address the troublesome issue of parts obsolescence. “We’re always improving our products,” continues Scheidt. “If the design team starts using a new part to enhance the efficiency of an existing product, that’s all well and good. But if you have the design team making procurement decisions in isolation, you can easily end up with a shortage of the old part, which still needs to be on hand for the service business. SAP software helps us coordinate purchasing so that we can avoid these kinds of situations.”
THE NUMBERS In the span of 16 weeks, SAP® software helped NexPress generate some significant statistics – demonstrating an impressive return on investment: $1 million in annual operating costs removed from business; 30% reduction in SAP system support costs; 50% reduction in demand planning/MRP operational costs; and 33% reduction in order management operational costs.
“Basically, our supply chain integration with manufacturing is so efficient, we sometimes forget about the complexity that the system is handling behind the scenes,” Bob Scheidt says with a smile. “That’s good for business and it helps us refocus our attention on some of the more pressing issues facing our business and our industry.”
Some of these issues include rapid new product commercialization, global supply chain management, and flexible manufacturing. By smoothing communication between design and production organizations, internal teams can leverage existing organizational knowledge and significantly reduce concept-toproduction cycle times. Not every project starts from a blank slate. Increased supply chain visibility, meanwhile, helps NexPress determine the appropriate stocking locations for relevant inventory, even in a global context. All this helps NexPress introduce new products more rapidly – a critical capability in a highly competitive marketplace.
MOVING FORWARD At the time of the SAP go-live, NexPress was a 50/50 joint venture of Kodak and Heidelberg. As of May 2004, Eastman Kodak Company acquired the entire NexPress business and its supporting manufacturing, sales, and service operations in Heidelberg. The NexPress organization, running as a Kodak subsidiary, is now fully leveraging the investments made in its SAP system as it faces a new chapter in its growth and success in the market. According to Bob Scheidt, however, one thing is perfectly clear: “Having reengineered our business using the SAP best-practices model, NexPress is more solid than ever before.”
