SANY GROUP

FAST-GROWING MANUFACTURER DRIVES EFFICIENCY AND INTEGRATION WITH SAP ERP

QUICK FACTS

We are a fast-growing company, and we see that SAP is also rapidly expanding its business in China. This growth momentum secured our trust in choosing SAP as a partner to support our business today and tomorrow.
Yang Ying, Manager, IT Planning and Control, SANY Group Co. Ltd.

Company Name: SANY Group Co. Ltd. Location: Changsha, China Industry: Industrial machinery and components Products and services: Construction equipment Revenue: US$1.98 billion (1.57 billion) Employees: 23,000 Web site: www.sany.com.cn Challenges and Opportunities Meet rapid growth requirements Support SANYs ambition to become a world-class enterprise Remove growth barriers to achieve operational excellence Objectives Replace legacy systems with a scalable enterprise resource planning (ERP) solution Integrate finance and business processes Manage all processes across the total product life cycle in an integrated manner Realize the integration of production, sales, planning, and inventory management SAP Solution and Services SAP ERP application

Implementation Highlights Smooth implementation, on budget and ahead of schedule Support of 210 business processes Continuous improvement through exploring the full potential of SAP ERP Why SAP Powerful ERP software functionality to support mission-critical processes Proven success cases for many multinational enterprises Growth momentum of SAP in China, securing SANYs trust in the partnership Benets Gained control of and insight into the entire operational process chain Accelerated information flow Reduced inventory levels by 30% Increased inventory turnover by 50% Raised planning accuracy to 90% Existing Environment Multiple legacy systems Baan software Third-Party Integration Database: Oracle Hardware: IBM Operating system: IBM AIX

SAP Customer Success Story Industrial Machinery and Components Construction Equipment

SANY Group Co. Ltd. is clearly one of the economic growth miracles of Chinese enterprise. Established in 1989 as a small welding material factory, SANY has evolved into the worlds biggest concrete machinery manufacturer and one of the top 50 construction equipment manufacturers in the world. Under the motto Quality Changes the World, SANY continually strives for technical innovation. So when the companys growth began to strain its legacy software, SANY decided to ramp up its technology infrastructure. By deploying the SAP ERP application, the fast-growing company has made a big leap forward in raising efficiency, reducing cost, increasing operational control, and improving business insight.
The renowned SANY name is recognized as one of the most competitive self-grown industrial brands in China. The company is engaged in all aspects of heavy equipment manufacturing. Its top-selling products include construction machinery, concrete pumps and equipment, piling machinery, and crawler cranes. With nearly 23,000 employees and revenue of US$1.98 billion (1.57 billion) in 2007, SANY Group was ranked among the top 10 enterprises of China by Forbes in 2008. The company supports customers in over 130 countries with 12 overseas subsidiaries and five industrial parks in Shanghai, Beijing, Shenyang, Kunshan, and Changsha. Its core member, SANY Heavy Industry Co. Ltd., was listed on the Shanghai Stock Exchange in 2007 with the largest stock market valuation in the history of Chinas construction machinery industry.

In early 2006, SANY made a strategic decision to eliminate these barriers, drive higher efficiency, and support future growth by replacing its old systems with a dynamic, operationally driven enterprise resource planning (ERP) solution. After looking into several options, SANY identified the SAP ERP application as the best choice. According to Yang Ying, manager of IT planning and control at SANY Group, functionality was the starting point of the evaluation. SAP ERP surpassed other competitive alternatives with its comprehensive and powerful functionality to support SANYs mission-critical processes. SAPs proven success in enabling an integrated information infrastructure for many multinational companies was another determining factor for SANY, which strives to achieve information excellence comparable with other world-class companies. We are a fast-growing company, and we see that SAP is also rapidly expanding its business in China, comments Ying. This growth momentum secured our trust in choosing SAP as a partner to support our business today and tomorrow.

Embarking on SAP ERP

In 2006, amid rapid business expansion and plans for future growth, SANY established itself as a group company. Under the new group structure, SANYs old IT systems showed deficiencies in supporting the increasingly complex organization and business models. To grow into an international enterprise, SANY realized that it needed an integrated information infrastructure that could increase its operational efficiency and help keep it ahead of the competition, both in China and overseas. A lack of integration between finance and business processes, high inventory levels, and inefficient production planning: these were the barriers we needed to remove in order to become a worldclass, best-run business, says Zhou Zhijun, ERP manager at SANY Group.

Setting Clear Objectives for a Smooth Implementation

To increase efficiency along its entire value chain, SANY set three goals for its SAP ERP implementation. Called the three integrations, these goals included integrating finance and busi-

With the help of SAP ERP, we have reduced the inventory level by 30% and increased inventory turnover by 50%. This has contributed to greater cost savings and improved cash flow.
Zhou Zhijun, ERP Manager, SANY Group Co. Ltd.

ness processes; managing all processes across the total product life cycle in an integrated manner; and integrating production, sales, planning, and inventory management. We want to optimize business processes with SAP ERP as the backbone and, very importantly, establish a scalable application infrastructure in order to adapt to changes in our organizational structures and business models, says Zhijun. The infrastructure should satisfy our current requirements while being able to support our future growth needs.

Today, SANY relies on SAP ERP to support 210 business processes, covering finance and accounting, procurement, inventory, production planning, quality control, sales, marketing, and human resources.

Gaining Greater Process Control and Business Insight

With the deployment of SAP ERP, SANY has achieved numerous benefits. According to Ying, the company can now execute greater control over its operations thanks to the integration

This improvement was not realized overnight. According to Ying, at the beginning of the project when the process flow was not yet standardized, SANY had only marginally increased planning accuracy from 50% to 60%. As processes became more standardized and automated over time, the company has experienced a quantum increase in planning accuracy, leading to substantial cost savings. We can now sustain the rate at 90%, says Ying. Even when China was hit last year by the snow disaster that led to volatility in supply and demand for materials, we were able to plan production with 90% accuracy. Greater inventory control was another noticeable benefit to SANY. Thats because SAP ERP accurately tracks all raw materials in stock, in production, and in transit eliminating the risk and cost of excess inventory. When a production plan is initiated, the software also helps generate a consolidated procurement plan. With the help of SAP ERP, we have reduced the inventory level by 30% and increased inventory turnover by 50%, says Zhijun. This has contributed to greater cost savings and improved cash flow. SAP ERP covers almost all of our business processes, and the implementation itself is a self-improvement process for us, adds Ying. As we get more and more familiar with the software, were continually exploring its full potential. We are not just using the functions now. We are at the stage of managing the application and optimizing how we use it. Using SAP ERP,

Through the integration of research and development, planning, production, and procurement, we have gained full visibility into the supply chain and have achieved an overall planning accuracy rate of 90%.
Zhou Zhijun, ERP Manager, SANY Group Co. Ltd.

SANYs implementation of SAP ERP ran very smoothly. We completed the deployment in only six months, says Ying. It was faster than we expected. The first phase of the SAP ERP deployment was a critical undertaking at SANY Heavy Industry, the core company under SANY Group. SANY Heavy Industry was already listed in China as a public company before the implementation. According to Ying, how well the deployment went would have a direct and immediate impact on the performance of the share price. It was a big challenge for us, recalls Ying. We could not afford any failure there. Luckily, the process went really smoothly.

and optimization of business processes. Information flow has been accelerated and discrepancies during the information relay have been largely reduced. We have gained control and insight, comments Ying. This is a big plus for the company. Improvement in planning accuracy is one of the key performance indicators that SANY used to measure the success of its SAP ERP implementation. Through the integration of research and development, planning, production, and procurement, we have gained full visibility into the supply chain and have achieved an overall planning accuracy rate of 90%, says Zhijun.

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for example, SANY has developed a set of analysis tools and formulas, taking advantage of greater data visibility to allow comprehensive analysis for effective decision making.

Exploring Opportunities for Continuous Improvement

SANY sees the implementation of SAP ERP as the first milestone in achieving the ultimate efficiency in information management. How we continue to apply the software to optimize our operational efficiency and effectiveness is a prominent topic, says Ying. Now that we have a solid ERP platform, we need to explore how it can drive continuous improvement and support change as we grow. Therefore, our relationship with SAP has evolved from a product partnership to a service partnership. We expect a new level of collaboration with SAP to address the needs of changing business models and objectives. Looking ahead, SANY plans to continue leveraging SAP ERP to further optimize the companys use of the software, support the complex requirements of its group structure, and improve data management.

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