Market leaders in producing specialised packaging, API
Group, manufactures for the luxury goods markets including tobacco,
pharmaceuticals and beverages. Its packaging includes the
reflective surface on a packet of Nurofen, or the holographic
products used on concert tickets for anti-counterfeit
measures.
With businesses in the UK, North America, Europe and the Far
East, and with more than 1000 employees, the company turns over in
excess of £120m. In the face of stiff competition, today¹s success
has grown from a strategic investment in
enterprise resource planning software (ERP) software, says Iain
Anderson, API Group¹s director of information systems.
API began as a holding company that grew through acquisition in
the 1980s and 1990s. But in 2001/2002 the group found itself under
increased pressure to cut costs and improve profitability, he says.
"While packaging is only a small part of a product¹s cost, the
generous margins came under increasing scrutiny and profitability
is reduced. A new executive management team looked at streamlining
in recognition of a number of inefficiencies." It was felt this
would be impossible without an aligned infrastructure capable of
matching the business changes required.
"Each operation had its own e-mail system, its own connectivity
to the outside world, its own anti-virus policy. There was massive
duplication of effort. It was a real challenge for the chief
executive and the finance director to make sense of the information
being pushed through from the operations, and compare apples for
apples. It was a very confused situation."
A solid foundation
"We had to get the basics sorted first, so we standardised all
of the global architecture: anything from the type of PC you have
on your desk, the software you operate for your day to day
activities, word processing, spreadsheets, e-mail anti-virus
software, networking." This was vital preparation before the
business systems were tackled. Each business in the group ran
autonomously "with different charts of accounts, different ways of
processing data, different methods of costing; everything that you
could conceivably think of as different, was different," says
Anderson.
Because of the extreme diversity acquired over the years, the
company felt justified in rationalising from the ground up and
replacing the tangle with one ERP system installed with little
burden of legacy integration. Operations could change to fit the
software rather than changing the software to fit some arbitrary,
and acquired, business situation.
"The functionality of Oracle's e-business suite could be
implemented without any customisation. We have configured it, but
done no intrusive customisation at all," says Anderson.
Admitting the enterprise is a manufacturing concern and "not
best skilled at looking after complex IT systems," API employed
Oracle consulting services to help implement the system, and
used Oracle's on-demand hosting service to look after it.
"We have completely outsourced the maintenance and the provision
of the hosting services. What we have internally is a small team
who look after the implemented divisions and we have an
implementation team actively deploying the application and
enhancing the application in the businesses to meet the individual
requirements."
A cultural change
But if it sounds easy to replace legacy applications with one
ERP system run by somebody else, then you are mistaken.
Anderson says that getting everybody to agree on terminology was
"absolutely a major challenge".
"When you try to get four divisions and 50 people to agree on
consistency on a variety of things that they are very passionate
about, it is very difficult. They have different cultures,
different ways of working, different thought processes and
completely different views.
"We spent a huge amount of effort banging people's heads
together getting consistent nomenclature, consistent method for
setting up items: what we would call the machinery and equipment;
how we would talk about shipping locations; what the documentation
would look like; consistency of packing notes, invoices and
purchase orders, all of that sort of stuff that our customers
see," says Anderson.
"The program has revolutionised the way the business presents
and looks at itself both internally and externally," he says.
Without this culture-changing effort, Anderson says the ERP project
may not have been the success it is. The system is now pivotal for
the company's software strategy. "We are using Oracle's e-business
suite as the platform for the future and as a long term
investment," he says.
Strategically, API has consolidated in order to expand. While
the initial roll-out was a replacement for burdened, miscellaneous
legacy systems, an outsourced ERP system is "ideal for an
acquisition, or setting-up new operations in new territories. And
that was always the model, to have something we can drop into any
new business," says Anderson.
However, API recognises that the evolving reality of business
software and work continues as an ongoing project. Anderson will
consider dashboards, enhanced management information, recruitment,
personal performance and other human resources functions in the
years to come. "We do not want to stand still so that it becomes
just what we had before," he says.