Enterprise resource planning steers API Group's growth

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.

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.

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