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Synthite tastes success with SAP and IBM


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This white paper is an IBM case study. IBM Global Business Services helped Synthite perform a fit-gap analysis to see where existing processes could be enhanced by replacing legacy systems with SAP ERP. IBM then helped to implement a suite of SAP applications and introduce new capabilities such as active ingredient-based costing and departmental key performance indicators. The result is a fully integrated sales order, manufacturing, quality control and product delivery solution with business analytics capabilities, based on SAP NetWeaver Business Warehouse.

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Synthite tastes success with SAP and IBM

  1. 1. we know they knowSynthite tastes success with SAP and IBM Overview The Challenge ingredient-based costing and business unit, and take corrective Flavorings and spices company departmental key performance actions on pricing, manufacturing, Synthite set ambitious sales growth indicators (KPIs). The result is marketing and management. targets that existing back-office a fully integrated sales order, procedures and systems struggled manufacturing, quality control  Key Solution Components to support. Separate purchasing, and product delivery solution with Industry: Foods manufacturing and documentation business analytics capabilities, Applications: SAP® ERP processes could not be integrated, based on SAP NetWeaver Business applications including financials, which prevented management from Warehouse. controlling, materials management, gaining a whole-company view of sales & distribution, production order status and manufacturing  The Benefits planning and quality management, efficiency. Delays in collecting and Synthite uses integrated sales order SAP NetWeaver® Business analyzing information led to missed and manufacturing data to match Warehouse, SAP Solution Manager opportunities for consolidating procurement quantities precisely to Hardware: IBM System x®series procurement and production. Lack production, which helps to control servers, IBM System Storage® of detailed raw materials data and inventory levels, reduce waste DS4700, IBM System Storage product costing prevented accurate and cut costs. Integrated materials TS3200 Tape Library Express estimates of final prices, particularly and quality management help Software: Windows SQL Server for new products, which had an Synthite to comply with stringent and Oracle database impact on profitability. international food standards, Services: IBM ® Global Business making it possible to expand into Services, IBM Global Technology The Solution new markets and geographies. Services IBM Global Business Services Executives scrutinize enhanced helped Synthite perform a fit-gap operational data to discover true analysis to see where existing raw materials and production processes could be enhanced costs, and ensure that sales prices by replacing legacy systems achieve business profitability with SAP ERP. IBM then helped objectives. Synthite uses SAP to implement a suite of SAP NetWeaver Business Warehouse applications and introduce tools to analyze profitability by new capabilities such as active customer, product, region and
  2. 2. “IBM helped us with an Synthite Industries specializes in fresh For example, raw materials and dried spices and their extracted procurement orders and the size of executive dashboard essences – known as oleoresins – for each order were based on typical that gives me end-to- the foods, flavorings and fragrances historic usage rather than an accurate end visibility of all key markets. For example, almost every sales pipeline figure. Similarly, where metrics on a single screen. ketchup, seasoning and sauce uses a several orders from different This exception reporting mix of oleoresins to add color, flavor customers arrived for the same and spice. product, there was no way to share the tool helps me and the information between systems, which department heads As the world leader in the field of meant that Synthite lost the opportunity manage performance oleoresin extracts, Synthite has a to consolidate the order to a more cost- much more efficiently. portfolio spanning more than 500 effective single production run. All in all, this new, stable products – from fresh and dried spices to oleoresins, floral extracts, value At a larger scale, international markets and scalable IT solution added products and application for foodstuffs and fragrances require provides us the perfect oriented solutions. It has a turnover of detailed product traceability, quality platform to deal with $90 million and is targeting $500 and safety standards. Separate future growth, giving us million by 2020. Synthite is spread over business systems at each location that critical edge in an five locations and has an annual made it difficult and costly for Synthite production capacity of over 60,000 to provide evidence of compliance increasingly competitive tonnes. with regulatory standards. To make international market.” growth into new markets possible and The company’s executives understood cost-effective, Synthite wished to Aju Jacob, Director at Synthite Industries that existing processes, which were embed automated product traceability managed by separate legacy systems and quality control into its business at each location with no processes. interconnection, would not be able to scale up to meet the challenges Aju Jacob, Director at Synthite created by growth. Industries, says, “A few years back, we decided to accelerate our growth rate. We were looking at new markets, capturing more market share and we wanted better control over pricing and inventory. We wanted to be able to forecast demand. But, we realized that we couldn’t do any of this because our legacy set-up was not integrated and had too many incompatible systems. So we wanted a unified and integrated IT solution to align and optimize our business processes to our strategic goals.” Minu Thomas, Head of Planning and Information Systems, Synthite Industries adds, “Some of the challenges we faced due to our legacy
  3. 3. systems were lack of standardization, planning process. Hence, ability to “The IBM approach toand wastage due to sub-optimal respond to customer enquiries with this SAPtracking in the areas of material likely delivery dates was alsoplanning, manufacturing, quality equally challenging. implementation effortcontrol and finance. Since we didn’t was extremelyhave a formal planning department, The lack of detailed information on methodical, structuredtraceability of orders was a problem. production costs also made setting and disciplined, whichSynchronization between sales, product prices a real challenge, was key to deliveringproduction and purchase was a which had an impact on thechallenge. We also wanted better company’s ability to respond the project on schedulecontrol over product costing.” quickly to new customer enquiries and ensuring the for different blends of spices / spice intended benefits.” Looking for the right ingredients ingredients in order to win newSynthite turned to IBM Global business and ensure its profitability Minu Thomas, Head of Planning andBusiness Services to help evaluate objectives. Information Systems at Synthite Industriespossible solutions, and later, as a fullimplementation partner. Sabu Gopinath, IBM Global Business Services’ project lead,“We chose IBM because of their deep comments: “Synthite’s managementindustry knowledge and their proven had a vision and we understood thatexpertise as a SAP consulting and vision perfectly. Smaller customersimplementation partner,” says Aju like Synthite need proven integratedJacob. “What impressed me was the solutions that provide rapid ROI. Atfact that they didn’t just talk about IBM Global Business Services, weimplementing SAP; they talked about have years of experience deliveringtransforming our business using SAP. such solutions across industries, soIBM demonstrated a clear we were able to tailor the perfectunderstanding of our strategic intent solution for Synthite very quickly.”and our business goals.” A recipe for successThe principal objectives were to IBM Global Business Servicesintegrate the different legacy systems, recommended replacing legacymoving all the production sites onto a systems and with a centralized ERPshared business systems environment solution from SAP. Working closelyand to replace manual processes with with the Synthite team, IBMautomated solutions. performed a fit-gap analysis, comparing the existing businessFor example, due to separate “islands” processes with the capabilities TECHNICAL LANDSCAPEof legacy systems across Synthite offered by SAP applications. As a Servers: IBM System x series servers,locations, compiling the overall result, Synthite decided to IBM System Storage DS4700, IBMproduction planning demand and re-engineer some of its processes System Storage TS3200 Tape Libraryarriving at an overall material to align with SAP best practices, Expressrequirements plan was a serious while also choosing to develop Software: SAP ERP, SAP NetWeaverbusiness challenge. There was no additional functionalities in the new Business Warehouse, SAP Solutioneasy way to link sales forecasts, SAP environment to meet the unique Manager, Windows SQL Server andproduction, procurement or inter-plant needs of certain business units. Oracle databasematerial movements as part of their
  4. 4. “I was very impressed Following the Ascendant methodology solution can track raw materials, – an end-to-end framework warehousing, production and with the IBM team specifically designed for SAP delivery costs, generating a through the entire implementations – IBM Global complete picture of product costs. implementation Business Services helped Synthite Synthite uses this new understanding process. Our senior deploy a core set of SAP ERP of input costs to ensure that pricing management team applications to manage group-wide meets product profitability and financials, controlling, materials margin objectives as part of the came to regard them management, sales & distribution, larger enterprise commitment to as so much more than production planning and quality sales and business growth. The just SAP technology management processes. SAP company also uses the same data to consultants, but as NetWeaver Business Warehouse (BW) help understand how to improve business consultants. was also deployed to provide detailed manufacturing performance and analysis capabilities based on drive costs out of the business. They remain a true standardized, accurate data. business partner and Serving up SAP to the business trusted advisor. What “The SAP solution IBM set up for us With the planning and development we achieved through provided tighter integration between stages complete, IBM Global IBM was business operations, sales, logistics and Business Services managed the SAP financials, and gave us visibility across implementation using a phased transformation.” the business,” says Minu Thomas. go-live model. In the first phase, the Aju Jacob, Director at Synthite Industries “The larger solution included IBM core SAP ERP functionalities were System x servers, infrastructure and introduced at the company’s main technology services and software.” spices and oleoresin manufacturing plants in Kerala and Karnataka. Next, Developing unique flavors the solution was extended to three IBM also helped implement new manufacturing locations across the functionalities in the SAP environment country – a spice ingredients division – for example, active ingredient in Kerala, a floral extracts plant in management at a material-batch level, Tamil Nadu, and a spice pre- which calculates costs based on the processing plant in Andhra Pradesh. specific characteristics of the The third phase was the introduction materials used in each product. The of SAP to the manufacturing facility at IBM Global Business Services team Calicut subsequent to its merger with was able to leverage experience from Synthite. previous implementations in similar industries to deliver this functional “IBM standardized the business requirement effectively. processes across our various divisions and locations, and aligned The advantages that these new its business goals with organizational functionalities give to the business are Key Performance Indicators (KPIs),” considerable. For example, the active comments Pramod J Simon, Head of ingredient management functionality Production at Synthite Industries. helps to track and monitor costs at “Consequently, Synthite is now each batch level, based on the active confident and geared up to handle ingredients content (e.g. capsaicin any amount of future growth and content for chilli). Now, the SAP innovation.”
  5. 5. Adding spice to the mix Learning with the master chef “Companies in India...Synthite executives wanted to increase Implementing SAP applications with have access tocontrol of the business by examining the associated configuration, worldwide markets,operational and product data and customization and training effort would and they have the bestunderstand the impacts of financial, have placed a comparatively highproduct and business decisions. For workload on the Synthite IT team. Much of technology at theirexample, this included establishing of the work required specialist doorstep. IBM andend-to-end traceability at any level for knowledge only useful during the SAP is helping severalproduct batches, from raw materials to implementation process, and the peak such organizationsfinished goods and scrutinizing slow- workload would have over-stretched an achieve their businessmoving goods against sales and internal IT team that was busyinventory. supporting ongoing operations. In aspirations, by taking consequence, the skilled resources their journey withThe standardized SAP application provided by IBM Global Business them. We bring ourenvironment ensures that accurate Services were crucial to the success of global experience andoperational data is captured in a uniform the project. knowledge and combinemanner for the Synthite group. Everymanufacturing site now accesses the “I was very impressed with the IBM it with local insight andcentralized SAP system and every team through the entire implementation capability to help ourpurchase, production information, process,” says Aju Jacob. Our senior clients innovate andquality result, sales order and delivery management team came to regard succeed.”instruction is captured. them as so much more than just SAP technology consultants, but as Vanitha Narayanan, IBM Managing Partner - IBM Global Business Services, IBM IndiaThe captured data provides Synthite business consultants. They remain a South Asiawith a valuable resource to examine true business partner and trustedoperations using SAP NetWeaver BW to advisor. What we achieved throughanalyze operational performance by IBM was business transformation.”customer history, current contractstatus, or by volume, value and “The IBM approach to this SAPprofitability. These latter figures act as implementation effort was extremelyan essential check, allowing Synthite to methodical, structured and disciplined,assess the accuracy of its production which was key to delivering the projectcosting and sales revenues at the on schedule and ensuring the intendedcustomer level, by product, by product benefits. They first did a systemcategories, regions, and other similar baseline assessment study to identifydimensions. the gaps in our legacy systems and also the benefits thereof in an SAPLeveraging business intelligence system, before proceeding with theIBM Global Business Services helped implementation. They did severalSynthite to define and implement a change management workshops torange of departmental KPIs to help ensure our users are comfortable withanalyze this data and present it in an the new system so that the overalleasily understandable way. The business performance did not suffer.NetWeaver BW solution was then used They also did a very good job ofto create customized dashboards as knowledge transfer to our employeesdecision support tool for senior before they left,” remarks Minu
  6. 6. Tasting sweet success “Thanks to IBM andWith the SAP applications embedded SAP, we are now fullyin the fabric of the company, Synthite prepared to competeis reaping the benefits of an integratedinformation infrastructure. For in the global market. Iexample, all sales are available as an think for any companyonline report, by various dimensions looking at transforminglike customer, product, plant or sales their business, IBM and IBM Deutschland GmbH D-70548 Stuttgartgroups, etc. The enterprise-wide view SAP should be in their sales orders allows planners topredict manufacturing workload and shortlist.” IBM, the IBM logo, and are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. Aassess capacity on a plant-by-plant Aju Jacob, Director at Synthite Industries current list of other IBM trademarks is availablebasis, and shift production between on the Web at “Copyright and trademark information” at if necessary in order to meet copytrade.shtmlcustomer demand. Intel, the Intel logo, Intel Xeon and the Intel Xeon priced resources. They have access logo are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the UnitedFull batch traceability is maintained, to worldwide markets, and they have States and other countries. UNIX is a registeredenabling Synthite to meet its regulatory the best of technology at their trademark of The Open Group in the United States and other countries. Linux is a trademarkobligations and customer doorstep. IBM and SAP is helping of Linus Torvalds in the United States, otherrequirements, which removes barriers several such organizations achieve countries, or both. Microsoft, Windows, Windows NT, and the Windows logo are trademarks ofto entering new markets. their business aspirations, by taking Microsoft Corporation in the United States, other their journey with them. We bring our countries, or both.Aju Jacob comments, “It helps to have global experience and knowledge Other company, product or service names may be trademarks, or service marks of others.all the relevant information at my and combine it with local insight and This case study illustrates how one IBMfingertips in near real-time. IBM capability to help our clients innovate customer uses IBM and/or IBM Business Partnerhelped us with an executive and succeed.” technologies/services. Many factors have contributed to the results and benefitsdashboard that gives me end-to-end described. IBM does not guarantee comparablevisibility of all key metrics on a single Aju Jacob concludes, “Thanks to IBM results. All information contained herein was provided by the featured customer and/or IBMscreen. This exceptional reporting tool and SAP, we are now fully prepared to Business Partner. IBM does not attest to itshelps me and the department heads compete in the global market. I think accuracy. All customer examples cited represent how some customers have used IBM productsmanage performance much more for any company looking at and the results they may have achieved. Actualefficiently. All in all, this new, stable transforming their business, IBM and environmental costs and performance characteristics will vary depending on individualand scalable IT solution provides us SAP should be in their shortlist.” customer configurations and conditions.with the perfect platform to deal with This publication is for general guidance only.future growth, giving us that critical Photographs may show design models.edge in an increasingly competitive © Copyright IBM Corp. 2010. All rights market.”ConclusionVanitha Narayanan, IBM ManagingPartner - IBM Global BusinessServices, IBM India South Asia, © Copyright 2010 SAP AG SAP AGcomments: “Companies in India have Dietmar-Hopp-Allee 16several advantages today: they are in D-69190 Walldorfone of the fastest growing economies SAP, the SAP logo, SAP and all other SAP products and services mentioned herein arein the world and have access to trademarks or registered trademarks of SAP AG inincredibly talented yet competitively Germany and several other countries. SPC03287-INEN-00 (November 2010)