Delta Motor Corporation has established itself as one of the e-commerce front-runners in South Africa - accelerating from the middle of the field to the front in less than two years
This leadership is the result of the company deciding to take the potentially risky "big bang" approach to the implementation of SAP R/3, rather than the more pedestrian and safe "slowly-does-it" route.
"We felt a bit like Shaun Watson-Smith (driver for Team Petronas Syntium Opel) going into a corner at the end of a straight," says IT general manager Guy Vellacott. "We committed ourselves fully to the implementation of SAP R/3, and there was no room for error."
The Delta IT team made the bend, kicking up a little dust on the way, and they`re accelerating strongly into the next challenge.
Powering the multi-million Rand investment was the SAP R/3 management system, which was chosen in part because of its e-commerce capabilities. The urgency was due to fears around the Year 2000 bug and the age of the existing diverse systems at Delta.
The challenge lay in the fact that the legacy systems - which had been added as the company`s market share grew over the years - did not communicate with each other.
Having identified e-commerce and integrated management systems as the way business was heading long before the concept became widely known, Delta faced the choice of trying to combine the different systems - or taking a calculated risk and going all out for the chequered flag with something new.
The looming Y2K deadline was not the only pressure on the Delta IT team.
"Kempston Road was, for example, running its materials system on a Brazilian system originally written in Portuguese and supported by a half-day employee. Clearly, we couldn`t sustain that," says Vellacott.
Just over two years ago Delta management put its collective foot flat on the accelerator. It was up to the director of strategic planning and IT, Evan Dold, and Vellacott and his team, to guide the company through the change.
At stake was the future of a R3,5-billion a year business.
To steer it safely through the corner the IT team had to:
Implement a single system across four manufacturing plants
Incorporate the Parts and Accessories (P&A) business in the new system
Install new networks
Introduce new technologies
Initiate, design, develop and implement an integrated office automation system for desk-top PCs, including PC literacy and Microsoft Office training
Bring the dealer infrastructure up to standard
Re-cable the entire organisation
"It was a major revamp with all aspects of the operation having to run concurrently," says Vellacott.
Functions that had to come on-line included logistics, production, finance, costing, sales, personnel administration, project management and parts and accessories.
The complexity is underlined by the fact that the Delta plants produce upwards of 250 vehicles a day - with each vehicle made up of around 1 200 components.
This means the system has to track 144 000 material movements a day at the Kempston Road assembly plant which produces Isuzu one-ton pickups - while the Opel plant (producing the Opel Astra and Opel Corsa) in Struandale has to manage 130 000 parts movements a day. The Truck and Component Assembly Plant need to be managed likewise.
"At the time we knew that the production of the new-generation Opels would shift to the modern Struandale plant, so the system had to be able to adapt to higher volumes at Struandale and lower volumes at Kempston Road," says Vellacott.
It was a challenge that stretched the capabilities of SAP R/3 to the limit.
"We purposely involved SAP throughout the development and implementation of the system - and the support out of Germany was critical to the success of the project," says Vellacott.
"With the help of SAP SA business partner, Combined Design Engineers (CDE) and SAP SA`s Technology team, it took us 14 months to configure SAP to meet our business process needs and to do the full change-over. One of the functionalities that had to be developed was the immediate "real-time" updating of the materials system from the shop floor.
"A late entry in the race was our decision to implement a number of dealer transactions over the internet. These were developed in a three-month period and have proved to be a successful functioning platform," he says.
"We had two objectives. The first was that we wanted a system that could run on a three-shift basis, which meant that we would never have the time to take the computer off-line to update the records.
"The second was that the old Brazilian system and SAP R/2, which we were running in Struandale, had real-time materials up-dating capability and we were used to it. There was no point in going backwards," says Vellacott.
Delta has become a benchmarking site for the on-line material back-flushing process for vehicle manufacturers around the world, and is also used as a reference site by SAP, in Germany, for high volume transaction processing across all industries.
"On the original equipment side we hit every one of our objectives on time - something of an achievement for any system implementation anywhere in the world.
"In doing so, we became the first automotive site in the world to use SAP R/3 across all modules. We were also the first SAP R/3 site in the automotive industry to implement real-time, on-line back-flushing, which automatically records the consumption of parts as vehicles are being built," says Vellacott.
The one area in which there were problems was parts and accessories.
"We underestimated the complexity involved in moving 6 000 line items a day, every day. The pressures never stop," says Vellacott.
The problem in parts and accessories lay in bedding down a new bar-coding system that was introduced.
"It sounds crazy, but we couldn`t get the parts out of the warehouse.
"We knew what was wanted and by whom, and we knew that we had the parts in the warehouse. But the discipline in the system worked so well that it wouldn`t allow us to issue the parts because it wasn`t satisfied that all the criteria had been met."
The parts department reverted to their manual "picking" process operating with SAP alone while the IT team worked to get the new functionality to perform to required specification.
Looking ahead, he says the fact that Delta now has an integrated management and information system means that the company can start re-inventing itself.
"Management now has access to reliable real-time information. It means that we can identify trends earlier and we can make forecasts with more certainty. Month-ends now take a maximum of five days. But, perhaps, the most exciting possibilities lie in the realm of e-business," he says.
Delta first started experimenting with e-business in early 1999 when the company`s dealers went on-line to order parts and to access financial information. Delta`s 210 dealers are now placing parts orders worth millions of Rand a month through the internet. "We are now looking to e-commerce on both our sales side and our supply side. Order to delivery times are receiving a lot of focus," concludes Vellacott.
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