Receiving two national productivity and improvement awards is a surefire indicator that a company's enterprise resource planning (ERP) system is producing tangible benefits - and that these are recognised not only internally, but externally as well.
The awards went to Toyota South Africa's Parts Operations and Systems Division. The company won a Gold Award (Corporate Category) in the 1999 National Productivity Awards, organised by the National Productivity Institute (NPI). Toyota SA also won a Special Award for continuous improvement in the 1999 Logistics Achiever Awards, organised by the influential Logistics News publication.
This follows the initiation of a productivity improvement drive within the company in 1992, and the implementation in 1996 of SAP R/3 into Toyota SA's Parts & Accessories Division (TSP).
"There is no doubt that without the support of the R/3 system, the extent of the improvements and changes that we implemented would have been limited," says Chris Baker, SAP Project Manager at TSP, and General Manager Inventory & Database Control.
"SAP R/3 has resulted in vast quality improvements and brought much more discipline to the environment," says Piet van Wyk de Vries, executive sponsor for TSP's SAP Project, and After Sales Director of Toyota SA Motors (Pty) Ltd.
One of the most important objectives of the company's improvement drive was to reduce the levels of inventory held at the various stages in the supply chain, while achieving high levels of customer service. This required a team effort from all levels of the workforce, many changes in traditional practices, and a sophisticated computer system to provide the backbone for the new-look work processes. TSP's SAP R/3 implementation included the materials management, warehouse management, sales and distribution and finance modules.
The company is now reaping the real, quantifiable business benefits of a sophisticated system that demands discipline from its users. SAP R/3 provides TSP with a true picture of its business. There is no longer any room for "creativity" by staff, who in the past could massage the figures.
"R/3 has given us more control over the business than ever before," says Baker. "We know exactly what the supply rate is each day, and what our sales were yesterday. We can, for example, measure the performance of individual inventory controllers to a far better extent than before.
"We can also now more accurately measure the performance of our suppliers. We are looking at timely deliveries and the support rate for the range of parts we buy from them.
"We also have much better control over our inventory. R/3 is controlling our entire stock, including the half that comes from Japan and Europe. We now hold less than four months' stock and have accurate inventory records. We keep stock based on demand. If a dealer needs a non-stock item, we locate it by importing it or having it made.
"We keep 80 000 different material numbers in stock, out of a total population of around 160 000. We can supply better than 94% of demand off shelf, and the rest we get within a couple of weeks. Our investment in stock is currently R100 million," he says.
"TSP is now starting to achieve its longer term objectives," says van Wyk de Vries. "Our vision is to be among the top 10 Toyota distributors in the world and to continuously increase return on investment for TSP. We want to assure availability of more than 97% of parts within 24 hours anywhere within our territory in order to maximise our market share.
"SAP has given us functionality that works. As our people became used to it, they made it theirs, and are now achieving their job objectives with the system. It has given the company more stability, and created a platform from which we have been able to implement organisational and process changes. We now have a solid foundation on which to achieve the objectives we have set ourselves."
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