Siemens Canada builds facility with global strategy

A new $32 million Siemens Canada manufacturing, engineering and training centre in Burlington, ON, is a working showcase for the company’s wide range of electrical/electronic products that span information and communications, energy and power, industry and automation, transportation and lighting. But the 83,000 sq. ft. facility that officially opened February 12, 2002 is also a testament to the wisdom of having one integrated IT infrastructure.

For several years, Siemens AG has standardized on a fully integrated SAP product suite, becoming the largest SAP user in the world, according to Roger Alexander, senior vice president, manufacturing and engineering at Siemens Canada. As a subsidiary of the 484,000-employee Siemens AG, Siemens Canada has followed suit in its use of SAP. Doing so has made it easier to amalgamate three Canadian locations into this new facility, reports Alexander.

“Moving production from one manufacturing facility to another is enabled by using the same SAP systems,” he says. “The SAP common backbone fills financial and technical requirements on a standard basis. It is a facilitating tool to run the (Siemens) conglomerate in a way that makes sense.”

He stresses that SAP helps make the company’s tagline “global network of innovation” a reality.

Certainly something needs to unite this company with operations in 190 countries and its many divisions, products and specialties. It ranks high among companies with the greatest diversity both in product and geography. In Canada alone, there are 12 manufacturing facilities in addition to the head office in Mississauga, ON.

The new Burlington facility brings Siemens Canada’s engineering resources under a single roof which also houses a manufacturing unit to produce electrical/electronic products for domestic and international market needs. Here, custom products such as palm-sized programmable logic controllers (PLCs) and cabin-sized electrical control centres for oil or gas drilling rigs are being calibrated, quality tested, assembled and shipped around the world. The 160 employees include senior engineers, computer SAP specialists, quality assurance specialists and staff skilled in electrical assemblies and mechanical testing. Since all jobs are different, requiring specialized assembly to meet specific customer needs – such as motors and sensors for a pulp and paper plant or a painting production line for a kitchen cupboard builder, computer-aided design specialists are also here using AutoCAD to design the integration of systems such as drive components, PLCs, software and independent automation systems.

“Every job is different,” Alexander says. “It takes a close working relationship with people on the floor and engineering staff to make everything click.”

“It is all integrated through SAP,” he continues. “We aggressively leverage the skills as part of this twenty-fourth largest company in the world. (We bring) purchasing, procurement as well as the manufacturing side of best practices into this operation. The common SAP shared information and business processes enables us to do that.”

Greasing the supply chain

“One can’t properly address one’s global requirements unless you have a system that gives you visibility across those global requirements both internally and externally,” adds Richard Elliot, vice-president of strategic initiatives, SAP Canada.

He says that while SAP in the first 25 years was about breaking down the walls within an enterprise, in the last five years, the focus is on enabling efficiencies between organizations, extending that value chain from within organizations to between organizations. He gives the example of directly accessing a key supplier’s inventory systems rather than calling up the supplier.

Elliott says SAP has a number of components that address the value chain that links customer demand to inventory and fulfillment or customer demand to supplier to engineer to manufacture and fulfillment. A series of point solutions cobbled together doesn’t provide true visability, he argues. “Best of breed type of solutions require interfaces to maintain or else the chain starts to fall apart.”

He sees an organization as being all about buying things, adding value to those things and selling them.

“In its simplest sense, the faster you can get that circle or wheel to spin, the more positive impact that will have on the company’s bottom line,” he explains. “The faster I can determine a customer need and then turn around and respond to that customer’s need by delivering the right product to that customer at the right time, the lower will be my inventory holdings, the cost of sales in terms of building the product and servicing the customer and hence the more money the organization will make. We’ve got a number of things that make that wheel spin faster.”

He cites a supplier relationship management component that facilitates interaction and relationship with suppliers. Single sign-on security is an important consideration, he says, so no one comes through the back door to access applications’ core systems.

Choosing applications to share

When breaking down the walls between companies, he adds, you need to choose what applications to keep behind your firewall or which ones in front. He notes you can mix and match.

“I can have my core finance applications behind my firewall whereas I might take even part of my inventory on the other side of my firewall and make my finished goods inventory accessible to my customers through a catalog,” he says. “So they can access all my different parts and prices available, but they are not accessing my core system.”

He notes that just as employees can be given access based on their roles or functions within the company, so different external partners or suppliers can be granted different access.

“Your top 20 per cent of customers could go further into the system, for example, allowing them to do an ‘available to promise’ check in addition to checking pricing,” he explains. “My key customer can access the system and see not only that part X costs $100 for them today because they get a special price instead of $120 list price, they can also see that I’ve got 42 of those parts in inventory and that the closest location to them in Toronto happens to be in Detroit and we can get it to them by nine o’clock tomorrow morning. This is when it starts to get powerful. I can extend my value chain out to my partners so it’s not just within the organization. It brings other organizations into play as well.”

Supply chain management (SCM) is another component that allows one to optimize which machine and which plant to build which product in and which people to put on those production orders, he reports. The intent is to optimize to drive down costs and increase the responsiveness to build the right product at the right time.

SAP also has a product life cycle management component that follows the iterations and costs associated from the design stage through to engineering through to production.

Like most larger companies, Siemens has both make or build to order requirements and as well as some mass production work. Work at the Burlington plant is custom orders with about 25 per cent of the products to be shipped globally.

The new facility follows a switchgear and motor overhaul facility opened in Sarnia in 2000 and last year’s opening of a national headquarters for the company’s Technical Services business unit. A 70,000 sq. ft. facility for international transformers and large rotating engine repair and overhaul is under construction in Hamilton, ON.

Siemens Canada’s 6,800 employees, located at 99 offices and 12 manufacturing facilities, contributed to $3.3 billion sales in Canada during fiscal year 2001.

“The market is here in Canada for the technology we sell,” says Alexander. “Siemens sees market opportunities in process engineering sectors.” The company also enjoys the advantage of a number of product lines, with Alexander noting that their drives, switchgear and construction lines have done well in spite of the economic slowdown in other areas.

Siemens Canada can be reached at ; SAP Canada