Streamlined manufacturing processes, lower production costs, and an integrated financial system – these are key benefits a global automotive supplier gained from its new business management system.
Haldex AB, headquartered in Stockholm, Sweden, was looking to replace its outmoded legacy systems and overhaul inefficient manufacturing processes.
To accomplish this, the company selected Microsoft Dynamic AX, a multi-language, multi-currency enterprise resource planning (ERP) system. Following the deployment, the company has reduced inventory by 15-30 per cent, while increasing productivity by 15-20 per cent, according to Haldex group director of information systems and information technology, Donovan Dean.
He says gains stem from two factors: the new ERP system and what is known in the company as the ‘Haldex Way.’
The ‘Haldex Way’ is a recently introduced internal process built on a “pull-based” business model that organizes manufacturing around customer demand rather than forecasts.
Prior to integration, the company found its inflexible legacy infrastructure could not adequately support the ‘Haldex Way’. In addition, Haldex used different manufacturing and financial systems at its various sites worldwide, and applied inconsistent production cost standards in some areas.
Nor did the organization have a unified view of their clientele. “We sometimes had to pull information from two or three different places to get a look at our customer base,” Dean says.
To resolve these issues, Haldex chose Avanade Inc., a global IT consultancy based in Seattle to integrate the Microsoft application.
Other vendors – including SAP, Oracle and QAD – were considered during the selection process, says Michael Merfeld, solutions director for Microsoft Dynamics at Avanade. “It came down to our focus and the capabilities we had to offer and how those offerings directly supported the Haldex Way.”
In particular, says Merfeld, the malleability that Microsoft Dynamics AX brought to the table was crucial for success. “Fundamental to their decision was the platform’s flexibility.”
Haldex had deployed Oracle at one of its sites before, says Dean, but found it “expensive and required a bigger bang implementation.”
“We felt confident we could manage Dynamics AX and ultimately be responsible for it internally rather than rely on partners for the long term,” he says.
In addition, some areas of the business presented unique requirements and the chosen application would have to adapt to these.
At the end of the ten-month implementation that began in April 2004, core elements of the system were operational, says Merfeld. At that point, Avanade began deploying individual components of the application and retiring elements of Haldex’s legacy infrastructure.
Deployment is ongoing, and expected to be completed by 2009.
According to Merfeld, the road bumps facing Haldex during the ERP rollout were not unique to the organization. “In any large-scale initiative like this, there are always challenges.”
In particular, he says, the diversity of legacy systems, business philosophies, and approaches from different countries were contributing factors.
“Getting the line of business leaders onboard with the change and the system was one big challenge,” agrees Dean.
Other difficulties included revamping the IT department so that its expertise would be business and Axpata skills, says Dean. “The IT department has become more business oriented now, so it can provide better support to the organization.”
(Microsoft Dynamics AX was originally developed by Damgaard Data A/S as Axapta in Denmark before Damgaard was merged with Navision Software A/S in 2000. The combined company, initially NavisionDamgaard, later Navision A/S, was then ultimately acquired by the Microsoft in 2002).
For the most part, Haldex employees have adapted well to the new system, Dean says. In some cases, they’ve even discovered additional functionality and have adjusted the business and workflow to suit those new features.
“Other sites are still struggling with the realization that they have to take ownership. It’s not an IT system, it’s a business system.”
According to a Canadian analyst, integrating a business management tool such as Dynamics AX can help to streamline the manufacturing process.
The process runs more smoothly when the front and back office components are well aligned, says Michael Hyjek, research director for customer segments at IDC Canada Ltd. in Toronto. “The company is able to move quickly from order to cash.”
A real-time snapshot of a company’s supply chain makes for easier decision-making, Hyjek adds.