Kao Corporation

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Kao Corporation C a s e S t u d y S A P E R P S o l u t i o n Kao Corporation Kao Corporation is known for its state-of-the-art information systems and its progressive approach has been covered by numerous IT journals and scientific papers. Particularly note worthy is Kao’s utilization of the SAP ERP package to standardize all the systems for its global group companies. Kao’s group companies in Japan are no exception. Kao Corporation in Japan had been operating on an in-house system for nearly 40 years. Nevertheless, Kao, striving to realize “Globally Integrated Management,” embarked on the redevelopment of its domestic systems with a project named “Blue Wolf*” *The name “Blue Wolf” derives from the Chinese characters signifying “beacon” (written “smoke of the wolf”), since beacons, in olden times, were used as means of transmitting information over long distances, faster than by using a man or a horse. Challenges • Reinforcement of enterprise management through the visualization of global management information • Swift and low-cost responses to rapid changes in the business environment and M&As • Gaining negotiation capabilities that would enable Kao to compete with the major European and U.S. retailers • Preparation for IFRS-compliance Solutions • Standardization of business processes and performance indicators worldwide • Development of a system that would enable the gathering of high-precision business data in real-time • Supporting swift decision-making through centralized management of data from across the world • Implementation of KPIs that would enable speedy and ongoing business improvements • Facilitating the implementation and expansion of best practices to / among groups and non-group companies Success factors • Project driven by leadership; Shared a common goal that includes all the operational divisions • Speedy and major personnel assignments required for project promotion • Establishing appropriate meeting structures, and execution of quality / progress management through frequent communications C a s Kao Corporation e S t u d y S A P E R Pursuit of best practices through the utilization of SAP ERP P S o l u t i o A decade spent on integrating all the systems of global group companies n The new integrated system developed on the basis of of implementing the package. “This was not merely replacing separation of core and non-core areas the former system area with the SAP ERP but using that as the basis and trying to devise how to swiftly incorporate best International competition in the manufacturing industry practices. The Company already had a system with which we has intensified over the years and has become increasing had become familiar over the past 40 years. Therefore, by borderless in every aspect. To boost Kao’s competitive edge on changing the non-core area instead of the whole system, we the international stage, a “visualization” of management needed to fit the different pegs into different holes.” information was required that would enable Kao to measure ABeam was the chosen implementation partner for Kao the group companies worldwide on a common scale. Corporation. Information has as much value for Kao as its products. Therefore, a system that accurately processes such data on a The project to integrate the systems of the 22 Asian daily basis would require the flexibility, versatility and business locations commenced a decade ago. expandability to enable it to swiftly and economically respond to drastic changes in the business environment and M&As. In fact, Kao Corporation and ABeam had already With these requirements in mind, the main feature of the commenced a joint project almost ten years ago, that would grand design of the new system, as envisioned by Kao, was the become the cornerstone of the current solution in Asia. separation of the system operation based on core and non-core In July 1997, the distribution model in Asia changed areas. The former comprised the planning systems, including drastically as a result of the Asian monetary crisis, which procurement planning, production planning, inventory began in Thailand. To keep pace with such seismic market planning, and sales planning, which had been developed from changes, Kao Corporation in Thailand boldly moved to Kao’s unique know-how accumulated over the years. The core implement the SAP ERP package, which would enable swift areas would continue to utilize the existing system, while the system development, and was rewarded generously for this non-core areas such as purchase management, production move. Encouraged by this success, in 2002 Kao launched management, logistics management, and sales management, the “Asian Business Synchronization” (ABS) project to which managed and analyzed performance data, and financial promote business improvements and standardize all the accounting / controlling, would be redeveloped using the SAP systems of 22 business locations Asia-wide, including Hong ERP package. Kong, Taiwan, Thailand, Singapore, and Shanghai. At the Nobunori Oji, Corporate Associate Officer and Vice time, ABeam was also chosen by Kao Corporation as the President of Global Information Systems, recalls the challenge implementation partner for the ABS project. History of Kao’s information technology projects, including the“ Blue Wolf ” 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Asia“ ABS” Project Promoting the standardization of business processes and The standard system was implemented in information systems of business locations Asia-wide, including turn at the Kanebo Cosmetics company in Thailand, Hong Kong, Singapore and Shanghai. Thailand, China and Taiwan. (October 2000 - Go-live date of the ABS system: End of February 2005 February 2005) (October 2000 - February 2005) Europe“ EPOCHS” Project The standard system was implemented in turn in Germany, Spain and France. (May 2005 - January 2006) U.S“. GAINS” Project The standard system Mexico“ MAYAS” Project was implemented in Full-operation of turn in the U.S. and new system Mexico. (September (April 2009) 2006 - March 2007) “ ” ★ Phase I of the Blue Wolf Project The standard system is implemented in New accounting (Japan: Integration of all the Japan. system becomes fully information systems) The system is redeveloped by utilizing operational (April Kao Japan’s own innovative system. 2010) (October 2007 - April 2009) Phase II of the“ Blue Wolf ” Project The accounting systems of the 24 ★ (Integration of the accounting systems of the 24 group domestic group companies are integrated companies and the systems of Kanebo Cosmetics, Inc.) in preparation for compliance with IFRS. Systems are also redeveloped in the accounting, purchasing and trade divisions of Kanebo Cosmetics, Inc. (June 2009 - April 2010) Based on Diagram 2 on page 36 of“ Special Report: The vision of‘ Japanese Information Digitalization’ in pursuit of the‘ Blue Wolf,” (Nikkei Computer, November 25, 2009), and partially edited by ABeam Consulting, Ltd. C a s e S t u d y S A P E R P S o l u t Nobunori Oji Masayuki Abe Hiroyuki Kowase i o Corporate Associate Vice President Vice President n Officer Information System Information Systems Division Vice President of Global Strategic Planning Global Business Information Systems Kao Corporation Synchronization Group and Kao Corporation Global Business Development Kao Corporation The SAP modules implemented under this project included was completed in a record time of just eight months. those for financial accounting, controlling, sales management, Furthermore, in the U.S. and Mexico, the project, with and inventory management. Approximately 1,300 business experience gained from functional enhancements in Europe, items including business processes, codes, rules and KPIs were was completed in a matter of five months. These global standardized. The Industry Framework®, an industry-classified projects are said to have contributed to an enhanced template developed by ABeam, played an integral part in this management level and improved performance. wide-ranging and complex process. This is one of a number of industry-classified templates that has been remodeled based on Targeting the crucial climax of “Global One” methodology used in previous projects and aggregated the Kick starting the “Blue Wolf” Project high-quality business processes of consumer-goods manufacturers. The “Blue Wolf ” was initiated on the basis of these “This came in extremely handy when deciding on the scope successes, with the standard system implemented on non-core of business processes, and became our major ammunition for areas in Japan based on results achieved in Asia and Europe. business process standardization,” recalls Hiroyuki Kowase, The project was divided into Phase I (from October 2007 to Vice President, Information Systems Division, Global Business April 2009) and Phase II (June 2009 to April 2010). During Synchronization Group and Global Business Development, Phase I, nearly 140 systems and subsystems such as those at who was then a central figure in the Project Management the headquarters and the eight domestic plant systems, were Office (PMO). The use of the same template throughout Asia standardized using the SAP ERP, and Kao succeeded in enabled responses to business processes that varied by country realizing visualization through the centralized management of and users speaking different languages. Business improvements inventory information and accounting journals, and real-time also proceeded at an accelerated pace, as the efforts made coordination. During Phase II, the accounting systems
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