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Project Goals

Interpipe is an international vertically integrated company, a manufacturer of pipes and railway wheels. The company is one of the ten largest pipe producers in the world. The sales of pipe and wheel products in 2015 amounted to 600 thousand tons.

Interpipe is the third largest manufacturer of solid-rolled railway wheels in the world. Company products are shipped to 80 countries through a network of sales offices located in the key markets of the CIS, the Middle East, North America and Europe.

The vertically integrated structure of the Interpipe holding is a usual structure for the financial and industrial group. Distributed throughout Ukraine, the factories are collecting scrap metal. This scrap gets to the steel processing plant. Located in Dnepropetrovsk Interpipe steelmaking plant is the most advanced in Europe. Interpipe Steel feedstock serves as a scrap, the production of the plant is a pipe billet that goes to the production of hot rolled steel pipes for other plants of the Interpipe holding company, and is also used for the production of welded pipes. In addition, this procurement is sold to other enterprises that can use it in their production.

Project Description

The implementation of the management system at Interpipe factories was carried out sequentially. First, the ERP-system ran on one of the enterprises. After the successful completion of the project the solution was scaled to other holding plants. At that time, each of the production enterprises independently decided on the implementation of automation systems. This led to the fact that the holding company Interpipe had different business processes, despite the fact that a unified ERP-system IT-Enterprise was implemented at all plants.

Holding management noted a poor standards of financial and economic data management, resulted in the need for centralization of management functions and the creation of unified processes. Data collection and processing took a long time because data collection and bringing the unified view required a significant amount of time since business processes were different at the factories of the holding and had different report formats. As a consequence, the adoption of important business decisions on the management of the company was postponed for a considerable period of time.

To eliminate these shortcomings, the company management has created a project of single corporate financial management.

Background of the project

IT-Enterprise consultants have been automating the production facilities of the holding company Interpipe for over ten years. Each plant of the enterprise and even separate departments had their own vision of the business management processes, as well as the goals of these business processes. As a result, at the project launch every business asset of the holding had a unique understanding of how the company should organize processes, and what are the goals of these business processes. Despite the fact that the united IT infrastructure was formed in the holding, and the overwhelming majority of the holding's enterprises were automated with the help of one ERP-system IT-Enterprise and united by unified information flows, the enterprise needed a single information space for effective centralized management. A single information space that operates with one normative reference information, single data sets for analysis emerged as a result of the implementation of this project.

Due to the lack of a single information space, Interpipe holding experienced difficulties with the consolidation and analysis of financial and economic information. At the beginning of the single treasury project, Interpipe was a poorly managed, very large (over 12,000 employees) company that was automated at the level of individual business assets, but lacked the necessary management centralization.

As a result, there was an understanding of the need for change. It was decided to analyze the business processes of the plants and choose the best implementation in order to replicate it to all holding assets. To implement this phase of the project, the best specialists from all the holding plants together with IT-Enterprise consultants, developed the single optimal business processes. These business processes were agreed upon and used as a service at the holding level.

In parallel with the unification of business processes at the holding, the organizational structure was optimized. The need to change the organizational structure of enterprises is explained by the fact that after centralization of management, there is no need to perform certain functions on the ground. As a result, increased the efficiency of data acquisition and transparency of management.

In the course of the project "Financial Management optimization" were identified six key areas:

• Corporate order register - this is the management of the products sales from the acceptance of the order to its transfer to production, as well as the logistics chain of delivery of products;
• Contractual accounting - creation of a single database of contracts for all companies, regardless of legal entities, taking into account all their requisites;
• Management of accounts receivable - becomes necessary after the introduction of a united order register; with its help, the company manages the debts of its customers and plans to receive cash;
• Management of accounts payable;
• Uniform accounting;
• Corporate treasury - when the business processes for managing receivables and payables are already centralized, you can centralize the treasury by making a so-called "payment factory".

Thanks to this solution structure, it covered all company business lines, which contain the financial and economic indicators necessary to manage the company's finances.

Implementation began with the creation of a united centralized basis for business processes - MasterData. During years of automation systems work plants gathered a huge amount of normative and reference information, which were not synchronized with the data of other holding companies.

The corporate register of orders is a single classifier of finished products, a register of conditions for the supply of products, as well as a directory of logistics orders. There was a single corporate classifier, which describes the finished products of all plants (pipes, wheels, pipe billets, etc.). All these data are contained in one classifier. And all plants work with the register of orders. The data of this register фку linked with production planning data and logistics planning data.

During the next project phase, contractual accounting was centralized. More than 10 enterprises of the Interpipe holding company work on the IT-Enterprise platform, and each of them had its own directory of counterparties. These data were standardized, and a single database was created. To do this, duplicate data were identified, a table of code translations was compiled, and enterprise data were adjusted. In the holding there were formed single directories of counterparties, types of contracts, as well as the status of contracts. After making adjustments for the base of 150 thousands of counterparts, the forecasted number of duplicates was not more than a hundred.

For the effective management of accounts payable and receivable, there were formed single directories of delivery terms of goods and materials, terms of payment by suppliers, a directory of conditions for the transfer of ownership rights, directories of regions, segments and conditions for settlements with customers.

These guides were supplemented with data that are required from financial services. Therefore, the corporate treasury developed a directory of PL items (revenue and expenditure budget) and CF (cash flow budget). Then the structure of financial responsibility centers was developed, as well as the directories of banks and settlement accounts.

Despite the implementation difficulties, the holding plants switched to single directories, and they did it quite quickly. IT-Enterprise specialists have developed mechanisms for replicating data. Now the data is either immediately entered into the central Interpipe database and then replicated to other objects, or plants input information to their own databases, then this information transferred to the employees of the holding company for the verification, and then data is entered into the central database and replicated to the other plants of the holding.

To implement a unified accounting within the holding, a single chart of accounts and a single directory of standard business transactions were formed.

Results

As a result of the single treasury project, financial departments were liquidated at Interpipe's enterprises and a single treasury was created. Payments are made from the central management company. The Treasury staff works in a centralized system, but at the same time performs payments on behalf of the individual assets of the holding company, and all the necessary data for the work is already entered into the system and is available to employees.

The needs of local accounting on each of Interpipe's plant are completely satisfied. The centralization of the treasury allowed to avoid situation when the plants or other assets of the holding uncontrollably dispose of financial resources. Now all payments are made only from the center, and the information is brought to factories post-factum.

As a result of the project, Interpipe holding received unified and standardized business processes. Duplication of managerial functions was eliminated. Services were optimized. Departments which functions were delegated to the central office were reorganized. Employees of the financial departments of the plants are transferred to a single treasury, employees of planning and economic departments work in a single budget center, etc.

The quality of business processes of all plants has increased due to optimization and use of best practices. As a result of the centralization of management functions, the flexibility and transparency of the management of the entire holding was increased, and for the related business processes of enterprises, a higher level of consistency was achieved.

Delegation of a number of management functions to the central office made it possible to optimize the organizational structure of plants.

As a result of better management of the holding, financial risks were minimized.