As in most enterprises of the machining industry, LLRZ set the task of increasing the production capacity while ensuring a given level of orders profitability. In addition, the project team had to increase manageability of all departments, which is achievable only when implementing a comprehensive system covering all key departments and services of the plant.
The management of the enterprise required a system of operational production control, rather than "post-mortem accounting", which operated at the plant.
- Increase of the capacity of the locomotive repair plant 2 times before the end of 2012
- Reduce actual duration of the repair cycle from 45 to 25 days
Due to the strong competition with other engineering enterprises, management of LLRZ was looking for tools that would allow more efficient production resources control and timely fulfill orders.
The strategic refusal to cooperate with Russian suppliers allowed enterprise to cross over to joint development with the world engineering leaders: Bombardier, Alstom and Siemens. The plant's products are in demand by the majority of large industrial enterprises of Ukraine and the world.
An important point of the plant modernization program was implementation of IT-Enterprise ERP-system. The system should improve the decisions quality of the enterprise management, and raise the level of awareness of senior management about the details of the enterprise operation. Special focus was on the organization of production planning and internal shop accounting.
In addition, the business model of the "Ukrzaliznytsya" repair plant supposes prediction of required repairs before examination of the technical condition of the electric locomotives. If it turns out later that the technical state of the locomotive is different from the forecast, the repair plant must sign additional contracts. Therefore, the accuracy of the forecast of maintenance work is important for the plant.
Planning the repair of high-tech equipment is associated with the processing of a significant amount of information. As a result, work with information took almost as much time as repair itself. The management required to automate the information processing and to reduce the repair preparation lead time of the electric locomotive.
Key project factors
The ERP system implementation project became a catalyst for changes in the business processes of the plant, allowed to optimize the enterprise management and created the prerequisites for real-time control in the future.
The chairman of the board of the enterprise is sure that development should not stop at this point: "In this industry we can’t say that we finished it. Modern technologies allow us to further improve. "
Implementation of the ERP system allowed the enterprise to increase production capacity by 2 times, without purchasing new machines and not increasing the staff. The plant reduced the duration of the repair cycle by 15-20%, which allowed the company to release working capital by 11.2 millions hryvnia.
An extremely important achievement of the state enterprise was the building of completely transparent business processes: automation made it impossible for fraud with reporting and theft from the warehouse (on-line monitoring of material flows in the shops using electronic document workflow made theft impossible). With careful planning, the warehouse stock balance decreased by 30%, and the savings are about 800 thousands hryvnia.
Previously, the company generated master production plans, which forecasted repair capacity for a year. These forecasts served as the base for purchases of materials and components. Inaccuracy of the forecast was very high. Now, plant maximized the forecasting accuracy.
Among positive changes that were made possible with the ERP implementation, it is worth to mention:
- Transition in repair and assembly production from manual mode control to a completely formalized system of planning and scheduling based on network repair schedules.
- Transition in production procurement from work on deficit positions (fire-fighting mode) to planning based on statistical interchangeability of the units on the repair objects.
- Generation detailed reports on actual material and labor costs for the each object repair (electric locomotive, linear products) using the methodology of cost accounting in production.
- Change of the contractual activity on purchases and issue of materials and unit sets for production.