Similar to most machine-building enterprises, the Lviv Locomotive Repair Plant aimed to increase production throughput while ensuring a certain level of repair work profitability. In addition, the project team faced the task of improving the plant division’s manageability that required an integrated system covering all key departments and services.
The enterprise management needed a system of production and operations control to leave the plant's after-the-fact bookkeeping practice in the past.
- Double the locomotive repair plant’s throughput by the end of 2012
- Reduce the repair cycle time from 45 to 25 days
In order to compete with other transport engineering enterprises, the management of Lviv Locomotive Repair Plant searched for tools allowing them to control production resources more efficiently and complete repair jobs in full and timely manner.
Having strategically refused to cooperate with Russian suppliers, the plant was able to refocus on joint developments with such global engineering giants as Bombardier, Alstom and Siemens. The plant's products are highly demanded by most large industrial enterprises in Ukraine and worldwide.
A crucial part of the plant’s modernization program was the introduction of an integrated ERP system by IT-Enterprise. The system was supposed to improve managerial decision quality and educate top management on the plant's operation details. The project particularly focused on the organization of production planning and accounting on the shop floor.
Since the plant does repair for Ukrainian Railways that controls the vast majority of the railroad transportation in Ukraine, it is expected to provide a repair workload forecast before the plant's employees can assess the technical condition of electric locomotives. If the actual technical condition is drastically different from the forecast, the plant has to draw up additional contracts. Therefore, the accuracy of the repair work forecast is essential for the plant.
Planning repair of such high-tech equipment means processing a significant amount of information. As a result, working with the information took almost as much time as the repair itself. The management set the task for the project team to automate information processing as much as possible and radically reduce preparation time for the electric locomotive repair.
Key project factors
- 15-20% faster critical repair cycle
- 30% less leftover inventory
- 50% fewer inspection claims
- Double the production capacity without purchasing new machines
- Up to 12 million UAH saved due to integrated ERP system
The ERP system project became a catalyst for changing business processes regarding interactions between the plant’s divisions. The implementation optimized enterprise management and created prerequisites for real-time management in the future.
The chairman of the enterprise’s management board is certain that further development is essential:
"In this industry, one cannot say they have done everything. Modern technologies allow continuous improvement."
Having implemented the ERP system by IT-Enterprise, the plant has doubled production capacity without purchasing new machines or hiring more staff. The repair cycle is now 15-20% faster, which has allowed the enterprise to release 11.2 million UAH of working capital.
A paramount achievement of the state enterprise is the development of fully transparent business processes. Automation has ruled out any possible accounting manipulations and theft from the warehouse (online control of material flows on the shop floor using electronic document management has made theft impossible). Due to careful planning, there is now 30% less leftover inventory at the plant, while the savings amount to about 800,000 UAH.
Previously the enterprise kept records of a yearly forecast number of electric locomotives under repair using the master production schedule. Materials and parts were purchased based on the MPS, so the error margin was very high. As of now, automation provides maximum forecasting accuracy at the plant.
Among other positive changes brought by the ERP system, the following ones are worth mentioning:
- Transition from manual control to a new fully formalized scheduling system based on the project network diagram in repair & assembly production.
- Transition from emergency repair (fire-fighting mode) to planning based on statistics of part and assembly turnover in repair objects.
- Breaking down actual material and labor costs for each object’s repair (electric locomotive, linear products) with the methods of identified cost accounting.
- Full transformation of contractual procedures dealing with procurement, receipt and issuance of materials as well as the plant's scope of supply.