“Kovalska” industrial and construction group: 2 times loss reduction because of using incorrect norms
|scale||5,000 employees||kpi||increase efficiency|
|Product||Expenses and controlling||Project time||1 year|
|year of briefcase||2013||geography||Ukraine|
|Industry||Development, engineering and construction||customer||IBG "Kovalska"|
Industrial-construction group "Kovalska" is one of the leaders of the construction industry in Ukraine. The group unites several large enterprises in different segments of the construction industry that provide a full cycle of work from the extraction of raw materials and the production of building materials to the construction of residential social and commercial facilities. The group includes 7 plants thar manufacture building materials. The total number of employees exceeds 5 thousand people.
The production of concrete is based on the use of component consumption rates. At the production facilities of the Kovalska Group used over 1,500 rates.
In 2012, due to late delivery of paper documents with the rates data to one of the group's enterprises, production used incorrect rates. According to the enterprise economists, in 2012 the company losses due to this were up to 800 thousands UAH. In addition to this, the amount of compensations for low-quality products for the same period were 250 thousands UAH.
After analyzing statistics and assessing the risks, company management recognized that maintaining highest standards is one of the most critical tasks. In order to avoid financial and image losses in the future, management decided to exclude further production of mixtures on the basis of incorrect norms.
Early, the laboratories at each plant independently issued and adjusted the rates for each of the concrete mixing facility (CMF). Since at enterprises were used different models of CMFs, both the transmission methods and the data storage formats for them differed.
At the time of the project start, 6 production plants had 24 CMFs and 1500 rates. To operate the productions, it was necessary to enter all 1500 rates into each CMF. When making changes to the current norms, it was necessary to provide input to several CMFs. Later, with the expansion of the company, additional equipment appeared and the situation worsened. Entering and adjusting the rates largely depended on the discipline of staff working with equipment in the field.
As a result of the survey, the following problems were identified:
- a large volume of paperwork while changing to existing rates;
- multiple duplication of information at the enterprises of the group;
- discordant and unsystematic adjustment of rates by laboratory engineers in the field;
- lack of proper control over the compliance of entered and adjusted rates.
Because of this, matrices manufactured under the same rates at different plants of the group or even at different CMFs of one plant could significantly differ while maintaining the necessary characteristics. It was impossible to guarantee the high quality of the finished product if matrices manufactured at different plants or CMFs were simultaneously delivered to the object. Claims from the customers and financial losses of the company were the result of this. In addition, the image of "Kovalskaya" suffered – the management was afraid of brand credibility losing.
Management of Industrial group “Kovalska” reorganized the structure of the group. An innovation and technology center were created that now is the only structure that forms rates for all plants of the group. Only engineers of the innovation and technology center can enter and adjust rates. That approach eliminated multiple input of information by each local laboratory.
IT professionals had to optimize the electronic workflow, minimizing the paper data exchange, to implement uniform rates for all CMFs, and to automate the monitoring of rates changes, allowing to make changes only within the ranges set by ITC, and to saving the history of rates changes.
This task was solved by means of the IT-Enterprise ERP-system, deployed at the plants of the construction group.
Key project factors
All production sites belonging to “Kovalskaya” group are automated, and the enterprises integrated into a single information system with the help of an Ukrainian integrated ERP system IT-Enterprise.
As a result of new functionality implementation, “Kovalskaya” group achieved:
- uniform rates for all CMFs groups;
- the process of rates adjustment within the permitted range, set by ITC engineers, has been automated;
- the workflow of enterprises is transferred to the electronic form;
- all plants monitor compliance of actual rates.
With implementation of this project were minimized the risk of forming matrices based on incorrect rates. Next year after the implementation of the project, the enterprise did not incur losses due to the use of incorrect rates in production. Actions taken in production lead to the improvement of the of products quality. According the results of 2013, the company losses due to complaints fell from 250 thousands UAH up to 120 thousands UAH, i.е. more than twice in a single year!