| [Editor's Note]: As the manufacture industry
steps into the customer economy era, quality, cost, delivery, and
service (QCDS) as a whole becomes the core advantage painstakingly
sought by customers and partners. In the meantime, QCDS contains
conflicts that are almost too complex to be coordinated in the industry.
The case of Tianjin Toyo Ink Co., Ltd. shows that ERP is perhaps
the best cure to create a balanced QCDS and maintain the sustainable
swift development in the printing industry. According to the record
in History of China Printing, water-based ink was applied in the
ancient Chinese printing industry, while oil-based ink, or oil ink,
was applied in the contemporary printing industry. In 1958 when
the First National Oil-based Ink Conference was held in Tianjin,
fifteen enterprises were present. At that time, the annual turnover
of oil-based ink in the country was 10,000 tons. In 1995, there
were over 100 oil-based ink manufacturers nation-wide. In particular,
over 20 of them were of a relatively large scale. The annual turnover
of oil-based ink reached 100,000 tons. In 1993, Tianjin Ink Co.,
Ltd. and Toyo ink MFG. Co., Ltd. funded a joint venture, Tianjin
Toyo Ink Co., Ltd., which became a large-scale Chinese oil-based
ink manufacturer. On September 10, 2003, Tianjin Toyo Ink Co., Ltd.
announced on the tenth anniversary news conference that four new
factories were constructed since the founding of the company over
a decade ago and now the production scale ranked No. 1 in the country.
Kunio Sakuma, President and CEO of Toyo Ink said that Tianjin Toyo
Ink was undergoing drastic adjustment of direction. As a result,
the business directions of the company would help improve the public
awareness of environment protection, security, and hygiene, and
assist Tianjin in striving to become the world No. 1 oil-based production
base. What Kunio Sakuma termed "adjustment of direction" referred
in fact to the coalesce with international practice. With the development
of the oil-based ink industry in the country, the color standards
of domestic oil-based inks gradually went towards the well-recognized
PANTONE Standards of the USA world-wide. In 1997, the "Sky Lion"
oil-based ink of Tianjin Toyo Ink Co., Ltd. was granted a license
by the Pantone Standards. To date, the "Sky Lion" oil-based ink
has been sold to over 51 countries and regions and become the leader
of the oil-based ink manufacture industry of the country. As Tianjin
Toyo Ink Co., Ltd. geared up efforts to merge completely into international
practice and operation, the sales volume increased sharply. The
external competition turned white-hot, while the internal production
environment was getting more complex. The senior management of the
company saw the necessity of resource consolidation and management
model adjustment.
Focusing on QCDS and Implementing Precision Management
Before the implementation of ERP, Tianjin Toyo Ink Co., Ltd. had
established eighteen operating branches in Beijing, Shanghai, Guangzhou,
Fuzhou, Wuhan, Qingdao, and other provinces where the printing industry
was relatively developed. The sales of oil-based ink features strong
seasonal change, diverse product portfolio, complex and changeable
POs, large PO lot fluctuation, full-process tracking required for
POs, and high requirements on after-sale services. Within the company,
Tianjin Toyo Ink Co., Ltd. adopts a layered management model. A
Sino-Japan joint venture, Tianjin Toyo Ink is structured with a
directorate on the top, General Manager under the directorate who
is responsible for the directorate, and functional departments under
the GM. The company applies level-by-level upward accountability.
In particular, the management office of the production department
functions originally to formulate the production plan, coordinate
the production, and issue the procurement plan according to the
sales POs by the sales department and the production forecast of
a certain category of products by the management office of the production
department. The production department is a core department of Tianjin
Toyo Ink Co., Ltd., with such related departments as sales, procurement,
quality inspection, the local Xiqing factory, and two non-local
factories in Jinhai and Dagang. The production mode fuses the characteristics
of both the discrete industry and the process industry. As the largest
oil-based ink manufacturer in the country, Tianjin Toyo Ink Co.,
Ltd. values the operation theory of customer satisfaction (CS),
employee satisfaction (ES), and society satisfaction (SS), and adheres
to the quality strategy of offering satisfaction to customers through
quality, cost, delivery, and service (QCDS), and keeping non-stop
pursuit of perfection. The company strives to serve the domestic
and international printing industries. The goal of the company is
to build itself into a world-class oil-based ink manufacturer. The
consumption volume of oil-based ink in China lags far behind that
of the international level. In the future five years, printing oil-based
ink is predicted to maintain a healthy development trend at a high
speed. After a decade of development, Tianjin Toyo Ink Co., Ltd.
has grown to a new stage. The conventional management model could
satisfy the market requirements on QCDS any more. To cope with the
situation, the company formulated a new strategic development plan
to consolidate organization resources, and form a production, supply,
and sales integrated management model through reforms of the company
organization and business process management. In addition, the company
intended to further improve and optimize the process, create a flat
management model, and achieve the goals of effective control and
precision management. Precision management cannot go beyond information
applications. Tianjin Toyo Ink Co., Ltd was aware that only the
incorporation of information-based management and operation into
the rich corporate culture, and the application of the information
management system as carrier and tool to the management and optimization
of the employees can the operation and management be under full
control. Furthermore, with information applications coming into
picture, the company can implement the effective control of time
cost, management cost, and process control cost, achieve the goals
of reduced procurement cost, inventory cost, HR cost, and business
operation management cost, and eventually materialize the product
value strength and represent the common interest of the enterprise
and all operation and management participants. In that regard, Tianjin
Toyo Ink Co., Ltd. selected a domestic management software application
to launch full-scale information-based enterprise management in
as early as 2000. However, the company then had a weak implementation
capability, and the implementation personnel had a less satisfactory
quality. They could not even install the product. As a result, the
requirement of efficient work posed by the company could not be
met. With renewed survey and inspection, Tianjin Toyo Ink Co., Ltd.
built up a strategic cooperation partnership with Kingdee (Tianjin)
and formulated an information-based overall development strategy.
The company planned to implement the full-scale information applications
in the production planning, workshop production, logistics management,
and distribution system in three years.
ERP Implementation and QCDS Recipe of Toyo Ink
The difficulty of the Tianjin Toyo project lied in the satisfaction
of the confidentiality requirement and the integrated management
of industrial and commercial industries. To implement the integrated
management of capital & logistics and sales & production,
Tianjin Toyo Ink Co., Ltd. created a "scientific recipe" of the
ERP implementation by centering on QCDS. The entire implementation
was divided into five steps, project initiation, project research,
project design, project test, and system cutover. The GM of Tianjin
Toyo Ink Co., Ltd. took the role of Project Team Leader, whereas
Ning Weiming, Manager of the management office of the production
department, worked as project manager. Other core members of the
project team, who were designated by the Project Team Leader, were
selected from the key employees of the financial department, production
department, material department, quality inspection department,
and sales department. Their responsibility was to participate actively
in collecting department requirements and project implementation
discussion, and cooperating PM to complete the tasks specified.
Tianjin Toyo Ink Co., Ltd. was comparatively large in scale and
involved in a wide business scope. In addition, the company adopted
a production mode that combined discrete production and process
production. Due to the characteristics afore-mentioned, the implementation
team formed by both parties followed the principle of "Step-by-step
Implementation, and Gradual Progress" and completed the implementation
in four phases. Phase 1: Financial implementation, in which the
standardized management of the financial system of Tianjin Toyo
Ink Co., Ltd. was to be implemented. Phase 2: Logistics and production
plan implementation, in which the close-loop of logistics was to
be completed, and the plan and the work of workshop management were
to be implemented. Phase 3: Sales implementation, in which the unified
management of 18 branches of the company in the country was to be
implemented. Phase 4: Follow-up, in which the further expansion
and follow-up improvement in the application scope were to be implemented,
for example, the initiation of the equipment management of the current
"Sunshine Engineering". During the implementation, the following
aspects of the Toyo project are typical of the oil-based ink industry.
The first aspect was material code setting. As a chemical product
manufacturer, Tianjin Toyo Ink Co., Ltd. had a wide array of materials.
During the code setting of the materials, it needed to give full
considerations of the special processes of the production plan,
the characteristics of the workshops, the cost accounting requirements,
and the industry characteristics. The implementation personnel properly
addressed the problems of one code for multiple materials and one
material with multiple codes. As a result, the barriers on the way
towards healthy and secure inventory management and min. & max.
inventory management were all removed. The second aspect was the
improvement of the production plan and workshop management efficiency.
Prior to the ERP implementation, the production management of Tianjin
Toyo Ink Co., Ltd. was implemented by the production planning department
and the production management department. The production planning
department was responsible for formulating the monthly work plan,
while the production management department was responsible for arranging
the weekly production and summary of the factories. After the ERP
implementation, the two departments were merged. The management
office of the production department after the merge directly utilized
the K/3 system to formulate the monthly plan according to the sales
POs and production forecast, and at the same time, arranges the
production plans for each lot on each day for the factories. Consequently,
the speed of responding to the market in the production plan was
raised. The production department can adjust in time the production
plans of the factories according to the market change. The third
aspect was the strengthening of the procurement plan management.
The management office of the production department after the merge
strengthened the implementation of the material procurement plan,
and adjusted the procurement plan in time according to the market
change. The conflict between high inventory of materials and shortage
of materials was properly solved. The fourth aspect was that the
original material picking was changed into material delivery. Based
on the management of the production plans of the factories, the
management of the Work In Process (WIP) in the workshops was strengthened.
The inventory department would deliver the materials to the production
workshops according to the production plan. The new practice changed
the randomness of material picking by the production workshops,
and reduced the product cost.The implementation of the K/3 system
helped to achieve precision control of the production management.
The previous two planning departments were consolidated into one
planning department. The management office of the production department
was able to implement more efficient production plan control and
production scheduling management according to the MRP calculation
result. The production scheduling and the procurement plan were
more accurate. The factories subdivided the MOs and implemented
the actual scheduling according to the issued production plan, and
were able to perform stock transfer according to the instant inventory
status. The production Picking List, Stock Transfer, and Product
Receipt Order of the factories could be handled by the Kingdee K/3
system. Meanwhile, the handling process could be tracked through
the system, and the production completion situation was under control.
In that way, the full process of production plan, MO, staging and
picking, operation planning and dispatching, production inspection
report, and product receipt was under precision monitoring and precision
control. The business management and production efficiency were
improved, the WIPs in the workshops were reduced, loss and cost
were lowered, and the balanced QCDS was guaranteed at the production
control link. A streamlined production process tamped a solid foundation
of the entire supply chain. The material procurement department
performed procurement according to the procurement plan issued by
the management office of the production department, and transferred
materials to the factories according to the Stock Transfer issued
by the management office of the production department. In addition,
the material procurement department assisted the factories to management
the semi-finished products, and automatically generated monthly,
quarterly, and yearly reports of the material department. The implementation
of the production plan and the logistics management system tied
a closer internal bond in the company. The production control and
the procurement response capability were both enhanced. The K/3
system opened up a supply chain information window for Tianjin Toyo
Ink Co., Ltd. The company can now make better judgment when it strikes
up cooperation with the suppliers. For example, the implementation
of the procurement POs was recorded, tracked, and controlled; the
price, discount, and quantity of the procured goods were controlled;
additional POs were implemented according to the replenishment status;
and the PO implementation differences were compared and displayed,
and the PO implementation was reflected according to the business
and analysis reports. In that way, the cost and the delivery date
were properly balanced. When cost and delivery date were balanced,
how to guarantee the quality effectively? It was exactly the role
played by the all-round quality control system of the K/3 system.
By utilizing three quality inspection business management functions,
K/3 procured goods inspection, completion inspection, and inventory
sampling inspection, quality management could perform effective
quality control together with the materials of the procurement,
inventory, and production links. For example, for the quality inspection
of the procured materials of Tianjin Toyo Ink Co., Ltd., the quality
inspection lot No. was provided through the association of the Receipt
Notice. The inventory administrator could only formulate the procurement
receipt order according to the Receipt Notice that had passed the
quality inspection. For the quality inspection of the about-to-finish
products, the quality inspection lot No. was provided according
to the quality inspection notice associated with MOs. The material
personnel of the factories could only formulate the product receipt
order for the MOs that have passed the quality inspection. The commercial
system, i.e., the management of the sales company and the 18 branches
nation-wide, was an important part to implement the all-dimensional
information management of Tianjin Toyo Ink Co., Ltd. The general
implementation objective of the sales company was to complete the
integration of supply, sales, & inventory and finance, help
create a unified and complete reservoir of master data of the subsidiary
companies, and summarize the information in time. After the implementation
of the commercial system in the sales company and the subsidiary
18 branches, the commercial system could complete sales contract
management and credit management & control, including credit
quota, collection deadline, AR analysis and alarm, and implement
price management and control, for example, the control of price
increase, price decrease, packaging fee. Most important of all,
the system automatically completed the upload of the account set
of the subsidiary companies on a daily basis, and could query the
sales data of the different organizations in the day. The smooth
implementation of the sales plan, procurement plan, and production
plan was guaranteed through the full integration of the commercial
account set and the industrial account set. The integrated business
operation could respond in real time to the customer requirements
and market changes, greatly improving the customer service performance
and forming an ideal close-loop of QCDS.
Analysis: ERP as Guarantee of QCDS
Based on the implementation of the Kingdee K/3 in Tianjin Toyo
Ink Co., Ltd., ERP reflects comprehensively the requirements of
the manufacture enterprises in implementing precision management
and performing QCDS control of the supply chain. ERP provides the
supply-demand chain logistics and capital flow information that
can be applied in planning, decision making, control, and analysis
& assessment of the full production and operation process of
the enterprise. The complete production process statistics help
the enterprise to thoroughly know about the material consumption,
quality status, and equipment use. The all-round lot tracking management
enables the enterprise to trace problems in production and material
use of each lot of products, and quickly analyze the causes of quality
problems. The full process of the production and operation of the
enterprise is effectively controlled and tracked, and the ideal
management of the enterprise logistics and capital flow information
is achieved. In particular, the industrial and the commercial systems
go hand in hand to form an all-dimensional, well-connected information
network between business bills, between the business bill and the
business master data & management information, which continues
to transfer and receive information from various sources. The all-round
information, control, and feedback system provided by ERP is the
effective guarantee of QCDS.
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