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Case Study

 

WoongJin Group Standardizes Processes Across 16 Subsidiaries

by Dave Hannon | insiderPROFILES

April 1, 2011

Korean conglomerate WoongJin Group has grown from six businesses to 16 in recent years. As this success story reveals, the biggest contributors to managing such rapid expansion effectively were standardizing business processes and implementing a single enterprise ERP system. Get details on the company’s streamlining and mobilizing efforts, the ensuing cost savings, unexpected opportunities, and lessons learned after such a broad transformation.
 

Since 2004, Korean conglomerate WoongJin Group has more than tripled its revenues, growing from six business units to 16. How did the company effectively manage such rapid expansion? According to CIO and IT mastermind Jae-Jin Lee, standardizing business processes and implementing a single enterprise ERP system were among the biggest contributors to the company’s successful transformation.

WoongJin Group’s tale is an unequivocal success story, yet its blueprint for success is not overly complicated. In 2004, the company was operating as a group of individual businesses with independent — and sometimes conflicting — business strategies and IT systems in place. Vital business functions, including finance and payroll, were decentralized, creating costly inefficiencies and limited visibility into areas of opportunity. The WoongJin Group management team understood that to expand in the long term, it needed to create one consistent, enterprise-wide view of business data, eliminate redundancies, and build a platform for sharing best practices and resources between its various businesses.

To facilitate that information sharing and provide a framework around which to standardize its business processes, WoongJin Group — under Lee’s leadership and vision — chose to implement SAP ERP as its IT backbone. The company also implemented SAP NetWeaver Business Warehouse (SAP NetWeaver BW) as a central repository for all of its enterprise data and centralized its IT resources in a single organization that would share best practices across the individual businesses.

The resulting cost savings and process improvements have allowed the company to focus on both organic growth and acquisitions.

Streamlining — and Mobilizing — Operations with a Centralized ERP System

The data visibility gained from WoongJin Group’s SAP implementation allowed for a number of process improvements. Prior to 2004, each WoongJin Group business had its own systems for managing its sales, financials, and inventory data. Because these individual systems were not integrated, the company’s order-to-cash cycle was not as efficient as possible, and some customers were not billed as quickly as they could have been. Now, with all of the data in one repository and the sales, supply chain, and finance systems all tied together, customer billing can be executed soon after a sale is complete.

For example, Lee points to one of WoongJin Group’s business units, WoongJin Coway, which rents water purification systems to consumers and industrial customers. This subsidiary has a massive team of 15,000 field service workers who are dispatched to customer sites to perform repairs or respond to other customer requests. In the past, after making a repair, the service worker would return to the office and pass the service information on to another employee, who would then enter the data into the appropriate system. But with a centralized ERP system, field service employees can enter all of the necessary information into SAP ERP via their mobile devices. This, in turn, automatically initiates the accounts receivable process while the service workers move on to their next assignments.

Integrating the SAP ERP system with mobile devices also helps WoongJin Coway track service personnel. Lee explains that when a service worker arrives at a customer location and scans a product’s bar code, the scanning device feeds the information directly into the ERP system. This automated workflow lets the administrative staff know when the service person arrived on site and what product or device they are working on. If a worker requires certain documentation that he or she can’t access on the mobile device, the call center has the product information at its fingertips. When the service call is completed, the service worker can be dispatched to another location immediately, without having to travel back to the office.

It should be noted, though, that the benefits of the SAP ERP and mobile device integration reach well beyond service workers. Because all the company’s contracts are stored in the ERP system, both sales and supply chain personnel can access the contract data from a mobile device while visiting customers or suppliers, rather than having to make phone calls or trips to the office to review the terms.

Lee also points out that employee performance has improved since the ERP implementation because managers at the division’s more than 1,200 offices can now review the prior day’s performance numbers at the various locations. And seeing how their peers perform on a daily basis motivates managers and employees to set more challenging goals.

SAP Integration Delivers Cost Savings

The business process improvements made possible by the centralized ERP system led to a number of cost-savings opportunities for WoongJin Group. For example, a major component of the WoongJin Coway business is replacing consumers’ home water or air filters. And the success of that business relies on service workers replacing the filters at the right time. Replacing them too early increases service costs and reduces each filter’s life cycle. But replacing them too late reduces quality and possibly customer satisfaction.

By integrating bar code information from mobile devices into the ERP system, the company now knows the exact date on which an individual filter was installed, what repairs or service that filter has received, and the exact date on which it is due for replacement. The ability to replace the filters at the optimal time has reduced costs so dramatically that these savings alone have paid for the ERP implementation at WoongJin Coway.

Another business unit that has realized cost savings is the WoongJin ThinkBig tutoring business, which manages more than 10,000 independent tutors and provides them with the teaching materials needed. With so many contractors in the field, the business reached a point where it required a large administrative staff to deliver support materials and record arrival times and payment information. In fact, the business was growing so quickly that the 300-person administrative staff was slated to double to 600 people in an effort to adequately support all of the tutors.

But by deploying to the tutors in the field a mobile self-service application that ties into the SAP ERP system, the amount of administrative work required was dramatically reduced. Tutors now can access all teaching materials and record all the necessary customer information directly from their mobile devices. The company did not have to increase its administrative staff after all, and this saved the company from what could have been a large staffing expense.

Unexpected Opportunities — and Looking Ahead

WoongJin Group’s implementation efforts have resulted in more than just improvements to the company’s internal operations and cost structures. They have opened up new business opportunities in areas where the company didn’t expect them. As its SAP ERP implementation progressed, the company’s IT team developed high expertise in IT service delivery. In fact, it developed such a strong reputation for its internal consulting experience that other companies began asking WoongJin Group for its advice in these areas, leading the business to create its newest business unit, an IT delivery organization called WoongJin Holdings CIT Service.

On the horizon, the business has several expansions planned for its SAP implementation. In terms of footprint, it plans to expand its ERP reach to include its solar energy and chemicals businesses. WoongJin Group also intends to deploy some business intelligence solutions to better leverage the data in its SAP NetWeaver BW repository, with the goal of delivering higher production yield at a reduced cost for its businesses.

WoongJin Group also plans to roll out the SAP Environment, Health, and Safety Management (SAP EHS Management) solution across the group of businesses to track its carbon emission reduction efforts. The company set a goal of reducing these emissions by 50% by 2015. A carbon management strategy hinges on broad support, Lee adds. So, from the first discussions on implementing SAP EHS Management, the vision has been for a very user-friendly design that would increase user adoption and allow a broad set of users to track carbon impact.

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