Mirgor, an Argentinian manufacturing company, first opened in 1983 as a producer of automobile air conditioning units and quickly grew, diversifying into the production of household appliances and cellular phones. In recent years, the company expanded its market share in Argentina to manufacturing products for worldwide brands such as SAMSUNG, LG, Nokia, and Microsoft; General Motors, Renault, Mercedes-Benz, and Toyota; and expanded its line of products, developing high-tech gadgets as infotainment for the automotive industry.
In 2012, Mirgor set out to replace its legacy ERP system to introduce analytics and replace tools within the information systems that support the lines of business. “We began to analyze all of the business processes, and then we needed to decide what would be the new set of tools for the company,” explains Daniel Cerdeira, CIO and Business Process Director at Mirgor.
For the next year, the company evaluated potential solutions and eventually elected to implement SAP solutions as the global suite. The business first utilized the basic functionality of SAP ERP, and after several technical analyses and comparisons, decided to run its new SAP ERP system on SAP HANA.
“After that, we had to decide where we should run this new architecture, and at the same time, we decided to outsource all our data centers and not have the hardware as proprietary equipment inside the company,” says Cerdeira.
Because there had previously been some communication challenges between the satellite data center and the factory plants located on Tierra del Fuego (the main island where the city of Río Grande resides), the business had to consider either physically relocating the data center to its headquarters in Buenos Aires province or moving the ERP system to the cloud.
“When we thought about having a data center devoted to our SAP systems on the island, we realized that it was not technically or economically feasible because we wouldn’t have all the human resources established on the island to attend to this kind of installation,” says Cerdeira.
In the end, the business opted to run the SAP system on SAP HANA Enterprise Cloud, which now supports Mirgor’s entire business operations. “We are supporting the movement of the raw materials in our warehouses to their production lines and the production of the final goods as well as the movement of those final goods to the clients or warehouses that work with our representative brands,” says Cerdeira. “The idea is to sustain the entirety of operations running on SAP ERP: all the commercial cycles, all the technical specifications of the raw materials and final goods, and all the back-office operations.”
In addition to SAP ERP and SAP HANA Enterprise Cloud, Mirgor also implemented SAP SuccessFactors solutions for all aspects related to its human resources as well as a non-SAP foreign exchange suite to manage all the imports and exports that run or are related to SAP ERP.
Production Continues Throughout Implementation
The evaluation phase was completed in late 2013, and Mirgor settled on its decision to run SAP ERP during the first quarter of 2014. Implementation began in August 2014 and after developing the new system and all the processes, Mirgor went live with SAP HANA Enterprise Cloud.
Erasing the old way of doing things and thinking in a new way is a challenge for this kind of project. Fortunately, SAP ERP running on SAP HANA gives the possibility to see the real results of the new way of doing things very quickly.
Cerdeira explains that the company took just over three months to prepare its existing legacy systems for the move to the cloud. “We had to prepare not only the integration of the information in the system, but the operation itself,” he says. “You have to coordinate the right moment to move the systems with the production processes of the different plants.”
Mirgor produces a variety of goods in half a dozen plants in the south of Argentina and was able to cutover to the new system on the same day for all the factories. Because of this, coordination was critical as well as a challenge — it was important to avoid any disruption in the production process. “We had to shut down the legacy system and simultaneously start the new system without any kind of stop in operations,” he explains.
Production was sustained in all factories with practically no disturbance. “It was not easy,” Cerdeira recalls. “Today, we are in the middle of the post-implementation process, trying to sustain all the operations. We have some challenges that are persisting in the coordination of the systems and the operations, but the company didn’t stop because of the change of the systems.”
The project remained largely on target in terms of timeline and was only delayed by two to three weeks while the implementation team ensured all the testing and data integration was complete. The implementation was managed with the help of several consulting companies, both from within SAP as well as from private partners, and each was devoted to a very specialized area of the project — from business processes to change management.
“We have a company helping with the SAP SuccessFactors solutions because we have installed SAP ERP Human Capital Management (SAP ERP HCM) and SAP SuccessFactors to sustain all the human resources processes,” Cerdeira adds. Prior to SAP SuccessFactors, Mirgor did not have any system to sustain all the normal processes of its human resources. “All those processes were sustained by hand,” he says. “We have now implemented all the functionalities of SAP ERP HCM. For us, SAP SuccessFactors works as an enabler of the rest of the project.”
Change management was a critical piece as well in terms of coordinating training and communicating the changes to Mirgor employees. “SAP is a very sophisticated, very good set of tools,” Cerdeira says. “Erasing the old way of doing things and thinking in a new way is a challenge for this kind of project. Fortunately, SAP ERP running on SAP HANA gives the possibility to see the real results of the new way of doing things very quickly. This is our most important challenge: trying to get employees accustomed to think in a completely new way.”
The Road to Realizing Benefits
It has only been a few months since going live with SAP HANA Enterprise Cloud, therefore, Cerdeira feels that the company cannot currently measure the range of benefits that it expects. “Today, we are still trying to get used to the new systems with the new processes,” he says.
While there are around 300 different users now in the SAP system, this project has touched the entire Mirgor population of 2,500 employees. “We know that we have to spend the next six months to one year getting used to the new system and the new functionalities with the idea that we will eventually have all the operations tracked by the new system,” Cerdeira says. “We are not yet touching the real benefits of this kind of change. We are working on this and demanding the rest of the organization to be patient and believe that we will see benefits in the next six to eight months.”
The most important benefit Cerdeira anticipates is improved communication, not only internally, but also between its clients and suppliers. For example, this means the company will be able to receive a piece of information that can be traced across all the operations, from the arrival of the raw materials to the delivery of the final goods. “This kind of information was completely unknown with the legacy system,” he says. While some information exists today in terms of production volumes and quality settings, with the new system, Mirgor employees will be able to track in real time the serial number of each product from production to delivery to the client. This real-time tracking will also open the door for employees to run analysis on the information as well, which will lead to various benefits in quality assurance and overall production.
Another key benefit the company anticipates in the coming months is in the real-time access to information with SAP HANA. Production employees will have the ability to track the final production of goods in real time. “This new information at employees’ fingertips will give us a lot of advantages that we didn’t have in the past,” says Cerdeira.
Mirgor is currently working to set up and coordinate the expectations for the benefits, establishing power users, and embarking on several initiatives, from product lifecycle management and materials administration to plant maintenance, finance operations, automation of the planning process, and consolidation of processes.
“For us, it’s very important how we manage each new product in the line,” Cerdeira says. “Time to market is very important. With cellular phones, a new model appears every two or three months. We are working on trying to expand the information and the capabilities of the system devoted to this kind of process.”