Damen Shipyards anchors growth and modernization with SAP S/4HANA
Damen Shipyards Group has grown with standardization and the supply of ships to stock, which means that the delivery time is short. In order to anchor further growth, to be able to scale up and to increase efficiency, modernization is a top priority at Damen. This means that a lot of attention is paid to the digitization and harmonization of business processes and technology, including attention to the people who work with them.
One ship, ten thousand parts
Building a ship is a long-term process to ultimately make one end product. You do not immediately think of an ERP package. After all, this is often used in a production environment, where a lot of repetition takes place, always the same raw materials and many similar end products. Building a ship, on the other hand, is a complex project. No ship is the same and in one ship there are ten thousand parts that are built up in different systems and spaces. Design and engineering are the source, after which all those purchases and assemblies must be coordinated in the planning process; and that is where the ERP software can make the difference.
The company currently uses the ERP software from the Swedish IFS in many divisions. That package no longer fits the wishes and needs of the Dutch multi-company company with more than thirty operating companies in the Netherlands and abroad. An upgrade from IFS version 7.5 to improve functionality, scalability and flexibility would require a lot of customization. However, it is not the only ERP package: Exact and Trimergo are still being used on some sites. At Damen Schelde Naval Shipbuilding and at Damen Yachting they work with Baan, now Infor.
Choice for SAP S/4HANA
How did the selection process go? Why did you choose SAP? “Three important components ultimately made the difference,” says Han Coenraad, IT project manager at Damen Shipyards. “First of all, the multi-company story. When building a ship, we make use of the expertise of other shipyards, as well as teams of engineers in various locations worldwide. Partners are also involved in this. So we need an ERP system that can support activities that are spread across multiple companies. A second criterion was the Buyer supply model with which we ship logistics items to the yards, often abroad, that will eventually build the ship's hulls. And finally the open integration platform of SAP S/4HANA that enables a better connection with our new CAD PDM platform Dassault 3DExperience (Computer Aided Design - Product Data Management) and our project planning application Primavera.”
Because a migration to a new ERP system can be quite drastic, we have not opted for a big bang but a step-by-step implementation. The project responsibility lies entirely with Damen itself. Han: “In the project we use senior consultants from the market. The project is divided into functional streams, such as Record to Report (R2R), Order to Cash (O2C) and Purchase to Pay (P2P). The project teams consisted of one or two functional consultants per stream, key users and a technical team in India. The project is characterized by pragmatics with a 'don't chat, but deliver' mentality.” A template was set up in advance in SAP with the basic processes that all Damen divisions can use. The built template has now gone into production at the Yachting division, with approximately four hundred users, mainly in the Netherlands. The solution is as much as possible 'plain vanilla', so without complex customization. The aim of this was to support the integrated collaboration around shipbuilding projects, also across the divisions. Now it is being rolled out to other divisions and innovations are being added.
Getting the business involved in an IT project is often decisive for its success. Onno Wiltink, logistics consultant: “The transition to the new system and a new way of working was great. During and after the implementation, the employees are confronted with the integrality of the new system.” How has support been created for it? “We had a ratio of eight key users to two consultants. With so many key users, you already have a large part of the community in your project and the acceptance rate is also higher,” explains Han. “In retrospect, however, we were very focused on the technical solution. As a result, we have somewhat lost sight of the impact of the changes. A few months before Go Live, we tackled this under the leadership of a new change manager. This allowed us to adjust many things.”
Supply Chain Report
“We got our teeth into the details,” continues Onno, who is involved in the implementation as SAP consultant from Aiden. “However, a number of key users were less likely to hook up. As a consultant, it is sometimes difficult to show exactly how the process works, in a chain of process steps, for example the so-called 'Supply Chain Report'. Because shipbuilding is 'Engineer-to-Order', with this report you can follow the logistics chain for each ship separately: how the materials are planned, how is purchased, the stock, and then delivery to construction or transport. The way that process was set up during implementation is different from the solution with Baan that had been in use for twenty years - and to which employees were used to. As consultants, we saw the power of the report, but the key users experienced this differently. We paid extra attention during the implementation to start using the new process and report. Fortunately, we have now reached a point where this new way really helps and provides more insight into planning and progress.”
What was the first milestone in the implementation? “I mainly hear positive stories from the key users in purchasing that I deal with,” Jasper Buis answers. As a SAP Consultant from TCS, he is involved in the implementation. “Material planning was still very manual in the old solution. There was no integral solution: a lot was still happening in separate Excels and emails. And that often went wrong. Purchasing certainly sees the advantages of this, now that everything has been resolved more integrally. They also consider the SAP user interface a major step forward. For example, the Approval Flow in SAP used to be entirely on paper. In short, these are fairly standard matters that, however, entail many advantages for purchasing. The users experience it that way too.” Onno: “Choosing SAP gives you standard processes that are strongly interrelated. We have chosen to use the EWM module for a small warehouse, with RF scanning. That SAP module can become very complex, but we have managed to keep the layout really minimal. The warehouse employees can now work well with this solution. Business departments now have to learn to work together in a different way, especially the processes across different departments. As soon as the key users understand the new way of working and have passed it on to their colleagues, this speeds up. They need to experience all those details live for themselves.”
What were the main learning points during the first implementation with SAP S/4HANA? “In retrospect, we should have started with change management earlier. Then we could have included the key users and users faster and better. We could also have informed the key users better about what would be on their plate. Other learning points, I think, were that sometimes we should have been a little more strict about procedures. In short, keeping a closer eye on the planning and the deliverables,” evaluates Han. “The informal approach, without an implementation party but with a few consultants, had both advantages and disadvantages.” Jasper agrees: “The advantage was that everything went very pragmatically, but there was also a need for a little more detailed planning. The business certainly needed this. They didn't always know exactly what to expect in terms of input and deliverables.”
The data migration should also have started earlier, adds Onno: “We are talking about all materials and orders that have to be loaded into the new system. It has not been successful enough to work with migrated data in the first test phases. It took us a lot of effort to correct things, even shortly before go live and weeks after. That's what we're going to bring to the fore on the next roll out. After all, at least a third of the project consists of data migration. The next division is Damen Naval. We will ensure that they, and all other divisions, fully benefit from the insights gained.”
Damen Shipyards Group
The Damen Shipyards Group family business has a rich history. The group, headquartered in Gorinchem, focuses on shipbuilding, defense and engineering. The company owns more than fifty shipyards, repair yards and related businesses worldwide. There are also numerous partner yards that build hulls locally for Damen. It employs approximately 12,000 people who together generate a turnover of approximately two billion euros per year.
Interviewee: Han Coenraad, project manager Damen Shipyards & Onno Wiltink, consultant SAP logistics & Jasper Buis, consultant SAP purchasing
Interview: Frans van Hoesel
Text: Jon Hoofwijk, IT text writer