Uponor, Deloitte and Oracle: The Only Way is Uponor - Jyri Luomakoski, Dr Willem Vaessen and Andrew Spence
When a successful business expands into other geographies and industry segments it can come at a price. Juggling several balls in the air can lead to inefficiencies, particularly when numerous IT systems are involved. Jyri Luomakoski, Dr Willem Vaessen and Andrew Spence tell us how they worked together to achieve optimum IT efficiency for the Finnish-based company Uponor.
Four years ago, Uponor had become a leading international supplier of plumbing and heating systems for both the residential and commercial markets. In booming economic times, it had grown both generically and by acquisition, so that it had 30 different manufacturing and sales operations throughout the continent.
The problem was it also had almost as many individual legacy IT systems running them.
‘It was recognised that the time had come to standardise business processes across the group and to do that a single enterprise resource planning (ERP) platform was necessary,’ recalls Uponor CFO Jyri Luomakoski.
A UNITED PLATFORM FOR EXCELLENCE
This substantial enterprise was given the name ‘Unified Uponor’ or ‘U2’ for short. It coincided with the legal restructuring of the group’s corporate portfolio and ran alongside the 2006 global adoption of the Uponor brand.
‘We realised that we had a huge amount of master data and that the same product probably had 30 different numbers and names. Therefore, managing a unified business was becoming impossible. We had to build the tools to integrate the company.’
They conducted a thorough prestudy programme to establish its requirements.
‘We held a competition among ERP software suppliers as well as consultants who would help us implement the system,’ says Luomakoski. ‘After careful consideration we chose Oracle as the platform provider with Deloitte as our lead implementation partner.’
‘Uponor, like many companies, needed to gain visibility of its business and particularly its supply chain,’ says Andrew Spence, supply chain business development director at Oracle.
‘Oracle’s open and integrated capability enables companies and their partners to operate as a single organisation, providing global visibility and delivering value to customers and shareholders.’
Oracle delivers the Uponor U2 platform as a hosted on-demand service and is responsible for all hardware, software, maintenance and performance.
A BALANCING ACT
When trying to standardise a company with many facets, it is important to ensure all departments are given equal attention. Deloitte director Dr Willem Vaessen, the consultancy firm’s leader on the U2 project knows this firsthand.
‘We know from experience that it is important to have a balanced approach. There is always a danger that too much emphasis is placed on the systems aspect or too little emphasis on the people. Consultants like to talk about process design and bringing in a re-engineering approach. But it is about everything: the data and its harmonisation, the systems, the process design and the people. You have to get all those elements right.’
The first roll out of the U2 project was in Germany in 2006.
As of this May, the Oracle ERP system had embraced all the supply side, all of the European factories and in Germany, Spain and the Nordic countries the sales units had also been integrated. Work is being completed on the UK sales and distribution function together with a group of smaller sales and marketing units.
Electronic Data Interchange (EDI) and vendor-managed inventory have also been rolled out for selected customers.
‘Our sourcing is now bundled and is a lot easier’ Luomakoski explains. ‘There have definitely been cost savings in terms of purchasing and there will be more. We think that the pay-back point of this type of investment is in the range of two to three years from the completion of the roll out, which will be at the end of this year.’
As CFO, Luomakoski is now more able to ask regional controllers awkward questions on their performance.
‘The Oracle system has increased transparency into the business and our cost structures. It gives us the opportunity to compare apples with apples in a clearly defined way whereas before, performance comparisons were challenging. From here on-in, managers cannot escape with poor excuses because it is now possible to test all the data; I can benchmark and ask the more informed questions to help myself and our managers improve weaknesses earlier.’
AFTERCARE
The power of Oracle lies in driving efficiencies and savings via transparent information flows. Vaessen recalls that during celebrations after U2 went live, the Uponor steering team was asked if they felt the project was now over.
The majority said that it was certainly not and that now the company had to learn to use its new tools to boost its integrated performance and growth.
‘Once the major phase of the implementation programmes are over, one of the key issues is to ensure we get all the business benefits we need to leverage out and re-capitalise on the system, and learn how much it can help us.’
Looking back on the actual implementation, Luomakoski says with the benefit of hindsight, he would have liked to have some targeted proof-of-concepts in critical areas up and running early, so that managers could have had more than flow charts to show them what was going to be happening.
Vaessen sympathises but points out that since Uponor had little experience of a full Oracle ERP system, the need to build up understanding of the power and potential of the new integrated system required careful groundwork.
Indeed, the ‘change management’ part of the process – bringing on board everyone from managers to shop floor workers – was, reflects Luomakoski, one of the more challenging areas of the whole U2 implementation.
‘We had a 60-strong U2 project team involving some of the best intellects in the company, who all appreciated that they had a unique opportunity to change the business. The key, however, was to sell the change to the people on the factory floor, the warehouse or in order handling; to tell them that the processes and tools with which they worked were also changing.’
In this respect, if he were doing it again, Luomakoski believes that he would have allowed a greater lead time to permit people to embrace the changes; ‘feeding them small bits and pieces rather than big chunks’ he says.
Vaessen points out that change management involved round table discussions throughout Uponor’s European operations in which staff were invited to challenge the new platform – a valuable process in his view – because it enabled conflicts to be made visible, then be addressed with everyone engaged.
THE END RESULTS
Vaessen recalls that Luomakoski once told him that he understood why consultants normally talk about ‘an engagement’ with their customers and never ‘a marriage’.
‘Our job was to make ourselves dispensable and to a large extent that has happened. Uponor have done a great job.’
‘We have definitely been encouraged by the results of the U2 Oracle ERP implementation system’ says Luomakoski, ‘which has already had big value because it has been a great demonstrator of how effectively you can bring about change when you take the best brains out of the business, put them into a programme office and give them the task to work out how to do things differently but in a common way.’
‘To maintain the focus on our business case objectives, part of Deloitte’s fees were put at stake and tied to the performance against four operational supply chain KPIs. Deloitte and Uponor’s regional management teams were in the same boat with the same targets.
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