Account of a Successful ERP Project Implementation at Ege Jeoteknik
With our sense of professionalism towards service to our customers, and along with the CANIAS ERP system, our flagship product that has proven itself with its multitude of features and quality, we are happy to continue to share in our customers' success stories.
Ege Jeoteknik is a leader in Turkey in natural stone, which it imports to several countries that include the U.S., Canada, U.K, Italy, Spain, Netherlands and France. To accelerate its business processes and to provide services with a higher degree of professionalism, Ege Jeoteknik started and is continuing a successful ERP implementation. Ege Jeoteknik General Manager Ozlem Yurdakul and Project Manager Oksan Cevik discuss with us their experiences relating to this implementation.
IAS:Ege Jeoteknik'in kuruluşundan ve hizmetlerinden bahseder misiniz?
Ozlem Yurdakul: Ege Jeoteknik's ownership was transferred over to us in 1999. Back then, the company's single business focus was on consulting services that it rendered relating to drilling. As part of that focus, we executed and completed a project for Total Petroleum at the Aliaga Petroleum Refinery in Izmir, Turkey. And currently, we are continuing work on the implementation of the Haramidere Petroleum Terminal for Total Petroleum. In 2002, due to changes taking place in our business, we decided to diversify and started the exporting of natural stone. We exported our first shipment of natural stone in September 2002. Afterwards, our primary focus moved from consulting to export operations. Currently, we export natural stone to the U.S., Italy, France, Netherlands, U.K. and Canada. We maintain our own warehouses in the U.S. and Italy. We work with about 80 producers in Turkey; we do not have production operations of our own and engage in trading only. However, we do manufacture stands for the display of natural stone, which helps our customers in their marketing and sales activities. These stands are put together from our own line of tiles, mosaics and border stones and are held in place by wooden framework. The manufacturing involving this activity takes place in a 1,000 m2 closed facility. We employ a total of 32 personnel.
IAS:Please tell us about your decision to transition to the use of an ERP system at Ege Jeoteknik. What problems were you trying to solve, and what progress have you made?
Ozlem Yurdakul: In 2005, we came to the conclusion that the order processing we were performing using Microsoft Excel and accounting software was proving to be too problematic, and we decided to search for a solution that would fit our organization. At the time, we did not know that the solution we were seeking would be an ERP system. We needed a system that would allow us to monitor our orders, relay the orders to our suppliers, and be able to generate reports. At the time, we had a staff of 10 people. While we had a small team, we were also faced with substantial business pressure from overseas to provide reporting and to accelerate the delivery of orders. So we decided to purchase a software program. The mistake we made at the time was not to assign a dedicated person to be the responsible contact point for this software in our organization.
For about a year, we tried in vain to get the program to conform to the way we do business. For everyone, it was much easier to continue to use Excel than to transition to the use of the new software. Then in January 2007, we hired an industrial engineer to help in the planning activities of our company. That's how we met Oksan Cevik. We had hired Oksan for planning of supply activities, but then realized that we needed a person to manage our project to transition our company to the use of an ERP system. So we assigned Oksan the task of running that project, which, looking at where we are now, has proven to be a very accurate decision.
We ran a product search for about two months, compared various products, tested their demo versions and finally decided on CANIAS ERP. While it was a slightly costly selection for us, we felt very comfortable with its user interface dialogues and the applications. We then started the implementation project in April.
IAS:What are some of the selection criteria that were of importance to you during your product selection? We know that there are certain vertical applications targeting your field of business. Why did you choose an ERP system instead?
Oksan Cevik: Yes, there are vertical applications in the marketplace, but there are also several companies who have been burned by those very same applications. We wanted a system where we would do our best to meet that system halfway, and the system in turn would be flexible enough to meet us halfway, resulting in a successful integration. The primary reason we decided on CANIAS ERP is that it was delivered to us accompanied with ready-made solutions. When we asked other vendors for solutions during their presentations, we received blank looks, and in fact, we felt that we were coaching them to come up with solutions. The IAS approach was very different, and provided us with several alternative solutions, which is why we decided to go with IAS. CANIAS ERP is a flexible system, and the fact that it is delivered with accompanying source code is extremely important.
Our primary expectation was to be able to adapt our complex business processes to the system. We had a diverse customer portfolio, and the products we delivered to customers varied widely. There were a multiplicity of materials definitions, the packaging had to vary per customer, and although the product was the same, it had to have a separate product code because the packaging was different. Only CANIAS ERP offered the absolute solution to this problem.
Ozlem Yurdakul: Visits we made to IAS reference customers also proved crucial. The fact that Atay Holding, a leader in our business, was using CANIAS ERP, made a significant impression on us.
IAS:How did Ege Jeoteknik move along in its ERP implementation? What customizations were performed on the system?
Ozlem Yurdakul: We feel we are somewhat different in terms of our make-up compared to other companies using CANIAS ERP. Our business processes are very distinct, and accordingly, a number of customizations have been developed that are unique to us. Purchasing and sales processes function in an atypical manner in our company, and therefore we had customizations performed. The packaging process required special attention. Development was performed that made it possible to show the corresponding sales activity for each purchase order. This provided us with the ability for traceability within the system. One of the major benefits for us has been the dramatic drop in error rates.
Oksan Cevik: We also performed a significant amount of development work within the MRP module so that purchase orders could be automatically created based on sales activities. As we are a company that primarily is involved in exporting, we deal with a large number of documents and forms that must be filled out, filed and maintained to meet regulations, such as documents transferred to shipping agencies, copies to customers, and the like. We are now able to generate these documents, and furthermore labels, through the CANIAS ERP system, which is a distinct advantage for us. So now, we have sales orders that are created, followed by the creation of the packing lists. After packing lists are created, the labels are automatically generated. This saves us a tremendous amount of time.
Prior to the use of the CANIAS ERP system, the process worked as follows: There were separate applications for entering orders, and for creating packing lists. Excel was used for manually filling in all types of forms. In fact, labels were printed manually, one at a time. The simple printing of a label required someone to be occupied for several hours.
There were too many control mechanisms required, and what one person did, eight others had to check to make sure it was done correctly. Yet we still faced errors. Now, however, once an order is created, the process flows from one step to the other, and everything happens automatically without any time wasted, with only minor checks along the way. Even label printing works in a manner integrated with the CANIAS ERP system.
Thanks to CANIAS ERP, we have been able to add value to our business processes. Now, at the time we create a purchase order, we are able to perform evaluations among our suppliers. We are able to view order profitability at the time a sales order is created, long before the goods enter our inventory and before the sale is realized.
IAS:We know that you are going through a rapid implementation process. Please tell us a little about this process.
Ozlem Yurdakul: We signed our contract with IAS in April and within one month, we were in live use. We put into place most of the business processes during that timeframe. We did not use the standard functionalities found in the system. I feel that the project management performed was very successfully. Workflows were determined with accuracy. We first formed the structure of the MRP functionality. Then we entered into the system existing orders. That was followed by data transfers. Because the workflows were so well designated, most users were able to rapidly adapt to the new system. During that transitionary phase, we pre-empted any problems through training sessions we conducted for users. Of course, the users did face some amount of difficulty, as severing ties to the legacy system created certain problems. This should be considered normal, but once they started using the system, they realized that it made life much easier for them. They saw that once they enter a sales order, they do not have to do anything else until the next step of creating packing lists. This made them embrace the ERP system with new-found energy.
The system provides several benefits for the users. A data transfer now only takes about 3 minutes. After seeing such benefits, they started sharing their ideas about the system. It is great to see the users being as eager as we are about the new system. We have transferred all legacy processing to the CANIAS ERP system, and no longer use any Excel spreadsheets. Everything is accomplished through the CANIAS ERP system. We now will work to further extend the system internally.
IAS:Although the time that has elapsed is relatively brief since you have started using your ERP system, were you able to see returns on your investment?
Ozlem Yurdakul: Putting aside the numbers for now, the primary return for us has been the new-found motivation the ERP system has sparked in all of us. It makes us and the users very happy to see everything working in a much smoother fashion. When we took a look at the recent 3 month period, we have observed a decrease in our inventory costs, as well as a higher turn-around in our inventories. Furthermore, it is an added benefit for us to be able to measure such improvements in an easy manner.
We have also been able to better organize our purchase orders, as we now specify pricing at the time we send in our orders. Each week they are able to see open orders, and we ask them to state new dates for these orders. The reports that used to take two days to prepare are now, through simple configurations in the system, generated within an hour. We may also have decreased our costs due to the use of the invoice control feature. In the past, we had to perform manual checks based on lists, and there was a high probability for making mistakes.
Now, we are able to run these checks through the CANIAS ERP system, without any development required. We have come across several invoices where we have been able to detect and correct mistakes through the use of the CANIAS ERP system, and have received reimbursements from the suppliers.
IAS:What are your comments on the state of the natural stone business?
Ozlem Yurdakul: This business field unfortunately has experienced major losses in the last 6 month period, especially in terms of exports. The fluctuations in exchange rates, as well as contractions in the domestic marketplace leading to decreased liquidity, has resulted in many smaller producers of natural stone to go out of business. Additionally, larger firms are downsizing as well. Furthermore, at the end of the year the banking instutions will start enforcing BASEL standards. I am not sure what the status of our suppliers will be after the start of that enforcement.
Italy and China are our largest competitors in the natural stone market. Italy has tremendous brand name power. And China has a great advantage due to its cheap labor. We have an opportunity to make a difference thanks to Turkish stones that are very rare around the world, such as travertine, as well as the quality of the Turkish natural stone. This is one reason why we heavily promote our travertine product line to emphasize the Turkish quality. We feel that in time, the Turkish travertine stone should carry the same brand recognition as the statement "Made in Italy" does currently. Various export associations are also working towards this goal. There are reasons that our company has become a leader in this market. We are completely customer focused. Based on our customers' requirements, we organize production in Turkey. This in turn makes both the customers and the suppliers happy. We have brought new practices to our business in terms of sales. As an example, we have designed new boxes for products. While more costly, they are both more elegant and more practical. In the end, we do have a need to differentiate ourselves.
Another change we introduced concerned the expectations we had from our suppliers that were not being met. We remedied this situation by adjusting our supply timeframes. We ask our suppliers to perform the planning of their own production and to inform us in turn. We try to emphasize to the suppliers what an essential requirement this is, that there are scheduling requirements which we are faced with that we must implement, and that they need to make certain promises to us to implement their production planning. We have just started educating them, and they are telling us that they are already experiencing the benefits. We have a lot of suppliers who have expanded from scratch. Some suppliers will only do business with us. Our company is owned by my father, who really is a "professor of stones". He provides technical assistance and support to all of our suppliers. The secret of our success really lies in nothing more than keeping both our customers and our suppliers happy. One of our suppliers, Altay Mermer in Balikesir, Turkey, examined the CANIAS ERP product, and decided to start using it.
IAS:What advice do you have for companies that are looking to deploy ERP systems?
Ozlem Yurdakul: The most important factor to consider when starting out any ERP implementation is the detailed analysis that should be performed. From the start, we built our implementation on a solid foundation. Looking back, we now understand how appropriate our decisions have been. We analyzed our business processes together with IAS consultants. While they educated us in the business processes used by IAS that are accepted worldwide, we told them about our own processes, and what we were seeking to accomplish. In the end, we were able to implement the best possible solution.
Another piece of advice I can offer is that the implementation not be attempted without a dedicated project manager. Otherwise, the project will not move along as rapidly and systematically when assigned to someone who is doing it as an add-on responsibility and on a part-time basis. In fact, working with an outsider who is not trained in the business or its processes can be beneficial. When we started working together, Oksan did not know anything about our business. Oksan knew neither about our export processes nor about our marble products. So Oksan was able to ask the question "Why?" repeatedly. Being asked the question "Why are we doing it like this?" leads to a whole new perspective. I feel that a project manager who is an industrial engineer is the best possible combination to have. Any engineer might well work out as well, but having an industrial engineer has allowed us to explicate our business processes much more freely.
Prior to our ERP product selection, we laid out our workflows on paper. We described our business processes and made a list of the expectations we had from the system. We then sat down with ERP vendors for discussions. We told them "Here are our business processes" and asked them "Can you satisfy these? If not, what counter solutions do you have for us?" And as part of that process, we analyzed the demo systems in detail. That method, I think, has led to our selecting the most appropriate system. We picked the system that was most open to customization and could lead to a working system in the least amount of time. In my opinion, being able to satisfy these were the primary advantage points IAS had. That is, it supported a structure that provides wide berth for tweaking the system.
I should re-iterate that the project is not over for us, and in all honesty, I probably will never be able to say that it will ever be over. We feel that we selected the right product by documenting our own workflows, and by staffing a dedicated project manager.
Oksan Cevik: Another point that should be mentioned is that we did not favor temporary solutions, but preferred permanent solutions that would stand the test of time. The customizations we performed were systematic ones that rested on solid foundations, able to be built upon in the future. So the system can be further developed in the future to a much greater extent, based on the the infrastructure we have established. Currently, the system exhibits a high level of integration.
My recommendation to other companies when establishing their own systems is to prefer solutions that can be built upon, instead of going with temporary ones. It is also critical for ERP vendors to have industrial engineers on their consulting staff. Even if you are working with a quality vendor, if their consultants are not good enough, are not creative, and cannot think in a flexible manner, it will do your firm no good. IAS consultants contributed significantly to our implementation.
IAS: We believe that in organizations that have embarked on ERP implementations, management's commitment to the project and to the system guides the project to success. At the same time, the most important role is played by the project manager. What have you done towards this end, and what advice do you have for other project managers?
Oksan Cevik: Prior to the start of the implementation project, it is a must to have documented workflow charts so as to be ready. While creating these charts, the business processes should in parallel be simplified and improved. An already complicated business process should not be attempted to be resolved through the ERP system. In a time period as short as two months, I was able to both analyze business processes as well as meet with ERP vendors to determine the best product for our needs. During those two months, I tried my best to learn as many of the business processes as possible. Having as short a period as two months did have one advantage: I did not have a conventional business process in mind. I always approached situations with the question "Why must this be done in this manner?"
During the implementation, the users tend to pose the most problems. Severing their ties to the legacy system to which they have grown accustomed proves to be problematic. At that point, having the management's support and power of interdiction is critical. In our case, we were lucky to have a high level of support from Ozlem Yurdakul. I suggest in starting out the process by fortifying the users' commitment in the project. The users should be put in situations where they absolutely have to use the system. This is something we did a lot in our implementation. For example, in the past, purchase orders were prepared using Excel spreadsheets, and labels and other date were created manually. We declared that following a certain pre-set date, forms would have to be generated through the ERP system, and were not to be created manually.
Each user first entered their own customers' information into the system and abided by date set by management. In any case, users are more eager to comply when they see their jobs becoming much easier to accomplish. As much as possible, we tried to guide the users towards making use of the system. Another piece of advice I would offer to those choosing to go with the CANIAS ERP system will be to attend training that covers the system's TROIA tool. Once training on TROIA is acquired, it makes the CANIAS ERP way of doing things and the mindset of the IAS consultants much more clearer.
Even if the project manager will not be performing any development personally, he or she should still attend this training to understand the consultants' language and what they do.
IAS:How do you feel management should approach such projects, and what have you done in your implementation?
Ozlem Yurdakul: A project manager should foresee and expect resistance on part of the users. No user will come running to a new and completely different system. When experiencing resistance in certain areas, we examine the system and try to understand why we have not been able to make those specific features attractive for the end users. We try make it more comfortable for them so that they will look forward to using the features. When the end users truly understand the benefits of the system, they commit to it.
The truth of the matter is that we had so much trust in the system that we were convinced of the return on our investment. Cost is another issue in peoples' minds. For example, the project does not always move in lock step with its planned schedule. I think this also has to do a lot with the organization's own pace, as well as the pace of its individual personnel. You are not sure how much you will have to spend on an implementation. For companies embarking on such projects, they should not be apprehensive about the time that will be necessary for consulting work.
Interview : Conducted by Oznur Tekiner
Ege Jeoteknik was founded in 1996 to provide project management and consulting services for drilling, and diversified in 2002 into exporting activities for natural stone products. In its sales activities, Ege Jeoteknik emphasizes portfolios over traditional natural stone marketing, and has 54 separate portfolios that successfully combine natural stone with tasteful aesthetics and art. It coordinates its activities with 84 domestic and 1 overseas suppliers, and primarily exports to the U.S. and Canada, as well as to the European Union countries through its subsidiary EJ Europe. By including new Turkish natural stones into its portfolios, the company strives to help make these products achieve the brand name status they deserve, both in terms of design and value. The company's goals include extending its export operations to the Middle East, Latin America, Far East and Africa, and to help establish a Turkish owned brand name in the global natural stone marketplace.