SAP Customer Success StoryIndustrial Machinery and Components – Construction Equipment

SANY GROUPFAST-GROWING MANUFACTURER DRIVES EFFICIENCY AND INTEGRATION WITH SAP® ERP

“We are a fast-growing company, and

we see that SAP is also rapidly expand-

ing its business in China. This growth

momentum secured our trust in

choosing SAP as a partner to support

our business today and tomorrow.”

Yang Ying, Manager, IT Planning and Control, SANY Group Co. Ltd.

Implementation Highlights• Smooth implementation, on budget and

ahead of schedule• Support of 210 business processes• Continuous improvement through

exploring the full potential of SAP ERP

Why SAP• Powerful ERP software functionality to

support mission-critical processes• Proven success cases for many multi-

national enterprises• Growth momentum of SAP in China,

securing SANY’s trust in the partnership

Benefi ts• Gained control of and insight into the

entire operational process chain• Accelerated information flow• Reduced inventory levels by 30%• Increased inventory turnover by 50%• Raised planning accuracy to 90%

Existing Environment• Multiple legacy systems• Baan software

Third-Party Integration• Database: Oracle• Hardware: IBM• Operating system: IBM AIX

Company• Name: SANY Group Co. Ltd.• Location: Changsha, China• Industry: Industrial machinery and

components• Products and services: Construction

equipment• Revenue: US$1.98 billion (€1.57 billion)• Employees: 23,000• Web site: www.sany.com.cn

Challenges and Opportunities • Meet rapid growth requirements• Support SANY’s ambition to become

a world-class enterprise• Remove growth barriers to achieve

operational excellence

Objectives• Replace legacy systems with a scalable

enterprise resource planning (ERP) solution

• Integrate finance and business processes• Manage all processes across the total

product life cycle in an integrated manner• Realize the integration of production, sales,

planning, and inventory management

SAP® Solution and ServicesSAP® ERP application

QUICK FACTS

The renowned SANY name is recog-nized as one of the most competitive self-grown industrial brands in China. The company is engaged in all aspects of heavy equipment manufacturing. Its top-selling products include construc-tion machinery, concrete pumps and equipment, piling machinery, and crawl-er cranes. With nearly 23,000 employ-ees and revenue of US$1.98 billion (€1.57 billion) in 2007, SANY Group was ranked among the top 10 enter-prises of China by Forbes in 2008. The company supports customers in over 130 countries with 12 overseas sub-sidiaries and five industrial parks in Shanghai, Beijing, Shenyang, Kunshan, and Changsha. Its core member, SANY Heavy Industry Co. Ltd., was listed on the Shanghai Stock Exchange in 2007 with the largest stock market valuation in the history of China’s construction machinery industry.

Embarking on SAP ERP

In 2006, amid rapid business expansion and plans for future growth, SANY es-tablished itself as a group company. Under the new group structure, SANY’s old IT systems showed deficiencies in supporting the increasingly complex organization and business models. To grow into an international enterprise, SANY realized that it needed an inte-grated information infrastructure that could increase its operational efficiency and help keep it ahead of the competi-tion, both in China and overseas.

“A lack of integration between finance and business processes, high inventory levels, and inefficient production planning: these were the barriers we needed to remove in order to become a world-class, best-run business,” says Zhou Zhijun, ERP manager at SANY Group.

In early 2006, SANY made a strategic decision to eliminate these barriers, drive higher efficiency, and support future growth by replacing its old sys-tems with a dynamic, operationally driven enterprise resource planning (ERP) solution. After looking into several options, SANY identified the SAP ERP application as the best choice.

According to Yang Ying, manager of IT planning and control at SANY Group, functionality was the starting point of the evaluation. SAP ERP surpassed other competitive alternatives with its comprehensive and powerful function-ality to support SANY’s mission-critical processes. SAP’s proven success in enabling an integrated information infra-structure for many multinational com-panies was another determining factor for SANY, which strives to achieve in-formation excellence comparable with other world-class companies.

“We are a fast-growing company, and we see that SAP is also rapidly expand-ing its business in China,” comments Ying. “This growth momentum secured our trust in choosing SAP as a partner to support our business today and tomorrow.”

Setting Clear Objectives for a Smooth Implementation

To increase efficiency along its entire value chain, SANY set three goals for its SAP ERP implementation. Called the “three integrations,” these goals included integrating finance and busi-

SANY Group Co. Ltd. is clearly one of the economic growth miracles of Chinese enterprise. Established in 1989 as a small welding material factory, SANY has evolved into the world’s biggest concrete machinery manufacturer and one of the top 50 construction equipment manufacturers in the world. Under the motto “Quality Changes the World,” SANY continually strives for technical innovation. So when the company’s growth began to strain its legacy software, SANY decided to ramp up its technology infrastructure. By deploying the SAP ERP® application, the fast-growing company has made a big leap forward in raising efficiency, reducing cost, increasing operational control, and improving business insight.

ness processes; managing all process-es across the total product life cycle in an integrated manner; and integrating production, sales, planning, and inven-tory management.

“We want to optimize business pro-cesses with SAP ERP as the backbone and, very importantly, establish a scal-able application infrastructure in order to adapt to changes in our organizational structures and business models,” says Zhijun. “The infrastructure should satisfy our current requirements while being able to support our future growth needs.”

SANY’s implementation of SAP ERP ran very smoothly. “We completed the deployment in only six months,” says Ying. “It was faster than we expected.”

The first phase of the SAP ERP deploy-ment was a critical undertaking at SANY Heavy Industry, the core company under SANY Group. SANY Heavy Industry was already listed in China as a public company before the implementation. According to Ying, how well the deploy-ment went would have a direct and im-mediate impact on the performance of the share price. “It was a big challenge for us,” recalls Ying. “We could not afford any failure there. Luckily, the pro-cess went really smoothly.”

Today, SANY relies on SAP ERP to support 210 business processes, covering finance and accounting, pro-curement, inventory, production plan-ning, quality control, sales, marketing, and human resources.

Gaining Greater Process Control and Business Insight

With the deployment of SAP ERP, SANY has achieved numerous bene-fits. According to Ying, the company can now execute greater control over its operations thanks to the integration

and optimization of business processes. Information flow has been accelerated and discrepancies during the informa-tion relay have been largely reduced. “We have gained control and insight,” comments Ying. “This is a big plus for the company.”

Improvement in planning accuracy is one of the key performance indicators that SANY used to measure the suc-cess of its SAP ERP implementation. “Through the integration of research and development, planning, production, and procurement, we have gained full visibility into the supply chain and have achieved an overall planning accuracy rate of 90%,” says Zhijun.

“With the help of SAP ERP, we

have reduced the inventory level

by 30% and increased inventory

turnover by 50%. This has con-

tributed to greater cost savings

and improved cash flow.”

This improvement was not realized over-night. According to Ying, at the begin-ning of the project when the process flow was not yet standardized, SANY had only marginally increased planning accuracy from 50% to 60%. As pro-cesses became more standardized and automated over time, the company has experienced a quantum increase in planning accuracy, leading to substantial cost savings. “We can now sustain the rate at 90%,” says Ying. “Even when China was hit last year by the snow di-saster that led to volatility in supply and demand for materials, we were able to plan production with 90% accuracy.”

Greater inventory control was another noticeable benefit to SANY. That’s be-cause SAP ERP accurately tracks all raw materials in stock, in production, and in transit – eliminating the risk and cost of excess inventory. When a pro-duction plan is initiated, the software also helps generate a consolidated pro-curement plan. “With the help of SAP ERP, we have reduced the inventory level by 30% and increased inventory turnover by 50%,” says Zhijun. “This has contributed to greater cost savings and improved cash flow.”

“SAP ERP covers almost all of our business processes, and the imple-mentation itself is a self-improvement process for us,” adds Ying. “As we get more and more familiar with the soft-ware, we’re continually exploring its full potential. We are not just using the functions now. We are at the stage of managing the application and optimiz-ing how we use it.” Using SAP ERP,

Zhou Zhijun, ERP Manager, SANY Group Co. Ltd.

“Through the integration of research and development, planning, production,

and procurement, we have gained full visibility into the supply chain and have

achieved an overall planning accuracy rate of 90%.”

Zhou Zhijun, ERP Manager, SANY Group Co. Ltd.

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Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company.

All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifi cations may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affi liated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

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for example, SANY has developed a set of analysis tools and formulas, taking advantage of greater data visibility to allow comprehensive analysis for effec-tive decision making.

Exploring Opportunities for Continuous Improvement

SANY sees the implementation of SAP ERP as the first milestone in achieving the ultimate efficiency in information management. “How we continue to apply the software to optimize our op-erational efficiency and effectiveness is a prominent topic,” says Ying. “Now that we have a solid ERP platform, we need to explore how it can drive contin-uous improvement and support change as we grow. Therefore, our relationship with SAP has evolved from a product partnership to a service partnership. We expect a new level of collaboration with SAP to address the needs of changing business models and objectives.”

Looking ahead, SANY plans to continue leveraging SAP ERP to further optimize the company’s use of the software, support the complex requirements of its group structure, and improve data management.

50 093 738 (09/02) ©2009 by SAP AG. All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.

Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of Business Objects S.A. in the United States and in other countries. Business Objects is an SAP company.

All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifi cations may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affi liated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.