Ciba remains competitive with SAP ERP

All regions now benefit from centralized and global business processes

In August a mammoth project is drawing to a successful close: In just under three and a half years, specialty chemicals manufacturer Ciba has implemented an extensive portfolio of SAP solutions to replace more than 100 enterprise resource planning (ERP) systems at its 80 locations and research centers in 20 countries. A project on this scale is rarely seen in the chemical industry, but Ciba had no alternative. To survive and grow in the fiercely competitive global market, the company had to harmonize business processes and operate more efficiently and transparently.

Implementation around the globe

On November 1, 2006, Terry Gorman, the manager of Project Enterprise, gave the order to deactivate the legacy systems at the Ciba locations in the United Kingdom and Italy. Austria, Germany, and Switzerland followed in May 2007, the Americas in November 2007, and the rest of EMEA (Europe Middle East Africa) in April 2008. And since August, the remaining Ciba locations in the Asia-Pacific region have been live with the system. With the help of the SAP Active Global Support organization and its support options, such as SAP MaxAttention, the project team overcame every hurdle. Trainings conducted by the SAP Education experts were equally important in ensuring successful implementation.

Tough markets

Ciba

Ciba, based in Basel, Switzerland, manufactures specialty chemicals for a wide range of industries. At its 80 locations around the world, the company produces additives for products including paints, coatings for the automotive and other industries, and cosmetics. These additives ensure that cars retain their finish, plastics keep their elasticity, paper does not tear, water is clarified, and our skin is protected from UV rays. Some of the latest innovations from the Ciba laboratories include a laser marking system for packaging and conductive inks to print conductive structures onto any surface. With 13,000 employees, the group sells its products in 120 countries and generated revenues of approximately CHF 6.5 billion (approximately U.S. $6.2 billion) in 2007.

The specialty chemicals market is very tough. Emerging Asian competition, in particular, has put pressure on traditional companies like Ciba and reduced their profits. Rising prices of energy and raw materials, buying syndicates, and a mounting number of regulations have also squeezed margins. “We can only survive if we increase productivity, become leaner and more transparent, adapt our processes, and reduce costs,” explains Michael Löchle, former CIO and now Head of Group Services & Administration.

Improved collaboration

Bird's eye view of the Ciba plant

“We also had to improve collaboration between our locations,” he continues, adding that this had previously been the exception rather than the rule at Ciba. Each plant had ordered its own raw materials, the procedures for outbound goods deliveries had varied between locations, the finance department at the headquarters in Basel, Switzerland, had only found out how the various subsidiaries performed at a late stage, and the customers had to struggle with different ordering processes. “Now everyone works hand in hand,” says Helmut Prestel, managing director of the manufacturing plant in Lampertheim, Germany.

Other advantages of this global project quickly became evident: Managers in Basel soon had an overview of how the individual locations were performing; they knew what stock was being stored where, and could submit, for the first time, consolidated forecasts for sales, purchasing, and production. They were also able to comply with international regulations, such as the European Union’s REACH directive on chemicals.

Better decision making

“Above all, we now have a common technical platform and a single, transparent set of data,” says Brendan Cummins, now CEO of Ciba. This means that planning is more reliable. Moreover, the company can see in real time what effect a transaction has on financial results and is more responsive to changes in the market. “The in-depth business data analysis enables the executive board to make better strategic decisions,” says Cummins.

Full benefits after full connection

Löchle feels it is “especially vital to have control over logistics, from production planning and materials purchasing to sales and marketing, and reduce costs this way.” The SAP implementation, he continues, has enabled Ciba processes to meet these requirements – and there is still enormous potential for increases in efficiency and decreases in costs.

Project manager Gorman says Ciba will reap the full benefits of Project Enterprise after all its locations have been connected to the SAP system. Consequently, the company has started a work group to optimize business processes using the software

Starting August 2008, all of Ciba’s ERP systems will run on a central system in Basel based on IBM servers.

Ciba implemented virtualized IBM System p5 590 servers, using the High Availability Disaster Recovery (DR) function of IBM DB2 to provide hot standby of production systems. IBM Tivoli Storage Manager handles backups of the high-performance IBM System Storage DS8100 disk system, and Libelle BusinessShadow for SAP provides long-distance replication capabilities for the new DR site, about 100 kilometers away, in a different tectonic zone.

There are other partners on board, among them the Indian system integrator Satyam and the IT service provider Unisys.

The implementation of the SAP system is part of a large-scale program to drive growth and improve the company’s cost structure. In 2007 alone, the program resulted in cost savings of over CHF 95 million (approximately U.S. $92 million). Ciba also runs SAP ERP, SAP SCM (APO), SAP SRM, SAP PLM (including SAP Environment, Health & Safety), SAP GRC Global Trade Services, SAP GRC Access Control, SAP NetWeaver XI, SAP NetWeaver Portal, SAP Treasury and Risk Management, and SAP In-House Cash.