When Tetley wanted to up the ante on its ageing information systems, it chose an integrated SAP system and project partner Diagonal. Brian Tinham finds a refreshingly good implementation.
Keeping the customer happy is a familiar imperative, and Tetley GB says its installation of an integrated SAP enterprise (ERP) system is doing just that: providing ‘efficient consumer response’ and giving customers the right products when and where they want them.
It’s a big operation. Tetley GB isone of the brand leaders in the UK tea market, and Tetley Group’s turnover for the year to March 2000 was £290m. Headquarters is in Greenford, Middlesex, and the company boasts one of the world’s largest tea factories, at Eaglescliffe near Stockton-on-Tees, and a distribution centre at Newton Aycliffe, Durham.
In 1996 Tetley decided it needed a system capable of improving utilisation of its internal information and supporting faster reaction to customer demands. Its cornerstone was to be a single integrated computer system replacing more than 90 disparate applications – including bespoke spreadsheets, multiple sales order processing systems and different financial packages at its various sites.
Says Andy Pepper, director of business information systems, “We assessed a number of ERP packages. We chose SAP because it was a fully integrated system, the market leader and spent more on R&D than any of its competitors’ turnover!” He continues: “The SAP package couldn’t fully meet our warehousing requirements, so we went for a separate but integrated package called Dispatcher there, and the system also needed to interface with some existing internal systems that didn’t need replacing, like payroll.”
Pepper says the firm had to go for the ‘big bang’ approach, “replacing the vast majority of systems over a weekend with SAP, and going on to replace everything else within one year.” But to get there, Tetley also needed to implement changes to its business processes throughout the company. Recognising that this was going to be a big project, Pepper says the firm looked for an implementation partner able to provide project leadership, business and IT support and “a pragmatic methodology”. He chose consultancy Diagonal.
Pepper says each of Tetley’s main functional areas fielded a small team comprising a senior Tetley person, a Tetley IT analyst and a Diagonal consultant – overseen by a co-ordinator. “It was crucial that Tetley had a strong sponsor at a senior level,” says Chris Chittock, managing director of Diagonal’s SAP Division. “We believe that any organisation can only get the most out of SAP by ensuring the active support of all business areas. Tetley gave a high level of commitment right from the top.”
Paul Duncombe, of Tetley’s IS department, says: “The teams were driven by the Diagonal project co-ordinator. If extra resources were needed, these were either filled by extra consultants from Diagonal, or contractors, who were brought in through Strand, Diagonal’s SAP Contracting Division.”
Implementation started in October 1997, with prototyping workshops under way by January 1998. The project team remit was total: SAP was the biggest component, but there was also the new warehouse system, EDI software, interfacing with retained applications, and customising of SAP specifically for tea blending. Eventually, the 150-user system went live on 19 October that year with SAP’s FI (financials), SD (sales and distribution), MM (materials management), PP (production planning); CO (control) and PA (profitability analysis).
Paul Gregson, who was part of the implementation team representing operations in Tetley, describes how an order is now handled. “An order might come from a major customer like Tesco, or one of the smaller outlets. Many send their orders through EDI; others phone or fax. Once received, the order is entered onto SAP and it checks stock availability, via the link to Dispatcher, our warehouse system. If stock is available, the order is processed and details of product, quantity and destination are passed to Dispatcher. The warehouse staff at Newton Aycliffe then pick the order, details of the delivery are confirmed back to SAP, and this generates the invoice.”
As for production planning, Tetley has a separate Insight Inorda advanced planning and scheduling system running in parallel with SAP and looking after both of its factories. According to Pepper, Inorda was already there, and at the time “SAP didn’t offer the kind of functionality we needed. “We’ve briefly looked at APO since,” he adds, “and the costs do not justify the added benefits and disinvestment penalties”
Says Gregson: “Forecast demand from the sales and marketing department, together with actual stocks, are passed from SAP into Inorda. This is turned into a production plan and passed back to SAP so raw materials can be checked and ordered. If there isn’t enough product when a sales order is received, SAP is used to check raw material availability, and factory production is rescheduled by Inorda. It means we can react quickly without holding large quantities of stock.”
The impact of the new system on staff and the business has been enormous: Pepper says that involving key users early did help, but there was still some shock. Says Duncombe: “We believed prior to installing SAP that mostly we had a useful set of applications. Bringing in a new package constrains you to use certain screens and terminology and to think like the package. All departments had to learn things afresh.” Interestingly though, he adds: “Users are now asking questions and finding that the new system allows them to do much more. With further training to help them understand SAP beyond their own responsibilities, there will be more opportunities for staff.”
“We are all seeing benefits,” says Pepper. “We have a much quicker sales cycle, a more rapid response to customer requirements, more detailed transport information and much tighter control over stock. Because the system is integrated we can get invoices out faster and management information is kept accurate and up to date.”
Currently, says Pepper, Tetley is still consolidating with SAP. “We can see there is much more that we can gain, but it’s steady as she goes – looking for shortcomings and fine tuning our processes.” He says Tetley is about to embark on an upgrade form SAP R/3 v3.1h to v4.6c but taking a wait and see approach with MySAP.com”
Although the company is considering e-commerce using SAP, it’s doing so using Diagonal’s own SAP solutions. He says “we’re looking at linking non EDI customers and suppliers using e-commerce rather than just considering extending EDI.”
Pepper concludes: “The SAP system has allowed us to streamline and reduce our overheads. We also have better visibility of what is going on in the system; better levels of information, better financial visibility, less double handling of data and better inventory control. For example, using SAP’s drill-down functions and reporting tools we get the information to make better decisions – which, in turn, have resulted in efficiencies and cost reductions in purchasing. I’m sure we’ll get many more benefits over the next few months.”
Author: Brian Tinham