Kirin Brewery Co.,LTD.

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The new PRIMERGY and MySAP SRM purchasing information system has greatly reduced the cost of indirect material’s procurement and successfully improved business application efficiency

The introduction of an ERP package to consolidate purchasing, has enabled large-scale cost reductions and improved the efficiency of the business process through improved analysis of all procurement information.

Kirin Brewery Co.,Ltd., a major player in Japan’s brewing industry, undertook a review of its indirect materials procurement processes. The resulting purchasing information system, based on PRIMERGY industry standard servers and mySAP SRM, has provided both cost reductions in operational efficiency and improved procurement analysis. This in turn has lead to purchase pricing for indirect materials being reduced through order consolidation and more consistent centralized eMarketplace procurement.

To make procurement processes more efficient, a system re-construction was initiated

Kirin Brewery is well known in Japan and around the world as a brewer of beer and other popular products. Its "Kirin Lager Beer" is available in many countries. Recently, products other than beer have become popular. Known as canned “chu-hi” in Japan, Kirin produces a range hit canned alcoholic beverages based on ingredients including brown rice tea, green tea and wheat based grain spirit.

Kirin’s procurement departments play a key role in the company’s management strategy. This is particularly so due to the companies large array of product offerings. Mr, Yoshizaku Ino, Deputy Director, in the Equipment & Planning section of the Procurement department, said, “Our department is in charge of the procurement business, which greatly influences production costs. We are positioned, as a strategic project department, and have the role of optimizing enterprise management while cooperating with each factory, sales and research department."

Optimization of procurement is an important business challenge as it influences profit improvement across the whole enterprise. At Kirin the production department directly manages the optimized procurement of raw materials. However efficiency improvements in procurement processes and reductions in the procurement costs are also being requested for business supplies and equipment. Known as indirect materials, their procurement scale has expanded hugely. This lead Kirin to start a radical review of its indirect materials procurement processes.

Mr. Ino elaborated, "The purchasing information system, that has been in use for more than 10 years, was not flexible enough to handle the requirements of new procurement systems like eMarketplace. In addition, there were operational issues such as the double entry of data into the purchasing system and again into the analysis system. I wanted to reduce purchasing operational costs by efficiency improvements in the procurement process. I also wanted to construct a consistent system that was able to analyze the purchasing data at the same time."

Another problem was the management of purchase history.

“Recently, focus on compliance within the enterprise has become a strong requirement. I saw that it was necessary to be able to refer to purchasing records, to learn who we have bought from and when/why/what we had bought. Then be able to submit this data for auditing.” (Mr. Ino)

Kirin Brewery commenced implementation of the new purchasing information system in 2002. The policy of using an ERP package was granted following evaluation. This proved that it was possible to cooperate flexibly with external procurement sites and that data analysis and use was easy.

System introduction

”PRIMERGY” and “mySAP SRM” are selected for the new system infrastructure

Fujitsu was chosen as the IT partner for this restructuring project. Mr. Ino gave the following reason, “Fujitsu was chosen as they had, after detailed analysis of Kirin’s procurement processes, proposed the adoption of mySAP SRM to solve our problems. MySAP SRM could easily be matched to the concepts of Kirin's procurement requirements. Function, price, and system potential were all evaluated using a points system, and Fujitsu’s proposal, compared with other packages, came out on top.”

Fujitsu’s PRIMERGY series of industry standard servers was chosen as the hardware platform to support the system. ”In construction of a large-scale system relevant to the entire company's operations, the most important point was the balance of reliability and cost of the system. Hardware costs could be reduced with high reliability and availability retained if Windows-based PRIMERGY servers were used. ”I therefore saw it as advantageous to use PRIMERGY”, Mr. Ino said when he introduced the reason behind choosing PRIMERGY.

In addition, “As other business systems had also been using PRIMERGY without operational problems, there were no worries with their use.” Mr. Ino continued.

System Overview

The new purchasing information system was successful in reducing costs

A new purchasing information system was named "PROCEED" and know-how from the Fujitsu-SAP Competence Center was used proactively to support system construction and SAP product implementation.

The purchasing duties of each branch were able to be consolidated by this new purchasing information system, budget allocation was optimized, and operating effectiveness and system performance have rapidly increased. ”In the past the cost of processing individual procurements was the same whether the amount was 100 yen or 10 million yen. Now with low priced products, processing following purchase approval, has become automatic” Mr. Ino said.

In addition, there was a large positive effect on the analysis and use of purchasing data in satisfying the original problem. As all procurement processes are now visible, it is possible to monitor business costs quantitatively. As a result, purchasing processes have been simplified further on a large scale. Now, purchase of similar products at a lower cost with bulk purchasing and discounts are possible by analysis of purchasing data. This has also greatly contributed to the reduction in the purchase costs. The accumulative effect of this approach has succeeded in producing about 5% reduction in the annual procurement costs of indirect materials.

In addition, Mr. Ino radiantly says, "Ordering without reference to history has been abolished with more thorough and correct purchasing methods being executed. Further strengthening of compliance has also been achieved, too." With the construction on schedule, and no problems since operations commenced, it can be said that Kirin Brewing is very satisfied with their PRIMERGY based mySAP system and Fujitsu's support.

Future Plans

Plans to further reduce the entire group’s purchasing costs by introducing the new system at all Kirin’s subsidiaries.

The resulting reductions in procurement cost have been given high praise, and in recognition of the excellent and distinguished service of the new purchasing information system, an in-house award the "Kirin Grand Award" was presented to the Procurement department. But they are not resting on their laurels. Various improvements are scheduled to be added in the future.

“The 'Catalog' database in the new purchasing information system, covering items for procurement, publishes around 100,000 items currently. This will be increased. We also want to consolidate the procurement business of our subsidiaries with the new system. This will further spread the effect of cost reductions, and realize further procurement savings across the Kirin group” Mr. Ino said.

Mr. Ino says with eagerness "We want to make our supplier relationships more close knit working towards a Win-Win situation".

Fujitsu firmly supports this approach with its PRIMERGY solutions.

User Profile
Company Name: Kirin Brewery Co.,LTD
Location: Tokyo Chuo-ku Shinkawa 2-10-1
Established: 1907 February 23rd
Capital: 102 billion yen
Employees: 5,771 employees (2003 end December)
Factories: 12
Laboratories: 7
Sales: 1,597.5 billion yen (2003)
Business Profile: Representative beer and low-malt beer manufacturer of Japan. Well-known for many popular products like “Kirin Lager Beer", "Kirin Ichiban Shibori", and “Kirin Tanrei”.
The product quality is especially valued and emphasized, canned “Chilled Beer” with yeast are delivered from factories to stores with refrigeration throughout the delivery.
URL: Kirin Brewery Co.,LTD

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