The effect of implementing Technoclass is increased productivity, production optimization and improved financial results


Krasimir Paskalev_Technoclass

The company Pnevmatika-Serta Ltd., was established in 1964 as a part of Hidravlika Ltd. It was privatized by RMD. In 2003 it became 100% owned by the French Serta SAS Ltd. Since then it has been the current name Pnevmatika-Serta Ltd.

The main activity of the company is the production of hydraulic and pneumatic cylinders, as well as parts for hydraulic cylinders.

The company’s products are sold on four continents. The main market is the EU, followed by North and South America. Customers of the company are practically all major world manufacturers of agricultural, road, construction and lifting equipment.

Pnevmatika-Serta Ltd. works with the ERP system Technoclass. What problems did the company encounter before implementing the system and were other process management systems used before?

Before the introduction of the Technoclass ERP system, seperate software solutions were used for each process without an established interconnection.

It is the need for a holistic view of all business processes in their interrelationship, especially the provision of production with materials, the optimization of the utilization of production resources, production planning and customer relations, the need to use uniform policies, rules and procedures are the main reason for moving from a more or less complete set of separate information systems to a single complex integrated management system for the company’s business as a whole. Such a system is Technoclass.

Why did the choice of system fall on Technoclass and on what criteria was this system chosen?

“The Technoclass ERP system” was chosen among 4 proposals based on the best “functional scope – price – quality” ratio.

The opportunity to work directly with the creator of the ERP system itself – the Bulgarian company L-Class, instead of intermediaries – was seen as a great advantage. This, in itself, represents a competitive advantage over other products offered by distributors.

What activities at Pnevmatika-Serta Ltd. are covered by Technoclass?

Currently, virtually all activities are covered by Technoclass, including automated production reporting using industrial terminals.

The only process managed outside of Technoclass is Human Resources and Compensation Management. However, this process is also integrated with Technoclass – labour participation data and the “wage rate” component of the salary are received from Technoclass. Labour cost data is transmitted to Technoclass for both planned and actual cost management and general finance and accounting management.

How do the work and production activities in Pnevmatika-Serta Ltd. improve after the implementation?

The main numerical indicator is the increase in productivity of both one principal worker and one person employed.

Quite a few of the processes have undergone automation and various improvements, the result of which is generally a reduction in the lead time of customer orders, optimization of the level of inventory, work in progress and finished goods, and hence the Company’s bottom line and the need for working capital.

Is this the effect of implementing Technoclass?

Yes, as I have already said, the effect is most pronounced in increased productivity, optimization of production leading to improved financial performance.

Of course, for people, the most important results are sustainable employment, increased wages and improved social and living conditions in the company.

Can you estimate the return on the investment made for the Technoclass system and its implementation and what exactly is this return?

In the years up to and including 2008 the workload was consistently high and it was only through the implementation of an ERP system covering all production processes that we were able to manage and increase production capacity. In this way, we were able to meet the ever-increasing demand for our products without affecting quality or cost.

Of course, returns can be measured in several different ways, including through unrealised costs.

An example of this is the total wage bill, which within a few years decreased from over 25% of the turnover to 13% in 2012, even though the average monthly salary increased more than three times and exceeded BGN 1,000. This alone represents a saving of several million BGN over the years since the implementation of Technoclass.

How does the system fit into the company’s manufacturing automation processes?

At the end of 2011 and the beginning of 2012, the functional direction of Technoclass for the reporting of intermediate stages of production using industrial terminals – the so-called “Data Collection System”. Coverage of the processes of reporting the load of machines and workers in this functional direction is forthcoming.

Of course, the industrial terminals (hardware и firmware) are developed and manufactured by a third-party company. But we designed and built our own “proprietary” mounting cabinets for the terminals and their peripherals.

What problems arose in the process of implementing Technoclass and how were they resolved?

I think the problems are well-known “classic”: doubts of expediency, fear of losing “indispensability”, fear of all-embracing control, fear of “reworking” in implementation…

But the solutions are also “classic” –  demonstration of full determination and personal commitment of the entire management team, serious advance preparation and full testing of solutions, rapid achievement of results concerning both the company and individual workers.

Is expansion of the ERP system envisaged – in the form of implementing new modules or upgrading existing ones?

Currently, the Technoclass ERP system covers all production processes and it is difficult to talk about expansion.

The development of the system will consist in upgrading existing processes and functions with specific changes to suit the company’s business development.

We are in the process of implementing just such a project to upgrade the Logistics process, incorporating specific activities, analyses and indicators.

The questions were asked by Victoria Lazova

Publication in Industrial Automation magazine (December 2012)