case satmatic-challenges of internationality-january2012
TRANSCRIPT
CASE
SATMATIC
Note: this case was prepared by Jeffrey Salahub with contribution from Reijo Koivula for the sole purpose of learning and class discussion at the Satakunta University of Applied Sciences Innovative Business Services (IBS) degree program. This case writer does not intend to illustrate effective or ineffective handling of decisions of the company in this case. Certain names and other information may be disguised to protect confidentiality. This pre-‐release/ work-‐in-‐progress version of the case is meant to be exclusively used for the IBS degree program and not to be disseminated or used without permission of the case writer. ©Copyright. September 30, 2009. Updated May 2010.
Scenario – On the floor – Where Value Hits the Road
Mike leaned over the table across a myriad of wires and components that he had put together over the past few days. Taking another look at the electrical diagrams on the specifications sheet served to him via the Oscar system, he traced the amount of wires and respective colour codes on the work-‐in-‐progress in front of him: “looks like this power distribution board will be done in good time, but there’s no bargaining with quality” he thought to himself. Mike systematically went through what he had just done: “Cable feeder is in place, fuse-‐switch disconnector done...yep, attached to the mounting plate...", his thoughts then wandered to one of the many coffee break meetings he's had with his colleagues: "That was an interesting way of speeding up the work Matti brought up, I may have to try it, although I've done these things for a few years already.” He grinned to himself: “well, this one will be out the door and on the way to the customer in no time, but if we can do it quicker this time with Matti’s new idea…maybe we’ll see another bonus soon…"
Meanwhile, as Mike was taking a look at print-‐out from the Oscar production management system with all of the info, Karl Salo was considering the extent Satmatic could provide engineering design services in an upcoming deal. “We have provided hands-‐on installation and commissioning services for years, but not a lot of pure design services, but we have done it before and definitely have the expertise: how much would this potential customer trust us to provide several tens of thousands of euros of design work based on the reference customers in the past? ” he pondered…
P a g e | 2 SATMATIC – THE COMPANY
Satmatic is a privately-‐owned company located in the Satakunta region of Finland, in the city of Ulvila. It is a company of approximately 100 employees and yearly sales revenue (2008) of about 22 million euros1 (see Exhibit 1). A sales office and production facility is also located in Kerava, Finland. Satmatic is a separate limited company, or loosely known as a “division” or “daughter company” of the Estonian-‐based parent company of Harju Elekter (www.he.ee). The Harju Elekter group employs approximately 500 people. All financial management and reporting is done in English and provided to the Estonian head office.
The core business of Satmatic (www.satmatic.fi) is the manufacturing of equipment for power distribution networks which includes automation and control systems for the energy and industrial sectors. The company is specialised in electrification and automation manufacturing. They develop, manufacture, and market automation control system cabinets, drive cabinets, and switch gears2 (see Exhibit 2). In addition to the manufacturing of equipment, and provision of engineering planning services, Satmatic has also successfully moved into the development of process control software. To keep competitive, the company depends on production speed, product quality, expertise and accuracy of delivery.
The company offers a wide range of services (see Exhibit 3) including initial planning and development, to installation and maintenance services. Although Satmatic produces physical, tangible products directly for its own customers, it also opens the doors to its own production facilities to other companies – this means Satmatic provides manufacturing on behalf of its customers and partners, who then provide the products to their own (non-‐Satmatic) customers. There are general categories from a production point of view: products produced under 1) contract manufacturing terms and 2) specific “one-‐off” project terms. This kind of manufacturing “service” provided by Satmatic is enabled not only by the expertise of the factory personnel, but by the smooth electronic flow of critical information3.
What started out as a locally-‐owned company in 1988 moved into the hands of the German company Siemens in the late 90s. Harju Elekter purchased 100% of the shares of Satmatic from Siemens in September of 2002. Although ownership was officially transferred to Harju Elekter, Satmatic continues to cooperate with Siemens by providing particular Siemens solutions via a licensing agreement. Another example of cooperation with Siemens was in 2006 when Satmatic provided the electrical control panels/cabinets for Siemens’ customer known as the Power Grid Company of Bangladesh Ltd. During that project, representatives from that customer and Siemens visited the Satmatic facilities in Ulvila, Finland to for factory acceptance testing4.
Through Satmatic, Harju Elekter purchased Finoval Oy (manufacturer and distributor of electrical equipment and switchboards) in 2006 -‐ this served to strengthen Satmatic’s position in the marketplace. Satmatic’s expertise and product range developed over these years. For example, Satmatic provided industrial automation software for a mineral wool plant in Poland in 2008. Satmatic has successfully moved from mainly a manufacturer of equipment to a developer and installer of process control software.
1 From 2008 Harju Elekter annual report, 354.9 million Estonian kroons in 2008 2 From webpage www.satmatic.fi 3 handled by “Oscar” information system, and internal production management system described later in case – this is strategic IT (Information Technology). 4 (The Bangladeshi manager from Siemens had lived in Finland for over half a year and had his own unique cultural experience in Finland). From Siemens ”Partneri” magazine 1/2006.
P a g e | 3 With parent company acquisitions and growth in the marketplace (increased sales) meant that Satmatic needed more production space. The 2008 Harju Elekter tells about Satmatic expansion which has continued until the time of this case writing (a large expansion to the Ulvila production facility began in June 2009.
INTERNATIONALITY – ENTRY STRATEGIES
Although the past 7 years are marked by steady sales growth, Satmatic like all private companies, is looking to improve profitability. Being too dependent on the domestic market is risky for any manufacturing company and Satmatic is no exception. Due to the demographics of Finland, Satmatic has engaged in international business from the outset as 1) there are only a limited number of large industrial installations in Finland and 2) the international nature of their Finnish customers has drawn them into the international arena.
Satmatic engages in a ‘follow-‐the-‐leader’ internationalisation strategy or otherwise known as ‘follow-‐the-‐customer’ strategy. Since the early 1990s Satmatic has pursued this way of operations when going across borders. Having developed expertise in the Finnish market and serving strong multinational enterprises such as Metso and Paroc, the company is considering its own independent international strategy.
Understanding the expectation for growth, and fully aware of the international nature of their business, Satmatic hired an export manager in February 2009. This is part of the overall internationalisation strategy of the parent company.
In the Meeting Room
Setting his coffee cup down on the table, Satmatic director Samu Piilonen glanced over at the white screen as the projector rendered slide ten of the presentation Aaro Lahtinen methodically prepared the night before. Aaro showed the sales results over the past few years in and assortment of product groups of various projects in varying countries. Over the years the company worked with their partners, usually quite large partners, and never undertook any kind of direct exporting. The projects definitely had to leave Finland, and the installers and experts had to physically travel from Finland to the customer’s premises, however all of the effort in terms of product and work hours went to and via existing customers.
Samu: “Well Aaro, what were you saying about Sweden – do you think we should test things out there?” Aaro: “It’s a good possibility – we’ve done several projects over the last 15 years and it’s not a lot different from Finnish industry, in my opinion” Samu: “Yeah, it is probably the lowest hanging fruit, although I don’t expect any attempts in Sweden to happen quickly -‐ we would need to expect fairly slow return on any investment there. Aaro: “Like any place, but if we could just free up some time from our salespeople, they are stretched quite thin “
The managing director left the room thinking to himself that the early years included several successful projects in Sweden. “Could those references still be valid today?” Maybe the contacts would be worth more than the aging references in the end. A lot of deliveries have also been made in the previous eastern
P a g e | 4 block countries of Europe, and more recently China, but the director felt these may be just a bit culturally distant, in addition to the fact that Satmatic has been a late-‐mover into China. “And when the language barrier is considered, it seems improbable that we would start there…considering our staff could always improve on their already good language ability” he pondered. He picked up his Nokia mobile phone and made a call to sales manager, Reino Nordquist:
Reino: “Nordquist”.
Samu: “I was just thinking about the project with Metso Power in Sweden – how much of the effort has moved over to us?”
Reino: “We ended up doing more of the management of the project and after spending all those months working face-‐to-‐face with the end customer, well, as you heard, the Swedes kept asking for special favours and extras to be added into the deal”.
Samu: How is the situation going there now? Have we put enough sweeteners in the Swedes coffee to be able to use them as references?
Reino: We see more potential with the customer, with possible upgrades and new contracts – but sometimes enough is enough. Having worked with them just might help us when pursuing other Swedish customers ” Reino said carefully as Samu amiably ended the call.
INTERNATIONALITY – CULTURAL ISSUES
Paroc in Poland
Johan Leppänen arrived at the Paroc5 manufacturing site in Poland around 9AM as usual, parking his modest-‐looking Volkswagen near the main building. The installation of the electrical systems were taking lots of time, and Johan was attributing it to a very experienced fifty-‐something Polish project manager as he muttered to himself: “unbelievable the nit-‐picking that went on yesterday, and I still can’t get over the fact that he bargained 5% off the price on the first day!” Manufacturing facilities in the previous eastern bloc countries were managed quite differently and being that many of the people involved in the Paroc were locals, one would expect some different points of view. Some of the attitudes displayed were quite different to what was norm in Finland. “Not only attitudes but also different customs” he muttered to himself, remembering how just around the time Satmatic was finalizing commissioning work at a factory in Turkey, the Turks sacrificed 2 lambs before it was taken into operation.
Johan remembered that in seemingly difficult tough situations one needs to pause and reflect a bit, not over-‐react, but to try to understand the situation first – “one’s own attitude is the key”, he thought. This requires a certain amount of understanding oneself, and this understanding often presents itself with the suitable attitude necessary to succeed in multicultural situations. He thought how humour can be a bit risky and can also reveal hidden attitudes and remembered about how fairly soon after arriving a non-‐
5 http://www.paroc.com/
P a g e | 5 Polish site manager mentioned to the Polish construction workers that “the Germans left a lot of things undone here 50 years ago”.
After spending close to a year living in Poland, upon returning back to Ulvila and the familiar Finnish surroundings, Johan was in for a surprise. Everything, although familiar, seemed a bit strange. The manner and behaviour of the people seemed different and then he realized maybe some changes happened to him. Colleagues back at the office asked how life really was in Poland and this led to interesting discussions. Johan related that it took him about a half a year to get used to living in Finland again.
Malaysian Upgrade
“It’s just incredible how one is treated here” Jussi Haapala stated, mobile phone held to his ear, as he sits down in his comfortable hotel room. “We’ve been on this assignment for several months now and the hospitality of the place still has not changed: people are friendly to me on the street, in the shops and particularly here where I’ve lived for many weeks at a time – they almost treat you like a god out here!” he gushed. Jussi was discussing with his colleague back in Ulvila, and he had a difficult time relating to stories about making the treacherous drive to work on icy roads. They ended the short call agreeing to do a net conference as both had diagrams and documents to share.
The Malaysian project involved an upgrade to a power network where the main partner did all of the negotiation and was a main point of contact with the customer. As in most projects, Satmatic is not responsible for much of the after-‐sales service of a large installation as this is the responsibility of the main partner. Most of the deals are done via large proposals that include a main partner6 who carries the most weight, and other smaller partners, each one providing their own price quotes into the proposal (offer). The customers are usually large corporations or government entities that follow a strict Request for Proposal/Quotation (RFP/RFQ) procedure. In Malaysia it was no different – Satmatic now needed to fulfil its installation obligations.
Although one’s eyes could not escape from noticing the poverty that was clearly evident all around the viewer, the places of accommodation for business people were of first rate quality. High-‐speed internet connections via LAN and WLAN networks could be found in many places and 3G wireless networks were easily accessible, therefore expatriates did not experience many problems with making voice calls and using data applications.
Jussi opened up his laptop computer in his room, and enjoying a stable connection to Internet via the local WLAN hotspot, he opened his Skype application. Glancing at the time on the corner of the screen, he estimated that it must be late afternoon at the home office: “the guys must be done drinking coffee and at their computers”. Jussi connected via Skype and sure enough, two of his colleagues were already online.
Colleague in Finland: “How’s it going over there, warm enough for you?”
“Weather’s fine, you don’t want me to rub in anyway so how about we just talk about what’s going on?” Jussi joked. “At least we didn’t have problems here with the electricity source – in Portugal we had to wait 3 weeks to get power. Delays like that cut into our margins, and even if costs are recovered, it causes a
6 “päämies” in Finnish
P a g e | 6 negative domino effect, as it keeps me from starting up or continuing other customer projects – just messes up the work schedule, which seems to always be changing” Jussi continued. Satmatic needed to carefully consider which projects to pursue, as there is only so much one person can do. The scarcity of competent resources would become even more evident.
Jussi uploaded a few documents and shared them to his colleagues in Ulvila “Ok, I know you aren’t great fans of web conferencing but it works well in my opinion, here’s some new documents I received today – there’s just a small change to the specifications that we need to consider for the next shipment”.
After the meeting Jussi reflected on the past few days, “I sure don’t have a clue what the people around me are saying but fortunately when talking to fellow engineers there really is no language barrier – we all know and understand the technical stuff.”
ORGANISATION
Ownership Structure and Form of Entity
Satmatic, a daughter company to a parent organisation, is essentially part of a large corporation (Harju Elekter). The corporation is listed on the Talinn stock exchange and as of the end of December 2008, there were just over 1000 shareholders with about 4.6 million shares being traded. Some of these shareholders own a fairly large piece of Harju Elekter such as the 32% share owned by a separate entity called Harju KEK, and ING Luxemburg owning 11%. It seems the shares are fairly well dispersed as 43% of the shares are held by small, private investors (“Other category in the 2008 annual report).
Exhibit 4 gives a graphical depiction of the overall Satmatic organisation. The managing director has overall operative and strategic responsibility over the whole organisation. Nevertheless, with the relatively large size of the company, the director can not manage day to day activities. Strategically crucial activities of the company are delegated to various people and decisions are made in these areas. Keeping informed of what is going on in various areas of the company is a challenge in any company, and Satmatic makes an effort to coordinate activities and ensure the free-‐flow of internal information -‐ the structure of the organisation supports this effort, hence the attempt to a matrix form of organisational structure.
There are approximately 6 main production teams (see Exhibit 5) at Satmatic, one of those teams focuses on logistics and another assembling the components in to customer/delivery-‐ready units. Each team specialises in mission-‐critical operations with the objective of reliably speeding up the lead time (throughput) of product (time from when materials come into the factory to when the finished product leaves the factory to the customer).
Teamwork – the team moves the process forward towards the end customer
Project teams are set up to look after large customers -‐ Satmatic does their own planning and writes its own part of the large proposals. Product development takes place in teams, while the production is conducted within groups or in what could loosely be called semi-‐autonomous work teams.
P a g e | 7 Project management and warehouse team
The project management area of the company consists of three people who take the customer orders and feed the information into the Oscar information management system. At this point, several individuals take responsibility for purchasing the materials necessary to fulfill the order: the materials necessary to build the product the customer wants. Certain materials like cabinets and wires are purchased “ready-‐for-‐installation” meaning the cabinets are pre-‐cut (holes ’ready-‐made’ so that Satmatic personnel doesn’t have to spend time preparing cabinets) and wires are pre-‐“stripped” (so that workers can directly connect wires and do not need to remove insulation from ends of wires to expose the copper inside). The purchasers ensure the right stuff is available the installers. This purchasing group knows how to get the deals and have formed solid relationships with suppliers – the raw material coming into Satmatic needs not only to be reasonably priced, but be of consistent quality and be delivered in a specified period of time. Satmatic does not want to lose any time on any step in this process. Each member of each specific team play an important role in ensuring the time between customer order and delivery to customer is as short as possible: it all starts with the project and purchasing teams.
With the completion of new and larger warehouse facilities in spring 2010 the difficulties in finding space for incoming and outgoing material were all but eliminated. The materials are inspected, some parts are looked at more closely, and all items are recorded into the enterprise resource planning (ERP) system – this pre-‐production phase of checking and keeping these in materials in order requires effort on behalf of the receiving warehouse team. The 200 square metres of shelves and mechanical inventory elevators provide a place for the new materials, and accuracy is required by the team members. Having everything stored optimally not only reduces errors, but it facilitates the next step of collecting the materials for the installers7 (production staff). This area is of strategic significance, as the company deals with high numbers of various materials, approximately 10-‐15 thousand different material/component labels.
The Production/ Installation Team
After the warehouse team collects the materials from the shelves, they place them on carts and roll them to the installers, who with their electrical gear, prepare to perform the critical task of putting all those bits and pieces together. The installation/production staff is split into two main groups based on the type of customer: 1) project production and 2) contract manufacturing8. The contract manufacturing team deals with higher volumes of fairly standardized products: most contract manufacturing jobs are done for similar types of customers and there is relatively little variability in the products. “Project” production involves customized jobs and can require different equipment and skill set. These two types of production “lines” are kept physically separate on the Satmatic premises but still within a short walk of each other.
Satmatic provides the possibility for interchangeability of teams, meaning individuals can change the type of tasks they are doing. A certain amount of specialization has been reached, but team members are not permanently fixed on one task or area. This is true with the installers, who can work on both contract manufacturing jobs and project jobs, depending on priorities and order volume.
7 ”Installers” in this context are the technical workers who produce the product, putting the components together into finished product. 8 “Contract manufacturing” is explained in more detail just before and within the IT section of the case.
P a g e | 8 The production team convenes at the beginning of a new manufacturing task in what is called a startup/kickoff meeting or “aloitus palaveri” where the order, specifications, and other details of the contract are presented and discussed. Each order that comes into the company is discussed directly with the installers. The team decides how to divide the work and how to go about doing it. The team feels that they are given responsibility and they take it and do not expect people of higher authority to be giving orders – the organization is flat and teams are self-‐guiding. Each team does have their own team “leader” but this is more of a point where communication flows through, as not everybody can be coordinating the communication through the place. As one team leader described it, in order for teamwork to be successful, which it has been so far at Satmatic, the team members must be committed and have the right “attitude” that is company-‐centered, not own specific task-‐centered.
Testing and Delivery
To guarantee reliability, before being shipped to the customer, all products go through a testing phase. There are several technical professionals on the production floor responsible for this final stage. Electrical tests (including wiring, alarms, signals, voltages, and current), insulation resistance tests, and grounding/earthing tests are performed. Just before the final assembled product leaves the Ulvila factory, digital pictures are taken and all inspection documentation is attached. These steps attempt to increase the reliability of Satmatic products.
The product is tracked through each phase with the ERP system and when the product is finished, it is taken to the warehouse for delivery. The warehouse team is back in action and end the process with another important task once they load the finished product on the delivery truck: make note in the ERP system indicating that customer can now be billed. Accurate billing is another key area as this is the trigger that initiates cash flow and the indication of an asset on the Satmatic balance sheet9.
Although at times the tasks seem mundane and mechanical, each step requires special attention. Understanding of what is involved in moving the material through the production process also gives the opportunity for individual team members to make improvements in how things are done – the motto is to do “the least amount of work as possible”: it’s about working smart, not hard. The company established a so-‐called “initiative committee”10 to look at the various suggestions for improvements that come up from different areas of the workplace. Initiatives are rewarded based upon their significance, but all new ideas and suggestions are welcomed.
Training is delivered regularly from Satmatic’s suppliers so that installers and the team members in charge of documentation maintain their product expertise. All staff is encouraged to complete other certifications and diplomas and the company will support this financially.
Sales Team -‐ Overview
Sales projects follow an informal account management structure, meaning people are assigned to key customers, and key customer projects, or ‘accounts’. Due to the small size of Satmatic, there is flexibility and autonomy within this sales group. Despite the company’s small size, the sales activity is quite intense
9 The terms ”asset” and ”balance sheet” are terms used when accounting (keeping track) of a company’s finances. 10 “aloitetoimikunta” in Finnish
P a g e | 9 making it impossible for the managing director to look after all individual proposals and customer accounts11. Sales proposals are done in mainly in Ulvila, and the head office in Estonia is kept briefed of the potential revenue, but the responses to these tenders are done solely by Satmatic. Communication is the glue that binds the members in solid internal teamwork.
One of the key activities for the sales team to determine is something called the scope of delivery. Specifying the scope early on in the sales process saves a lot of time and confusion internally. For example, the international customer may make a basic order of 10 cabinets without providing any documents, assuming Satmatic does the planning and engineering. It must be specified what exactly is to be delivered and there are two options: 1) Customer does engineering service work themselves or, 2) Satmatic does the engineering. It needs to be determined if Satmatic will do part or all of the commissioning service work. The scope of deviations in delivery varies across countries. In the United States, typically only cabinets are delivered and the customer completes the field cabling and installation by themselves. The Americans often do all installation engineering and subcontracted engineering will do the installation drawings based on documents and schematics provided by Satmatic. In Europe, Satmatic will typically provide the installation engineering but the customer will do the physical installation on the site themselves. In Asia there also some changes in requirements. These issues can be taken for granted in various geographical areas and a basic understanding across countries is necessary.
Networking and Teamwork Across Organisations
In the Malaysian case, Satmatic worked with UPCast from Pori. Even the deliveries often went through the partner network, and not directly from Satmatic to the Malaysian customer. The partnerships between Satmatic and its suppliers and Satmatic and its customers, particularly contract manufacturing clients can best be described as “relationships”. The teamwork across organisation is described in terms of relationships but it is based on the same principles at teamwork inside the organisation: communication (sharing information), trust, and mutual benefit (attitude) . These relationships are more long-‐term in nature and require mutual trust by both parties. Strong relationships within networks is a competitive advantage for any company, but even more critical for a technical high value-‐added manufacturer like Satmatic.
MEDIA
Satmatic has used several types of tools in communicating internally and externally. The customer magazine ‘Satsi’ is produced in both print and electronic form, and it is easily accessible from their webpage. This keeps customers informed and also helps maintain the image of the customer. There has been some discussion within the company about the role of this magazine. Other external communication tools include basic digital marketing communications in the form of group email among stakeholders.
Customer information is maintained for future marketing and sales efforts. The Customer Relationship Management (CRM) tool will likely be implemented soon. Web tracking software is used to track tracking
11 The word ”account” does not mean ”tili” in Finnish with referring to a customer. It is simply a business term for ‘customer’.
P a g e | 10 movements of visitors to website. Only a very small amount of traditional advertising has been used – in the past the company enjoyed more orders than it could deliver, therefore increasing demand via advertising was unnecessary. However with the decrease in orders over the past 6 months and the looming sense of economic uncertainty causes Satmatic to re-‐think the importance of increasing company and brand awareness. Currently the company is working with an outside image consultant on its total marketing activities.
Internally the company uses email and production team leaders and all managers use it extensively despite its setbacks. Weekly or bi-‐monthly face-‐to-‐face meetings are held in the various operative areas. The managing director holds an information session to the whole staff every quarter.
Contract Manufacturing – enabled by Oscar
A significant part of Satmatic production is attributed to contract manufacturing. Companies, instead of manufacturing the electrification and automation products themselves, outsource production to Satmatic on a contract basis. Satmatic then can focus on making its own core products and increase volumes. These contracts are created with a longer term relationship in mind as they bind Satmatic and partner firm via mission critical activities – this involves a deeper level of mutual trust and interdependence. About 9,5 million or 60% of the total 15,8 million euro sales revenue in 2007 was attributable to contract manufacturing.
INFORMATION TECHNOLOGY – Core competency for Satmatic business
ERP
The manufacturing sector in the 1960s created something called material requirements planning (MRP) to be able to integrate and automate production scheduling for systems where materials are built into subassemblies and then assembled into finished products. The main idea is to share the information that is used over and over again in a company. Logistics, warehousing, manufacturing, assembly, distribution and accounting are the typical functions that are brought together or ‘integrated’ via MRP.
With Enterprise Resource Planning (ERP) the basic idea of MRP was expanded to include the entire enterprise. Business functions that are brought together (integrated) through ERP are sales, billing, customer contacts, shipping, inventory management, accounting, finance, and human resource management. ERP is used extensively in large companies with operations in many geographic locations, often serving users with various languages. For pure production management, Satmatic is using the Oscar system for Windows and does not plan to make any changes until earliest 2012-‐2014.
ERP systems are cross-‐functional and often replace dozens of individual function-‐specific software applications. Firms choosing to convert to an ERP model (like Satmatic years ago) typically bought the software and related consulting services from specialized ERP vendors or resellers. ERP software systems are typically not turnkey systems and the firm must customize the system with the use of company-‐specific business rules and data. Usually the company would need to make significant changes in traditional ways of doing things or so-‐called “business processes” to take full advantage of the integrated ERP functions.
P a g e | 11 Satmatic has not yet integrated all of its business functions or “processes”12 however the company provides turnkey deliveries looking after the whole electrification solution from the start (planning) to installation (commissioning and training) on the customer site.
Oscar who?
Materials management and production planning are at the core of the Satmatic Oscar system. The Oscar system keeps track of an inventory of over 10000 different products. The Oscar system is a tool that provides Satmatic with ability to serve the production needs of their customers. This is the tool by which Satmatic provides so-‐called “process control software”. Each individual customer that requires power boards and cabinets does not need to have this tool, which is based on solid ERP/MRP principles. It is more than servers and computers networked together with some smart software.
Overview of Satmatic Processes (described in “team” context above, here described in “IT” context):
The whole business process starts with the customer – some kind of contract is sealed with the buyer of a Satmatic product or service. This contract, which started with the sales proposals and requirement specification, is defines the whole operation in detail. Prices of materials for the product being produced by Satmatic are determined, and sometimes the materials and pricing come directly from the customer. More often Satmatic staff responsible for purchasing will seek out the materials and corresponding pricing.
Each product component, from wires to brackets to switches and fuses, is labelled (given a name or label) by the production management system (Oscar). The materials list is a key item of information that describes each component that belongs to a particular product. The customer provides the materials list in a particular file form (.csv) and it is fed into the Oscar system which will then make an electronic order to the suppliers for any component that is not readily available in Satmatic’s warehouse – it is not viable to keep all types or a large abundance of inventory at the Satmatic premises. Immediately the customer receives the updated ‘materials list’ complete with newest pricing information.
After the electronic exchange of information is complete as described above, the production work is ready to begin and Satmatic prepares for the arrival of materials to the factory. The Satmatic team is ready for action (see section on teamwork). The efficiencies created via electronic information (data) exchange in the Oscar-‐assisted system are significant. A key measurement is called lead-‐time (läpimenoaika) which is the time it takes for product to go from planning to delivery. Lead-‐time has decreased by 20% directly due to the Oscar system, and more gains have originated by work planning and ideas generated from the Satmatic team members.
Due to this system, Satmatic is essentially providing a logistics service to its customers. Some of the customers using this system are Cimcorp of Ulvila, the fibre optics producer Nextron, a large Swiss cable manufacturer and a large global packaging company (Ito) . Oscar allows for all the materials to be brought together, tracked efficiently and assembled into products for quick delivery. In this industry, the material suppliers are quite concentrated and prices do not fluctuate very much and are basically the same worldwide. Therefore Oscar can handle high volumes of these materials and therefore Satmatic can
12 This describes processes/operations in a nutshell. A more closer look at processes covered later on in curriculum.
P a g e | 12 produce higher volumes, meaning higher sales. The system also is able to convert to hours, making pricing a bit easier. Satmatic delivers over a thousand of these electrification units per year with the help of Oscar. Worth mentioning is Satmatic’s Customer Relationship Management System (CRM) that is currently under developing – these systems help keep track of the customer contact mainly for sales and after-‐sales service purposes.
General IT
Word processing, spreadsheet, and presentation applications are commonly used at Satmatic. For
technical design and production management, other applications are used. The company runs Windows™ operating system on its computers, and also the software most critical to their business, Oscar, is optimised fro the Windows™ environment. Examples of windows-‐based applications such as word, excel, and powerpoint. Certain non-‐core-‐business IT activity has been outsourced. The Satmatic webpage development and hosting is done outside of the company.
AFTERWORD
Satmatic began offering solar energy based equipment in addition to its traditional product line13. In 2009 and 2010 Satmatic ventured into the business of providing electrified posts for heating vehicles in parking lots car parks. In addition to the standard heating boxes standing in the parking lots, throughout 2011 Satmatic developed the e-‐tolppa service and by January 2012 it broke the 1000 user barrier. E-‐tolppa monitors the use of electricity and the turning off-‐and-‐on of the vehicle heating. It also can be used to charge hybrid vehicles.
13 Google docs link to 2010 overview https://docs.google.com/a/ibs.samk.fi/open?id=0BwfGpx9-‐oCGOOTYyZGEyYzYtNGRiYy00Y2Y5LThmYzItNzIzZjE3MDc3ZjY4
P a g e | 13
EXHIBIT 1
Satmatic Sales Revenue –2002-‐2008 (updates http://www.satmatic.fi/upload/satmatic-‐oy-‐2010-‐katsaus-‐eng.pdf)
million Euros (€) million EEK
(Estonian kroons)
2002 2,2 33,9
2003 5,7 89,2
2004 7,4 116,0
2005 8,9 139,7
2006 12,7 198,1
2007 15,8 246,7
2008 22,7 354,9
Satmatic Sales Revenue – Millions of Euros –2002-‐2008
P a g e | 14
EXHIBIT 2
Satmatic Products
Automation Cabinets
Control cabinets Control desks Pneumatics
Motor Control Cabinets
Sivacon 7400A 8PU0 3200A 8H50 1600A
Electricity Substation
Compact substations Distribution Switchgear
Component Sales
Projects
Automation Electrification Instrumentation
Picture of a Switchgear (Motor Control Cabinet):
Picture of a Compact Substation:
P a g e | 15
EXHIBIT 2 continued
Satmatic Product Groups -‐ breakdown by industry14
14 From 2008 annual report
P a g e | 16
EXHIBIT 3
Satmatic Services
Contract (Franchise) Manufacturing
Projects
Engineering – software and hardware
Documentation
Commissions
Training
Installations
Electrical Installations
Automation Instrumentation
Maintenance
Logisitc Services electrical components or automation/instrumentation components
Siemens System Integrator (PCS7, Simatic)
P a g e | 17
EXHIBIT 4
Satmatic Organisation-‐ Chart Form-‐ Satmatic 1.6.200915
15 Satmatic internal documents
Sales
Sales Director:
AL
Sales Managers
JK
JS
RN
KM
Siht.palvelut
Anu Rantala
Manufacturing Projects, Purchasing
MG (in Ulvila)
AF (in Kerava)
HH KN AR
Purchasing
TK TL SJ MR
Planning/Project Services
JR
JL
TV
JH
TL
JH
Kokonaisprojektit
Juha Leppänen
Production
KA (in Ulvila) KH (in Kerava)
Logistics
PK
Production Teams
JL JR KL TH KA KH (in Kerava)
Administration and Personnel
RL
Finance, Billing, ERP
RL AH AR MK MP SJ MR
Managing Director Administration RL Quality and Environment MR, KM
Marketing, Managing Director and 3-4 managers
P a g e | 18
EXHIBIT 5
Satmatic Production Teams16
16 Satmatic internal documents
Team 1
9 members
Team 2
7 members
Team 4
8 members
Team 3 Logistics
8 members
Team 5
7 members
Team 6 Project Management
3-4 members
Team K – Assembly
13-14 members