SAP Customer Success Story | Mill Products | Financo Group

Financo Group: Fortifying Core Software to Support Global Expansion of Cement and Concrete Business

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Company Financo Group Industry Mill products Products and Services Cement, concrete, and hydraulic binders Web Site www.financo.it SAP Solutions SAP ERP application Partner IBM Italia S.p.A.

As Italys Financo Group prepared to expand internationally, it had to get ready for global challenges. It needed an integrated software solution to help it standardize processes across its cement business (Colacem S.p.A.) and concrete business (Colabeton S.p.A.). The group immediately considered the SAP ERP application. Most large cement and concrete companies use SAP software, says Colacem CIO, Andrea Coccia. We evaluated it against a scorecard, and it proved to be the right solution.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Blending tradition and innovation to foster success

Financo Group is the holding company of the Colaiacovo family. The company dates back to shortly after World War II, when the family began manufacturing roofing tiles. Over time, the small business evolved to what it is today a major industrial group in Italy and around the world. The group employs 2,500 people and achieved consolidated earnings of 616 million in a recent year. Financos core business is cement and concrete production, but it also has a presence in other sectors including transportation, tourism, media, and real estate. The group is based in Gubbio, Italy, and has operations throughout Italy and in Canada, the Dominican Republic, Spain, Tunisia, Albania, Jamaica, and Haiti. Financos cement business, Colacem S.p.A., and its subsidiaries and associated companies in the cement industry generate annual sales of over 408 million with 1,700 employees. The company operates branches in Italy and overseas, including seven complete cycle plants, one lime production plant, one plant for premeasured products, three port terminals, one grinding plant, two storage facilities, and several local offices. The concrete business, Colabeton S.p.A., has locations throughout Italy. It designs, manufactures, and markets guaranteed-performance concrete, along with a wide range of specialty products. Each unit has a research laboratory and ISO 9001-certified facilities with highly qualified personnel who offer expert support.

Expansion by itself has never been a goal of the company but a consequence of quality and capacity to meet customers needs.
Andrea Coccia, CIO, Colacem S.p.A.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Embracing the quality of doing

According to ancient texts, a miraculous event occurred in Gubbio, Italy, where Financos cement and concrete businesses are headquartered. During the time when St. Francis of Assisi was living in Gubbio, he tamed a ferocious wolf that was terrorizing the city. Today, both Colacem and Colabeton display a wolf in their respective logos. Its presence signifies the groups belief in the importance of remembering the past to inform the present while nourishing the future. It also characterizes the companys tenacious spirit. This company was built on hard work, determination, ideas, and expertise, says Colacem CIO, Andrea Coccia. Its part of our corporate culture to stay one step ahead. So when Financo was ready to expand its business beyond the borders of Italy, it wanted to stay one step ahead of its needs. It needed to strengthen its software foundation to prepare for the global challenges it would eventually face. Our software environment was developed in-house and wasnt integrated, Coccia explains. We needed an integrated software solution that could support our growth and objectives. Financo wanted to establish a common set of applications and to standardize its policies, procedures, and processes across locations. These steps would increase the efficiency of its operations and make it easier to assimilate and manage the companies that it planned to acquire.

At Colacem, we aim to improve technological processes, establish the best working conditions, and achieve proper industrial growth with the most careful respect for the environment.
Andrea Coccia, CIO, Colacem S.p.A.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Tallying a scorecard where everyone wins

Financos next step was to determine which software solution would help the company achieve its goals. We started by comparing different solutions but then decided on a more pragmatic approach, Coccia explains. Most large cement and concrete companies use SAP software. So we developed a scorecard to evaluate how well SAP software would meet our requirements. The challenge would be to meet the diverse needs of both the cement and concrete businesses. Financos cement business has a limited number of large customers with a somewhat predictable demand curve. Its less predictable concrete business is based on small orders from a large number of customers, and it relies on timely deliveries and efficient order-to-cash processes. Concrete is not a stable product. You have to deliver a truck within one and a half hours of preparing the concrete or you risk losing it. So you cant have downtime in your processes, Coccia adds.

Core functionality requirements met by SAP ERP

90%

90% of our core requirements, so we took it to the next level and designed a business blueprint, Coccia explains. All functionality was fully covered.

The SAP ERP application would allow Financo to standardize and optimize processes among subsidiaries, suppliers, and customers. Its multilanguage functionality was another strong selling point, given After defining its requirements, Financo took a hard the companys overseas expansion plans, as were look at the SAP ERP application. The software met scalability and ability to integrate non-SAP software.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Formulating a software solution to expand global reach

Financo was operating mainframe hardware with IBM servers, so it was a natural choice to select IBM Italia S.p.A. as its software implementation partner. By working with one partner that could support both our hardware and software environment, we could be sure there would be no gaps in performance, Coccia says. To support the implementation, Financo assembled a team that included IT personnel and key software users. We organized it based on functional area, and we identified a process owner for each area, Coccia explains. The implementation benefited from clear project methodology, executive-level sponsorship, and an integration manager who helped drive the project forward. The company piloted the software for six months at two of its smaller plants. We wanted to test the software in a real situation but without the risk of a full implementation in one of our larger companies, Coccia adds.

6 months
Time needed to integrate a new plant During the pilot, the team tested the core functionality, established a train-the-trainer program, and learned a lot about the software. It also refined its business processes as well as its approach to rolling out the software to subsequent locations. In the following six months, Financo rolled out the software to its two largest plants in Italy and then began to implement it in some of its overseas operations. With each implementation, we build our collective knowledge of the software. We can now deliver a full implementation within six months, Coccia affirms.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Operating an integrated software environment

Financo now runs a single software instance for its extended enterprise and operates a shared services center to manage common processes such as finance, purchasing, and maintenance. SAP ERP has enabled us to expand this concept across the group worldwide, Coccia says. Within its cement business, Colacem has integrated its SAP ERP software with its truck and yard management software. We use it to prioritize shipments and schedule deliveries based on truck and driver compatibility, Coccia says. The management software operates in real time with our SAP software, but an offline mode is available in case of temporary downtime. Colacem uses the plant maintenance functionality in SAP ERP to support preventive maintenance processes in its plants and for technical and administrative tasks related to managing its fleet of vehicles. It uses the marketing functionality for customer satisfaction and market analyses. It also keeps track of incoming raw materials with functionality that automatically posts purchase orders, stock transfers, and receipts of goods. Financos order-to-cash process is fully supported by SAP ERP, both for Colabeton and Colacem. In Colacem, the sales order is controlled at the order entry stage and we then run an immediate credit check so we dont deliver to a customer that has exceeded its credit limits, Coccia explains. A critical aspect of Colabetons processes supported by SAP ERP is quality control. The recipe for our concrete is formulated at headquarters, Coccia explains. Then we enter it into SAP ERP for the production plants to follow. They have no autonomy to change the recipe, which helps us adhere to legal and safety requirements.

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SAP Customer Success Story | Mill Products | Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Building on a stronger foundation

By equipping Colacem and Colabeton with the right tools to support its expansion, Financo is realizing its business strategy. It has standardized its business processes to accommodate international growth. Were more agile in acquiring new businesses and assimilating them into our operational structure, Coccia says. By running an integrated software environment, Financo has reduced its technical complexity and minimized IT effort and cost. It is also realizing the cost benefits and operational efficiencies of running a shared services center, particularly for its financial processes. By having everything in one solution, weve been able to reduce our financial closing time by 50%, Coccia adds. With this stronger foundation, the group has increased the efficiency of its operations across subsidiaries and with suppliers and customers. The logistics of scheduling deliveries and maintaining vehicles

Reduction in working capital by buying fewer spare parts

5%

has also been simplified. We look at each vehicle as a cost center, Coccia adds. We can now maintain tighter control, which helps avoid potential misuse of vehicles and fuel. Each operating business is in better control of its inventory of spare parts as well. We know precisely what we have in our warehouses, locally and globally, so we can avoid double buying, Coccia adds. These improvements alone have enabled Financo to realize a 5% reduction in working capital. We have recouped a quarter of the project cost through inventory reductions alone, Coccia says.

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Financo Group

Executive overview Company Vision Why SAP Implementation Solution Benefits Future plans

Continuing the trend for success

Through its consistent technology upgrades, the search for new market opportunities, the quality of its products, and its commercial competitiveness, Financo has become a leader in the cement and concrete industries. The group plans to continue on this trend by rolling out its SAP ERP software to some of its more remote locations. Financo also plans to implement a second phase to add new SAP applications, specifically SAP BusinessObjects solutions, to its application portfolio. We have hundreds of reports that our middle managers prepare for top management, Coccia explains. Were satisfied with the figures, so now were looking to enhance how we visualize and present the data. In the meantime, Financo will continue to build on the considerable success it has achieved to date. I believe that the benefits weve realized through our SAP software will only increase as the company continues to grow, Coccia concludes.

CMP14352 (11/10)

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