Lenovo Group(HKSE: 992) (ADR: LNVGY) ,a $ 46 billion US dollars “Fortune” Global 500 company, is a global leader in consumer, commercial and enterprise innovation technology. In Jan 2014, Lenovo agreed to acquire the mobile phone handset maker Motorola Mobility from Google, and in July 2014, fully acquired the X86 server business from IBM.
Why Lenovo need this project ?
The US Committee on Foreign Investment(CIFUIS) approved Lenovo’s X86 acquisition proposal from IBM on the condition that all the X86 servers sold in U.S have to be exclusively built in Lenovo owned plants located in Mexico and U.S. This strict regulation requirement brought about the Bohemia Project (core parts are new APO, new VMI and new CFE systems). The projects servers as the foundation for maintaining and expanding Lenovo business in North America.
The Bohemia Project is designed to enable X86 manufacturing capability and build an E2E supply chain IT platform in Lenovo’s USFC and Monterrey plants (existing PC plants in North Carolina, US and Monterrey, Mexico, Shenzhen, China). By doing this, the project will realizes its two primary objectives:1) meeting CFIUS’s strict regulation and 2) achieving cost per piece saving targets.
Additionally, the comprehensive E2E IT platform will lay an essential foundation from the transfer from IBM system to Lenovo strategic platform. These objectives must be completed by Aug.2015.
Business solution we built for Lenovo
In Sep 2014, Lenovo and SAP signed a contract, to help Lenovo to delivery new APO, new Vendor Management Inventory(VMI) and Cost Forecast Engine(CFE) solution for supporting the X86 acquisition and enabling Lenovo to complete this acquisition by replacing the legacy IBM supply chain networks.
VMI (Vendor Management Inventory) is a highly automated execution system and an indispensable part of Lenovo supply chain network.This VMI is similar to SAP SCM SNC module, but with many Lenovo’s special business features like zero inventory and integration with 3rd logistics system.
CFE (Cost Forecast Engine) is a cost calculation system, it was designed for processing cost simulation accurately,real calculation,analysis & finance control, and guide pricing for ECC material purchase.
SAP Labs China CD team is fully responsible for new VMI and CFE system. It is a total E2E solution which was built from zero and based on SAP HANA platform. The scope of project included requirements analysis, redesign, development and deployment, and handover to Lenovo IT. CD also supported the system go-live implementation and helped Lenovo build their own HANA maintenance team.
Comments: The legacy VMI & CFE based on Oracle, Web logic and JDA i2, it will continued to be utilized for Lenovo’s PC business line.But the new VMI and CFE, totally built on the new architecture, will fully support for new x86 server enterprise business group.
We all knew that SAP HANA can be a high performance backend database of SAP ERP/APO/BW these application system, But…
- Could we build an independent system on SAP HANA without netweaver’s support, using only SAP HANA XS as the Web Application server to support core business process of supply chain system?
- Could we redesign and rebuild a VMI and CFE system on SAP HANA, that matched all requirements of Lenovo and have it perform better than the legacy oracle platform?
- Do we have any similar reference case about building a customized non-sap system on top of SAP HANA XS?
- Video Link: https://www.youtube.com/watch?v=dtYbtPxfflI
- Blog Link: http://scn.sap.com/community/hana-in-memory/use-cases/blog/2016/01/20/lenovo-build-new-vmi-and-cfe-system-on-sap-hana-xs-for-x86-business-line
Human impact of SAP HANA
For Global Planning and Purchase Department
- These teams could use more than 1~2 weeks to finish an executable plan of cost forecast and guide price of each material. This is because the cost calculations could take up to and over 11 hours. In the old business mode this was mandatory daily work.
- Now, not only can these teams accomplish the same tasks in approximately 6~8 minutes, but the global team can re-calculate this at any time. Even within the supply chain department’s global planning meeting they can immediately see the final result once a cost is added or an expense factor changed. With the leverage of the powerful computing capability of SAP HANA, this new CFE system is now fundamentally changing their team’s work mode while improving the planning efficiency of their supply chain network.
- Prior to using the new solution the business user would spend up to a week’s time to create and review a full set of alternative cost plans. They’d create one in the morning and wait until the next day to see the costimpacts of the new plan. Now, the business user can quickly complete a number of different simulated cost forecast plans as an alternative. All calculation changes are performed in the mornings, and the alternatives are reviewed in the afternoon planning meetings, thereby saving up to 4 days of effort.
For Global Supply Chain and Planning Department
- Around 50 % IT support tickets originated from business end users related to VMI process. Such issues as processes executing too slowly or being delayed, and data missing between the ECC/3PL and VMI components. This was primarily caused by the complex Oracle DB/FTP server/Java Program architecture to handle data communication.
- Now, the solution relies on Data Service and OData Services to handle all data communication between ECC/APO/3PL and VMI system, eliminating unnecessary offline file and database integration, and making the process much simpler and smarter,it enables business support team can identify the exception faster.
Business and Social Values
Business Values for Lenovo and SAP
- Beta Tauri(includes phase 1&2 of CFE,VMI and APO systems for Shenzhen LSTC and Monterrey plants) prepares Lenovo for business growth and supports the continued integration of the System x Server businesses. This is the second of several major releases that will enable Lenovo to exit the Transitional Services Agreement(TSA) with IBM.The transition work completed to date, including the Beta Tauri release,reduces Lenovo”s annual TSA costs by $50M through system consolidation.
~QingTong Zhou, SVP and CIO, Lenovo Group.
- In 2015,we signed $20M licence deal with Lenovo, its the largest deal in the history of SAP Greater China. The major component of the deal is HANA enterprise edition,the successful go-live of these two systems(VMI and CFE) is very helpful in accelerating Lenovo”s HANA adoption, and provided very strong support to the deal.
~Jeffrey Liu, Global Account Director,SAP
- New CFE system enables the business user of planning and purchasing department to finish all their work in one day, not one week or more.Increasing the speed of decision making and ensuring they can focus on more valuable work tasks.
- New VMI system makes all processes faster and smarter with high automation,
- Technical information has become more user-friendly for business users. With the well-designed process and UI,the business users can detect issues at any point by themselves and accurately inform the IT support team to fix the problem in a timely manner.
Social Values in China
- After this project go live,it has been listed into the customer success stories of SAP Labs China on the SAP HANA innovation topic.
- SAP HANA and XS were proven to be a robust platform for innovative applications in customer”s landscape.
- By referencing Lenovo”s architecture, SINOPEC now plans to migrate some of their partial business processes of BW into SAP HANA. They have already migrated to BW on HANA before.
- HUAWEI also referenced these experiences,using DU/CR/TR to manage their development packages in their current SAP HANA system,also adopting OData Service as an option in its whole enterprise web service architecture.
- Non-sap system based on Oracle DB/WebLogic/JDA-i2,used many FTP/Java/Oracle DB as intermediate of data communication, it makes process very difficult to maintain and identify problems.
- Eliminated all file exchange using Data Service and OData Web Service, and also moved whole oracle PCDW(Planning Consolidation Data Warehouse) into SAP HANA, it was used to store all PO and Master Data, BOM information centrally, as VMI and CFE has many data exchange with it.
- The whole architecture of New VMI and VMI are simpler and clearly, easier to maintain.
- The core calculation and forecast process of new CFE system was accelerated from days into 6~8 minutes,this improvement totally changed current business operation mode, and all analytical reports are in 2~3 seconds.
- New VMI system can hold 3 times supplier collaboration process of supply chain network than before.
- More than 2000 business user in phase 1(Mexico Plant and Shenzhen Plant)
- First custom development non-sap system on SAP HANA XS
- Biggest pure Native HANA Application CDP project.
- 7x data compression ratio and 2TB Lenovo(IBM x86) HANA server
- 100 UI5 Screens(most screen has CRUD、Upload/Download,Execution/Trigger)
- 330 Customized tables
- 490 Store Procedures
- 500 Roles(DB roles and virtual Role,95% are virtual)
- 2000 Business end users
- 250000 lines SQL Code(old and new process, do not includes JS code)
New Patent of BOM Explosion
How to handle massive BOM explosion? like 100 thousands BOM with 5 level
Usually,we would use cursor to loop all BOM one by one in traditional way,but it does not work in SAP HANA very well.
So,we use the hierarchy and temp table to solved this most important performance part and submitted a patent application in SAP,its very useful for projects which has similar requirements.