CASE STUDY: Wärtsilä integrates activities

Background

Wärtsilä Finland Oy—the Finnish subsidiary of Wärtsilä—supplies its customers in the marine and energy markets with complete life cycle power solutions. Its global network provides service, maintenance, and reconditioning for machinery and power plants throughout their lifetime. The company mainly exports its products to Europe, Asia, and the Americas.

VM-Group Oy combines design, sheet steel processing, and skilled craftsmanship into a seamless production process, providing prompt delivery of high-quality products. The company’s customers include large export enterprises in Finland and their subsidiaries abroad, as well as machine and equipment manufacturers.

Wärtsilä Finland Oy’s factory in Vaasa, Finland and VM-Group Oy—one of the factory’s biggest suppliers—gained substantial benefits by linking their business processes electronically.

Challenge

About five years ago, management at Wärtsilä Finland Oy’s Vaasa factory started investigating methods of transferring data electronically to its suppliers in an effort to decrease the number of mistakes, save costs, and gain tighter production control. "Our staff performed tasks manually at that time and dealt with a huge amount of transactions. It was very difficult to identify and resolve problems," says Information Systems (IS) Manager Ossi Kuurila.

According to Wärtsilä Finland Oy’s statistics, VM-Group Oy’s performance record was unacceptable. However, the company’s deliveries had always been nearly 100 percent correct and on time. "People did not want to enter data into the existing system. Instead they took care of things by telephone and stored the information on paper or in their heads. Nobody bothered to update the system if we changed a delivery date, so our own statistics were unreliable," reveals Kuurila.

Data often fell through the cracks on VM-Group Oy’s end as well. For example, the company might unknowingly continue working on an order after Wärtsilä Finland Oy cancelled it. "Since all of our processes were manual, information about order changes and cancellations was often transferred from one person to another verbally or on paper rather than entered into our system," says Managing Director Peter Koistinen.

Another issue was the fact that VM-Group Oy often manufactured unnecessary parts because orders were based on Wärtsilä Finland Oy’s original estimate rather than its actual need at the time of delivery.

Solution

Wärtsilä Finland Oy initially researched both Web- and Extensible Markup Language (XML)-based solutions, only to find that neither used standardized electronic message content. VM-Group Oy also came to the conclusion that the available options were too rigid and expensive.

A few years ago technology improved, and Wärtsilä Finland Oy decided to use Electronic Data Interchange (EDI) as the basis for its data transfer system. The company chose Anilinker Oy (now Liaison Technologies) NetEDI—the smartest and most functional solution on the market, in Kuurila’s opinion. "Compared to earlier EDI solutions, Liaison's concept is of a totally different caliber. It is many times lighter, cheaper, and more flexible."

VM-Group Oy also recognized the benefits of NetEDI, although the commitment to one operator raised some doubts initially. It soon became apparent, however, that in the future EDI operators will cooperate in much the same way as cellular providers. "Liaison is cooperating with Elma Electronic Trading already, so companies using that operator are directly connected to the common network with Liaison," says Koistinen.

Results

Wärtsilä Finland Oy and VM-Group Oy began communicating electronically using Liaison’s solution more than a year ago. Besides VM-Group Oy, there are already ten other suppliers in Wärtsilä Finland Oy's network. By year’s end, the company hopes to bring fifty new suppliers online.

Wärtsilä Finland Oy and its suppliers currently transmit order, delivery, and invoice data. The company originally hoped that 70 percent of all data at the Vaasa factory would be handled electronically by the end of 2001. However, 50 percent of the data was moving across the network successfully by early autumn, and Wärtsilä Finland Oy now feels that it will reach—and surpass—its goal.

According to Kuurila, the biggest advantage of the new system is that Wärtsilä Finland Oy can now easily manipulate electronic order, delivery, and invoice data in its own internal systems. "We successfully automated our order and invoicing process because we now have only one interface and messages come in and go out in the same format."

The amount of mistakes in Wärtsilä Finland Oy’s workflow is now minimal. Those that do occur are easily uncovered and corrected. The whole production process is more streamlined and timely, and suppliers receive order changes and cancellations automatically.

For VM-Group Oy the most important outcome of the project has been that Wärtsilä Finland Oy's order data flows quickly and without errors directly into VM-Group Oy's internal systems. "We are able to provide better service and react faster to changes in Wärtsilä Finland Oy's process. We can keep smaller amounts of stock on hand and get through the workday with less hassle and stress," expresses Koistinen. “This level of efficiency will also translate into future cost savings.”

Wärtsilä Finland Oy is currently using Liaison’s services to develop a solution for electronic transfer of Portable Document Format (PDF) and Computer-Aided Design (CAD) files to its suppliers. VM-Group Oy is planning to promote use of Liaison’s network among its own suppliers.