Part 2 of a two-part series that asks, “Where do you start your digital transformation?” and illustrates the impact of digitalization on six of Korea’s top companies. Read Part 1. For more customer perspectives, please read the Digital CIO series.
In Part 1 of this series, we highlighted the experience and insight of executives from three leaders of the Korean economy: Lotte Chemical, Delivery Hero (Yogiyo), and SK Hynix. Part 2 features three more of these top companies: Hyundai Kia Motors, Daewoong Pharmaceutical, and Kolon Benit, which recently concluded its largest, US$4 billion merger.
Digital core, key partner for smart mobility – Hyundai Kia Motors
Hyundai Kia, a global Top Five car-maker for electric vehicles, autonomous driving, and personal air vehicles (PAV), aims to become a smart mobility company that encompasses eco-friendly car manufacturing and services using electricity and hydrogen by 2025.
As existing vehicle manufacturers focus on high-quality mass production centered on internal combustion engines, they have, of course, maintained an independent operating system between corporations, allowing for supplier-centric standardization and region-specific design.
However, current and future markets are increasing the demand for personalization based on small-quantity batch production, and the demand for eco-friendly cars has become a new opportunity in the market. Sharing services for houses, hotels, and taxis now affect automakers, and if they don’t make money from smart mobility, they’ll lose the market.
To be able to respond quickly and flexibly, robust information infrastructure and data-driven decision-making are key to allowing more than 50 entities to move like one body. To this end, Hyundai Kia’s decision is cloud ERP based on a global single instance (GSI). Fast and accurate decision-making requires an in-memory-based GSI environment, as well as cloud computing for rapid deployment and data aggregation.
The result is a successful reduction in costs of US$26 million per year and a reduction in consolidated accounting settlements from seven days to three days. The company has acquired an engine called digital core and has succeeded in digital transformation with two wheels: digitalization of R&D and smart factory.
“ERP is the core system for preparing, connecting, analyzing, and utilizing the most important data. In that sense, the next-generation digital core is clearly the most important means of digital transformation, even if it is not all of it.” Dongbok Kwon, Hyundai Kia Motors
An essential step to a “billion-dollar club” – Daewoong Pharmaceutical
Daewoong Pharmaceutical expanded its business with biotechnology and cosmetics based on generic medicines and achieved $1 billion in sales.
To continue this growth, the company needed an operating model where members worked autonomously with clear goals, were transparent about the results they created, and were rewarded with certainty. It also required a responsible management support infrastructure to support business innovation and employee growth through open collaboration, accelerating customer value, and global innovation in drug development.
After a thorough evaluation, Daewoong Pharmaceutical launched the “S4 Project” in October 2018, with the goal of securing an “S”-centered core system representing SAP S/4HANA, Speed, Standard, and Smart management.
With the next-generation digital core implemented, all employees can now see the company’s performance and current issues at a glance. This transparency enables the company to focus on building an intelligent work environment where employees can do their best for performance-driven tasks.
“Daewoong Pharmaceutical sought to secure the foundation for becoming a global healthcare group with an intelligent enterprise environment. This upgrade to digital core has brought digital transformation to the fundamental way we work, and increased work efficiency.” Sengho Jeon, President, Daewoong Pharmaceutical
Rebirth for innovation and growth – Kolon Benit
For Kolon, it was not easy to respond to a rapidly changing external environment because each of its business entities functioned in a silo; these silos are divided into chemicals, fashion, construction and distribution, environment and energy, automotive parts and IT, and bio and healthcare.
First, Kolon put together an IT environment comprising its major chemical companies then combined the construction and IT-dedicated companies. In less than two years, however, large amounts of data were generated and accumulated, resulting in a system slowdown. A general bottleneck of the IT systems also occurred. Once again, the system needed to be overhauled.
To rectify the situation, Kolon decided to introduce a new cloud-based digital core for 19 companies including nine major affiliates, five in China and some in the United States.
Based on this innovative experience, Kolon gained new competitiveness in winning orders from external IT upgrade projects, and it has boldly proceeded with next-generation IT deployment projects. As a result, sales order-based production increased from 49% to 77%, while information inquiry and analysis response time decreased by eight to 47 times in financial accounting.
Finally, the new system helps Kolon adhere to a new government labor regulation strongly mandating that employees work no more than 52 hours a week. The recent innovation of real-time reporting for each unit of work supports Kolon in maintaining compliance.
“Proactive response creates new opportunities, as other companies are now embracing these changes. There is a solid and flexible information infrastructure for the transformation of the reborn Kolon.” Chun SunKyu, Director, Kolon Benit
Find out how you can support your digital transformation with SAP S/4HANA.
This article originally appeared on SAP Story Hub and is republished by permission.