The production plant of Sokpol-Koncentraty is located in Zagłoba, in the Powiśle region of Lublin, one of the largest raw material bases in Poland. It has been purchasing fruit from local fruit growers for several decades. Annually, the company processes about 70 thousand tons of fruit, mainly apples, producing fruit and vegetable juices and concentrates.
In order to improve the quality of supply chain processes, including in particular the handling of raw material purchases and relationships with suppliers (individual farmers and other processors), the company decided to implement the SAP S/4HANA system. The implementation partner was SNP. The project started in November 2019, and the go-live took place in July 2020. The implementation was carried out using the SNP SPRINT suite – a dedicated solution for mid-sized companies, including a set of key business features, together with a proven implementation methodology as well as organizational and IT tools to support the project. SNP SPRINT is an S/4HANA-based solution certified by SAP.
The work was carried out during the COVID-19 pandemic. For this reason, the system configuration phase as well as internal tests and module and integration tests were performed remotely. Only the blueprint phase was completed before the lockdown. Despite these difficulties, the project was kicked off as planned. This was possible thanks to the commitment of the project teams and constructive cooperation between Sokpol Koncentraty and SNP.
The scope of implementation included the following areas: finance and controlling, sales and distribution, as well as materials management and production planning. Interfaces integrating S/4 with an external HR and payroll system were also prepared.
Due to the company’s profile – fruit and vegetable processing – the key objectives of the system implementation were related to the logistics chain and included:
- improvement of reporting,
- standardization of logistics processes,
- transparency of material flow,
- raising the efficiency of warehouse operations and processes,
- increasing the number of inventory checks in warehouses.
Purchase, weight, self-billing
For companies dealing with food processing and production, an important area of activity is the procurement of raw materials, i.e. often the purchase of meat, milk or agricultural products directly from their producers, including individual farmers. Often purchase is made on the basis of previous contracting or permanent contracts with suppliers. Also in Sokpol Koncentraty, this process was included in the the scope of customizations of the SAP standard according to the customer’s requirements.
In the materials management area, a significant functionality extension prepared in accordance with the customer’s specification is the purchase cockpit. It helped to automate, for example, the process of purchasing fresh fruit and vegetables in the SAP system.
The solution includes a connection with a platform scale where vehicles with raw materials entering the plant are weighed. At the customer’s request, the process was additionally enriched with the SAP Fiori application for creating passes. The application available via a web browser is used by gatekeepers, who register in it the entries and exits of the suppliers from the company’s premises.
The main task of the application is the systemic creation of a queue of fruit suppliers who wait in front of the gate for unloading and are let in only when called by the security guards. Ultimately, it will also be possible to monitor the time spent by a given vehicle on the company’s premises.
The pass created at the gatehouse with a minimum set of information is then used to identify the supplier on the scale where a vehicle with goods is weighed. The goods can be both in bulk and in the supplier’s returnable packaging.
After the first weighing, the vehicle leaves the scale and is unloaded. Then it returns to the scale for a second weighing, which is followed by determining the net weight of the goods. Once unloading is complete, drivers can pick up the returnable packaging delivered during previous deliveries of fruit and vegetables.
Once all the required data has been obtained, the system automatically posts the receipt of goods and carries out their pricing. The pricing is then the basis for the company’s payment obligations to the supplier. The whole process is carried out automatically, without participation of the scale employee, who is responsible for technical activities, i.e. weighing, counting of packages, identification of business partner (in this case the supplier). Financial operations connected with the fact of raw material delivery take place in the background.
As proof of delivery of the fruit/vegetables after the second weighing, the supplier receives a so-called weighing slip. The printout includes all important information related to the delivery. Since most raw materials are purchased directly from farmers and growers, Sokpol-Koncentraty issues invoices on their behalf (the so-called self-billing). The invoice also indicates a related weighing slip, which allows suppliers to maintain control over settlement of accounts with recipients.
The whole process is automated and its handling is simplified as much as possible for Sokpol employees.
In addition, the process of purchasing raw materials takes into account the obligation imposed on flat-rate farmers by the legislator to pay a contribution to the National Support Center for Agriculture of 0.1% of the value of the goods sold. The relevant calculation is specified in the invoice.
We’ve become more competitive
In connection with the new production activity launched in 2018 (launch of retail production), it was purposeful to implement a system covering the initial stages of production planning and preparation with precisely defined master data. These data were collected and verified even before the implementation period, but there were no mechanisms of connection between individual activity areas, i.e. the existing IT system for recording business events and new areas recorded outside the system.
With the growing volume of finished goods, it became more and more difficult to manage the inventory levels that are a basis for production planning, and the purchase or production of components.
In the case of some components, the profile of the company allows for the purchase or production of a specific bill of material component, i.e. the creation of the so-called multi-level bills of material, and this was an additional element that had to be regulated systemically. Therefore, it was decided to rely on the SAP S/4HANA system solutions that are well-known and proven in practice, and experienced SNP consultants.
With SAP, we gained an automated production planning and implementation process based on available materials. This made it possible to reduce the inventory levels and, as a consequence, the funds allocated to cover the material demand. We are provided with a reliable calculation of the production profitability as early as at the stage of the production order, which is crucial in our industry characterized by high dynamics of prices and low margins.
Clear and reliable pricing based on real production costs has allowed us to reduce the prices of our products while maintaining profitability. We have become more competitive in the market, which has already resulted in new contracts."
Sławomir Malarczyk, Chief Operating Officer, Sokpol-Koncentraty
In addition to standard system solutions, dedicated solutions for supporting planning processes and production reporting have been developed in the production planning area.
Sales and production planning is a flexible S/4HANA tool for forecasting and planning. It can be used to determine sales, production and other operational goals on the basis of historical, current data and/or future estimates. In addition, capacity planning can also be performed to determine the production capacity needed to meet these goals. The solution was configured according to the customer’s requirements.
In the area of confirming the completion of production orders, a functionality for reporting on the utilization of available REL and EL capacity was added. Dedicated available categories and codes of downtime depending on the production line were defined. This simplified and increased the accuracy of reporting production downtime and its analysis.
A line operation report was prepared, presenting a billing of operation time for individual production lines. In addition to the recorded production times, it also includes setup times and unscheduled downtime broken down into categories. This report provided Sokpol with a tool for controlling current production and reporting production in a given period (weekly, monthly, quarterly), including calculation of basic KPIs.
The component consumption report shows theoretical consumption by net recipe, theoretical consumption by recipe plus scrap rates, actual consumption for production orders, actual consumption for production orders, quantity and percentage variances and variances per unit of measure. In addition to its reporting function, this tool can also be used as a basis for triggering the process of updating master data or controlling a particular part of the production process.
The SAP S/4HANA system at Sokpol-Koncentraty is maintained in the SNP Managed Cloud. SNP provides comprehensive system maintenance and support, including a guarantee of business continuity, administration and proactive monitoring.
In solving day-to-day problems with the operation of S/4, system users are supported by dedicated SNP service teams as part of the remote SAP application management service.
The system maintenance model adopted by the company allows it to use a modern system supporting the organization’s processes, with the guarantee of its reliable and uninterrupted operation. There is no need for the company to build internal competencies in the technical or application layer.
Cooperation: Dariusz Bochenek, Paweł Napadłek, SNP Poland
Sokpol-Koncentraty is a manufacturer of fruit and vegetable juices, nectars, purées and flavours from fruit and vegetables. The company’s headquarters is located in Zagłoba near Kazimierz Dolny. The modern production plant provides highly developed technological facilities, consisting of the state-of-the-art production lines and technological machines and equipment. The company processes approximately 70 thousand tons of fruit annually, mainly apples, producing ca. 15 thousand tons of fruit concentrates, 5 thousand tons of purées and 5 thousand tons of NFC juice. It has customers in Poland, Germany, Austria, England, Russia, Czech Republic, the Netherlands, Estonia, Switzerland, Norway, Slovakia, Sweden and other countries.