SAP at core of Rayonier success

When the country's third-largest forestry owner, Rayonier, chose SAP for its new medium-density fibreboard plant at Mataura, it set some rigid parameters. The result: the core modules of the system were delivered a week early, and on budget, enabling the plant to open on its scheduled date, June 25.

When the country’s third-largest forestry owner, Rayonier, chose SAP for its new medium-density fibreboard plant at Mataura, it set some rigid parameters. The result: the core modules of the system were delivered a week early, and on budget, enabling the plant to open on its scheduled date, June 25.

With no legacy baggage to consider, Rayonier began with a clean sheet. Plant manager Allan Croft agrees the project was slightly easier to implement because of this. “But because the plant is new, it has meant new people being hired, each with a different background and view. It has been an engineering rather than a re-engineering exercise.

“It was a case of having a very clear strategy, and of adopting SAP’s processes on a well-defined timetable.”

US-based Rayonier, with an annual turnover of $US1.3 billion, entered the New Zealand forestry market when it bought Timberlands, early in the 1990s, and has gone on to acquire a number of other small forest blocks. It currently owns 100,000 hectares of forest.

The decision to build a medium-density fibreboard (MDF) plant — Rayonier’s first in the world — was made at a time when MDF was booming worldwide. Such a plant is not highly capital intensive and is an obvious value-add proposition.

“The decision to build at Mataura (10km south of Gore) was based on being close to the raw materials and the supply chain and not facing competitive pressure for the materials that exist in the North Island,” Croft says.

“We believe a combination of high technology and high-quality raw material can give us a long-term quality and price advantage.”

Most of the finished product will be shipped to Asia — where high-quality MDF earns a premium for things such as furniture manufacture.

“The supply chain is a relatively new distribution and manufacturing philosophy. It involves creating an unbroken chain of processes, from the supplier’s supplier to the customer’s customer.

“Information technology becomes the key ingredient. Customer-value information is just as important as the finish of the board,” says Croft.

Rayonier chose SAP’s R/3 modules running on Digital Alpha hardware under Windows NT. The database selected was Microsoft’s SQL Server, version 6.5.

“We settled on SAP because of its level of integration and its seamless data flow. It came down to the quality of the product and the support SAP provided.”

The decision to run with SAP was made late in September 1996, and by Christmas the initial design of the system was completed.

By the end of January — after a series of final discussions, the design was frozen. As things were proposed they were bedded in by a set date. There was no later opportunity for change. The processes were bolted down in January.

Core functions were delivered in April, a week ahead of timetable. Croft reckons this is probably the fastest implementation of a complex, integrated manufacturing solution ever achieved in New Zealand. “We’re now moving into the other functions as we proceed with commissioning the plant.”

He says SAP primed the contract and used its international “best practice” guidelines implicit in the design of R/3 to build on. “This has meant we’ve been able to implement in a matter of months rather than years.”

Central to the supply chain philosophy is the capability to include suppliers into the IT infrastructure.

For example, the resin in tanks on site is owned by the supplier.

The tank is linked to Rayonier’s systems and as resin is drawn off it is automatically paid for and the supplier notified as stocks need to be replenished.

Croft says Rayonier has ended up with a very high-value implementation of SAP. “It wasn’t cheap but it has been a value-making exercise. It has got to be good value if you can create a functional system within six months.”

SAP was the prime contractor for the implementation, with hands-on configuration and project management subcontracted to ICS Deloittes.

Other subcontractors included Walker Datavision, for barcode systems and intelligent shop floor devices; Computer Systems Engineering, for development and customisation of shop floor control systems; and Supply Chain Consulting, for co-ordination and management of interface development between the SAP modules and the Work In Progress tracking system.

When the plant is at full production, later this year, it will be producing 140,000 cubic metres of MDF annually.

The Mataura plant, which is massive — the main processing shed is 323m long — has cost around $180 million to build and, according to Croft, is expected to generate an annual turnover of about $60 million initially.

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