BML Inc., one of Japan's largest clinical testing centers, has constructed and implemented "SAP R/3" ERP package software in an open system comprised of five modules, which focus mainly on the financial management functions. This system, the first of its kind in the clinical testing industry, has been effective in increasing the level of BML's management activities. In addition to applying integrated information in company management, the company is currently considering the construction of a new and expanded system.

Increasing the level of financial management through an open system that meets the needs of the era

Masato Chikira Manager, ERP Promotion Section Management Planning Division BML Inc.

BML Inc. has simultaneously implemented five SAP R/3 modules company-wide, with a focus on financial management. This is the first time such a system has been adopted by a company in the clinical testing industry. We asked Masato Chikira, Manager of the ERP Promotion Section in BML's Management Planning Division, about the background to this implementation.
"About ten years ago, we had created a financial management system using mainframe computers. We decided to implement the new system because the mainframe system was no longer able to meet the needs of the era. Specifically, it was unable to accommodate new areas of business and the increasing number of subsidiaries that were included in our consolidated closings. Another factor was the system's inability to keep up with the changes in accounting standards that had come about as a result of the 'accounting big bang'?for example, the disclosure of information from each quarter's closings.
"We considered implementing ERP package software once, three or four years ago. We looking to building an open system at the time as well, as a means of reducing TCO, but we gave up on the idea because we came to the conclusion that given the issues of reliability and balance between the package and the server, we would be better off continuing to use the existing system.
"Later, on instructions from top management, we began studying the construction of a new financial management system that used ERP based on PC servers. At that time, the R/3 4.6C was one of the systems we evaluated; also called on a consultant to conduct a detailed evaluation of the entire system, including the hardware configuration."

Kuniaki Kitahara, Deputy Manager of the ERP Promotion Section, commented as follows.
"NEC conducted benchmark tests as part of its support activities, so we got a clear impression that the PC server was able to handle the data volumes involved."

As a result, the company decided to use the R/3 in an open system format. Kitahara talks about the company's goals in going with this system.
"Our ultimate goal was not just the implementation of an ERP package. The key was how we would be able to effectively use the information obtained through ERP. We had seven specific goals in mind: to improve profit management, to strengthen cost management, to speed up consolidated closings, to strengthen budget management, to strengthen personnel and management systems, to increase the efficiency of management division administration, and to strengthen our information infrastructure. In this way, we were aiming to integrate management information and enable our people to obtain information in real time."

Achieving stable R/3 operations with PC servers

BML selected R/3 because it is a global de facto standard, because it guaranteed stability, and because it offered possibilities for future improvements in system functions. Kitahara talked about the process that led up to the company's selection of NEC as its development partner.
"We've been relying on NEC for software development for some time now?our relationship with them goes back more than ten years. We've always been very happy with the results, for example in the development of an automatic blood dispensing system called "Frontier and Symphony," which contributed to laboratory automation. This background was a large part of our reason for selecting NEC as our partner in the implementation of the new system."

The applications of R/3 cover a wide range of fields, including accounting, purchasing, cost and P/L management, and sales management. The five modules actually implemented by BML were:

1. FI (financial accounting)
   
2. CO (management accounting)
   
3. SD (sales management)
   
4. MM (stock and purchasing management)
   
5. EC-CS (consolidated closings)
   

Achieving real-time tracking of numbers and more efficient management

Kuniaki Kitahara Deputy Manager, ERP Promotion Section Management Planning Division BML Inc.

The system has only been in full operation for a short time, but according to Kitahara, definite effects are already being seen.
"First of all, we can see profit and loss data for each division at a very deep level. For example, in the sales department, we can now track detailed data on performance in a number of specific areas, such as sales profits. R/3 is not originally a system designed for business rationalization. In that sense, the level of management has undoubtedly improved, in keeping with our original goals."

Kurata explained these effects in a little more detail.
"In the past, data processed monthly was output on paper and then confirmed, but now we can check the daily numbers on a screen in real time."

Chikira talks about the merits of implementing R/3.
"The number of employees involved in the system's operation is exactly the same as in the previous arrangement. The greatest advantage for the company, however, is that with the same staff, we can obtain even more detailed information and more accurate management indexes."

Taisuke Kurata Section Chief, ERP Promotion Section Management Planning Division BML Inc.

Kitahara talked with great anticipation about the future of the system.
"The main theme for our next step will be how to use the information integrated through ERP. This will be a mission for the individual divisions. We have two approaches in mind in this regard. The first is to create a new extended framework, for example incorporating SCM or data warehousing, and the second is to promote continued business process reengineering."

According to Kurata, because the system's performance is more than satisfactory, the company will focus its energy on maintaining this performance.

"R/3 is an execution-oriented system, Kitahara adds. "In the future, we plan to devote our energy to the construction of a planning system."

Looking back on the system's implementation, Chikira summed up as follows.
"The system was completed according to the scheduled budget, and we are very grateful for NEC's substantial efforts, with regard to education before implementation as well as follow-up service. We particularly look forward to NEC's support in the future, during the period until our in-house staff has learned the ropes."