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December 17, 2014

ERP implementation to be launched in Russia

Will be Eastern Europe's largest project to implement ERP systems in aviation.

By Ellie Burns

SAP SE’s subsidiary in Russia, Aviation Equipment, and RT-Inform (part of Rostec) have signed an agreement to implement Enterprise Resource Planning (ERP) systems.

Launching in Russia, this will be Eastern Europe’s largest project to implement ERP systems in aviation.

The cost of the three-year agreement is 174 million roubles, and the holding’s return on the information platform implementation is expected to exceed 400 million roubles by 2017.

"The deployment of a comprehensive ERP system is a key step for us in the implementation of the holding’s strategy. SAP solutions will ensure transparency of our processes for the suppliers and customers. We will be able to manage risks and transform our business in line with the international standards, ensuring competitiveness of our products and services on the global scale," said Maxim Kuzyuk, the CEO of the holding.

"The ERP platform will cover all major processes of the company from industrial planning to management accounting The ERP system designed to balance the processes of production, procurement, and sales. It enables us to plan more accurately with better control of inventory levels, and facilitate effective intercompany cooperation by incorporating data from suppliers to track the entire supply chain."

The SAP ERP information platform is scheduled to be fully implemented by 2017. The value of the system deployment for Aviation Equipment has been calculated to be around 400 million rubles and will be achieved by accelerating inventory turnover and release of working capital, improving employee productivity, equipment utilisation, and reducing production costs.

Additionally, according to expert estimates, the implementation of the project may increase the capitalisation of the company by up to 10%.

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"The world’s leading aircraft manufacturers such as Airbus, Sikorsky, Safran, Pratt & Whitney, and Honeywell, have implemented and operate the SAP platform," noted Vyacheslav Orekhov, CEO of SAP CIS.

"By implementing SAP, they improved accuracy of production planning to 98%, increased staff productivity by 30%, and grew customer satisfaction by 10-20%. Rolling out a system of this size and depth is unprecedented in the Russian aviation industry."

Without taking into account the growth of capitalization, the ROI period is estimated at 3.5 years maximum, and the newly introduced system is expected to bring first tangible results within a year after the launch of the first module.

The objectives of the ERP system include a radical improvement in planning accuracy and depth, which lowers costs through improved machine utilisation, reduced inventories in warehouses, a streamlined production cycle, as well as lower non-fulfillment risks due to improved predictability of manufacturing times, workloads and material delivery times.

The system will also enhance the quality and speed of making critical decisions that improve the utilization of all the company’s resources. A transparent system will reduce risks and increase attractiveness of the company for investors and banks.

"The use of SAP software by one of the leading Rostec holdings is an important step not only for the Aviation Equipment holding, but for other companies within the State Corporation. Our company has taken an active part in negotiating the purchase of SAP software in the interests of the holding. Acting as an IT Center of Expertise for enterprises within the State Corporation, we are ready not only to take part in the implementation of this ambitious project, but also in the subsequent product maintenance and customer support. We are ready to provide assistance to other Rostec holding companies using SAP to meet the challenges of building and developing their unified database," said Kamil Gazizov, General Director of RT-Inform.

By 2017, SAP ERP will be implemented at all of Aviation Equipment’s key production sites. During the implementation, a Center of Expertise will be established to develop and support ERP systems.

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