Hagihara Industries

Hagihara Industries

Construct the objective management system by standard cost

The effects and future plans of Hagihara Industries

Company Profile
Establishment November 1962
Numbers of employee 412
Capital Stock JPY One billion
Net sales JPY 18billion
Business Category manufacturing
Business segment Manufacture and sales of flat yarn and secondary product the main raw material of which is polypropylene and polyethylene
Contents of introduction Introduced the big bang of purchasing management, Inventory management, sales management, production management, financial management, accounting management of SAP ERP. Introduced SAP BW at the same time.
Period November 2002 to December 2003

The concept and theme; reconstruction of core systems

The first opportunity to think to introduce ERP was a decrease in operational efficiency due to the aging system, however, looking back the evils of the system to pursue the field of rationality so far and concerning the rapid changes in business environment, an important evaluation point was the system that can contribute to value creation from the perspective of management.
Further it is the subject to ensure international price competitiveness with Southeast Asian Countries with a focus on china, Hagihara industry Inc. was faced with a crisis of market share decline because inexpensive competing product related to flat yarn, have been imported from China and Southeast Asia in 1990s.Hagihara industry Inc. increased the price competitiveness by deploying a production base to China, and recovered and strengthened market share by development of high value-added products. Against the backdrop of such a business environment, in reconstruction of the system, they defined it was the most important to make mechanisms of cost management and profit and loss management underlying to strengthen price competitiveness, and that became the standard to select a system. Concerning in about six months, SAP ERP AND
IPS package was selected as the System which contributes to the management and information infrastructure to facilitate the strengthening of price competitiveness.

The aim of the cost managing system; goal management system by standard cost

The concept of the system of cost management and profit and loss management supported by Deloitte Touche Tohmatsu is “To evaluate where to invest properly by managing customer profit, product profit, and departmental profit using standard cost.
“The standard cost” means standard cost (target cost) defined for CO by not changing the way of cost accounting of financial accounting.In other words, actual cost is not suitable for management.
It is necessary to set a cost to reduce cost and make a profit and share this cost. And it is important for manufacturing and sales side to understand each goal and responsibility. Furthermore, being evaluated the results, the aim is to raise awareness to improve the price competitiveness.

Why IPS Public package make it possible?

IPS public package (manufacturing: chemical) develops and provides various additional functions to improve operating cost management by SAP ERP.

1. Support for setting up standard cost
Even though it is complex to set up standard cost in actual work and in setting up SAP ERP master, and necessary for input of so many task plan and high customers’ level of operation, our model makes it easy to set up standard cost by referring to the past actual cost.
2. Actual cost accounting and analyzing differences
We provide actual cost accounting by monthly batch usually operated in each company, and function to analyze differences from standard cost. The result od analyzing differences makes it possible to analyze cost in various meshes and provides effective information to reduce cost.

The project had been prolonged for two months from the first plan (one year), and been started (The story about extending the term is useful information for customers, so, we would like to introduce that later).
After cutting over, there was no problem to immigrate and operate the system. We heard so many reflections from customers for smooth operation.

Two months after introduction, one end of its effects has appeared. By cost management system and analyzing system of BW mentioned above, they found unprofitable products in what they consider profitable. That was equivalent to about 30 percent of their current profit, and they defined it as the most important problem.Now, in HAGIHARA INDUSTRIES INC, they feel positive reactions to new system. Furthermore, project members made goals to make an effect by using SAP ERP and went back to their original department, and have led other members.

At the global-leveled market competition, ensuring price competitiveness is fundamental key issue.
The key concept if IPS public package is to provide the base of cost control and information of profit and loss management.
Most of companies know cost, however, do they construct a system of controlling as management? Or, do they construct a system for all of their members to push on it?
IPS provides solutions to such companies.

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