Eastern Europe’s largest project to implement ERP systems in aviation launched in Russia

SAP SE’s subsidiary in Russia, Aviation Equipment and RT-Inform (part of Rostec) have signed an agreement on implementing Enterprise Resource Planning (ERP) systems. To date, Aviation Equipment has been the first company in the Eastern European aviation market to build a global integrated resource management system. The cost of the three-year agreement is 174 million rubles, and the holding’s return on the information platform implementation is expected to exceed 400 million rubles 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 utilization, and reducing production costs. Additionally, according to expert estimates, the implementation of the project may increase the capitalization of the company by up to 10%.

“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 utilization, 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.

Aviation Equipment Holding specializes in development, production, and after-sales support of aircraft systems and individual components. The Holding’s companies also manufacture a wide range of products for the oil and gas, automotive, transport, and energy industries. Aviation Equipment incorporates 35 companies of the aviation industry located throughout the country: in Moscow, the Moscow region, Ufa, Samara, Ulyanovsk, Omsk, the Arkhangelsk region, and other regions of Russia. The Holding is one of 12 integrated organizations forming the “Rostechnology” State Corporation (Rostec).
The Holding’s main customers include United Aircraft Corporation; Russian Helicopters; United Engine Corporation; Russian Railways, Aeroflot; Sibir; UTair; and more.

RT-Inform is the infrastructural, 100% subsidiary of Rostec State Corporation. In accordance with the decision of the Corporation, RT-Inform is a single center of expertise for implementing trade and procurement activities of the holding companies and organizations of the Corporation in the field of information technologies, information security systems and other equipment, for acquiring, implementing, and maintaining management and cost accounting software, and for providing services in the field of information technology.

The Rostec State Corporation is a Russian Corporation, established in 2007 with the purpose of support the design, manufacture and export of high-tech industrial products of civilian and military designation.  It includes 700 organizations, of which nine are currently holding companies in the defense industry and five are holdings in civilian industries. In addition, 22 organizations are directly subordinate. The Rostec portfolio includes such famous brands as AvtoVAZ, KAMAZ, Russian Helicopters, VSMPO-AVISMA, etc. Rostec is located in the territory of 60 federal subjects of the Russian Federation, and it delivers products to markets in more than 70 countries. In 2013, Rostec revenue totaled 1.04 trillion rubles. Tax payments to public coffers at all levels exceeded RUB 138 billion.