First Flush
for the Systems

Turning into a Smart Company by using SAP S/4HANA

Traditional teatime thanks to state-of-the-art digitalization: The enterprise Ostfriesische Tee Gesellschaft (OTG), which was founded in 1907, is now getting prepared for the future. The company’s migration to SAP S/4HANA has led to the standardization of its previously heterogeneous system structure as well as to the optimization of its processes. Its warehouse management processes are now mapped in an embedded Extended Warehouse Management (eEWM). But all this is just the kick-off – further digitalization projects are about to follow. OTG – a perfect example of a successful cutover to the SAP S/4HANA real-time suite.

The challenge

OTG, the largest subsidiary of LSH (Laurens Spethmann Holding), has grown through acquisitions and restructuring over decades. It used to have a very heterogeneous system structure with numerous interfaces and system breaks. Master and inventory data was spread across several different systems. This is not appropriate in the light of today’s challenges, says Karsten Rösener, CIO and CDO at OTG: “We have to be able to react promptly to market requirements. We have always been very efficient as far as our production set-up is concerned, but we had a backlog demand with regard to mapping processes, in particular to depicting the supply chain process.” Moreover, sustainability is a major goal. Across the entire supply chain, i.e. from the farmer to the consumer, and for all brands, OTG is going to use raw materials only from sustainable sources.

© Ostfriesische Tee Gesellschaft GmbH & Co. KG

The solution

As a result, OTG needed a universal platform, an optimized supply chain, simplified database structures and the ability to access critical business information in real time. Karsten Rösener: “Although we hadn’t worked with SAP before, we decided to migrate to SAP S/4HANA. We wanted a modern, powerful and future-proof ERP.” SAP S/4HANA is the prerequisite for a full digitalization of the company, including cloud services, analytics and innovative technologies such as the Internet of Things.

A radical new system landscape resulting from a Greenfield implementation was required. The advantage: according to the roadmap, the implementation of SAP S/4HANA is divided into sub-projects, which means separate implementation activities in the respective plants. This ensures that the new system can be introduced to the various specialized departments step by step. This approach represented a lower risk for the ongoing business and delivery capability than a big bang, where the migration takes place at a specific point in time. The integration affected six locations and almost all functional divisions of the company – from finance, purchasing, sales and order management to production and warehousing.

The core of the project was a template and rollout concept to standardize the processes of the various OTG locations and divisions within the entire company. “Once templates have been put in place, it is possible to apply them to the other locations. This facilitated the migration, as did a rollout concept that includes all locations and takes the needs of the various users into account,” explains Markus Hellenthal, partner at consolut and project manager. Thanks to agile project management, it was possible to implement the project within the defined budget and a very short time: It took only nine months from kick-off to go-live.

The result

OTG holds meaningful data for all corporate areas now and is able to take much faster and better decisions. “SAP S/4HANA links all our business systems and warehouse processes. This gives us a real-time view on the corporate operations and allows us to plan and implement our logistics processes in a state-of-the-art way,” explains Karsten Rösener. It is a huge advantage that the activities of all employees, i.e. from sales and production planning to purchasing and shipping, are fully integrated and that any data is exchanged. Whereas the planning of material requirements used to take, depending on the company, several hours, a period of 20 minutes is now sufficient. Even in the event of major changes, a new run can be started during the day without affecting the users’ work. The improved material requirements planning is an important first step to move as an intelligent company towards more sustainability.

Wait and see? Not at OTG. As a follow-up project, the company went on to optimize its warehouses, for example to reduce throughput times for pallets. SAP S/4HANA enabled the company to integrate an embedded SAP EWM, a central solution for warehouse management. This allows mapping processes in real time. Users can exactly see where a particular item is being located – even across plants. The eEWM does not require any additional hardware, is included in the standard scope of the license and can be extended with additional Advanced eEWM functionalities. As the agile approach with sprints had proven effective, OTG retained this method for the introduction of the eEWM. The system went live outside the tea season between April and August 2020/2021 and without affecting the seasonal operation of the warehouses. Full delivery capability and invoicing were ensured from day one.

Company profile

OTG, based in Seevetal near Hamburg, is one of the market leaders in the German and European markets with its brands such as Messmer, Milford and Onno Behrends and, on top of that, is Europe’s leading supplier of private tea labels. For the food service and catering market, it offers a range of teas specially tailored to the restaurant, hotel, bulk consumer and catering sectors. OTG also develops customized product concepts for national and international industrial companies and supports them from the initial idea to the successful market launch of their products.