2014 - ERP strategy - Case Study - E_ D____

The Right ERP for E_____ D_______ – For Internal Consumption

The Right ERP Strategy for E_____ D_______

Company

Logo

Images are reproduced here without permission, in good faith, for internal CONFIDENTIAL

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intention of infringement or harm. Images and information have been sourced through Google and

other public resources, and in case of any copyright violations can be deleted if pointed out.


2

Industry Information

Source: Company management interview, Hoovers, First Research

Desc.: Printing on Cloth, Glass, Metal, Paper, and Plastic

Size: $ 880 billion (Global)

$ 80 billion (US, ~ 28000 companies)

Traditional printers are moving either upstream (content creation) or

downstream (content distribution) to build a sustainable business model


3

Industry Information

• All companies depend on effective sales operations.

• Large companies have scale advantages.

• Small companies have to focus on local/niche segmentation.

• For small companies, costs are related to designing, materials

(paper, ink, etc), manpower, marketing, taxes, insurance, etc.

Price is important, but quality and timeliness are more critical.



4

Company Information

• Founded: 200*, by M***** and B**** F*****

• Business: Customized L__________________________

• Started from the garage of their house, first warehouse in 200*.

Vision: To be the premier l______________ studio in the country, known for its high-end,

trendsetting d_____ that smartly incorporate a ________________.

HQ: S__ D_____, C_

Company

Logo



5

Company Information

• Customized Social Correspondence C____

• Customized S__________ and G____

• Exclusive Designing

• Revenues: $ 860,000 (2013)

• Rev Growth: ~ 20% (Industry growth average = 4-6%)

• Margins: Gross: ~ 26% (v/s Industry: ~ 30%)

Net: ~ 0.6% (v/s Industry: ~ 2%)

• Employee Base: 12 - 15

Company

Logo



6

Current business challenges:

• Inventory Management

o Lack of visibility within warehouse.

o End-of-period inventory accounting issues.

• Improvement in Profitability / Sustainable Financials

o Margins less than industry, barely break-even.

o Cyclical profitability.

o Difficulty in expense planning.

• Production

o System for manufacturing/printing was being loosely used.

o No understanding of where job holds were.

“We need to grow at 20-30% year on year. Our current inefficiencies don’t allow us that.”


7

Current business challenges:

• Sales

o Delayed response to customer about availability due to poor inventory management.

o No CRM software.

o No visibility of customer demand.

• Vendor Management

o Ad-hoc procurement practices.

o Spot procurement meant higher pricing / no long term discounts.

• IT

o 3 overall systems [Production, Finance (Quickbooks), Admin (MS Office)] + Design.

“Inventory was a nightmare. Nobody ever knew what we had on our shelves. When a customer

called, someone ran to the back of the warehouse to see if we had the product or not”.


8

Company Business Strategy

Value Proposition:

Customized high-end designs,

with letter-pressed printing,

focused on niche client segments.

Customer Segments and Channels:

High-end retailers and direct end-users,

via

direct sales and website.

Key Drivers:

• Special events are perennial.

• Repeat celebrity customers business.

• Owned equipment, nearly depreciated.

• Right IT solution will improve efficiency,

boost sales (volumes and revenues),

and margins.

Key Performance Indicators:

• Design-wise volumes,

• Material usage,

• Inventory turnover,

• Unique designs per designer,

• Event-based marketing expense RoI,

“We know we are not doing justice to our potential. We have a good team, a good product,

a good market niche, yet are unable to translate into strong margins.”


9

IT Strategy

Objectives/Goals: “We need a cloud-based business management solution for growth, and to

become much more profitable in a complex manufacturing environment”.

MANAGEMENT

WANTS A CLOUD-BASED ERP SOLUTION

Evaluation Criteria:

• Reputation,

• Scalability,

• Price,

• Ease of Use,

• Functionality in one solution,

• One team for technical support.

Management Shortlist:

• NetSuite

• SAGE ERP X3

• SAP Business ByDesign

Our Recommendations:

• SAP Business ByDesign

• Oracle e-Business Suite

• Microsoft Dynamics GP


Management

Operations

Others

Internet/

Gartner

Testimonials

Reqmts vs

Offerings

Email/Phone

Demos

Access to

stakeholders

Finalizing the vendor and SI

Internal

Stakeholder

Interviews

Vendor / SI

Research

Shortlisted

Partner

Interviews

Final

Selection

Problem Identification,

Capability Assessment

Evaluation Metrics,

Partner Universe

Solution Framework

The 360 Degree Plan

Vendor / SI

Partners

10


11

Side-by-side Comparison

Source: www.top10erp.org/erp-software-comparison-cloud-based-saas-platform-566


12

SAP Business ByDesign

• Comprehensive integrated business management package delivered On-Demand.

• Designed from the ground up, for small & midsize companies.

• All the benefits without a large IT department and an upfront licensing fee.

• No upgrades to manage, no maintenance, and no up-front capital costs.

• Simplified navigation, interactive graphics, and tight integration with Microsoft Office.

• Rich, intuitive user experience helps speed adoption and increase productivity.

• Mobile computing gives secure access – anytime, anywhere, on any device.

• Modular, so you use only what you need now, and other functions later when you need them.

• Built-in business analytics, so execs can see how the business is running at any time.

• Highly secure data centers that are managed, monitored, and maintained by SAP experts.

• Personalize users' interfaces and dashboards based on their roles and preferences.

• Trust, because it’s built by SAP – known for its ERP software leadership.

https://www.youtube.com/watch?v=X5tD0n7H2Mk


13

Various modules of SAP Business ByDesign

• Supply chain management – Supply chain setup management, supply chain planning and control, and manufacturing warehousing and logistics.

• Executive management support – Empower management with more control over the business and better decision making with customized real time analytics.

• Financial management – Provide single, up-to-date view of the financial position spanning financial & mgmt accounting, and cash flow management.

• Customer relationship management – Support processes that span marketing, sales and service activities, and focus on your customers.

• Supplier relationship management – Focus on relationships with suppliers, thru procurement processes aimed at reducing costs.

• Compliance management – Maintain compliance with changing laws and regulations and meet regulatory standards.

• Project management – Drive project success using the integrated project management solution.

• Human resources management – Manage your workforce, using organizational management tools, and employee self-service.


14

Cultural Challenges and Overcoming Them

Design Team No experience of working with ERP system/modules.

Shopfloor,

Finance,

Procurement

Job Insecurity, due to automation possibilities.

Challenge to Overcome: New System Buy-in and Acceptance by all Stakeholders

SOLUTION The Change Management Plan:

Include, Communicate, Educate

Sales Team Accountability for forecasting customer demand.


15

Change Management Checklist

• Do your employees really understand the need for this

change and how it benefits them?

• Do you have a clear project sponsor actively leading the

change?

• Do the employees understand and agree on the

objectives?

• Do employees agree on the high priority of this project in

relation to competing initiatives?

• Do you have mechanisms in place (open door policy,

anonymous email, etc.) to allow for employees to provide

feedback and input?

• Is your training program tailored to specific roles that

employees will have?

• Do you have a plan in place for continued support after

go-live?


16

Change Management Plan (Overview)

Include All Stakeholders

Communicate Benefits towards personal and professional growth –

organizational growth a by-product.

Educate Best practices, Efficiency improvement measures

OUTCOMES

Core jobs get done better -> Productivity increases ->

Potential New Business Opportunities ->

Revenue & Margin expansion -> Job Security

Proposed Solution – Inclusion, Communication, Education


17

Change Management Plan (Detailed):

Planning

• Identify future state of business and the benefits of change.

• Identify risks and risk mitigation strategies.

• Develop 1-on-1 and group communication and training schedules.

• Identify change champions within organization.

Awareness • Communicate, Communicate, Communicate

Understanding • Educate on the personal, professional and organizational benefits.

• Get functional members to monitor progress.

• Get stakeholders involved in continuous improvement projects.

Acceptance • Follow up to confirm knowledge transfer.

• Discuss in team meetings about missed ideas/opportunities.

• Offer more responsibility and accountability.

OUTCOME System Buy-in by all Stakeholders


Action Items

What to

watch out for

Risk Mitigation

Continuous (Communication + Assessment + Motivation) – Resisters = Financial Benefits.

Risks and Risk Mitigation

Communicate.

Clean-Up.

Identify Adopters.

Map and Model.

Testing

Training and Adoption

Change Resisters.

Mgmt Indifference.

Garbage In…

Slackers

Educate.

Motivate.

Target Setting

Weed / Isolate.

Constant Review.

18


The Implementation Plan

Develop a

Strategic

Plan

Do a

Procedure

Audit

Assign a

Project Team

Examine

Biz Processes

Freeze

Objectives

Make a

Project Plan

Capability

Assessment

Assess Process

Automation

Align Processes

to Objectives

Build SOPs

Data

Gathering

& Cleanup

Assess

Datatypes

Collect &

Standarize Data

Review Input

Data

Clean data,

better accuracy

Training

&

Testing

Assess Data

Accuracy

Test against

SOPs

Train project

team

Testing by

Project Team

Soft-

launch &

Go-live

Prioritize

Function-wise

Address any

new issues

Train

management

Continuously

Monitor

Day 0 to Day 60 Day 61 to Day 90 Day 91 to Day 120 +

A properly implemented ERP solution would significantly improve internal metrics.

19


20

Revised Business Plan

• Faster inventory turnover -> better balance sheet position

• Quicker job-holds resolution -> better production efficiency, higher sales

• Better materials planning -> reduced spot purchases, material costs

• Improved demand forecasting -> reduced cyclicality of financials

• More customer satisfaction -> increased repeat business

• Real-time data analytics -> quicker decision-making

• Knowing order-to-cash cycle -> improved cashflows

• Better cashflows -> reduced working capital

• Improved business dynamics -> more business development opportunity


21

Financial Implications

• Upfront License Fees => Zero

• Upfront Capital Costs => Zero

• Upgrade Costs => Zero

• $150/user/month => $ 10,800 /yr for 6 users (2015 E)

• Training Costs => $ 3,200 for all employees

• Customization => Zero, in lieu of acting as a case-study and

referrals of SI to other businesses.

• Inventory De-bottlenecking => $ 43,000 over next 5 months.

• Better material planning => $ 80-90K per year.

• Improved Margins target => 38-40% (Gross), 14-16% (Net)

(2015 E)


Acknowledgements…

The E_______ D______ Team:

A__, A_____, R____, B____ and M________

ERP specialist:

R______ D_____

Technology

2014 - ERP strategy - Case Study - E_____ D________

2014 - ERP strategy - Case Study - E_ D____