2014 - ERP strategy - Case Study - E_____ D________
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This document summarizes an internal presentation made to a printing company about selecting and implementing an ERP system. It provides background on the printing industry and the company. It analyzes the company's current challenges around inventory, profitability, production, sales, and IT systems. It then evaluates SAP Business ByDesign as a potential ERP solution and outlines plans for change management, implementation, and anticipated financial benefits including improved margins from better inventory and material planning.
![The Right ERP for E_____ D_______ – For Internal Consumption
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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”.](https://image.slidesharecdn.com/2014-erpstrategy-casestudy-ed-150224132612-conversion-gate01/85/2014-ERP-strategy-Case-Study-E_____-D________-7-320.jpg)
2014 - ERP strategy - Case Study - E_____ D________
- 1. 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 consumption. The views expressed in this presentation are solely of the author and without any 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. Source: Company management interview, Hoovers, First Research
- 4. The Right ERP for E_____ D_______ – For Internal Consumption 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 Source: Company management interview, Hoovers, First Research
- 5. The Right ERP for E_____ D_______ – For Internal Consumption 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 Source: Company management interview, Hoovers, First Research
- 6. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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
- 10. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 11 Side-by-side Comparison Source: www.top10erp.org/erp-software-comparison-cloud-based-saas-platform-566
- 12. The Right ERP for E_____ D_______ – For Internal Consumption 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.
- 13. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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
- 18. The Right ERP for E_____ D_______ – For Internal Consumption 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
- 19. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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. The Right ERP for E_____ D_______ – For Internal Consumption 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)
- 22. The Right ERP for E_____ D_______ – For Internal Consumption Acknowledgements… The E_______ D______ Team: A__, A_____, R____, B____ and M________ ERP specialist: R______ D_____