A direct sales and e-commerce company was growing steadily by 30 percent every year. Ongoing recruitment and outdated systems meant that processes were increasingly strained. There was a lack of accuracy and transparency. Growth targets were only achieved at great expense and effort. Fluctuations in demand were hedged in the regions using additional end products. Orders could only be created every two weeks.
In this situation, the interim manager took on the task of introducing a global system for enterprise resource planning. The ERP system was to make it possible to reduce costs in relation to turnover without jeopardizing growth.
New organization developed for demand and inventory planning as well as supply planning
After an analysis of the current situation with the corresponding key performance indicators (KPIs), the interim manager reorganized the responsibilities as a first step. Previously, all activities were centralized. In the new organization, demand and inventory planning was handed over to the regions. Supply planning for purchasing remained centralized on site, while supply planning for the factory in Asia was relocated there.
In a second step, the roles and responsibilities in the new organization were defined and filled according to the interim manager's specifications. In the third step, all affected employees and department heads were invited to a meeting to get to know each other, define the future processes and draw up the specifications for the software. This took into account which steps were feasible in the first phase of implementation.
Specifications for ERP software in the form of a cloud solution created and implemented
In the fourth step, the software in the form of a cloud solution was negotiated and selected based on the specifications and a weighting for the individual areas (functionality, operation, IT architecture). The interim manager then drew up a project plan and implemented it with the project team. The key figures served as a guide.
Significant improvement in stock levels and delivery times
The interim manager's improvements yielded positive results in several respects. Instead of a demand plan at category level, it was now possible to plan individual products and materials. The most volatile product in the group no longer led to higher stock levels for the entire product group.
The ERP system improved the accuracy of the forecast, reducing safety stock levels. Thanks to integrated planning, large parts of the safety stock could be built into materials at the beginning of the supply chain instead of into finished products. In this way, 2 million dollars were saved in the first 6 months.
The order cycles were reduced by one week and could also be executed daily if required. Launch profiles for new product launches in conjunction with new processes resulted in a 50% improvement in the forecast accuracy of these products and a saving of 250,000 dollars. Marketing figures were also much easier to incorporate with the new ERP system. Communication improved due to a common basis for discussion.
Capacity utilization of the warehouse increased by more than 20 percent
The transparency also led to better decision-making in other areas of the company. Financial planning improved by 1 percent thanks to better forecasting. Potential unavailability of products was recognized earlier and corrective measures were initiated. Measuring the success of promotions improved marketing figures by 30 percent.
The capacity utilization of the warehouse increased by more than 20 percent thanks to improved utilization of pallet metrics. And the alignment of pallet sizes through the supply chain optimized container utilization (fewer LCL deliveries). Freight costs fell by 12 percent. The service level remained at almost exactly 100 percent over the entire period.
