ERP processes

01.06.2012

Jack Wolfskin changes its processes over to the ”Dynamics AX 2012“ software by Microsoft. The outdoor clothing and equipment retailer expects high flexibility, scalability and lots of creative freedom. Will its wishes come true? ERP projects are often a massive effort and are frequently a lot more expensive than originally planned. We shed a light on what this is attributed to and what you can do about it in this focal topic.

With this changeover, Jack Wolfskin standardizes its business processes in the areas of finance, purchasing, sales, logistics and service. The ”Microsoft Dynamics NAV“ ERP solution, geared towards small and medium-sized businesses, had already proven its worth. The changeovers are part of an overall IT strategy with which Jack Wolfskin sets the course for its international growth. That is why software multilingualism was a decision criterion.

The overall strategy is the crucial point of many ERP projects. The specifications for this have to come from management, yet the in-house IT staff has to implement them, oftentimes supported by external service providers. Experts believe that about half of all ERP projects cause massive problems. Project duration is significantly overrun and project costs explode.

IT as management function

Frequently, management is not involved enough. Yet ERP deeply encroaches on the structures of a company. Before you start looking for a software provider, you have to develop an overall concept and tackle the necessary organizational and process changes. If you defer this and instead appoint subproject teams, you cause friction losses and conflict. People are far too much geared towards the existing operating procedures and avoid the “big step”. An ERP project is primarily not an IT project, but an organizational project.

During the initial phase, it is imperative to define the general requirements. Top management needs to answer the crucial questions: what do we want to change? What do we want to achieve with this project? What makes it successful and where are the risks? What budget and what realistic timeframe are available? Who in the company should take care of this and can he/she be released from their normal work to do this? You cannot do an ERP project on the fly.

Defining clear roles and responsibilities

It makes sense to delegate duties and responsibilities to an outside party. An interim manager who is already experienced with ERP projects and the associated transition periods is one possibility. This outsourcing not just during the implementation, but also at the management level has another advantage: the upcoming organizational changes cause uncertainty – oftentimes not just at headquarters, but also at the stores, storage facilities and with business partners. A third party – who is not involved in the old hierarchies – can act more impartially. However, an elaborate task profile is required.

Not until it has been clarified, can implementation begin. Commercial enterprises would like to have a contract for work and labor and prior agreed upon fixed costs. However, implementation partners know that contract specifications are often vague and therefore factor in significant risk premiums. Contract specifications should not include those items that are already standard in good software, but rather the functions that are critical for the business.

Interview with Florian Bernauer, Managing Director maxess Systemhaus, Kaiserslautern, Germany

Software has to help users carry out their day-to-day business in the best way possible. In Florian Bernauer’s opinion, it is not enough to only superficially represent processes. You have to incorporate the in-depth knowledge of the individual associates into the software. The Managing Director of maxess sees inventory management as an essential tool for many hype topics in retail – from electronic shelf labels to mobile applications all the way to Cloud computing.

How do you find a good consultant for ERP software?

A good ERP software consultant has to be able to optimally align individual business processes in practice with the features mapped in the software. On the one hand, this requires many years of practical knowledge and diverse project experience, but on the other hand also a good knowledge of the applied software and its possibilities. In my opinion, it is not crucial which skills are gained first – the balanced mix is important – combined with having an open demeanor and great communication skills. In short and to answer your specific question: you can find a good ERP consultant at maxess.

Can you break ERP implementation down into portions or do you recommend a conversion in one fell swoop?

There is no pat answer for this, since it essentially depends on the actual situation, the size and the convertible areas of the project, respectively. We have already successfully gone through both variations. Since an implementation has to be carried out at the same time as the day-to-day business in most cases, normally sub portions are defined which can gradually and with little risk and resources expenditure be converted sequentially. The smaller and more straightforward the project scope, the better the realistic chance for a “Big Bang” conversion.

Inventory management is only as good as the collected data. Where do you detect the most mistakes in data collection?

The master data, particularly the article master data, is the foundation of inventory management. However, data management is often being neglected and done inconsistently, which saves time at first, but leads to mistakes in subsequent process steps with major consequences.

Interview with Johannes Schick, Managing Director höltl Retail Solutions, Bad Hersfeld

The materials inventory management software ”RetailFlow Enterprise“ by höltl was awarded “Top Produkt Handel 2012“ (top retail product of 2012) at the EuroCIS trade fair. What is behind all this? We spoke with Managing Director Johannes Schick. He believes that EDI is now also becoming feasible for smaller retailers. He has no time to rest though. The software market is a tough market.

The trade magazine”handelsjournal“ bestowed the readers’ choice “Top Produkt” (gold) award to you. What constitutes this innovation?

Our materials inventory management software is entirely new and not an upgrade or bit was adopted from the previous system. Now EDI is the important, integrated component and has a larger significance than the previous manual data entry. In the software market, it is customary to link EDI. For us, the processes during the development were the main focus. Now it does not matter how the data gets into the system – whether that is electronically or manually. The database is also new. Now we have ”EPC inside“, based on the latest GS1 standard, and for the first time ever we managed to develop a hybrid system. That is to say, we can simultaneously provide an article congruent with EPC and EAN. This way, retail can slowly change from EAN to EPC.

Who is the target group – large chain stores or small specialty retailers?

Our first customer was a sporting goods chain with five stores. By now, we even service large international corporate groups. As a software company, we make a living by diversifying and serving small as well as large clients. One large project sometimes takes two or three years until it can be won and then implemented. That is why it is smart if you also have smaller retailers. They sometimes make a decision within two or four weeks – but they are no less demanding.

Our materials inventory management software is made up so we can cover small companies as well as large ones with up to 1,000 stores. The process behind it – article master or incoming goods all the way to auditing – is always the same. The main goal of materials inventory management is to determine inventory and how it happened. In other words, complete transparency of the process chain.

EDI is far too complicated for many smaller retailers. What do you say to that?

Up to know that was true, but it no longer is with the new system. It is no longer necessary to “map” EDI data. If you wanted to get started in the past with EDI, you had to create many different allocations to be able to actually import the data. We have completely gotten rid of that. After data import, you can immediately start selling at the checkout. Later you can add attributes slowly or simply use the product groups or master data attributes of the manufacturer.

A new car model has all kinds of initial quirks. Are those already behind you?

The pilot phase is already completed and the product was ready to go into production during the past nine months. We tested with several verticals in the retail sector and with large companies from the Katag and Intersport group of companies. The Katag AG is Europe’s largest fashion service provider with more than 350 affiliated retailers and over 1,500 locations. Katag offers you brand collections, space concepts and marketing – but also EAN barcode labeling with EDI connection. Intersport is the largest German trade association for leisure and sports retailers.

How difficult is it to juggle a trade association?

On the one hand, in a trade association there is the main office as a contact and on the other hand, there are several pioneering retailers that volunteer as interested parties after an announcement was made within the association. They usually then become idea generators for the fine-tuning during the pilot phase.

Who are your competitors – SAP and Microsoft?

I would rather say, we are one level below, even though there are many overlaps between the SAP and Microsoft market. Yet I definitely also see us with retailers in the triple-digit million bracket. We have customers that already make 70 million transactions per year. Our competitors are the usual suspects – Hiltes and Futura and in the checkout area GK or Torex for example.

How is the software market for retail going to develop from your point of view?

There is also merciless crowding out competition in the software market. The price pressure continues to increase. Nowadays there are no longer any bad systems, since they have already been crowded out; there are only good ones and very good ones left. The market is getting tighter. There are constantly consolidations, buyouts and also shakeouts. If we want to grow as a software manufacturer, we have to take something away from others. However, I do not see us being swallowed up. Quite the contrary: when I look at our numbers, we are clearly takers. Last year was another record year for us and the outlook for this year looks good. We have high capacity utilization and we are desperately seeking new people.

What are you working on right now? Are the new items for the next EuroCIS trade show already clear?

Right now, we are discovering the sports and leisure market. We are always doing it like this: with each new trade sector, we gain new experience and continue to expand our market. A few years ago, we experienced this with car number plates makers, an entirely different industry sector. One vendor approached us back then and now we are the market leader in this segment. We always plan for EuroCIS in the second half of the year.

Interview by René Schellbach, EuroCIS.com