Most growing companies are getting the message that they cannot rely on islands of information locked in spreadsheets, databases, simple financial applications, and e-mails. Because a traditional system of disparate functional systems and one-off files becomes unsustainable and restrictive as the company grows, they are searching for a single source of truth and a governance model to manage it.
In an IDC Analyst Connection interview, IDC’s Ray Boggs, vice president of Small and Midsize Business Research, and Mickey North Rizza, vice president of ERP and Digital Commerce Research acknowledge that growing companies cannot sit idle. “A key indicator of a firm having outgrown current technology is when it becomes difficult to connect data between functions, making it a challenge to assemble a comprehensive view of business operations,” they stated. “This inability and related frustration are clear signals to management that processes lack effective coordination.”
For companies generating billions in revenue, overcoming this common issue may be best resolved by implementing an ERP system across all areas of the business. However, for midsize companies, this decision is not as easy . Very often, midsize organizations view all ERP systems the same – neither financially viable nor operationally feasible. The idea of dedicating a significant amount of capital and resources to a single implementation lasting for months can be downright devastating to a midsize business bottom line.
While this may seem like a no-win situation for most midsize companies, Heliotron Deutschland knows that an ERP solution scaled to the needs of midsize companies does exist. And for this growing leading manufacturer and distributor of liquid wax candles, a cloud-based ERP solution was a good choice.
Reaching a critical breaking point with traditional thinking
Founded in 1976, Heliotron’s candles are used in more than 12,000 hotels, restaurants, churches and chapels, funeral parlors, and community establishments across 37 countries, from Costa Rica to New Zealand. The only way this workforce of 64 employees could serve such a diverse clientele is through its ability to customize every order.
“We only have about 2,500 different products. But since our offerings can be mixed and matched, our customers can choose from over 16 million combinations,” Heliotron’s CEO Oliver Schneeberger says.
As a cost-cutting measure and in preparation for the height of the candle-production season, Heliotron orders full containers of their materials approximately six months ahead of time. This is where the accuracy of its manufacturing planning is critical. One out-of-stock component could mean that an order will not be produced cost-effectively and shipped to the customer on time. The company would then be forced to absorb the higher expense of ordering the part and delaying product delivery to end customers.
Heliotron’s sales processes were also beginning to hinder its growth. The processes were entirely paper-based and manual, which was in direct conflict with customer demand for faster delivery. After the submission of a sales transaction, a picking list was generated, printed out, and physically carried to the warehouse so an employee could manually process the order. Once the shipment was complete, the box was brought back to the office, where the invoice and packing slip were created.
It is very important for Heliotron to optimize its processes to handle customer requirements because it ultimately impacts the trajectory of its growth and reputation. “We needed to find a system that supports our day-to-day operations and makes it easier for us,” Schneeberger says.
Creating a backbone for growth with cloud-based ERP
Heliotron decided to implement a cloud-based ERP software designed for small and midsize companies. “We did not have the time and resources to look into how to efficiently manage our processes,” Schneeberger explains. “This is one of the main reasons why we chose a cloud-based ERP software – it came with preset best-practice processes.”
From HR administration, finance, and sourcing to logistics, sales commissioning, and product distribution, the technology enables all employees and leaders to control every aspect of the business from one source. “We really like this integrated approach because everything is connected to each other,” Schneeberger says. “Everything we do in one part of the ERP system has a footprint in the financial management area.”
Now that the technology is making it easier for the company to monitor and report on operations in real time, the business is improving its success rates.
- 80% more calls handled by inside sales agents per hour
- 10 times more sales closings
- 6 times more volume being shipped without increasing warehouse staff headcount
- Accelerated order fulfillment cycle, with shipping time reduced from 3 days to 90 minutes
- Lower inventory turnover ratio – from 18 months to approximately 15 weeks
The list of improvements for Heliotron goes on and on. But ultimately, everything gained from this implementation results in better cash flow and improved profitability.
“Going to the cloud with an [ERP] system was very easy [for us] to do,” says Schneeberger. “This was, by far, the best move our company has made in the past 10 years.”
Find out the answers to five common questions that small and midsize companies ask about ERP systems. Read the IDC Analyst Connection brief, “Small and Midsize Businesses Put ERP at the Center of Digital Transformation Strategies,” featuring IDC’s Ray Boggs, vice president of Small and Midsize Business Research, and Mickey North Rizza, vice president of ERP and Digital Commerce Research.
For a first-hand view into SAP solutions for small and midsize businesses, visit www.sap.com/sme.