SAP for Retail
eSmoking World: SAP Business One in a nationwide commercial network
In 2013 Chic Group, the owner of the retail network eSmoking World significantly improved its business results. The main area of the company’s operations, i.e. retail sales, increased by 100% (the number of eSmoking World retail outlets in Poland doubled), it opened a European logistics centre and new branches abroad. In these changing business conditions 7milowy from the BCC Group implemented a comprehensive enterprise computerization project which includes the implementation of a SAP Business One central management system, integration of ERP with the e-commerce platform and the implementation of the POS solution in the eSmoking World retail outlets.
The first small batch of e-cigarettes was sold in 2007 and only 6 years later the company hit the result of PLN 80 million. Providing information on the number of eSmoking Word retail outlets is a risky task since their number is growing almost month by the month. Currently, it is over 1,100 retail outlets – mainly its own and franchised stands and shop spots in shopping centres. Plus 27 000 points in the convenience store type networks, petrol stations and newsagents. The company is also doing well online – the e-commerce eSmoking World platform supports thousands of Polish and foreign customers. The company owners go with the flow – at the beginning of this year in Ostrzeszów, where is the company has its registered office, they opened a modern production plant with a research laboratory.
SAP Business One the central system for retail
Chic Group within just a few years has become a major player in the e-cigarettes market in Poland and Europe. The dynamic growth in the sales volume, the need to manage the growing network of retail outlets, as also striving to reduce the customer service time and to improve its quality have influenced the decision to invest in an integrated system. The main objective of the implementation project was to optimize business processes and the support for the key business area – retail sales. The new system was to replace the Polish manufacturer’s ERP solution which, inter alia, could no longer keep up with the dynamic development of the eSmoking World business.
The company has decided to a SAP Business One system as a stable and flexible ERP system that had been proven with many companies, which allows to organize business processes and provide reliable managerial information that is obtained also from other, critical for the client’s industry IT solutions (e.g. industry systems, in-house solutions). The company 7milowy, specializing in providing SAP solutions for small and medium-sized enterprises sector, has been engaged as the implementation partner.
The scope of the project has been developed during the pre-implementation analysis carried out by 7milowy. They have defined the sources of problems in the company’s current operation, named the retail processes that require support and established goals to be achieved.
The project began in August 2013 and the go-life of SAP Business One took place in July 2014. The scope of the implementation works of SAP Business One was extensive and included:
- finances and accounting,
- domestic, foreign and Internet sales,
- warehouse and packing,
- POS retail outlets,
- complaints and customer service (CRM),
- reporting (Business Intelligence).
SAP Business One has become the central platform "binding" business management. However, due to the nature of retail industry it was also important to integrate SAP with applications allowing for handling retail outlets, the online sales portal, as also the B2B portal to handle large customers (e.g. petrol stations).
Therefore, in addition to the implementation of SAP Business One an important part of the work performed by 7milowy was to deliver and implement a solution to manage different retail outlets of eSmoking World (Positano), as also to integrate the online sales platform and the wholesale B2B portal with the SAP Business One system.
As part of the project 7milowy has also prepared a SAP Business One functionality prepared in accordance with the needs of Chic Group. The solution defined as SAP Packing Facility is used for order picking – handling preparation and shipment of goods from the central warehouse in Ostrzeszów to retail outlets and individual clients in the country and abroad.
As pointed out by Hubert Urban Member of the Management Board of Chic Group: “We are still in the phase of the rapid growth. We are pleased with the process but on the other hand such a rapid development generates numerous challenges. The number of processes we need to have under control, the data to be processed and business decisions that are to be made are growing practically overnight. We have more and more employees, trading partners, customers. Such a complex network of interactions cannot be managed without reliable information available in an integrated system. We have expected that the implementation of SAP Business One will be an opportunity to organize and standardize business processes – from the sale of a single e-cigarette to the overall financial result”.
Project double challenge
It was not the wide scope of works or the complexity of the integration that was the major challenge of the project carried out at Chic Group. In the course of the performance of works the company recorded a very intensive growth. It increased the number of employees, the target number of the SAP system users and the number of the points of sale located throughout the country which had to be covered by the implementation have grown twice. They have also established partnerships with store chains and petrol stations, which significantly increased the number of customers and the sales volume. The company has continued to open foreign branches in Europe which also require IT support.
„The project was challenging from the very beginning. It was not a classic ERP system implementation but a full computerization of the company’s business. In addition, with respect to the original assumptions the scale of the project has dramatically increased. We had to actively respond to changes, such as verify the scopes and deadlines for individual stages. Thus we have proved our high competences in project management that ensure safe execution of works at the customers’ facilities” – says Michał Lorenz, Project Manager at 7milowy, responsible for the execution of the implementation.
The scope of works performed by 7milowy:
- Implementation of the SAP Business One system
- Delivery of the SAP license
- Maintenance support for SAP maintenance
- Development of proprietary functionalities SAP Business One
- Delivery and implementation of the POS solutions
- Integration of the SAP and POS systems
- Integration of the SAP system with the e-commerce platform
- Integration of the SAP system with the B2B platform
Positano, handling retail outlets
Commercial success of eSmoking World is based on a dense network of retail outlets. The model of cooperation with trading partners assumes virtually cost-free launching of the points of sale and low cost of their operation and maintenance.
The proprietary POS solution prepared by the implementation partner, the company 7milowy, fits in this strategy. Positano plays a dual role – supports sales processes in retail outlets and provides information to the central ERP system thanks to the integration of the two solutions.
As a typical POS the system allows for quick record of the sales and control of inventory. The sale is documented with printouts from fiscal printers and the program records basic cash transactions. What is important, the program has been designed so that the operator has access to all functions from the main screen level. The solution has a friendly interface and is intuitive in use – does not require a complicated employee training. The platform allows the retail outlets for updating products, price lists, inventory, downloading information on current promotions and it guarantees the Chic operating centre in Ostrzeszów an ongoing insight into the sales data.
Not only has the solution improved the activity of retail outlets but it also contributes to the rapid development pace of the commercial network. From the IT support perspective to open a new point it is enough to have a laptop, install the Positano application whose installation program may be sent via an e-mail, and access the Internet twice a day (at the opening and closing the shift) to update products and price lists and to send the sales report to the system.
SAP integration with the e-commerce platform
By integrating the e-shop www.esmokingworld.com with SAP Business One the company has gained full online control over the availability of goods in the warehouse, which improves the customer service by reducing lead times for orders, eliminates mistakes and delays and reduces the number of complaints.
From the operational perspective the main benefits of the integration of the e-commerce platform and the SAP Business One system are:
- automation of business processes
- updating inventory in real time,
- increase of employee productivity (by eliminating repetitive tasks, e.g. enter the same data numerous times).
For companies which, like eSmoking World, deal with the sales online, the integration of an internet store with the ERP system is a business necessity. The integration platform prepared by 7milowy guarantees fast and accurate exchange of data between these two solutions. During the integration works 7milowy used the software TaskCentre by Orbis Software.
SAP Packing Facility: a step further than the warehouse
In Ostrzeszów there operates a modern central warehouse with an area of over 1,500 sq. m which provides services to all of the Chic Group trading partners. Every day the company sends hundreds of packages executed according to customer’s orders. Customers may avail of nearly 3,000 products, including disposable e-cigarettes, kits, batteries, accessories, cartridges and liquids of various brands, volume, strength, taste...
The rich assortment is what attracts customers, however, ensuring fast and flawless execution of orders is quite a challenge. In order to improve the picking and reduce the time from placing an order to the dispatch of goods to the customer 7milowy has prepared a proprietary extension of SAP Business One: SAP Packing Facility.
The employees of the central warehouse use intuitive SAP interfaces connected by the data bus to the central SAP Business One. The system provides information about the time of packing taking into consideration the size of the order and the diversity of products and measures the delay with respect to the accepted standard. Based on such data it is possible to generate reports, e.g. with information about the average time to prepare the shipment, employee performance. The SAP Packing Facility is connected to the functionality supporting the central warehouse, which allows for real-time tracking of the levels of inventory and restocking on a regular basis.
Retail processes at the European level
One of the main objectives of the undertaking was to optimize business processes with a particular focus on computerization of the retail sales. And this goal has been achieved. Increase in the employee productivity and improvements in the area of logistics are additional important benefits achieved through the implementation of SAP Business One.
The model of integration of all of the key applications under the umbrella of the central SAP Business One proposed by 7milowy allowed for the support of retail processes at a high level while maintaining lower costs. Additionally, thanks to the combination of SAP Business One with the POS solution the company has gained full control over its retail activities. It is possible to keep track of inventory levels from the central warehouse level down to an individual point of sale. Each day a detailed report of the sales volume and profitability is available which provides detailed information in the selected sections up to the level of the selected point of sale.
Chic Group has significantly reduced the time necessary to obtain key information. The system collects the data and the statistics showing, inter alia, the number of packages sent each day, the packing facility performance broken down by an individual employee calculated from the number of packaged lines, units of goods. If there is a need, section information can quickly be obtained, e.g. on the average lead time or the number of complaints.
With such a rapid growth currently being experienced by Chic Group an efficient central IT system like SAP has allowed to systematize the results and measure their actual value with the consideration of the made investments. By putting business processes in order in the ERP system the company has gained a rich reporting platform that provides an insight into business data: from the general (aggregate information) to the particular (e.g. sales data of a selected shop spot).
Although the implementation project was finished in mid-2014, still during its course it became apparent that further system development will be necessary. Launching the company’s own production in a new facility at the beginning of 2015, opening companies abroad and new markets, as also continuous expansion of the sales network in Poland extorts new needs in the scope of the IT systems. Chic Group is continuing the cooperation with 7milowy.
eSmoking World with SAP Quality Award 2014
The implementation project in Chic Group was awarded in the fifth edition of the international competition SAP Quality Awards for the region of Central and Eastern Europe. The implementation of SAP Business One carried out by the company 7milowy was awarded in the category “Rapid Delivery – The shortest implementation time”.
The category includes projects of the range of less than 500 users and lasting not longer than 1,000 man-days. The international competition jury selects the winners based on strictly defined criteria, such as, among others, quality of implementation, used methodology, complexity of support from the partners, innovation of the implemented solutions and transparency of communication channels. The reward for Chic, according to the verdict of the jury, was decided by:
- the results of the project: successful completion of the ERP system integration with POS and the e-commerce platform, the construction of custom functionalities of the packing facility in the SAP Business One system,
- the quality of the implementation: the use of the pre-implementation analysis and ASAP methodology,
- business benefits: improvement of the efficiency of processes, increase in the employee productivity, improvements in the area of logistics,
- design challenge: dynamic growth of the company during the implementation.
Hubert Urban, Member of the Management Board of Chic Group, emphasises that the SAP Quality Award distinction is the merit of the entire team implementing the system.
The words of praise should be directed to our partner, the company 7milowy who is the author of the implementation and of our success. The company has had the opportunity to prove itself in the challenging business conditions and demonstrated high standards of work. We have achieved the goals set during the pre-implementation analysis, the cooperation with 7milowym goes very well and the consultants have demonstrated their expertise. I am glad an independent jury has also appreciated that.
SAP Quality Award 2014 is a competition designed to reward companies that have demonstrated the best approach to the execution of implementation projects. It was open to all SAP customers from Central and Eastern Europe whose projects have been implemented in 2013 and 2014. In the fifth edition of the competition the awards were distributed in five categories: innovation in the cloud, mobility and the HANA platform, as also the shortest implementation time and the greatest business benefits.
Chic Group is the owner of the Europe’s largest store chain and the eSmoking World specialist points of sale which include more than 1,100 retail outlets and an international e-commerce centre which realises online orders to over 24 countries around the world. The Group also includes one of the most modern facilities in Europe producing liquid nicotine for e-cigarettes and its own research laboratory. Only in Poland the eSmoking World products are available in over 27 000 retail outlets that supply more than 1.5 million users of e-cigarettes in the country.
More information: www.chicgroup.eu www.esmokingworld.com