Building the advantage
PDB: SAP Business One as a foundation for the B2B platform
The construction industry – as a barometer of the economy – is particularly sensitive to the slightest fluctuations in the economic situation. In addition, global corporations increase their expansion by opening subsequent construction stores in increasingly smaller towns. In order to matter in the fight for customers, Polish representatives of this sector must actively respond to the movements of international players. Polska Dystrybucja Budowlana has decided to focus on streamlining internal business processes and improving customer service. It has invested in SAP Business One integrated with a modern B2B platform.
Polska Dystrybucja Budowlana is a Polish distributor of building materials of many significant manufacturers, operating all over the country. The company represents an interesting business model – it unites more than 600 small and medium-sized wholesalers from across Poland. The joint purchasing of commercial goods and representing a strong business group give it a better bargaining position, generate cost savings and make it a competitive player. Additionally, it creates services that distinguish its offer on the market. The offer of the Construction Advisor 24 can be used as an example. PDB provides support for the entire construction project, from expert advice, through providing relevant materials on time, recommendation of subcontractors, up to ensuring the continuity of the project execution by coordinating the work of individual contractors.
An important step toward strengthening the company's competitiveness in the market was the project of launching the B2B platform for business partners – suppliers and customers. Polska Dystrybucja Budowlana received subsidies for this project from the European Regional Development Fund under the Innovative Economy Operational Program 2007-2013. 7milowy, a company from the BCC Group, became the implementation partner and solution provider.
The Management Board expected an access to information about the real margin, systemization of the goods data, faster data processing and reporting, and an ultimate increase in the value of the company.
Upon analyzing the needs, it was decided to use the integrated SAP Business One system. The solution was to serve as a basis to build a B2B portal, its data source, as well as a basic solution to support the integrated management of all areas of the company. The main objective that the Management Board of PDB set for the implementation project was to strengthen the cooperation with suppliers and customers through a modern and convenient form of contact, which is a web portal. With regard to SAP Business One, the Management Board expected the quality of company data to be improved (in particular, an access to information on the real margin), the goods data to be systematized, the speed of data processing and access to reports to be increased, the system infrastructure to be prepared for new projects and development of the company, and its value to be ultimately enhanced. The first step was the launch of the ERP solution. SAP Business One was put into operation in March 2014. In parallel, work on the creation of a dedicated B2B portal based on the implemented ERP system was carried out. The platform was made available to PDB customers and suppliers in September 2014.
New quality in customer service
The B2B platform prepared by 7milowy is a modern channel of communication with suppliers and customers. The solution has improved the quality of service of external partners, streamlined internal business processes and accelerated the fulfillment of orders. The platform allows partners-customers to review the range of products, to check the availability of a product and its current price (taking into account sales terms and discount thresholds applicable for a given partner), to add and edit items in the shopping basket, and to approve or cancel the basket. Then, an order for the product is created and registered in the B2B solution. Both suppliers and customers can also check the current balance of accounts with PDB. The portal supports the exchange of information through a standard format for electronic document interchange (EDI, Electronic Data Interchange). A partner (a supplier or a customer) can send orders, purchase orders, offers, delivery documents and invoices directly to the B2B through EDI. Additionally, he can obtain a confirmation of sending and receiving the documents. In the future, it will be also possible to easily integrate the portal with subsequent EDI systems of new business partners. Through the use of the EDI standard, the portal becomes also a great repository of documents exchanged with partners: invoices, orders, etc.
An integrated ERP system
The source of current data on stock-on-hand, a billing balance, price lists for counterparties of PDB is the base system SAP Business One located under the interface of the B2B platform. This system supports all the key areas of the company: finance, purchasing, customer service, inventory management and sales and distribution. Additionally, in a narrow scope – for purposes of a paints mixing room – production management solutions were deployed. As part of the implementation project, 7milowy also launched an application (an add-on) for handling payroll and personnel processes, integrated with SAP Business One and recommended by SAP.
Sales and distribution
Due to the nature of the business of PDB, in the first place, the focus was put on handling sales and inventory management processes. SAP Business One supports employees of Polska Dystrybucja Budowlana in the processes of collecting requisitions, monitoring the inventory level and availability, as well as handling collective purchase orders and optimization of deliveries.
The solution is very flexible when it comes to determining prices, preparing specific price lists, setting discounts and bonuses. This enables volumes, funds and discounts to be automatically managed for individual customers in particular transactions. In the building sector, where wholesale final prices are frequently changed and adjusted depending on many factors, it is an especially important functionality.
Margins – that is, how not to read the tea leaves
PDB conducts sales through three basic channels:
- retail and wholesale from its own building depots (direct selling),
- construction advisors (the “Construction Advisor 24” service) – orders as part of supervised projects,
- wholesale – supplies to construction wholesale stores and large construction projects.
With respect to the last two channels, the main task of the system is to control margin levels of individual transactions. The construction industry is very competitive, with relatively low levels of margin on a product. Reliable data for the preparation of commercial offers and calculation of margins as well as real control of final margins by transactions, investments or customers are some of the most important goals of the system implementation at PDB. The system provides data at the stage of preparing a commercial offer and estimating and calculating a margin, with taking into account the costs of transport, services, bonuses. This allows traders to prepare competitive offers that ensure the assumed level of profitability – which reduces the level of business risk. When individual orders are being fulfilled and of course after their completion, it is possible to check the margin level both for individual transactions or goods and globally for the entire project – with taking into account the actual prices at which the goods have been sold to the customer.
Despite the fact that much of the data used in the margin calculation changes dynamically, the sales terms are now updated in the system on an ongoing basis. Another important function of the implemented solution, designed to control financial flows, is the mechanism of monitoring the margin level and credit limits of customers and the blockade of an order upon exceeding boundary conditions. If the current margin level is lower than expected, the customer exceeded the time limit for payment or a credit limit, the system blocks the possibility of further service by the coordinator. Further customer service requires a decision by a senior manager. A suitable acceptance path is defined in the system.
As a fast-growing company we needed a robust, but also flexible solution. We chose SAP Business One, because it is a system that links all areas of the business. We deal with wholesale and retail, which require different system solutions. SAP Business One has allowed us to create solutions for these different branches of business.Each implementation is a difficult process for the entire company. 7milowy accompanied us throughout the life of the project. The implementation required an enormous amount of work to be done by the Management Board, managers, IT specialists and employees who were to use the new solution on a daily basis. It was only thanks to the understanding of the need for change and the hard work of the whole team that we managed to move the whole company to the new system in a relatively short time.
The implementation has brought tangible benefits in various areas of our company. At the level of the Management Board, the cross-sectional reporting and the ability to create new reports allow for better management of the business. The introduction of acceptance paths and reduction of the waiting time for acceptance of a margin or automation of credit limits have sped up the work of many operational employees.
However, we are not satisfied with maintaining the status quo. We are constantly working on the development of the system. Increasingly more suppliers are willing to join EDI, and more customers want to use the B2B platform. We are constantly thinking of new functionalities that will help us increase the efficiency of operation.
Business analytics for accounting purposes
SAP Business One has a financial module combined with controlling features, which supports the work of the Department of Finance and Accounting, assists in the management of budget, receivables and payables, and the cooperation with banks. Built-in standard reports (Business Intelligence solutions) help users in their daily work, and the module for creating new reports and analyses allows for cross-sectional reporting to the management board of the company. In Polska Dystrybucja Budowlana, the system additionally supports the handling of operation financing elements, such as factoring and insurance accounting for construction transactions. In the financial module of the system, the information about financial parameters of counterparties is maintained.
A mobile warehouse
The monitoring of stock levels, as well as tracking of stock transfers and updating of stock-on-hand in real time provide the knowledge on the current availability of goods.
As part of the implementation, a mobile solution for terminals used by warehouse operatives was also prepared. The application, which uses the data collector tools, allows for the delivery to be created directly with reference to the order.
Process automation, margin control
The whole process of customer service – from posting a commercial offer in the portal, through ordering, selling, delivering, up to invoicing and payment – is currently taking place in a single, integrated tool – SAP Business One. Gaining control over cash flows and monitoring the profitability of transactions on an ongoing basis (tracking of margin levels) are the main benefits of implementing the ERP system.
The SAP system, which is a world standard for integrated management, provides the possibility of developing even closer relationships with suppliers in the future. The company is already considering the benefits that could result from the integration of purchase orders and stock-on-hand levels with key manufacturers of building materials.
Polska Dystrybucja Budowlana Sp. z o.o. is a rapidly growing company operating in the market of building materials and construction services. The company specializes in wholesale of products of many reputable manufacturers. A unique service offered by the company is the Construction Advisor 24 (DB24 – Doradca Budowlany). The Advisor gets directly to a building site, providing both materials and proven contractors. A comprehensive approach and innovative IT tools used by the Construction Advisor 24 makes the service increasingly popular in the Polish market.
More information: www.polskadystrybucjabudowlana.pl www.doradcabudowlany24.pl