Mississauga SMB tackles big biz problems with SAP ERP suite

The 99-person, family-owned Dynamic Paint Products based in Mississauga, Ont. is a small business with big business challenges.

It’s a local manufacturing and distribution company that serves tier 1 retailers such as Walmart and Home Depot along with Tier 2 players like General Paint and Sherwin-Williams, but like many SMBs the company’s IT systems was a jumble of disparate systems put together on an “as needed” basis.

Last year, Dynamic Paint was able improve production and distribution efficiency by replacing maze of business, warehousing and business intelligence systems with all-in-one enterprise resource planning (ERP) suite from SAP. The implementation, which took six months, helped the paint manufacturer drastically cut lost man-hours in updating and synchronizing disparate database across the company, according to Paul Lobb, chief operating officer of Dynamic Paint.

“We may be a big operation but we were very much like a traditional SMB. We acquired equipment at the time it was needed,” said Lobb. “As a result we eventually ended up with as much as six different and disparate systems.”

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The company’s business system handled items such as sales, inventory cycle, order entry and costing, and came from Microsoft Dynamics SL. This ERP system could not support warehouse management such as bar coding and freight management, so Dynamic Paint bought a warehouse management system from another vendor. The companies business intelligence (BI) tool came from yet another source, as did Dynamic Paint’s freight management system.

Each system kept its own separate database. “There was no visibility across the systems and we ended up being not very efficient with data,” said Lobb.

The company did not have the ability to update information across the board with a command. Once one system is update, personnel had to manually update the other systems to keep information accurate. “I estimated we were using at least two hours each day just to manage the interfaces,” said the company COO.

One of the major repercussions of such as situation, Lobb said, would be that sales might approve an order based on stale reports that the warehouse inventory could cover the demand. “If we end up not having the inventory we end up with an inconvenienced and possibly irate client and a hit on our reputation.”

Searching for an ERP solution

In June last year, Dynamic Paints began looking to streamline its process, said David Moon, IT and process manager for the firm.

“Our challenge with our main ERP system, the Microsoft Dynamic, was stability and suitability,” he said. “The system is essentially an accounting and finance software but we also need a manufacturing and distribution tool.”

Moon said Dynamic Paint went on an extensive search for a replacement. “W liked the SAP product because it was capable of serving our business, warehousing as well and sales and distribution needs in one package. There was no need for third party solutions.”

Apart from that, the SAP Business all-in-one ERP is able to scale as needed. “This system will grow with our needs and aspirations,” said Moon who said the paint company is pursuing plans to expand operations beyond its current presence in Canada, China and Poland.

Lobb said SAP’s IT partner CONTAX Inc. helped allay fears that SAP would not be able to understand the needs of Dynamic Paints. “Many SMBs see SAP as being too big for our business…We felt CONTAX was very wired into our business – it had a very intimate understanding of the culture and challenges faced by out company.”

CONTAX delivered the phase 1 implementation of the project one time and on budget.

SMBs in need of enterprise tools

More and more SMBs are seeking enterprise grade software tools, according to Mary Peterson, SAP’s national director for the channel. “We’re seeking a lot of from the SMB sector. These companies are realizing that in many areas they need the same capabilities as large enterprises.”

“SAP Business all-in-one ERP is actually a full business suite cut from out enterprise offering, but we’ve packaged it to be applicable for the SMB market,” she said.

For instance she said, the tools are all free configured in base templates for fast easy and fast deployment.

Paul Edwards, director of SMB and channels research at IDC Canada, said that Dynamic Paint’s experience, illustrates that key pressures that many small businesses are under today. “Technological advances, increased competition and desire to go global are pushing many organizations to improve efficiency through technology.”

Edwards, who wrote a case study on the company, said the Dynamic Paint executive team was primarily in search of a scalable system that could support its long term goals.

The company’s business plan included extending distribution into the United States and bolstering its international presence, which includes a plant in China, with offices in Australia and Europe. “They needed a system that could provide visibility into all company activities worldwide across all business and operational functions to provide executives finer business oversight and guidance.”

Clients that are using new technology also act as a driver for change, he said, “This tends create a domino effect down the supply chain.”

For instance, he said, there’s a need for tools that provide up-to-the minute forecasting and time-sensitive product delivery that is automatically triggered from the retailer stocking system.

Edwards said the key benefits achieved by Dynamic Paint were:

  • Reduction of six sytems to one and elimination of data inconsistency and maintenance cost
  • Supply chain visibility which allows better forecasting
  • Seamless transfer of inventory between company sites
  • Improved inventory tracking and fill rates, leading to 10 per cent reduction of inventory
  • 10 per cent reduction in operational head count in front desk and back end supply chain.

ERP implementation tips

Lobb and Moon of Dynamic Paint have the following advice for SMBs considering an ERP implementation:

  • Have a mindset for change. The motivation for innovation must cover the company from top to bottom
  • Take stock of your resources. Make sure it is enough to cover the roll out and adoption period
  • Pay attention to detail. Understanding your databases and how data flows throughout the company is key. Make sure you know which is the “correct” data
  • Plan the whole life cycle of the implementation. Manage expectation, not everything goes to plan
  • Prepare your staff for the change. “You will be dealing with people who are experts in their field. In some cases you might have to tell them they need to retrain,” said Lobb

Nestor is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.

 

 

 

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