When the recession hit late last fall, the construction and oil and gas industries were among the first to suffer.
Luckily for Colin Osborne, he had started planning a technology project that may help his company ride out the downturn.
Bringing more efficiency into the business
The CEO of Oakville, Ont.-based Vicwest Income Fund is preparing to launch the first phase of an enterprise resource planning (ERP) rollout based on SAP Canada’s Business All-in-One product, with a view to streamlining its entire supply chain.
Vicwest Income Fund is an open-ended, limited-purpose investment trust that fabricates, sells and distributes building construction, agricultural storage and liquid storage products.
SAP Business All-in-One is business managment software for mid-size firms with “best practices” built in — helping these companies manage everything from financials, human resources, procurement, inventory and corporate services, to customer service, sales and marketing.
“We started the process of ERP assessment almost nine months ago. It was a little bit before the world fell apart,” Osborne said. “It was really driven by the fact that we’re going a lot of great things in our business, and the more efficiency we bring in, the better and stronger and forward-looking our management can be.”
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Vicwest operates from two divisions, Vicwest Building Products and Westeel Storage Solutions, and sells under seven different brand names to international markets.
While the Vicwest side supplies metal roofing, siding, insulated metal panels and composite panels, Westeel specializes in bins, hopper cones and other containment products for grain and fertilizer.
‘Hodge-podge of systems’
“We’ve actually performed well in a difficult climate,” Osborne said. “Construction and oil and gas have been hit by the downturn, but the agricultural side of the business is up.”
The challenge is, Vicwest operates 19 facilities, many of which came through acquisition and which continue to operate relatively independently. While some of them many use Visual Manufacturing or a similar point product, others have home-built systems for managing business operations that haven’t been touched for decades.
“We ended up with a real hodge-podge of systems – some custom built and others that were up to date but not integrated with anything else,” he said.
“There as one (ERP) system that was built in 1970s. It was actually a pretty good system, from data mining perspective, but you couldn’t enable it to do customer access through the Web.”
After months of blueprinting the company’s needs, Vicwest opted for SAP’s Business All-in-One, which the Waldorf, Germany-based software giant designed specifically to branch into the small to mid-sized enterprise segment.
Conrad Mandala, vice-president of SME with SAP Canada Inc., noted that 70 per cent of SAP’s Canadian customers are now in this space, though getting that message across sometimes takes work.
“There are two battles I fight – I have to go out there and earn the business, and I have to continually break up the myth that we only sell to the Home Depots of the world,” he said. “In this case, we’ve got industry-specific solutions that are tailored around implementations.”
Osborne agreed. “We looked at a number of packages, but the level of integration (with SAP’s product) strikes me as more robust and more evolved,” he said.
IT’s embedded in the business
Vicwest hopes to use SAP’s technology to improve its practices around inventory management, scheduling and the use of working capital, according to Osborne. Although the company has a vice-president of IT, Osborne suggested the technology is decentralized in nature.
“It’s extremely business-oriented. There’s almost no corporate IT,” he said. “IT is all embedded in the businesses. It’s in the business units themselves. It really seen as a business service.”
Right now, the plan is to do the implementation in three phases. This includes deployment at Vicwest, then Westeel, then the corporate and back office side. Osborne hopes to see at least two phases done next year. This should make things easier for the organization as it continues to grow.
“When we’ve been launching new product lines or processes, introducing new plants or products, it’s been challenging,” he said.
Mandala said SAP hears the same thing from many other SME customers. “The software is the software. We never get the question, ‘Is the software gonna work?’ It’s more about, can we help them do something that’s going to bring a meaningful solution for their business?”
As Vicwest rolls out its ERP system, Osborne said the firm will be looking at key performance indicators such as inventory turns, working capital reduction, and more efficient procurement.