Canadian toy maker reaps rich rewards with new enterprise software apps

Spin Master is best known to Canadian consumers as the maker of the Air Hogs flying toy.

“There’s never a dull moment with an Air Hogs flying toy overhead,” runs a slogan on the company’s site.

And there hasn’t been a dull moment at Spin Master since the company rolled out SAP enterprise software, in 2006, to run key business operations.

Spin Master says the software system has transformed its business, enabling it to go to market with new products much faster, and take customer satisfaction to an all time high.

Faster order fulfillment, more accurate sales projections, fewer non-compliance penalties from retailers, and the ability to “push and pull” products in response to market currents – are some of the other benefits.

Spin Master Ltd. has experienced dramatic growth in a relatively short period of time.

From a small business started in 1994 by three college friends with a little more than $10,000 in seed money, the toy maker has grown into a global firm with more than 400 employees, and revenues of more than $400 million.

To support this growth, however, the company needed to overhaul the systems it used to run its business, and so the firm rolled out SAP R/3 –business software apps from SAP Canada Inc.

SAP is one of the world’s largest makers of enterprise resource planning (ERP) software. Its global headquarters are in Waldorf, Germany and Canadian headquarters in Toronto.

Essentially ERP systems automate and optimize a range of business operations – including manufacturing, supply chain management, financials, project management, human resources and customer relationship management.

After evaluating products from several vendors – including SAP’s chief competitor Oracle Corp. – Spin Master opted for the R/3 system.

To ensure an effective rollout, a core project team met off site to ensure cross-functional understanding of all business process requirements.

A steering committee convened monthly to resolve issues that arose during the implementation phases. Users received 40 hours of in-house training.

Speeding up product development and enhancing customer contact processes were among the key business objectives of the SAP deployment.

From a technology standpoint, the company sought to integrate its IT systems and information delivery across multiple processes, including finance, product planning, sales, and distribution, new product development and logistics.

The idea, said Spin Master president and CEO Anton Rabie, was to allow employees access to information across multiple remote sites, thereby supporting faster and better decision making.

He said the SAP system helped the company achieve this, partly by offering employees visibility into data from various business processes.

For example, Rabie said, rather than wait for e-mails or manually prepared reports to arrive at their desks, employees can now access updates on multiple business processes on their computer screens.

The impact on staff efficiency and productivity is significant.

“Employees [now] understand how their day-to-day operations affect the entire supply chain.”

Armed with up to date information, Spin Master can make accurate predictions and plan its product and market strategy more effectively, Rabie said.

Complete supply chain visibility did wonders for the business, he said.

Inventory carrying costs fell. And as better information sharing and collaboration helped Spin Master meet order specifications and commitments consistently, retailer imposed non-compliance penalties reduced dramatically.

Responses to customer inquiries, which used to take three days, can now be provided the same day. Rather than wait days for feedback from other departments, employees are able to access pertinent data on the system almost instantly.

Automation of mostly tedious manual tasks is one of the biggest benefits offered by ERP applications, according to a Toronto-based technology analyst.

These applications enable employees to focus on more productive activities, said Vinay Nair, research manager for enterprise applications at IDC Canada.

But he said calculating the return of investment (ROI) on an ERP implementation is generally difficult because the benefits do not directly tie in to an organization’s bottom line.

SAP is very good at turning out ERP apps with built-in processes that require only minor tweaks to make them usable in any industry, the IDC Canada analyst said.

Edited by Joaquim P. Menezes

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