Case Studies from SAP Insider: Indigo Books & Music and Newell Rubbermaid

I attended the SAP Insider Logistics and Supply Chain Management 2010 conference in Orlando, Florida a couple of weeks ago. My colleagues attended other SAP Insider conferences held at the same time focused on manufacturing and product lifecycle management (PLM). You can read their takeaways about those conferences and the keynote presentations by Richard Campione, Executive Vice President of Suite Solution Management, and Peter Graf, SAP’s Chief Sustainability Officer and Executive Vice President of Sustainability Solutions, at the ARC website.

The main reason I attend these types of events is to speak with customers and to hear about their implementations. Simply put, the presentations from Indigo Books & Music, Dow Corning, and Newell Rubbermaid were among the best I’ve attended so far this year. But before I share what I learned from these case studies, let me first make some general observations about SAP (an ARC client).

All of the keynote presenters from SAP emphasized “end-to-end processes” and “implementable steps”—i.e., despite the economic challenges, companies shouldn’t lose sight of the big picture and their long-term objectives. They should focus on transforming their end-to-end business processes, but they don’t have to get there all at once. Companies can get there in steps, by implementing targeted solutions that address their immediate pain points first and then build from there.

This focus on processes is much more tangible and grounded, in my opinion, than SAP’s high-level messaging last year about “Clear Enterprises,” which was centered on business intelligence (BI) and analytics. While BI remains important for customers, leading with processes, and mapping solutions to them, is arguably a better strategy for SAP. The end-to-end logistics and fulfillment process for SAP includes Global Available-to-Promise, Supply Network Collaboration, Extended Warehouse Management, Transportation Management, Event Management, and Global Trade Services.

Is this “end to end” messaging really new or differentiated? Not really, but in many ways SAP is going back to basics, which is a good thing.

The real question is around implementable steps, on whether SAP can shed the perception that there’s no such thing as an affordable, quick time-to-benefit SAP implementation. There’s only one way for the company to do this effectively: share customer success stories with the public, or with the analyst community at a minimum, even if under NDA. Compared with other vendors, SAP is much more conservative about sharing details about customer deals and implementations, hence the reason I was so impressed (and pleasantly surprised) by the customer presentations at SAP Insider.

Indigo Books & Music: Indigo is Canada’s largest book retailer with $1B revenue, 247 stores nationwide, and an e-commerce site. In early 2009, the company launched a $15M+ “Supply Chain Redesign Project” which included building a new distribution facility and replacing aging material handling equipment and a warehouse management system. According to Sumit Oberai, the CIO at Indigo, the company was historically a “best-of-breed” IT shop, but it adopted a “platform/SAP First” strategy in early 2009 to reduce total cost of ownership and simplify architecture. The decision on WMS was between SAP EWM 7.0 and a best-of-breed solution, and according to Oberai, the decision was difficult because there was little difference in functionality. “EWM’s ability to deliver retail specific business requirements exceeded our expectations – only one customization [was] required,” Oberai stated. In other words, from this retail customer’s perspective, SAP has narrowed (closed?) the functionality gap with best-of-breed WMS solutions. This milestone is reflected in the hockey-stick growth in EWM implementations SAP experienced in 2009 compared to previous years, based on data the company shared with me. Indigo selected SAP in September 2009 and the first EWM implementation (in the new facility for online fulfillment) is on schedule and on budget to go live in Q2 2010.

Newell Rubbermaid: Newell Rubbermaid (“Newell”) is a $6.5 billion global marketer of consumer and commercial products. Its brands include Goody Products, Levlor, and Sharpie. The Newell customer presenter gave a very detailed and insightful presentation on the company’s implementation of a Customer Managed Inventory (CMI) replenishment strategy with Walmart Canada—i.e., move from a purchase order driven model to a scan-based trading model where:

  • Goody receives nightly point-of-sale (POS) data from store-level scans.
  • Goody uses POS to calculate store inventory levels and generate replenishments.
  • Replenishments are sent to Walmart distribution centers where they are cross-docked and shipped to stores.
  • Goody owns the inventory (consignment) at the store until nightly scan information triggers the sale.

According to the presenter, the business case for implementing this new process included the opportunity for Newell to better manage the merchandising space at retail which could be used as a test environment for merchandising concepts, new products, and category management. It also allows for more promotional opportunities, both with inline and off-shelf placement, that could lead to a competitive advantage in the future and further entrench Newell Rubbermaid in the retail market.

I can’t possibly condense a 1.5-hour presentation into a few words, so I won’t try. But as you can imagine, this “pay for scan” transformation was not trivial and it affected various ancillary and sub-processes (the project took 11 months to go live). From an IT perspective, Newell is using SAP Supply Network Collaboration and SAP APO (among other solutions).

Simply put, this case study underscores why I believe SAP’s renewed focus on end-to-end processes is a smart move, and why more customers like Newell Rubbermaid need to share the supply chain and logistics process transformations they are enabling using SAP. It’s like that old philosophical question, “If a tree falls in a forest and no one is around to hear it, does it make a sound?” I suspect there are other interesting supply chain and logistics case studies out there, other examples of implementable steps in practice, but they’ve remained in the shadows of the SAP forest. I look forward to seeing and hearing more of these case studies in the weeks and months ahead.