ERP made retailer's results crystal clear

Retail is a complex business for Sydney-based glass and crystal retailer Royal Scandinavia. With 51 stores in Australia and New Zealand and 20 of those as online stores for its George Jensen and Orrefors Kosta Boda lines, the ability to manage high volume transactions daily is a stressful scenario, according to Royal Scandinavia’s financial controller Peter Chapman.

“With thousands of transactions flying around each day, we’re after state-of-the-art technology. And we have to run and support our technology on our own as a stand-alone operation, as we get no support from our parent company,” Chapman said.

For the company which was established in Australia in 1978 after separating from its parent company Royal Scandinavia AS in Denmark, managing ERP processes in an integrated way was not a forte, Chapman said. “The worldwide group was running a dinosaur back-office processing system for around 10 years which was horribly old and also did some paper-based processing,” he said.

Royal Scandinavia merged with Swedish glassware maker Kosta Boda in 1990, adding 40 new people to an existing staff of 20. Suddenly Royal Scandinavia needed a much smarter ERP system because it had outgrown an in-house system developed by Wang in the mid 80s, Chapman said.

“We were clobbering the older system until exit stage into the mid-90s, and I wanted to move to a new integrated ERP model.”

Chapman shortcircuited the headache of searching the Yellow Pages for a suitable vendor by using Ernst & Young. The consulting firm shortlist three “good” vendors for an ERP solution, and Pronto was one of them. “[Ernst & Young] narrowed down the process for us and chose it as the best fit because of its spectrum of experience from your James Hardy down to the five-person shop,” he said.

The decision to overhaul Royal Scandinavia’s ERP system was also political. Chapman was fighting off a move by the retailer’s parent company to foist an AS/400 system onto the Australian operation.

“I was terrified of going back into the proprietary world. The [proposed] mainframe system was big and cumbersome. It wasn’t geared up for retail or Australian conditions – it didn’t have sales tags and it would’ve taken a lot of mods to work,” he said.

Royal Scandinavia has an annual turnover of $20 million, $7 million worth of stock and processes some 60,000 transactions a year.

Maturing into a “more retail-focused” business over the years and now with 130 staff, it was essential the company revamped its accounting system to seamlessly integrate the front end with the back end, Chapman told Computerworld.

“Pronto’s product enables a single transaction from a shop to go right through to general ledger, then update stock, and cost the sale in the one blast. That cut out a lot of interfacing that most other systems on the market required at the time.”

Chapman said it’s important for vendors to be able to show they develop and source their own technology because this proves they “control” all of their products. He said Pronto, for example, “wasn’t sourcing its products from the US or England under licensing agreements which may lapse or be under the control of overseas vendors which may change direction and leave local companies stranded with a particular direction”.

With only two finance and accounting support staff, Chapman said his added responsibility of IT can be distracting. But “user-intuitive” ERP software like Pronto’s lets him run the retailer’s IT operation for all its Australia and New Zealand stores smoothly from his Warriewood, Sydney head office.

“The strength of Pronto is that you don’t need an IT manager to use the systems. It’s a black box sitting there, and the vendor has great resources to get you going when you have to, like a server upgrade recently. It sourced that [task] out for us and that sort of special one-off service went smoothly.”

Sophisticated reporting features within the software also lets Royal Scandinavia perform more in-depth reports than its overseas counterparts, reporting data on stock by day, state, store and stocked item.

After investing $200,000 in the ERP project, Chapman said the new solution has paid off for Royal Scandinavia by giving the company a more productive backend, and improving operational efficiency.

When faced with vendor selection, a business of Royal Scandinavia’s size and scale is less focused on cost than on acquiring “current-generation” IT products, Chapman said.

“The strength of a vendor is local support; its service capacity, and products’ ability to be implemented where you can do it yourself and don’t have to keep running back to programmers every five minutes because you couldn’t handle things.”

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