SAP Business One in a retail chain

In 2007, the first small e-cigarette batch was sold, and six years later, sales reached PLN 80 million. Providing information about the number of eSmoking World points of sale is a risky business, since this number is growing almost each month. Currently, there are more than 1,100 retail outlets – mainly proprietary and franchised stands and shop-in-shops in shopping centers. Moreover, there are 27 thousand points in convenience stores, fuel stations and newsstands.

The company is also doing well online – the eSmoking World e-commerce platform supports thousands of Polish and foreign customers. The owners are keeping up the momentum – at the beginning of this year in Ostrzeszów, where the company’s headquarters are located, they opened a modern production plant with a research laboratory.

SAP Business One as a central system for retail

The Chic Group became  a major player in the e-cigarette market in Poland and Europe in just a few years. The dynamic growth of the sales volume, the need to manage an increasingly large network of points of sale, as well as the desire to shorten customer service time and improve its quality influenced the decision to invest in an integrated system.

The main objective of the implementation project was to optimize business processes and support the key business area – retail.

The new system was supposed to replace the ERP solution from a Polish manufacturer, which was unable to keep pace with the dynamic development of the eSmoking World business any longer.

It was decided to choose SAP Business One as a stable, flexible ERP system that has been proven in many companies and that streamlines business processes and delivers reliable management information that is also acquired from other IT solutions critical for the customer’s industry (e.g. industry-specific systems, proprietary solutions). BCC, a company specializing in providing SAP solutions for small and medium-sized  businesses, was selected to be an implementation partner.

The scope of the project was prepared during the pre-implementation analysis carried out by BCC. Sources of problems in the company’s current operations were defined, retail processes requiring support were identified and goals to achieve were established.

The project started in August 2013, and SAP Business One went live in July 2014. The scope of SAP Business One implementation work was wide and included:

• finance and accounting,
• logistics,
• domestic, foreign and online sales,
• a warehouse and a packing center,
• production,
• points of sale (POS),
• complaints and customer service (CRM),
• reporting (Business Intelligence).

SAP Business One became a central platform “fastening together” business management. However, due to the specific nature of the retail industry, it was also important to integrate with SAP the applications supporting POS, an online sales portal, and a B2B portal for serving large customers (e.g. fuel stations).

Therefore, in addition to implementing SAP Business One, a significant part of the work done by 7milowy was the delivery and implementation of a solution for managing eSmoking World points of sale (Positano), as well as the integration of the online sales platform and the B2B wholesale portal with SAP Business One.

As part of the project, 7milowy also prepared the functionality of SAP Business One developed according to the needs of the Chic Group. The solution called SAP Packing Center is used for order picking – handling the preparation and shipment of goods from the central warehouse in Ostrzeszów to points of sale and individual customers throughout the country and abroad.

As Hubert Urban, a member of the Chic Group Management Board, points out: “We are still in a phase of intense growth. We enjoy this process, but on the other hand, such a rapid development presents many challenges. The number of processes we need to plan, data to be processed, and business decisions that we have to make is growing almost each day. We have more and more employees, business partners, customers. This complex dependency network cannot be managed without reliable information available in an integrated system. We expected that SAP Business One would be an opportunity to streamline and unify business processes – from sales of a single e-cigarette to the overall financial result.”

A double project challenge

In the Chic Group project, it was not the wide range of tasks or the complexity of integration that was the biggest challenge. When the work was underway, the company recorded a very intense growth. The number of employees increased, the target number of SAP users and points of sale located across the whole country that needed to be covered by the implementation doubled. A partnership with chains of stores and fuel stations was also established, which greatly increased the number of customers and sales volume. The company continued to open foreign branches in Europe, which also require IT support.

The project was demanding from the beginning. It was not a classical implementation of the ERP system but a full computerization of the company’s business.

“The project was demanding from the very beginning. It was not a classical implementation of the ERP system but a full computerization of the company’s business. In addition, the scale of the project dramatically increased compared to the original assumptions. We had to actively respond to changes, for example to verify scopes and deadlines of individual stages. We have proven our high competence in project management, which guarantees safety of work for customers,” commented Michał Lorenz, Project Manager at 7milowy, responsible for the implementation.

Retail processes at the European level

One of the main objectives of the project was to optimize business processes with a special focus on the computerization of retail sales. And this goal was achieved. Increased employee productivity and logistics improvements are further important benefits of implementing SAP Business One.

The integration proposed by 7milowy for all key applications under the umbrella of SAP Business One as a central system has enabled retail processes to be handled with maintaining high standards and low costs. In addition, as a result of connecting SAP Business One with the POS solution, the company has gained full control over the retail business. It is possible to track inventory levels from the central warehouse to a single point of sale. Every day, a detailed report of sales volume and profitability is available. It provides accurate information in selected cross-sections up to the level of the selected point of sale.

The Chic Group has significantly reduced the time needed to obtain key information. The system collects data and statistics showing, among others, the number of packages sent each day, the productivity of the packing center broken down by a single employee, calculated based on the number of packed lines, pieces of goods. If necessary, you can quickly obtain cross-sectional information such as average order fulfillment time and the number of complaints.

With the rapid growth of the Chic Group, the efficient central IT SAP system has allowed the results to be systematized and their actual value to be measured, taking into account capital expenditure. By streamlining business processes in the ERP system, the company has gained a rich reporting platform that allows you to view business data: from a general level (aggregated information) to a detailed level (e.g. sales data of a selected shopping stand).

Although the implementation project ended in mid-2014, it became evident when it was underway that further development of the system would be necessary. Launching its own production in a new plant at the beginning of 2015, opening up companies abroad and new sales markets, as well as the continuous expansion of the sales network in Poland generate new needs regarding IT systems. The Chic Group continues to work with 7milowy.