Facing New Growth

Feature Article | March 23, 2011 by Perry Manross

hdadjasdh (photo: Fotolia)

Skin-care solutions: SAP supports Ego Pharmaceuticals' business processes (photo: Fotolia)

In 1939, Dr. Erwin Oppenheim stepped off the steamer that had taken him from his home in Germany to his future in Australia. He had run a successful dermatology practice in Dresden and sought to ply his trade now in Melbourne.

Erwin faced difficulties: He was versed in Latin, French, and his native German, but spoke very little English. And unlike Europe, Australia simply did not have the skin products Erwin required to treat his new patients. Nonetheless, equipped with familial support, modest means, and a few furnishings, he took up his profession once again in a new land.

“Gerald, I need this. Go make it,” Erwin would command his son. It was a no-nonsense operations model at the Oppenheim dermatology practice, but one that quickly bred innovative ideas and the foundation for yet another business.

In 1953, Gerald, who had studied to become an industrial chemist, and his wife, Rae, a nurse, set up values-based Ego Pharmaceuticals. It was to become a brand synonymous with skin care and whose products have since become household names in Australia and beyond.

A business based on values and reputation

“Values-based means values come before profit,” says Alan Oppenheim, Gerald’s son and now General Manager of Ego Pharmaceuticals. “In the long term, a company is only its reputation,” he adds. And in the long term, Ego’s values of innovation, ethics, people, and quality, have secured consistency of strength in the company’s reputation.

These values, he attests, have taken Ego from a manufacturer for a handful of local dermatology practices to a company of 250 employees with a presence in 23 cities in nine countries, serving tens of thousands of pharmacies, dermatologists, and hospitals around the world.

Like his father before him, Alan grew up in the ubiquity of his father’s business. He recalls sitting with Ego’s second employee, a woman by the name of Eunice O’Donohue, who affixed labels to products. “It took a good long time until engineers were able to come up with a labeling machine that could match Eunice’s precision,” Alan notes.

Next Page: Robust system supporting robust processes

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Values before profit: From skin-care to software, Ego puts quality first (source: Ego Pharmaceuticals)

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IT support for sales, planning, and finance are vital to Ego's continued growth (source: Ego Pharmaceuticals)

Progress with each generation

In 1981, fresh from university with a concentration in information technology, Alan joined Ego, implemented the company’s first computer system, and wrote the software for it.

Now, together with his biochemist wife, Jane, scientific and operations director, Alan ensures the staff is equipped with the required facilities and systems to continue developing and delivering some of the most innovative products in the skin care industry.

Among Ego’s market-leading products are: QV cleansers and moisturizers, SunSense sunscreens and self-tan, Aqium antibacterial hand gel, and DermAid anti-inflammatory cream. Ego brings these products to market throughout Australia, New Zealand, and the UK, as well as in Singapore, Hong Kong, Malaysia and other Asian markets.

Increasingly, Ego’s products are leaving lasting impressions in the Middle East. The Minister of Health for the United Arab Emirates, for example, has stated his family can’t go to sleep without using QV.

Ego will need such foreign testaments for its planned expansion. With a total of 25 countries and growing, Ego exports are critical to the company’s overall strategy of generating 50% of its business from markets outside Australia by 2020.

Robust system supporting robust processes

Alan’s initial homegrown IT system held for ten years, until Ego supplanted it with its first commercial system. It didn’t take long until Ego also outgrew the six self-contained instances of that system, and became bogged down by the more than 650 spreadsheets it required.

“Our job is to continually improve products, but also improve our processes,” Oppenheim says. Innovation in processes around production, planning, finance, and sales had proved nearly as vital as research and development. And Ego needed an IT system that could support these processes. “But Ego is a pharmaceutical company, not a software company,” Oppenheim says. “When it came time to find a new solution, we were out to create a new Ego not to create new software.”

Ego opted for SAP Business All-in-One on account of its ease of implementation and built-in best business practices. Ego also implemented SAP BusinessObjects Edge to boost visibility within the company’s operations. “Our philosophy for a long-term investment like SAP is to not cut any corners,” Oppenheim says. “We invested in solid systems that enable robust processes to set our staff up for our expansion and continued growth.”

The project was carried out by SAP implementation partner Clarity Consulting Group Australia and covered financials, materials management, warehouse management, production planning, and sales and distribution.

Next Page: Increased transparency reduces risk

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Global expansion: Ego aims to earn 50% of profits from foreign markets by 2020 (source: Ego Pharmaceuticals)

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SAP Business All-in-One helps Ego control inventory and reduce risk in manufacturing (source: Ego Pharmaceuticals)

Increased transparency reduces risk

Ego quickly realized a return on investment of approximately AUD 100,000 per month. But ROI was not the only consideration. Regulated by Australia’s Therapeutic Goods Administration, Ego is committed to mitigating risk as much as possible and must extensively document changes to its operations to demonstrate continuity of quality control. To this end, SAP Business All-in-One helps staff quickly identify and control which products are cleared with regulators in which countries and to control orders and delivery accordingly.

From a functional perspective, Oppenheim himself enjoys the convenience of using SAP to run sales reports anywhere, anytime. Ego’s award-winning sales teams have been able to enjoy better customer service from the improved quality of order processing and significantly lowered delivery error rates.

At the same time, employees can log on to the system from anywhere to find the status of any order. Profitability reports, too, allow staff to make strategic decisions on how best to go to market in different countries with different products.

Back in the manufacturing center, Ego employees use the system to track stock levels, with the assurance that everyone is informed based on a single, unified, and correct set of data.

Furthermore, Ego soon will be able to better control inventory and production planning, and even interface its flow meters with SAP Business All-in-One for the dispensing of ingredients in the manufacture of its products with wins for staff safety and efficiency, as well as for the environment.

Partners in growth

Ego Pharmaceuticals is currently planning on entering three new countries, while continuing to nurture ideas into innovations, and innovations into products. Ego’s sights are set to growth and expansion while maintaining the values to which it attributes its past success.

“And our SAP system will grow along with us,” Oppenheim says. “We will continue to add subsidiaries and staff in more countries, and we count on SAP to support the robust processes Ego needs to expand effectively as we live the Ego values.”

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