Webinars can be instructive. But how often do they make the listener snap upright? Philip Pinneaux, regional manager, Global Enterprise Management Solutions (GEMS), an SAP Business Partner, presented the lowdown on GEMS’ mService solution at a SAP-sponsored webinar on “Service Provider Excellence.” It sounded good. Then Douglas Greenstein, CFO of DITAN Distribution, Inc., a logistics service provider, laid out what mService had done for his company. It was a PR director’s dream.
GEMS started in 1997 as an SAP-certified solution provider to the service industries. Today, its 100 consultants – at locations in Dallas, Houston, Pittsburgh, and Los Angeles, as well as in India, and Germany – have a 12-year-plus average experience level in SAP solutions. They deliver 65 preconfigured industry solutions to service industries in such areas as oil and gas, electrical, logistics, professional, and engineering, covering business-to-business, enterprise resource planning (ERP), and, recently, customer relationship management, (CRM) and mobile sales and service. As a full-spectrum logistics service provider, GEMS covers everything from outsourcing and logistics to B2B procurement.
GEMS is an SAP Vertical Solutions Reseller (VSR), and the mService solution is a qualified mySAP All-in-One Solution developed specifically for business, technical, and logistics service providers. As outlined by Pinneaux, it addresses the full service life cycle, including financial management, project planning, resource management, equipment maintenance and inspection, order processing, procurement, and fulfillment. ERP and CRM functionality helps control service engagements from receipt of order to customer billing, says Pinneaux. And mService can be implemented at a fixed cost in as little as three months.
Games are no game
OK, but what does that mean in practice? Greenstein made that end crystal clear. DITAN is a 10-year-old third-party logistics provider of entertainment media products – especially video-games. The company acts as a conduit between producers of media entertainment (or “publishers,” as they’re known in his business) and retail giants like Wal-Mart. These products, he explains, have a “volatile demand cycle,” with a short manufacturing cycle and a short shelf life: 60-70 percent of the product sells through in the five days after release. Therefore, next-day or second-day delivery is a must.
Naturally, DITAN’s clients – on both the production and retail ends – are continually looking for anything that will cut shipping time and costs and reduce inventory levels. After the 1999 holiday season, Greenstein recalls, DITAN saw that its legacy IT systems wouldn’t be able to handle the coming explosion in video-games. “We needed a technology solution to cover hundreds of thousands of transactions a day and that would move product from different sources to our nine facilities and 15 sub-facilities and put them together in the same box – and cut transportation costs,” he says.
When DITAN started looking for a logistics solution, he recalls, SAP looked like overkill for their $50 million business. But DITAN management soon found that GEMS mService, as a mySAP All-in-One solution, was actually only about a 15 percent more than lesser competitors’ products, that the functionality would grow with DITAN’s growth, and that support costs were also basically equivalent to the competition.
Altogether, says Greenstein, “This made SAP an easy choice. Since we were a small company, some of our peers were perplexed as to why we chose SAP. Now they see how well it worked and some of them have become SAP customers too.” Since starting with mService, DITAN has been consistently under in its IT budget and generally spends less on IT than its competitors and peers.
Eye on the logistics pipeline
“In our business, the information system is the single most critical element in supplying customers,” he explains. “We have to process and translate, validate and cleanse information and get the product out the same day. SAP has been the single point of success in doing this for our customers.”
These customers, he notes, need to know where their product is at all times, and the GEMS mService Web-based system enables them to check every aspect of the delivery cycle in real time. They can see all the product that comes in to DITAN, when and how it gets processed, when and where it goes out, and the complete tracking information.
This self-management feature eases data processing for DITAN customers, Greenstein says, cutting days out of their billing cycle, delivering more accuracy and better analytics. As a result, retailers can minimize inventory, and publishers (producers) can better judge their needs: Working from point of sales information, they can gauge remanufacturing requirements faster and more accurately.
The GEMS mService package for DITAN included SAP R/3 version 4.6c, including modules for financials, order processing, sales and distribution, materials management, and warehouse management, plus a portal, radio frequency module, and EDI front end developed by GEMS. It was all up and running within three months, he says. DITAN brought all its customers into the system within six months, leaving the company a three-month breathing space before the 2000 holiday season.
The mySAP All-in-One solution was ready out of the box, with minimal customization and modification, he says. “You’re not overburdened to take bells and whistles you don’t need. But when you want it, it’s there, and, boy, does it work.”
Lower freight, more units
DITAN presented the SAP system to a major consumer electronics retailer with 1,500 sites, showing them how it helps take products from multiple manufacturers, distribute them across DITAN facilities, and deliver them overnight onto the retail shelf. The customer’s own analysis came back saying they would save at least $30 million in the first year on freight. “Even we were a little astounded,” recalls Greenstein. Other customers came up with similar projections.
Starting from a base of roughly 13,000 transactions daily in 1999, DITAN increased to a sobering total of 1.3 million on the Tuesday before “Black Friday” of 2002 – the Friday after Thanksgiving, the heaviest shopping day of the year. The company shipped a total of 67 million units to 18,000 addresses in 2002 – with a distribution accuracy of 99.98 percent – and expects growth to continue at a rate of 10-20 percent. “We touch one of every six video games distributed in US, largely because of SAP,” Greenstein says. Yet, “We don’t need to go beyond the current SAP environment in hardware or software,” because of its scalability. He rates the Sarbanes-Oxley Act accounting controls as “absolutely excellent.”
Referring to DITAN’s approach to judging benefits, he adds, “We use TBO – total benefit of ownership. SAP is the absolute best solution for us and our customers. Support costs are lower than with our legacy system because the product is rock solid.”
It’s a GEM
For his part, GEMS’ Pinneaux stressed the advantages to his company of teaming up with SAP, saying that the software giant’s 12 million users and 30 years of experience make for an “unbeatable combination.” In the small and midsize business market, he says, the mySAP All-in-One solution shows unlimited scalability, bringing the IT muscle of larger companies to the smaller-company environment, but with the added pluses of quicker implementation, lower investment (at a fixed price), and quicker return on that investment.
The improved ROI, he explains, comes in part from the efficiencies of a common design; reduced service delivery costs through better resource allocation, lower customer turnover due to satisfaction, and timely billing resulting in quicker cash flow
For its mySAP All-in-One mService solution, he says, GEMS provides EDI, portals, training, and end-to end support. The solution uses preconfigured, functional building blocks based on SAP Best Practices to cover everything from transaction-based services to collaborative work, tracking, and maintenance. He estimates that 70 percent of the required functionality for an SMB service provider comes from SAP preconfigured, with 20 percent added by GEMS, and 10 percent tailored to the customer.
To view a replay of the GEMS-hosted webinar, visit www.sap.com/solutions/smb/allinone/newsevents/partnerwebconferences.asp.
To learn more about the GEMS mService solution, go to www.gemsconsult.com/AIO.asp or www.sap.com/solutions/smb/allinone/prepackagedsolutions/serviceproviders.asp, or call 972-247-0630
For more information on DITAN, go to http://www.ditan.com.