Success and Growth – They’re in the Bag

Feature Article | February 18, 2004 by admin

Yak Pak (www.yakpak.com), the leading trend-designer and manufacturer of urban-oriented bags, faced the following challenges – with a financials package that had reached it growth limits and without a formal warehouse and inventory management system:

  • 35 percent compound growth over three years
  • Inventory turns at 13X (most companies are in the 5X range)
  • 15,000 ship-to points increased to 75,000 (including the online store)
  • Increase in active customers from 400 to 3600
  • More sales = more service with lifetime warranties

The company may be small, but it sure covers the territory. Products are designed at Yak Pak’s headquarters in New York City, which also houses administration and sales. All products are manufactured at the company’s wholly-owned factory in El Salvador and the company has recently opened a new warehouse facility in Texas. Yak Pak operates a signature store in San Francisco and a retail website.

The ultimate goal

According to Richard Haugen, Yak Pak’s chief operating officer, “My goal for the business is to make and sell the best bags. What’s going to help me reach that goal? How can we get to the next level – especially for our sales team and our sales processes?”
Yak Pak needed to upgrade its business management software to include factory planning and control, purchasing, sales, customer service, warehousing, and distribution. Haugen had a couple of tough questions for software vendors:

  • Can it scale – for my warehouse, for sales and for the web?
  • How can I convince my CFO to spend the money?
  • Fear of spending

Haugen realized that his company was going to spend money just to keep the status quo – and there wouldn’t be any left to fund new growth. Furthermore, Yak Pak was faced with hiring more people in order to provide a high level of customer service and to track charge backs.

No decision was not an option

As with any small business, spending money is always a concern. However, Haugen and Rolando Cohen, CFO, knew they had no choice. “Every day I delay the decision, I’m losing money,” says Cohen. Haugen adds, “When the old system crashed, order clerks couldn’t recover orders, resulting in lost sales. The financials system couldn’t keep up with the increased transaction volume. Instead of driving growth, it was inhibiting it. For example, it cost us $4,000 every time we added a new field to a form. However, when an upgrade was applied, we lost all the new fields.”

Kudos for SAP Business One – The American Express Edition

Yak Pak chose SAP Business One – The American Express Edition for Wholesale Distribution. Created specifically for small and midsize businesses, it enhances SAP Business One core applications for financials, procurement, distribution, and sales force support with capabilities for EDI, warehouse management, credit card processing, document management, tax compliance and reporting and e-commerce site integration. The American Express Edition is distributed through the American Express Alliance Program, which provides a single source for the total solution including hardware and software, among other capabilities.

Ease of use

Many software vendors claim their products are easy to use, but few really deliver on that promise. Haugen is a believer. Within days of implementing SAP Business One – The American Express Edition at a newly opened warehouse with an inexperienced staff (the most senior worker in the warehouse had been on the job for 19 days), orders were being shipped without a glitch. “It is truly easy to train everyone on this system,” states Haugen. “All the transactions have the same look and feel – whether someone’s entering orders or shipping products.”

Improved productivity

Alerts and workflow are supporting a number of key business processes. For example, when a customer places an order above a certain limit, an e-mail goes to production to give them a “heads up.” Getting authorizations for purchase orders used to be a time-consuming process that delayed the purchase. Now it happens automatically, according to predefined rules that are easily maintained and updated in a table. The chargeback process, formerly a big concern for Haugen, is now operating smoothly – without additional staff.
To ensure that managers are not overwhelmed with activities and information they don’t need, Yak Pak decides which critical business events and processes to support with alerts and workflow. For example, managers are notified when an invoice is produced without freight charges or when a line item is entered at zero cost, as in the case of samples.
Haugen noted that the ability to select events has hidden advantages. “If I don’t want the CFO to know what I’m going to buy next year, I could turn off all the alerts for the budgeting process. But it’s so easy to customize the system that the CFO could go back in and turn them on again.”

Simplified reporting

Haugen notes how the extensive capabilities of SAP Business One simplify report generation. “By using Drag&Relate and the custom report wizard in SAP Business One, we don’t have to spend a lot of money – and time – to get complex customized reports. For example, in our previous system, it took 45 minutes to get a demand forecasting report. Now it’s just seconds.”

Leveraged investments

Imagine sitting in your home office and loading master data for your inventory, customers, and your chart of accounts. You could if you were running SAP Business One – The American Express Edition.
Ease of use is matched by ease of maintenance. Haugen states, “Our B2C Web site is supported by one programmer. It runs on SQL and uses SQL scripts. Because SAP Business One is built on the same platform, my staff doesn’t have to learn another language. And we can use the SAP Business One Software Development Kit (SDK) to build enhancements.”
Although Yak Pak used consultants to set up and test its 20 EDI partners, Haugen is confident that his staff can handle any additions or upgrades. “The key thing now is that when our consultants leave, we can handle any similar changes ourselves.”

You can afford to meet the challenge

Haugen remembers sitting in on a demo of SAP Business One and thinking, “Wouldn’t it be great if we could afford something like that. And guess what – we can!” He looked at his current solution and future needs and realized Yak Pak couldn’t achieve its growth potential without a change. “I don’t want to grow by adding people. I want to grow by adding sales.”
By implementing SAP Business One – The American Express Edition, Yak Pak is getting the best from its employees, its business processes, and its technology. “We’re a small company. And maybe we tend to do things the same old way. You know the saying – ‘If it ain’t broke…’. But we’ve improved our business processes and taken advantage of our investment in new technology. And if our project team ever runs up against something they can’t solve or they need a second opinion, they are backed up by a team of SAP Business One consultants and partners across the country.”

Brenda Mackay

Brenda Mackay

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