The aim of the GHU AG (Gesellschaft für Handelseffizienz und Unternehmenspartnerschaften) purchasing cooperation is to support small and midsize tire dealers without linking them to the “franchise chain”. The umbrella organization contains around 230 small and midsize tire dealers from all over Europe, and with this structure, the cooperation aims to strengthen the position of the dealer in the industry so that favorable discounts and conditions can be negotiated. By bundling strengths, it also wants to prevent the tire industry from securing all sales channels and thus making dealerships superfluous.
GHU, which was founded in May 2006 and is based in Fulda, Germany, draws together the strengths of SMEs. However, the members are still free and independent enterprises. With them, the cooperation plans a range of more than 5,000 items, purchases these and keeps them in stock. Up to 20,000 tires per day can be dispatched from the central warehouse in Fulda – a big advantage for dealers with limited storage capacity.
Powerful IT sets the tires rolling
With 15 employees, the Fulda-based company is a very lean organization, and must therefore rely all the more on a powerful IT system to guarantee complex planning and delivery. However, the choice of suitable solutions was limited, says Thomas Diegelmann, Head of Materials Management, Logistics, and IT: “Many of the merchandise management systems developed for tire dealers did not offer us sufficient planning tools or options for connecting up suppliers and system partners.”
GHU therefore chose Tradesprint, an enterprise software developed by cormeta AG on the basis of SME solution SAP All-in-One, which not only promised investment security but was also tailored specially to tire dealerships. It contains important and detailed industry-specific enhancements such as a search using matchcodes, standardized data transfer to the tire industry via Electronic Data Interchange (EDI), and an integrated webshop.
The deciding factor for GHU was ultimately the fact that the software supports dynamic, seasonal planning. It uses past sales figures, replenishment lead times, the day’s current stocks in the GHU warehouse, and special system partner requirements to determine the optimum order time and automatically creates order proposals. Temporary peaks in demand can also be taken into consideration more effectively. Seasonal and regional factors can be stored in Tradesprint and displayed at any time on a screen with a mouse click.
Productive in 50 days
GHU had an ambitious schedule for the implementation of the software. Assortment planning was to be set up and Tradesprint implemented just four months after the company’s foundation. The tight schedule was chosen for a good reason – because GHU wanted to be up and running by the start of winter business.
The software was ready for use just 50 days after conclusion of the contract. According to Diegelmann, the cormeta consultants made an important contribution. “The people from Ettlingen demonstrated that they are familiar with the tire dealer business. We didn’t need to explain to them any peculiarities of the industry such as markups and discounts, list prices, and types of bonus in the industry. They also provided deep SAP knowledge,” he states.
The team first implemented the central functions for order processing and merchandise management, then developed assortment planning and installed a webshop. One critical element was the creation of the master data: in just eight weeks, the suppliers had to be selected and detailed planning implemented. Only when this had been completed could GHU know which items they needed. It was also necessary to store complex prices, conditions, discounts/bonuses, and subsequent agreements in the solution.
Well-founded assortment planning
After smooth production start-up, the cooperation is very satisfied with its ERP software. “Tradesprint covers all our requirements, in terms of price management and materials management, central billing and fleet and leasing business,” says Diegelmann. The solution is used to map complex bonus and credit memo settlement, and offers detailed functions for customer and supplier assessments. In addition, a data warehouse is integrated in Tradesprint, which GHU uses to store regional item offers centrally and takes into consideration in pricing.
For the planning of the assortment, GHU uses the sales history, current market estimates and warehouse stocks, and data on vehicle stocks from the Federal Motor Transport Authority, which is broken down in detail by region and provides an insight into the sales potential for tires. The suppliers’ recommended prices are also included in planning. At regular intervals, the material master is revised based on manufacturer items and current prices. Based on this information, GHU creates a six-month overall plan that indicates the predicted demand for each product segment – tires, rims, accessories – each material group, such as car, offroad, motorbike, and agricultural tires, each price segment, and each brand.
Individual plans for the trading partners can be generated from this overall plan. From July 2007 members will be able to call up these plans for comparison via the system partner portal in the webshop – at the moment, they are still sent by email. If the forecast differs from the actual demand, the dealer can revise the plan directly in the portal. The updated data is transferred directly to the Tradesprint data warehouse. The solution automatically updates the demand per item and manufacturer to ensure accurate procurement in line with demand, based on the amended plan.
Replenishment within 24 hours
On request, the company also controls replenishment for its members. The dealer reports sales and current stocks every day. Tradesprint checks whether levels have fallen below the defined minimum stock based on the individual plan. If so, replenishment is automatically triggered, whereby the dealers themselves can determine the days and times at which they receive deliveries. Stocks are always defined so that they generally cover the period between two deliveries. If this is occasionally not the case – for example as a result of unexpectedly high demand – the customer can place an order immediately by telephone or via the webshop. Delivery is within 24 hours.
The GHU business model is a success – since the company’s foundation, membership has been constantly on the increase. By the end of 2007 the cooperation expects to have 300 dealers. According to Diegelmann, the attraction of his company is clear. “In a market that operates with tight margins in which every cent counts, a clear view of the current purchasing situation is extremely important. We offer our members this because we map and monitor the complex discount systems of all tire manufacturers in our IT solution in a straightforward way and update this data every day.”
Dealers do not need to worry about maintaining material master data either, and can leave planning and ordering to the Fulda-based cooperation too. “We draw together logistics expertise, financial strength and marketing knowledge and our services provide our members with measurable added value, not just in terms of prices,” stresses Diegelmann. The SAP-based enterprise software has an important part to play: Tradesprint sets the tires rolling.