Fast and global expansion is every entrepreneur’s dream. If companies do not want their bubble to burst, however, they need to take specific measures to sustain their growth. Their business processes and IT infrastructure need to keep up with the speed of change. Alfagres, Colombia’s largest building material supplier, knows this all too well. With an average growth rate of 20% over the last five years, the company was facing a twofold problem: no end-to-end data flow along its value chain and an inadequate information system.
“It was getting harder to keep up with our foreign business and still be efficient,” says Doris Ladino, IT project manager at Alfagres. Too often, manual steps slowed down decision-making processes. “That ultimately hurt our competitiveness.” Because Alfagres did not always have the information it needed, high inventories blighted some areas of the business, while stock-outs caused problems elsewhere. The company could not effectively monitor its processes and make reliable forecasts.
Global logistics for more competitiveness
Founded in 1971 in Bogotá, Colombia, Alfagres produces and distributes building materials, including quarry tiles, ceramic tiles, tumbled marble, and carpet. Alfagres operates several locations in Colombia and exports worldwide. Sales for the United States, Canada, the Caribbean, Europe, and Asia are conducted from Miami, Florida. Mexico and Central and South America are served from Bogotá. With 2,300 employees, the company generated U.S.$150 million in revenue in 2007.
Faced with these difficulties, Alfagres management decided to optimize business processes and establish a global supply chain. Both objectives would require a new IT infrastructure.
Easier said than done. “We were choosing from 15 solution providers – and our standards were very high,” Ladino says. “Our specification for the new system detailed 4,000 functions.” Ultimately, however, these requirements made the decision a straightforward one. SAP ERP, together with SAP Advanced Planning & Optimization (SAP APO) and SAP NetWeaver Business Intelligence, fulfilled over 85% of Alfagres’ requirements.
Plus, SAP offered more than just a list of functions: “With SAP, we can synchronize our value chain and keep a close eye on the entire group with its subsidiaries and brand offices,” Ladino says. Specific benefits include improved project monitoring, optimized materials usage, and strict cost controlling. With these measures, Alfagres has reduced its manufacturing costs by 5% and its inventory level of slow-moving items by 25%. Raw material waste in tile and flooring production was also cut by 5%.
Higher productivity through best practices
To get even more out of its new solutions, Alfagres draws on SAP Best Practices. The preconfigured settings and automation make it easy to optimize processes. “We implemented documentation standards and risk controls. From now on, everyone follows the same procedures,” says Ladino. In addition to benefiting the efficiency of the entire company, this has enhanced the productivity of each employee.
Ladino attributes the success of the project primarily to the experts from SAP Consulting, whom she heralds as key contributors to the project’s success. The SAP consultants implemented the solution in seven months, while fulfilling all requirements and sticking to schedules and budgets. “SAP Consulting impressed us with its competence. The consultants all had extensive experience from past projects,” Ladino says. She also appreciates their ability and willingness to take on responsibility in tricky situations, smoothly bringing the project to a successful close.
Alfagres employees, however, were slower to warm to the new software. “It took some time before the users recognized the benefits of the new system,” Ladino recalls. Now, 800 of her colleagues use the software and “many wonder how they ever lived without it.”
Plans for localized payroll
The solution is now in a stabilization phase. Having seen the many benefits that integrated systems have brought to Alfagres’ core business, the company is hatching new SAP-based plans, including a localized payroll system. “We also want use SAP APO more because it will enable significant savings in shipping,” says Ladino. Her team is additionally looking into mobile solutions from SAP. For now, that remains a vision, since sales and warehouse staff would first need to be equipped with portable devices. “But when the time comes,” Ladino says, “we would be pleased to work with SAP Consulting again.”