Getting a Handle on the Business

Feature Article | December 12, 2007 by admin

Quinko-Tek may not be a household name, but if you’re shopping for furniture at Bureau en Gros in Canada or Staples in the United States, you’re sure to see office furniture units that incorporate Quinko-Tek hardware. Headquartered in Quebec, its name is true to the company’s focus. It derives from the French word “quincaillerie”, which means hardware. Adding “Tek” to the name reflects the high technology functioning of such products as hinges, locks, and drawer slides that have many intricate moving pieces. The business isn’t just about nuts and bolts and adhesives.
In the early years Quinko-Tek focused on becoming the primary supplier to the RTA and fully assembled furniture industries, which it came to dominate. In recent years, Quinko-Tek has also started to supply the kitchen cabinet and home renovation markets. The growth of the company’s vision has taken it beyond the province of Quebec, first into Ontario, and now to direct ship to customers in South and Central America and the United States, increasing revenue from $4.5 million to over $13 million in the last 10 years.
Quinko-Tek operates in a very competitive marketplace, with prices squeezed at both ends of the importing and distribution spectrum. In the past, Europeans were the dominant players in the market. Today Asian suppliers produce with less cost and provide 60 percent of the goods. Only 20 percent comes from Europe and the balance from the US and Canada. The constantly increasing price pressure made clear the need for cost accounting efficiency improvements.

Clearing the way to move full speed ahead

A big impediment to Quinko-Tek’s advancement was the outdated, locally developed, proprietary software that was not serving the company well. The six-year old system required frequent, costly fixes and there was always a time lag for getting support. In all, the company had invested triple the original cost of the solution, and it still wasn’t doing what they needed it to do. For instance, they couldn’t easily define and manage budgets and compare actual and planned figures to get an accurate and up-to-date picture of the business. It was very difficult to set up profit or cost centers to allocate revenue and expenses according to their specific distribution rules.
Lou Dorosz, Quinko-Tek Controller says, “Soon after I started with the company I realized that no matter what we did, the system we were using simply couldn’t produce the financial reports we needed, including income statements, cash flows, and aging data. I couldn’t keep working seven days a week. And the pressure on the staff was just enormous.” A solution had to be found.
Of necessity, Dorosz and his team wanted to be able to focus more attention on improving margins and growing revenue, which they knew meant reducing operating expenses and cutting costs throughout the order-to-cash process. The three top areas of practical improvement they identified were producing a price list, managing landed cost calculations, and generating key management reports with a single view of the business.

Sifting and sorting – and choosing the new solution

In January 2005, with the top three priorities identified, Dorosz began the process of compiling the full list of requirements and getting input from all personnel, including clerks. “I asked everybody to think about what was making their work and their processes hard and what they needed in order to be more efficient,” he says.
Dorosz sent an RFP out to eight vendors. By the fall the list was narrowed and the three top candidates made live presentations to all key department heads and some end users, who grilled them thoroughly.
“At the end of the process I asked each of the six department heads to justify their preferences,” says Dorosz. “Out of the six we had immediate agreement from five and a half that SAP Business One was the right choice.”
In October, with that decision made, N’Ware Technologies, an SAP Channel Partner, developed a schedule and began the blueprinting process. “Patrick Lavallée from N’Ware came in for two weeks and went from user to user to find out where he’d have tweak the system for our use,” says Dorosz. “Then he had us set aside a large room with ten PCs in it to train people.” Lavallée presented key concepts, assigned homework, and supported users in practice sessions. He trained section by section with real data running in a realistic staged environment. Dorosz comments, “Lavallée’s patience and thoroughness made all the difference in helping people say, ‘I can do this.’”
The new system went live on February 1, 2006, the beginning of the Quinko-Tek fiscal year. “It was a smooth transition, with no disruption of the operation whatsoever,” comments Dorosz with some amazement. “People came in over two weekends, and that was it.”

A better grip

Reviewing the value of the new solution, Dorosz notes that for the first time Quinko-Tek was able to generate a standard price list. Up until this point, pricing was kept in the owner’s desk drawer and people had to line up at the door to consult with him for up-to-date information. Today, with the correct landed cost factors and other pertinent information loaded into the system, key players are able to access accurate pricing for immediate use.
This helped automate and streamline the order desk function, and enabled the company to cancel the plan to hire additional support staff. It also made it possible for sales people to get orders into the system more quickly. Now they can sit with their customers and work with the order desk via phone to place orders directly into the system.
Regarding the landed cost calculations, Dorosz says, “We used to have two people dedicated to manually feeding all suppliers’ invoices and other data into the system, a very time-consuming proposition. And we needed that information instantaneously. When the process was automated, we were able to get more accurate information and have it more promptly. In the first year we decreased our costs by eliminating those two salaries.”
Also, while the management team thought they were operating with just in time principles before, they now see that they had actually been operating largely on judgment calls. Today, with a better view of past, present, and predictive data, such as current purchases and stock information, the company is doing far better inventory management.
The purchase order process has improved dramatically, as well. For instance, Dorosz points out that “if you miss a dot in Chinese you may very well order the wrong item.” Standardized data helps to streamline the process and to eliminate costly errors.
“Overall I’d say that with SAP Business One we’re eighty percent more efficient than before, due to our streamlined and automated processes and the quality and timeliness of information,” Dorosz estimates.
Dorosz says that he continues to refine the reports that Quinko-Tek can generate with SAP Business One. The executive team now uses Query Manager with ease, and they look forward to using the full functionality of XL Reporter, which offers the ability to analyze real-time financial data in any format.

Christine Macfarlane

Christine Macfarlane

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