No Time to Waste

October 20, 2008 by Prof. Dr. Christine Arend-Fuchs, SAP AG und Dr. Peter Bielert, Reyher

Reyher Product RIO SCAN Photo: F. Reyher Nchfg. GmbH & Co. KG

Globalization, market consolidation, increasing energy costs, and sales diversification all have a significant impact on the wholesale sector. The significance of the wholesale trader‘s role as an intermediary between manufacturers, retailers, and processing plants is under threat. SAP has worked with some of the sector’s most renowned companies to analyze their current situation, success models, and strategic and operational IT
requirements.

Many new business models focus on performing secondary business processes as external services for other companies. Flexible IT infrastructures make this technically possible by connecting suppliers and customers using industry standards. Midmarket wholesaler Reyher works this way to procure its customers’ complete range of C items.

Catching up

While suppliers, retailers, and logistics service providers have significantly modernized and standardized their IT over the last few years, wholesale traders have lagged behind, according to a study by the market intelligence firm IDC. Although 62.7 percent of the Western European retailers questioned said they use an enterprise resource planning (ERP) system, only 45.5 percent of the wholesalers did.

Although the industry recognizes the need to catch up and is prepared to make the necessary investments, many wholesalers are anxious about embarking on large IT projects. One potentially viable solution to this problem is a service-oriented system architecture, in which parts of the old software can be combined on a process platform with applications from any manufacturer, and new IT acquisitions can be successively integrated.

Differentiating through service

Reyher

Reyher is one of the leading suppliers of fasteners and fastener technology in Europe. In 2008, the company and its 450 employees generated revenues of €200 million (approximately U.S.$278 million). Reyher boasts one of the most extensive ranges of screws and C parts in the industry, with 110,000 articles in stock in a single, highly automated logistics center containing over 180,000 storage bins.

The fastener and fastening technology specialist Reyher delivers 98 percent of articles ordered within 24 hours from its highly automated logistics center. The company also offers its customers two services that can help increase productivity along the value chain through process integration: a kanban service for inventory control at the customer’s site and e-business for customers and suppliers.

Together, sales, the kanban service, and the e-business service constitute the company’s core processes. Reyher recently went live with release 6.0 of the SAP ERP application. Thanks to thorough planning with two test upgrades and the integrated program comparison tools, the implementation ran smoothly and on schedule. The project was completed in three months – much earlier than the estimated external project effort of 125 days. The newly installed hardware also cut the average response time from 600 to 350 milliseconds.

An effective IT strategy

In addition to its SAP retailing system, Reyher is mapping four further applications to its core processes:

  1. the Reyher Order Management kanban system to dispatch orders from inventory controls;
  2. the Reyher Internet Order Web shop, which has proven very significant to exports;
  3. a product data system to maintain article master data and catalogs;
  4. and the Reyher stockholding system, LVR.

To aid decision making, both the wholesaler’s customers and its purchasing and sales departments need reliable information about stock levels and conditions. This data can be found in Reyher’s Web shop.

Real-time updates

To ensure that orders are correctly processed, the article master data, partner article numbers, and inventory and condition data must be updated in real time and kept consistent throughout the system group. SAP transactions give users access to detailed status information and sophisticated reporting functions. Buyers and sellers can display article data, customer data, and supplier data in virtual cockpits. The cockpits are continuously updated using the document postings in the system. Users can also monitor and manage orders, purchase orders, and returns.

By upgrading to the current SAP ERP release, Reyher is now working with a service-oriented system architecture. With the SAP NetWeaver technology platform, the company will be able to use state-of-the-art technology to develop interfaces for collaborative applications. Customers can access additional data and functions through shared archives using the growing portfolio of SAP services. A new solution based on the SAP Records Management application is being developed for the special parts service. This focuses on the information flow between purchasing and sales, which includes SAP documents, CAD drawings, Microsoft Office documents, and e-mails.

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