Lextron feeds rapid, acquisitive growth with SAP and IBM

Published on 11-Mar-2010

Validated on 09 Dec 2013

"The very close integration of DB2 and SAP applications, combined with the advanced technical features designed to reduce storage requirements, deliver direct savings for Lextron in administration costs and infrastructure investments." - Tim Hays, Director of IT, Lextron, Inc.

Customer:
Lextron, Inc.

Industry:
Consumer Products, Wholesale Distribution & Services

Deployment country:
United States

Solution:
Business Integration, BA - Business Intelligence, Enterprise Resource Planning, Optimizing IT, Optimizing IT, Supply Chain Management

IBM Business Partner:
SAP

Overview

Specialist animal health products company Lextron, Inc., of Greeley, CO, has grown rapidly both by acquisition and through organic growth. Founded in 1967, the company now posts annual sales of approximately $500 million and employs more than 500 people.

Business need:
Having built its business both by acquisition and through organic growth, Lextron was operating three separate business management solutions. With locations across the US, managing customers, controlling inventory and tuning business processes was a complex challenge. Lextron management wished to increase its understanding of its operations, improve efficiency, and standardize its processes, and the existing solutions were not up to the job.

Solution:
Working with iTelligence, an SAP Gold Partner and Global Services Partner, Lextron implemented SAP ERP solutions as a single, centralized instance for all its divisions, with an IBM DB2 database. Lextron is taking advantage of DB2 Deep Compression technology, saving a total of some 175GB across the whole system landscape.

Benefits:
Inventory is managed at a group level, allowing Lextron to ship any product to any customer from any warehouse. Customer orders, payments, volumes and related data can be shared between business units, allowing cross-selling and up-selling opportunities to be identified. Standardized business processes and information management have helped to cut operating costs and reduce error rates, creating a template ready to be applied to the next corporate acquisition.

Case Study

Specialist animal health products company Lextron, Inc., of Greeley, CO, has grown rapidly both by acquisition and through organic growth. Founded in 1967, the company now posts annual sales of approximately $500 million and employs more than 500 people.

Lextron operates five principal divisions: Lextron Animal Health, Lextron Micro Tech, Lextron Information Systems, Animal Feed Technologies and Precision Logistics, and a related company, Aspen Veterinary Resources.

Tim Hays, Director of IT, explains, “Three separate underlying business systems made it difficult to leverage economies of scale and distribution, and to control inventory and manage logistics. Sharing customer data bordered on the impossible. We wanted to streamline our operations, cut costs and improve our financial performance, and we wanted to reduce our goods movements between locations and eliminate excess delivery trips.”

These desires led to the selection of SAP software as the enterprise-wide business management solution, running on its existing HP server infrastructure. To support the SAP applications, Lextron selected IBM DB2 to provide scalable, high-performance data management.

Ensuring strategic approach
While consolidating to a single group-wide platform was the natural solution, each time Lextron acquired a new business, with its own infrastructure, there was a danger that the problem would simply re-emerge.

“There was every sign that Lextron management would continue on the acquisition trail,” continues Tim Hays. “We wanted to be able to move existing and new businesses onto a shared solution that would allow us to treat customers, operations and finances as an integrated whole. To do so, we wanted to standardize processes and best practices across the group, which in turn dictated a high degree of scalability. Lastly, the solution would need to offer the flexibility to add new product or service lines to meet the needs of new acquisitions.

“The Lextron business has bold ambitions, including $1 billion-a-year revenues, and implementing a single view of operations, customer relationships and sales would be a significant catalyst in reaching that goal.”

Selecting SAP software
“Looking out at the ERP landscape, it was clear that for a $1 billion company there were only two or three realistic choices. Working with iTelligence, our preferred IT services partner, we identified SAP for Wholesale Distribution as a very close fit. With additional SAP ERP components we could build a comprehensive solution that delivered on all our key objectives.”

iTelligence is an SAP Gold Partner and Global Services Partner, and has developed its own industry package solution, it.wholesale, based on SAP for Wholesale Distribution best practices. Lextron implemented it.wholesale, which includes sales and distribution, materials management, financials, controlling, financial supply chain management, and profitability analysis. To handle enterprise-wide customer data, Lextron implemented SAP Customer Relationship Management, linked directly to the SAP eCommerce component.

“The integrated nature of the SAP applications allows us to manage and improve customer service across multiple business units,” remarks Tim Hays. “SAP solutions offer us a bigger toolbox, if you will, to add more functionality and larger capabilities, and to do so on a robust foundation.”

Choosing DB2 information management
For the consolidated SAP applications to deliver the promised enterprise-wide benefits, it was important to share data from a single source. Lextron selected IBM DB2 as its strategic information management platform, running on HP-UX systems.
“We did some homework before taking this step, and spoke with other companies running DB2 on HP-UX. There was a good degree of skills overlap between our previous Informix-based applications and DB2 administration, which promised to reduce the training workload. The performance, cost advantage and depth of the SAP and IBM partnership made the choice for DB2 compelling.”

Approximately 500 users access around 1TB of data, which is expected to triple in the next year as the SAP applications are enabled. Lextron is taking advantage of DB2 Deep Compression technology, and saw reductions of the database size not only for the production system but also for the whole landscape, saving a total of some 175GB.

The smaller database sizes also result in a lower workload for the database administrators, with less time spent on backup and restore tasks and more time devoted to business development. Lextron is also using deferred table creation, an installation option in DB2 for applications based on SAP NetWeaver that replaces empty database tables – which already consume disk space – with read-only virtual views.

“The very close integration of DB2 and SAP applications, combined with the advanced technical features designed to reduce storage requirements, deliver direct savings for Lextron in administration costs and infrastructure investments,” says Tim Hays.
Lextron has deployed HP Integrity BladeSystem servers with a mix of solid-state and conventional hard drives. The much reduced footprint required by DB2 helps control storage costs, particularly for tier-1 solid-state drives.”

Transforming the business
With the SAP application and DB2 information management infrastructure in place, Lextron is positioned to transform its business from top to toe.

Tim Hays comments, “Using the integrated SAP CRM data and materials management, we can optimize our deliveries and reduce the number of times we shift goods, and report on our logistics performance to monitor improvements. We can now map customer orders directly to inventory and delivery.”

With central inventory management at group level, Lextron is able to ship any product to any customer from any warehouse, with complete certainty of 100 percent order fulfillment. There is no need to run reverse logistics to fulfill orders, saving considerable expense. Customer orders, payments, volumes and related data can be shared between business units, allowing cross-selling and up-selling opportunities to be identified.

Creating the acquisition template
Most important for this acquisition-lead business, standardized business processes and information management have helped to cut operating costs and reduce error rates. The embedded processes have created a template ready to be applied to the next corporate purchase.

“The SAP applications will enable us to eliminate some of our current report generation, which involves data extraction from multiple systems and distribution as spreadsheets. In place, we are implementing a series of dashboards using Adobe AIR, providing near real-time information based on shared, accurate data within DB2.”

Tim Hays concludes, “The SAP and IBM solution is good for Lextron, and good for our customers.”

Products and services used

IBM products and services that were used in this case study.

Software:
DB2 for HP/UX, DB2 for Linux, UNIX and Windows

Operating system:
HP-UX

Service:
IBM-SAP Alliance

Legal Information

IBM Deutschland GmbH D-70548 Stuttgart ibm.com/solutions/sap IBM, the IBM logo, and ibm.com are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of other IBM trademarks is available on the Web at “Copyright and trademark information” at http://www.ibm.com/legal/copytrade.shtml Intel, the Intel logo, Intel Xeon and the Intel Xeon logo are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. UNIX is a registered trademark of The Open Group in the United States and other countries. Linux is a trademark of Linus Torvalds in the United States, other countries, or both. Microsoft, Windows, Windows NT, and the Windows logo are trademarks of Microsoft Corporation in the United States, other countries, or both. Other company, product or service names may be trademarks, or service marks of others. This case study illustrates how one IBM customer uses IBM and/or IBM Business Partner technologies/services. Many factors have contributed to the results and benefits described. IBM does not guarantee comparable results. All information contained herein was provided by the featured customer and/or IBM Business Partner. IBM does not attest to its accuracy. All customer examples cited represent how some customers have used IBM products and the results they may have achieved. Actual environmental costs and performance characteristics will vary depending on individual customer configurations and conditions. This publication is for general guidance only. Photographs may show design models. © Copyright IBM Corp. 2010. All rights reserved.