Published on 08-Oct-2010
Validated on 03 Dec 2013
"The choice of platform has been exactly right, offering high performance, with excellent scalability. We consider the SAP applications and IBM Power Systems servers as an investment in the future, which brings our IT infrastructure in line with the business ambitions of the company." - Klaus Hopp, Head of IT, ElectronicPartner
Business Continuity, Business Intelligence, Business Resiliency, Enabling Business Flexibility, Enterprise Resource Planning, Information Infrastructure, Information Integration, Optimizing IT, Optimizing IT
IBM Business Partner:
Founded in 1973, ElectronicPartner has evolved from a family company into an international corporate enterprise based in Düsseldorf, Germany. Starting with the wholesale of radio and electrical appliances, the range now includes consumer electronics, lifestyle and wellbeing products sold through its own, franchised and independent retail outlets. The 1,000 company employees focus on supporting retailers under the ElectronicPartner, comTeam and MEDIMAX brands.
ElectronicPartner is expanding rapidly, both geographically and in its product range. Building the business successfully requires fast access to operational and financial data, across languages, currencies and locations. The in-house legacy business management application offered limited commission payment capabilities, was restricted to German, and provided little flexibilitty.
Selected a suite of SAP Business Suite 7.0, SAP for Retail and SAP ERP applications, including materials management, sales and distribution, warehouse management and SAP NetWeaver Process Integration. SAP and other general business applications software were implemented on two IBM Power 570 servers running the IBM i operating system, with its integrated IBM DB2 database.
Using data consolidated to IBM DB2, ElectronicPartner can perform ‘what-if’ analyses on pricing and margins based on real trading data, and predict likely demand for specific seasonal products and adjust its inventory and purchasing plans accordingly. Year-end closing statements that took several weeks are now completed in one day. Multi-language SAP applications support local operations. Purchase, payment and commission reconciliation are completed in real-time.
Founded in 1973, ElectronicPartner has evolved from a family company into an international corporate enterprise based in Düsseldorf, Germany. Starting with the wholesale of radio and electrical appliances, the range now includes consumer electronics, lifestyle and wellbeing products sold through its own, franchised and independent retail outlets. The 1,000 company employees focus on supporting retailers under the ElectronicPartner, comTeam and MEDIMAX brands in Austria, Belgium, Germany, Italy, Netherlands and Switzerland, generating group revenues of around 1,500 million EUR.
Building the business successfully requires fast access to operational and financial data, across languages, currencies and locations. Managing sales commission payments is a vital activity for ElectronicPartner, as it relies on financial incentives and rewards to motivate its franchised and independent retailers. ElectronicPartner wanted to adjust pricing, commissions and payments as rapidly as possible in response to changing market conditions, but existing systems offered a single end-of-day reconciliation process that could not be changed.
The central business management solution, developed in-house, presented all its reports in German. For new operations in Italy and elsewhere in Europe, German-only user dialogs were hard to use for many people, and the system did not possess multi-language capabilities.
ElectronicPartner’s unique business model, combining its wholesale operations with franchised and independent retail outlets, has proved enormously successful, yet it was being limited by inflexible back-office applications.
Klaus Hopp, Head of IT, explains: “The original solution was almost 20 years old, used green screens, was all in German and could not handle additional workload or functionality. In particular, because it ran batch rather than online processes, it only permitted one commission payment calculation per day, a significant limitation with thousands of partner retailers selling to more than 200,000 customers daily.
“The trading company needed to be able to adapt to changing market requirements, which in turn requires efficient supply chain and optimized process operations. The limited functionality of the existing solution in the logistics, warehouse and materials management areas represented further serious shortcomings that were hindering company growth.”
Rapid, smooth migration to SAP ERP
Following a six-month research process, which included surveys of its own staff and of other wholesale traders, ElectronicPartner selected SAP for Retail, SAP Business Suite 7.0 and a comprehensive range of integrated SAP ERP applications, including materials management, sales and distribution, and warehouse management.
System design and planning took a further six months, which included assessment of possible server platforms. ElectronicPartner had excellent experience of the reliability and performance of the IBM Power Systems platform running the IBM i operating system, and was keen to continue to exploit these features and its in-house know-how of the platform.
ElectronicPartner selected IBM Power 570 servers, capable of running the SAP ERP applications, additional SAP NetWeaver components, CODA financial management and other ElectronicPartner general business services such as file and print, and the supporting IBM DB2 database. Production applications are hosted on a primary server, using seven of the eight processors divided into logical partitions (LPARs). The LPARs are sized according to the application workload, allowing ElectronicPartner to match its processor investment closely to the service levels required by the business. The eighth processor is dedicated to the CODA financial management software.
ElectronicPartner uses IBM Backup Recovery & Media Services (BRMS), which provides true online backup support for Lotus Servers such as Domino and Quickplace. BRMS offers complete server recovery options to help reduce business risk, for example by allowing synchronous and asynchronous SAP system backups even while the SAP system is live and running, 24/7.
Intensive staff training was supplied by Integrata, averaging six days per user. On this solid foundation, successful go-live was completed over a single weekend for all six countries. The central SAP instance is located in Germany, and the country operations are connected over high-capacity leased lines. System sizing was supported by the IBM SAP International Competence Center, and the server was delivered and deployed by IBM Business Partner becom. Customizing and application optimization was completed by COMSOL, providing SAP consulting services, while system configuration and tuning was delivered by IBM Business Premier Business Partner and SAP Service Partner basycs.
“ElectronicPartner was impressed by the co-operation between the business partners, with leadership from basycs and close support from the specialist services provided by COMSOL and becom.
“We studied a similar implementation of SAP applications on Power Systems running IBM i, and were impressed by their experience,” says Klaus Hopp. “By selecting IBM i, which includes IBM DB2, we had also answered our database choice, too. DB2 is cost-effective to operate and is particularly favorable in relation to the SAP license. Collaboration between the partners was excellent, the sizing estimates provided by IBM were very exact, and no post-implementation changes were needed. The IBM Power Systems configuration has proved to be ideal for ElectronicPartner.”
Accelerating and optimizing processes
With the SAP solutions in place, ElectronicPartner has transformed its business operations from top to toe. Where previously multiple systems were consulted in order to produce a coherent view of sales, stock and finance, ElectronicPartner now handles every aspect of its wholesale activities from within the SAP applications.
For example, the company is now certain that its trade margin statements for every single product sold to each retailer are 100 percent correct, and that the statements are connected to the correct goods delivery, credits and payment advices. This includes automatic calculation and payment of relevant taxes and duties related to cross-border movement of goods. Each country is able to see reports and financial summaries in its own language and, where appropriate, currency.
“The integrated nature of the SAP applications has accelerated our processes and improved reliability,” Klaus Hopp explains. “Our capabilities have improved enormously. For example, previously the order deadline for next-day delivery was 1pm, whereas we can now accept orders as late as 5pm, and be certain of our stock position to ensure 100 percent fulfillment, even with a stock range of some 15,000 articles and a total stock list of about 100,000 articles.
Oliver Haubrich, Chief Executive at that time, adds, “The key message is that SAP applications on IBM Power Systems allow ElectronicPartner to provide the best possible services for our partners through superb supply chain performance and an optimized stock portfolio. ElectronicPartner has reduced warehouse costs with lower inventory levels and faster stock turns, allowing us to offer keener prices and better margins to the retailers.
“The insight offered by the business information warehouse has been very well received by the operational departments. It offers significantly faster and better information on sales, margin and inventory.”
Flexible analytics improve operations
Alongside the core SAP ERP applications, ElectronicPartner runs SAP NetWeaver Business Warehouse (SAP NetWeaver BW) and SAP NetWeaver Process Integration (SAP NetWeaver PI), which integrates data from the SAP applications with its CODA financial management software, from Unit4 Software.
ElectronicPartner uses DB2 to manage the transaction data generated by the SAP applications and the data produced by the CODA financial management software. This combined data is exported from DB2 to SAP NetWeaver BW, and ElectronicPartner is able to examine buying histories, order patterns and financial margins to help optimize operations.
“For example, based on consolidated data stored in DB2, ElectronicPartner uses SAP NetWeaver BW to perform ‘what-if’ analyses on pricing and margins based on real trading data, and predict likely demand for specific seasonal products and adjust its inventory and purchasing plans accordingly,” says Klaus Hopp. “These activities are designed to reduce operating costs, cut stock levels and release cash from inventory, while improving next-day delivery service levels for retailers.
“Retail partners are able to connect their own electronic ordering systems directly to the ElectronicPartner SAP applications. Orders are received by the ElectronicPartner SAP NetWeaver XI interface, which supports all relevant connection types. Regardless of the source system, data is correctly presented to the SAP applications with no manual intervention.
“The shared SAP data managed by IBM DB2 ensures that there is a single source of validated information at all points through this linked process. This saves customers and ElectronicPartner considerable time, eliminates error, and cuts costs for all participants.”
Further improvements in the course of modernization are the standardization and automation of the central planning process, which will increase picking list accuracy and reduce logistics, by optimizing each delivery with the best mix of products and route.
Partnering with IBM for success
With the SAP applications in place, ElectronicPartner runs a highly efficient, low-maintenance operation that offers greatly improved service to its retail partners.
Klaus Hopp concludes, “Internal processes work faster and external service is better. For example, where year-end closing statements for our retail partners took several weeks, we can now complete them, with 100 percent accuracy, in one day. IBM DB2 delivers a secure and reliable database foundation, and the IBM Power Systems server provides non-stop operation.
“The choice of platform has been exactly right, offering high performance, with excellent scalability. We consider the SAP applications and IBM Power Systems server as an investment in the future, which brings our IT infrastructure in line with the business ambitions of the company.”
Products and services used
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.