Published on 16-Apr-2012
"The decision to use IBM Cognos to standardise and automate our reporting system was exactly right. The system offers us maximum freedom to create reports, so our management always has the right information at hand." - Uwe Bögershausen, Chief Financial Officer, Derby Cycle AG
IBM Business Partner:
Derby Cycle is Germany’s largest bicycle manufacturer in terms of turnover, and a leading manufacturer in Europe. In recent years, the company has experienced steady growth; last year, this resulted in a 36 percent increase in turnover, bringing it to a total of €235.5 million. Derby Cycle’s product offering includes electric bicycles, sports bicycles for recreation, and competition bicycles, as well as comfort bicycles for everyday use and touring. These are marketed under the company’s established brands: Kalkhoff, Focus, Raleigh, Univega and Rixe.
Derby Cycle AG’s reporting system was very complicated due to the manual processes involved. In addition, management and field personnel were unable to produce daily drill-down reports and analyses on current business.
Using IBM Cognos Business Intelligence technology, Derby Cycle has unified and automated its reporting and analysis system. The web-based IBM solution is centralised and provides decision-makers with the daily management information they need, in the form of reports and dynamic analyses.
The new information system increases insight into the company’s business systems and data. Derby Cycle makes business decisions based on solid facts to co-ordinates sale, production and storage processes with each other, thereby reducing the total costs and increasing overall productivity.
To read a German version of this case study, please click here.
Derby Cycle is Germany’s largest bicycle manufacturer in terms of turnover, and a leading manufacturer in Europe. In recent years, the company has experienced steady growth; last year, this resulted in a 36 percent increase in turnover, bringing it to a total of €235.5 million. Derby Cycle’s product offering includes electric bicycles, sports bicycles for recreation, and competition bicycles, as well as comfort bicycles for everyday use and touring. These are marketed under the company’s established brands: Kalkhoff, Focus, Raleigh, Univega and Rixe. The company’s dynamic growth is reflected not only in the quantities produced or its growing number of employees (currently 630), but also in its organisational structure, which is becoming more complex. This made it necessary for Derby Cycle to develop its internal processes and related IT systems.
A focus on distribution
The economic success of Derby Cycle is based on a carefully linked distribution network and its partnership with retailers. The company supplies its bicycles to some 3,200 resellers as well as to more than 60 countries worldwide. An important success factor is the optimal co-ordination of orders and inventory. Only this can guarantee that the bicycles that customers have ordered are delivered on time while, at the same time, avoiding excessively increasing storage costs.
A central component of corporate and sales management at Derby Cycle is involves the so-called “daily”. This is a daily report that provides senior management, sales managers, warehouse managers and field staff with the required business ratios. Manuel Behlen, Head of Controlling at Derby Cycle says: “The ‘daily’ answers the important questions posed by everyday business operations. How many orders have been received? How many invoices have we issued? What do we have in stock? Which products have been manufactured, and which have already been delivered?” The answers to these questions provide the basis for co-ordinating production, inventory and distribution. Bottlenecks can thus be avoided, storage costs reduced, and product offerings targeted to the right markets.
Daily manual operation
In the past, the “daily” was created manually using Microsoft Excel, a process that created an ever increasing workload. The reasons? First of all, Derby Cycle has recorded strong business growth in recent years, mainly due to the increasing popularity of electric bicycles. This has increased the amount of data that needs to be processed. Second, the IT landscape of the company was heterogeneous: figures relating to sales, production, inventory, costs and orders were held in separate systems, including the ERP system, the accounting system and local solutions in Australia and the United States.
Towards the end, an employee required about half a day to extract the required figures from the heterogeneous source systems, manually merge them in a spreadsheet and distribute them to the various departments. Uwe Bögershausen, CFO of Derby Cycle says, “This manual reporting took an immense number of working hours. In addition, we lacked detailed and consolidated insights into the growing global business from the monthly reporting.”
Project objectives and solution choice
At the end of 2010, the company decided to modernise its reporting system. The main goals were to establish a single, consistent database, standardised reporting channels and faster access to business-related information.
Mathias Seidler, CEO of Derby Cycle explains: “Derby Cycle needed a central information system that would facilitate access to business data.” The project also needed to point the way for future developments. “We selected a single-vendor strategy to cover the areas of planning and corporate consolidation. Our overall goal is to optimise the availability of data on the long term. This is the only way that we can fully concentrate on our core business,” continues Mathias Seidler.
After a brief selection process, Derby Cycle decided to use IBM Cognos technology in the future. The final deciding factor was a proof of concept from the SIEVERS-GROUP consulting firm, whose consultants developed a daily sales report based on IBM Cognos Business Intelligence 10 software. “The possibilities of the solution were impressive, especially in the areas of performance, report design and visualisation,” says Manuel Behlen. “In addition, the solution is web-based and provides individual access for various users within the company.”
With regards to the future, the extensive IBM portfolio of reporting, analysis, planning and consolidation solutions was convincing. “Even at this early stage of the project, we decided to implement the IBM Cognos Controller for the automation of corporate consolidation,” adds Manuel Behlen.
Project: technical implementation
In February 2011, Derby Cycle began the deployment of IBM Cognos 10 as well as the technical implementation of the required reports. Together with the SIEVERS-GROUP, the project team initially created a software concept and a “business ratios and reporting” guide for managers in the financial, distribution and storage divisions. Then, consultants from the SIEVERS-GROUP implemented a data warehouse (Microsoft SQL Server) and configured interfaces to all legacy systems, including the international ERP systems (for example, Baan). They also integrated warehouse data that is collected via mobile devices. Finally, on the basis of reporting requirements, they developed specific data models, centralised all product and customer master data, and implemented time dimensions and order and inventory statuses. After about three months, the implementation was completed and the new reporting process finalised.
Automated information availability
The new information system has been in use since mid-2011. The reporting and information paths at Derby Cycle are now largely automated. Each night, during a four-hour loading process, all sales and management-related business data is merged in the central data warehouse and prepared for reporting in multidimensional IBM Cognos Power Cubes. The controlling department has configured a total of about 200 standard reports and customised them for various needs and permissions. Sales managers, warehouse managers, employees from financial accounting as well as senior management log into a web portal and simply press a button to access the relevant management information. In addition, reports on customers, orders, turnover, or annual turnover comparisons for individual regions are sent automatically to all sales reps in the field.
From data comes knowledge
All of this gives Derby Cycle completely consistent and clean data, and data quality has significantly improved. Previously, employees needed approximately half a day to compile the “daily”; now the report is aggregated and made available to selected users automatically.
This benefits senior management as the “daily” gives information about basic performance indicators as well as sales and inventory data. “Since the reorganisation of the system, we receive various data on a daily basis - from worldwide turnover to quantities produced and bicycles sold to gross margins,” says Mathias Seidler. The values are presented in aggregated daily, weekly, monthly and yearly views, and the solution enables analyses by drilling down and drilling up to brand and product level. Deviations from the planned budget are seen at a glance. Management can make strategic business decisions by product segments or invest on a secure factual basis.
Furthermore, production, inventory and distribution are always coordinated. Warehouse managers receive updated daily figures on stockpiles or production figures via the web portal. Thus, storage capacity is in complete agreement with production and the order situation, leading to an increase in efficiency and a reduction in inventory costs. For example, an employee in the field can monitor the order situation at retailers and identify current trends at any time using dynamic reporting and analysis. Various bicycle models and brands can thus be targeted to specific markets. Moreover, financial managers receive daily reports on current cost accounting and the financial statements include ordering details, which increases cost transparency and also contributes to cost efficiency.
Other innovations in sight
The successful business intelligence project is the starting point for further technological developments. Derby Cycle is planning to expand the reporting system to cover procurement and logistics.
In late 2011, the company also began an implementation project that has the aim of automating corporate financial consolidation. Derby Cycle implemented IBM Cognos Controller and is using the solution as a first step towards group consolidation in accordance with Germany’s HGB financial reporting standards. “IBM Cognos Controller aggregates financial data from the various source systems and automates the closing process,” says Manuel Behlen. “Once the implementation is complete, the solution will support the overall group consolidation in accordance with HGB and IFRS standards, including the automatic creation of financial and management reports.”
In addition, Derby Cycle is using the web-based IBM Cognos TM1 planning solution to establish a worldwide, automated and consistent corporate and marketing planning process. “The simplification of processes for our further business development is very important. We will also take the next development steps in these areas,” says Manuel Behlen.
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