ESAB boosts customer satisfaction with seamless EDI

Accelerating onboarding for new clients, improving cash-flow, reducing invoice and order processing costs

Published on 17 Oct 2012

"Working with Enfo Zystems and IBM, we have built a solution that transforms our EDI capabilities. The ability to offer a flexible, reliable EDI service to our customers plays a key part in our ability to compete for the business of companies in highly demanding industries such as automotive manufacturing. Over the coming years, we expect to see considerable benefits in terms of both efficiency and cost reduction." - Richard Humphries, Atlas Development Manager, ESAB

Customer:
ESAB

Industry:
Industrial Products

Deployment country:
Sweden

Solution:
Business Integration, BA - Business Intelligence, Information Integration

IBM Business partner:
Enfo Zystems

Overview

ESAB is one of the world’s leading providers of equipment, consumables and services for welding and cutting processes and applications. Founded in 1904 by Oscar Kjellberg – the inventor of the covered welding electrode – the company has grown globally, with operations in North and South America, the Asia Pacific region, Southern Africa, Russia and Europe.

Business need:
To meet customer requirements, win new business and streamline internal processes, ESAB wanted to improve its ability to exchange orders, invoices and other data with its customers electronically.

Solution:
Enfo Zystems helped ESAB to build a single platform for electronic data interchange (EDI) across Europe. The new solution is built on IBM® WebSphere® DataPower® XB60 appliances.

Benefits:
Accelerating order and invoice processing will boost cash-flow. Retiring legacy systems will reduce costs. EDI development for new clients now takes days rather than months. Full ROI is predicted within three years.

Case Study

To read a Swedish version of this case study, please click here

ESAB is one of the world’s leading providers of equipment, consumables and services for welding and cutting processes and applications. Founded in 1904 by Oscar Kjellberg – the inventor of the covered welding electrode – the company has grown globally, with operations in North and South America, the Asia Pacific region, Southern Africa, Russia and Europe.

The importance of EDI
ESAB works with major clients in a range of industries, including some of the world’s leading automotive companies. In many cases, these clients need to manage a highly complex supply chain in order to support just-in-time manufacturing processes, which makes them very demanding customers. When they place an order with ESAB, they need to know that it will be processed correctly so that the products can be delivered on time. For this reason, ESAB’s ability to automate the ordering process by integrating its own systems with those of its customers via electronic data interchange (EDI) is becoming more and more important.

“From a customer service perspective, we knew that EDI was critical in terms of retaining our existing clients and gaining new business,” says Richard Humphries, Atlas Development Manager at ESAB. “And from our own point of view, we recognised that the ability to streamline our order management and invoicing processes was important both operationally and financially. If we can receive and process a customer’s order faster, we can deliver that order faster too. Equally, the more time we can cut out of the invoicing process, the better the effect on our cash flow.”

The ability to streamline accounts receivable processes such as invoicing can be a huge financial advantage for a company. Research by Enfo Zystems, an IBM Business Partner that supports ESAB’s integration platforms, suggested that reducing “days sales outstanding” (a standard accounting measure of a company’s average collection period) by even a single day could provide cost benefits for ESAB of 3.9 million SEK (US $ 596,000) per year.

Moving towards a single solution
For its European operations, ESAB’s existing order management and invoicing EDI processes were split between three different systems in its Nordic, Germanic and UK regions. The EDI solutions themselves were effectively a “black box” – it was very difficult to track individual orders or invoices through the EDI process, and it was equally difficult to reconfigure existing EDI interfaces or create new ones. In one case, developing an interface with one of the company’s automotive industry clients took almost 12 months.

“We wanted a solution that would make business-to-business integration simpler, so that we could manage it in-house instead of hiring consultants whenever we wanted to develop a new interface,” says Richard Humphries. “With some customers we were still receiving orders and sending invoices by email or fax. In the long term, if we could bring them all into our EDI landscape, we would not only increase customer satisfaction, but also improve efficiency by eliminating these costly and error-prone manual processes.”

Building on a successful partnership
ESAB consulted Enfo Zystems about finding a single solution for EDI. The company was already using IBM WebSphere Message Broker to provide an integration hub for its internal systems, and when the Enfo team suggested building the new EDI solution around another IBM product – the IBM WebSphere DataPower XB60 appliance – ESAB was impressed.

“The most impressive thing about the DataPower appliance is how easy it is to update or develop new EDI interfaces,” comments Richard Humphries. “Instead of coding everything from scratch, you can easily set up new customers in the system simply by selecting the appropriate attributes via a graphical user interface. From a business point of view, this means it is much quicker and easier to bring new customers on board.”

Integrating new clients more quickly
ESAB decided to go ahead with the project, and worked with Enfo Zystems to deploy the solution. The IBM WebSphere DataPower appliances now provide a single point of control for all messages exchanged between the company’s European systems and the systems of its clients.

“One of the most important aspects of the project was creating new interfaces for clients who were already using EDI on our old platform,” says Richard Humphries. “This really showed us the advantages of the new platform. In a matter of days we were able to retrofit an interface that took a year to develop with the old ‘black box’ solution. Setting up clients on the system – which used to be a major obstacle to our ability to win new business – is no longer an issue.”

The new system is also much more reliable. Messages can now be tracked through the whole EDI process, and any problems are highlighted automatically by the DataPower software. As a result, the risk of an order or invoice being misdirected or delayed in the system has been considerably reduced.

Looking to the financial benefits
In financial terms, ESAB expects the solution to deliver a full return on investment within three years. The EDI project has been a key part of a larger initiative to rationalise the company’s European systems, and when this has been achieved, it will be possible to retire a number of legacy systems and processes. This will enable ESAB to reduce its ongoing IT costs significantly.

Since the solution should also help to improve the efficiency of the company’s operational and financial processes, the long-term cost benefits should be significant. Exchanging financial data with customers electronically and in real time, rather than relying on traditional email, fax or postal transactions, should help to accelerate order management and invoicing cycles. In turn, this should help to improve cash flow.

Richard Humphries concludes: “Working with Enfo Zystems and IBM, we have built a solution that transforms our EDI capabilities. The ability to offer a flexible, reliable EDI service to our customers plays a key part in our ability to compete for the business of companies in highly demanding industries such as automotive manufacturing. Over the coming years, we expect to see considerable benefits in terms of both efficiency and cost reduction.”

Components

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

Software:
WebSphere Transformation Extender, WebSphere DataPower B2B Appliance XB60, WebSphere Message Broker

Legal Information

© Copyright IBM Corporation 2012 IBM Sweden AB SE-164 92 STOCKHOLM Sweden Produced in Sweden October 2012 IBM, the IBM logo, ibm.com, DataPower and WebSphere are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other company, product and service names may be trademarks, or service marks of others. IBM and Enfo Zystems are separate companies and each is responsible for its own products. Neither IBM nor Enfo Zystems makes any warranties, express or implied, concerning the other’s products. References in this publication to IBM products, programs or services do not imply that IBM intends to make these available in all countries in which IBM operates. Any reference to an IBM product, program or service is not intended to imply that only IBM products, programs or services may be used. Any functionally equivalent product, program or service may be used instead. IBM hardware products are manufactured from new parts, or new and used parts. In some cases, the hardware product may not be new and may have been previously installed. Regardless, IBM warranty terms apply. This publication is for general guidance only. Information is subject to change without notice. Please contact your local IBM sales office or reseller for latest information on IBM products and services. IBM does not provide legal, accounting or audit advice or represent or warrant that its products or services ensure compliance with laws. Clients are responsible for compliance with applicable securities laws and regulations, including national laws and regulations. Photographs may show design models.