Supply chain savvy

Switz Group has improved its cash flow and eased the management of its growing business by implementing a mobile solution from Intermec that makes its supply chain more efficient. Additionally, the Saudi confectionary and bakery chain is now in a position to leverage its customer data more effectively.

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By  Maddy Reddy Published  August 28, 2004

|~|noshirinside.jpg|~|Noshir M. Chinwalla, the CFO & CIO of the Switz Group.|~|Saudi confectionary and bakery chain, Switz Group, has upgraded its supply chain and improved the management of its daily sales invoices with Intermec’s mobile computing solution. The company sells its goods to retailers through a network of sales representatives who source the goods from production centres across Saudi Arabia, UAE, Oman, India, Singapore and the Philippines. In Saudi alone, the sales reps deploy 300 trucks daily to cover a network of 140 routes to ship the produce to 30,000 retailers. At the end of each business day, the sales staff return to the office to submit more than 8000 invoices, generated each day through cash and credit sales. These are then entered manually into the company’s database. Tracking the huge volume of invoices and keeping tabs on the stock level, as well as cash flow, was proving to be a challenge for Switz. “As a group, we were not able to track all of our customers and sales accurately. All sales and customer invoices were tracked and entered manually into the system. We were unable to track the credit and cash sales effectively from the thousands of invoices each day,” says Noshir M. Chinwalla, the CFO & CIO of the Switz Group. Another issue facing the US$63 million confectionary company was its cash flow, which meant it needed an immediate solution to keep its growing business financially healthy. “Around 70% to 80% of our sales are cash, while the rest is on credit ranging from 10 to 60 days, based on the agreement with the retailer. Also, in the bakery business, the shelf life of products is very short. Everything that is unsold or has expired has to be returned and it is hard to keep a record of everything,” Chinwalla explains. In order to take control of the situation, Switz decided to computerise its sales invoicing with Intermec’s 700 series handheld terminals (HHT). Powered by Microsoft Pocket PC and Intel Xscale processors, the HHTs run RoutePro32 route distribution software. The project kicked off in Saudi Arabia last October. After a three-month trial, Switz Group started rolling out the new solution with the help of Intermec’s Saudi Arabian partner, Mirnah Technologies. To cover a large market like the Kingdom, the confectionary company segmented its operations into sub-territories or regions, each with it’s own independent IT infrastructure. Even the stock, cash receivables and records are maintained independently and controlled at the collection point to maintain consistency. Now, at the end of each business day, the field staff return to the office, placing their HTTs into docking stations connected to a LAN. The day’s invoices, forecasts, sales returns, stock adjustments, van-loads, payments and credit data are then uploaded into the regional database. Once the data is collected, the regional servers link to the central server in the company’s Damman head quarters where all the day’s transactions from across Saudi are consolidated into one central database. “The regional teams do not have to connect to the central server for everything. The regional server saves us time and money on connectivity costs. The idea for such a semi-centralised layout is that every region has its own server and its own dedicated sales team. At the end of the day, the management now has a complete picture of each business day,” explains Chinwalla. As for the company’s remote sales depots without leased lines, the HHTs have an inbuilt modem. The data is transferred via a telephone line to the nearest regional server, where it is later synchronised with the central server. With the automated system, Switz Group’s sales team is able to link the company with its customers. The process starts with the sales forecast, where the salesperson in the field knows or can estimate the customer’s needs and the market demand. He or she then submits three-day forecasts electronically from his or her HHT to the SQL 2000 middleware, which interfaces with an Oracle-based Orion ERP system. The information is then consolidated and sent for production where each sales representative’s account is credited with a new stock. Once the technical side of the project had been complete and the new infrastructure was in place, Switz was faced with the challenge of persuading its employees to use the new technology. “Technical issues were not the problem, accepting the change was. With the new technology, we are able to track all the stores electronically. We are able to see if the sales reps are actually visiting the store, the accuracy of the sales figures, productivity levels and work activities. Initially, this made them apprehensive and insecure. They felt we are controlling them and making them accountable,” explains Chinwalla. “[However,] as they get used to the computers as a selling tool they will increase route productivity and increase their commissions,” he adds. The US$800,000 project is complete and the company has started reaping tangible benefits. Intermac’s RoutePro32 software on the front-end and the middleware from Mirnah, Intermec’s partner, has enabled Switz to track sales patterns, which in turn allows it to make adjustments to its deliveries on a daily basis. The company can also collect demographic information for promotional purposes via its handheld computers. Adding to the benefits of accessing current information, Switz is reaping a better harvest from its historic data. In the current implementation, a large chunk of data is captured in the middleware, which allows the management to analyse sales data for several months, rather than for a few days. The confectionary company hopes that all the mined information will help in its market research and help it recoup its investment next year. “The computerised invoicing has given us the much needed sales automation and saves us time and resources. We now have specific information about which end user is buying what product across all the routes and our customer base. The implementation has helped us in sales management, but it has not produced additional sales. The best thing is that we are now able to track when expired or stale goods were returned and whether they were purchased on credit or cash. Our payment cycle has also improved — this has helped us reduce our sales recall value by 2%,” says Chinwalla. ||**||

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