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The Chalhoub Group, which provides luxury goods in fourteen regional markets and enjoys strategic alliances and joint ventures with brands such as Louis Vuitton, L'Oreal and Puig, has overhauled its ERP system by deploying business intelligence (BI) tools and a corporate performance management (CPM) solution from SSA-Global to sharpen its competitive edge.

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By  Maddy Reddy Published  November 30, 2004

|~|newslead1.jpg|~|(L to R) Mansour J. Hajjar, general manager of Allied Enterprises, one of the business units of Chalhoub Group with Elie Choueiri, group IT manager at Chalhoub Group. |~|The Chalhoub Group, which provides luxury goods in fourteen regional markets and enjoys strategic alliances and joint ventures with brands such as Louis Vuitton and Puig, has overhauled its enterprise resource planning (ERP) system by deploying a solution from SSA-Global.

The motivation for the project came from Chalhoub wanting to rapidly and easily review the activities of each of its 100 retail stores and local distribution channels, so it could meet the demands of an extremely competitive fast moving consumer goods (FMCG) environment. These requirements were important both for the general management of the company and its 2400 employees, who needed to have a high level view of all the activities.

“We wanted to have easy access to representatives, so we compiled information based on the right dimensions. In other words, we wanted to just press a button to get all the necessary information,” says Mansour J. Hajjar, general manager of Allied Enterprises, one of the business units of Chalhoub Group (pictured left).

“To put it in a nutshell, we wanted to not only get accurate and timely reporting, but also reduce costs and increase productivity. The scope of the ERP implementation was for the entire Group. We wanted to standardise the entire system across all business units.”

Prior to signing the contract with SSA Global, Allied Enterprises went through a 10-day proof of concept, during which company data was evaluated and organised. Within five days, the system was in place and capable of analysing the most complex data. Analysis was set up for several units. It took four months to complete the implementation of the first pilot site and then three weeks for other sites. The Chalhoub Group’s IT department and key users managed the implementation internally with support from SSA Global consultants. The deployment took three years.

Thanks to the organisation’s standardised IT infrastructure, which is built on IBM-based Windows 2000 servers and clients, Hajjar’s team had a rather easy task of rolling out the ERP apps to its 400 IT users.

“We did face a few issues initially, like in any other implementation, but if businesses have the proper procedures and commitment from the management, then it’s not an issue. We had reached a stage where our inhouse expertise would just add modules based on our needs, apply standard procedures and roll out the new solution to different divisions. All this happened in less than six weeks,” says Elie Choueiri, group IT manager at Chalhoub Group (pictured right).

The vendor and the company’s IT team then set out for a full integration of all the transactions between the finance, sales, procurement and inventory departments. Previously, the firm used to rely on separate apps; hence transferring data across the various departments and synchronising different databases into a single repository was the biggest challenge. However, today the integrated system covers distribution, logistics, procurement, finance, sales, inventory and warehousing.

What used to take a week in terms of data preparation, report formatting, printing and presentation based on static or historic data now takes approximately 30 minutes and reports are generated on the fly with realtime data based on an unlimited number of combinations. More importantly, because the ratio of information accuracy to data integrity is 100%, the system has brought in the required trust, increasing its reliability and user acceptance.

Hajjar, who is a former IT director of the company, says the full value of their ERP investments can only be realised by extending its functionalities to the next level. “A solid ERP system is the cornerstone of the data in an organisation, since all the data lies there. Once this in place, the full benefits and value of the system can be leveraged,” he adds.

To maximise its investment of more than US$2 million, and 20% of that amount in recurring costs through maintenance, Chalhoub Group has implemented a business intelligence (BI) solution from SSA, as well as a corporate performance management (CPM) application.

The former helps the company consolidate and manage its data more effectively, while the CPM apps allow a precise and rapid presentation and analysis of transactional data, thereby giving users a deeper insight into sales trends, explanations for unexpected fluctuations in sales and the ability learn from customer behaviour.

Today, the SSA CPM solution is used for analysing data across all departments, including purchasing, sales and inventory. It also allows its 300 ERP users to get reports on products and suppliers, and the company is able to make product-purchasing decisions quickly because the inventory analysis is more accurate.

Additionally, the purchasing team can now easily obtain the average cost of sale of products sold over past 12 months. This is especially useful for people like Samarjit Bhullar, department manager at Chalhoub. “Drill-down timing is very important for us since all the purchasing decisions are based on what was sold during the previous months. It is now quick for us to find out how long the inventory is going to last per month, thus helping us optimise the inventory levels,” he says.

Prior to implementing the CPM app, 77% of the reports requested by users were unnecessary. Today, the request levels have dropped to about 20 reports. “CPM has given us an appetite to look further into the ERP data. It takes you to the next level. The things we did yesterday, we don’t do them anymore,” says Hajjar.

Now the company has a mature ERP system in place and its BI and CPM value-adds, it is able to better analyse business margins and make informed decisions. Also, besides tracking profiles for identifying buying trends, the overall solution offers product performance tracking and a 360-degree view of the retail stores to senior management and operational staff.

Having acquired technical finesse, the company has now set out to consolidate all its financial reporting, which till date was isolated based on different business units. In doing so, aspects such as net profitability, profit and loss per customer, actual sales versus budget and work flow will be magnified to give management a holistic view. The retail group is also actively reviewing the new version of Baan now called SSA ERP 6.1, released in August this year.

“Our IT systems are now stable, reliable and performing well. It is up and running for all our activities, and obviously we are starting to think about the next step. We are quite keen on consolidation of all our financial information from the various operating units. It will give our finance team the ability to delve into the data and analyse trends,” says Choueiri. ||**||

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