Shaping systems for FMCG

Beverage distributor African & Eastern is building on its ERP platform to implement new solutions for supply chain

Tags: African + Eastern (www.africaneastern.com/)FMCG fast moving consumer goodsOracle Corporation
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Shaping systems for FMCG Samir Khan, regional IS manager, African & Eastern.
By  Mark Sutton Published  May 3, 2014

In the region’s FMCG sector, African & Eastern has built a thriving business in its niche field of beverage distribution, wholesale and retail. With a nearly 100-year history, the company has built a $230m plus business, which now sources products from around 30-40 countries, and ships to an equivalent number of countries.

The company has varied lines of business, including servicing the Dubai hospitality sector, retailing for the domestic market in several territories in the Gulf, and also servicing Duty Free shops in the UAE and neighbouring countries. With the growth of the hospitality sector in the region, and the company’s own efforts to expand, A&E has seen double-digit  CGAR over the last 13 years, increasing market share from low twenties to high forties in its main market.

As a specialist in the beverage sector, A&E fulfils a number of roles, including supply chain operations to serve more than 500 customers; it operates as a retailer through its network of more than 25 stores, and also as a marketing company for the brands it represents.

The company handles a wide range of products for its brand partners, including high value and perishable products, the majority of which are also controlled distribution products.

Samir Khan, regional IS manager comments: “With this rapidly growing business, with its complexities, there are more than 15,000 SKUs, of which one third are active. We have more than 400 brands, more than 1,100 outlets and 500 customers, it is a big spread of moving pieces — to make all this tick, we need a 24-7 IT operation.”

The rapid growth of the company has created challenges for IT however. Previously the company had been using different ERP systems to manage operations in Dubai, Abu Dhabi and Oman, meaning three different systems, with three different set of processes. A&E identified that this was a problem, Khan says, and decided that it needed to replace these systems with a standard operating model. The company tied up with Oracle, to implement its JD Edwards ERP and develop industry best practices.

The deployment did not go to plan however, in part due to how the parameters of the system were set, and there were complex issues arising with the ERP. Khan explains: “The challenging issue that we had encountered was that we operate in single items in some lines of business, but the lowest unit of measure in the system we had was cases, across all LOB. Over a period of time, we realised that in effected LOB our inventory showed decimals of the actual lowest unit of measure, so for example, there were 0.988 bottles,because there were approximations in the system. This obviously resulted in reconciliation and system hygiene issues. We did a lot of manual work to make our books accurate each day, but we needed to fix our system also to improve productivity.

“We had issues with the server performance too, and with this, the business confidence in IT wavered — we had stabilisation issues, performance issues, data accuracy issues,” he adds.

The IT team decided that it needed to do the root cause fix to change the base unit of measure, and to smooth out the other issues. It was a “massive change” Khan says, and not something that had been attempted before. A&E worked closely with the vendor, to try out a range of different solutions to turn the project around. Khan says it took around a year of work to turn the system around and restore the credibility of the IT department as well.

“When we set it rolling, our CEO, our head of operations, our CFO, were so relieved to see a clean month end, clean inventory, clean books. It was a big challenge that we resolved, but it laid down the foundation for winning the business over, and paved the way to working on strategy and other value added projects.”

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