11 december 2007
A powerful ERP solution for retail: Tekhnosila and GMCS present results of joint project
SAP, Tekhnosila, and GMCS announce the completion and first results of the project creating the retail chain's resource planning system. 

At present Tekhnosila's system embraces the chain's major business processes, including procurement and sales, goods flow accounting, as well as financial and management accounting. The system is built on SAP for Retail (SAP ERP 6.0-based).

The decision to implement SAP for Retail was made in spring 2006 at the onset of the regional expansion of Tekhnosila, Russia's most dynamic home appliances and electronics retail chain. The solution's wide capacity best corresponds to the requirements of company business development and support of operations management of Tekhnosila's geographically distributed structure. Leonid Tukavkin, Vice President for Strategy, Tekhnosila, says implementation of the modern management system became particularly urgent after the company opened numerous new outlets and the timely supply of goods to the regions became critical.

An original implementation approach was adopted in order to reduce the project time and receive the first results of the new system launch faster. A joint team of Tekhnosila and GMCS specialists chose parallel implementation of analytical and operations system blocks instead of the usual serial process of key business processes automation.

"When deciding to employ the unusual implementation logic, we definitely took a certain risk. This also was the first time such an approach was used for an implementation based on the new SAP ERP 6.0 version in Russia," Leonid Tukavkin says. "The results of the project, however, surpassed all our expectations. In the first two months that the system was running we recognized that it was stable and started to regularly produce high-precision data on daily sales, balance of merchandise in the outlets, and monitor the entire process of goods flow, from plant equipment supplies to final shipments."

Based on the selected implementation approach, two systems were deployed simultaneously. One system is used to manage sales data. It is based on SAP POS Data Management. The other system manages finance and logistics and is based on SAP ERP.

The key result of the implementation of the first system is higher speed and quality of producing outlet sales reports and consequently higher quality of management decisions. To collect relevant information on Tekhnosila outlet performance, GMCS implemented SAP POS Data Management to create an interface with the outlet automation program. System users now get updated information on merchandise balance every two hours. The data on retail and wholesale sales of the entire chain is available already on the next day .

The data is now much more accurate. GMCS consultants on the project also developed and realized an algorithm of multilevel verification of outlet reports using product ID codes, prices, bill number, etc. Retail outlets also are notified of mistakes in reports and the correction process is put under control. The correction time now takes one to three days rather than a month or two.

Presently, all sales and product movement data is accumulated and processed in a single depositary created by GMCS based on SAP Business Warehouse and is available for the staff of various Tekhnosila departments. Corporate system users, including commercial and finance department specialists, accountants, logistics, retail and wholesale trade staff receive exact data on daily operations in the required analytical frameworks.

As a result of the second sub-project, SAP ERP implementation, a unified system of the retail chain’s key business processes management was establishment. In the process of implementation a joint Tekhnosila-GMCS project group automated sales, procurement, and logistics. Tekhnosila internal expert team automated financial and management accounting. The performance of the company's key business function is now carried out in a single system, allowing Tekhnosila to monitor the motion of goods and transportation costs in real-time mode, efficiently management transportation and logistics costs, abandoning unprofitable transportation projects. Tekhnosila now supports a competitive price level and timely replenishment of stock even in the most distant regions.

The company plans to further cut the logistics costs by engaging all functions of the management system.

The project took 14 months to implement. The system is used by the headquarters and staff in seven regional offices, and at the chain's three distribution warehouses. All Tekhnosila outlets are connected to the SAP POS Data Management sales information system.

Tekhnosila continues its extensive development and plans that the chain's new business optimization goals will concern strategic planning and assortment planning and management (based on SAP Merchandise & Assortment Planning), as well as detailed demand forecasting and outlet replenishment (based on SAP Forecasting & Replenishment).

About Tekhnosila

Tekhnosila Retail Chain, founded in 1993, carries out retail and wholesale sales of electronics and home appliances. The chain currently includes 176 outlets in 129 Russian cities, including 77 franchising projects. 27 outlets are located in Moscow and the Moscow region and 149 outlets in the rest of Russia. The chain’s online store has been open since 2005. The chain reported sales of $1.012 billion, total profit of $230 million, and EBITDA of $61 million in 2006.

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