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If it’s not broken, why fix it? This is the perennial question that plagues IT management. It is a reason to stick with a successful system which, over time, can struggle to keep up with business demands.
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Lingerie manufacturer Van de Velde was facing this dilemma when it attended Inforum, the Paris conference for ERP supplier Infor, held this month.
Hedwig Schockaert, the company’s ICT and supply chain director, told Computer Weekly that the manufacturer, which saw turnover of €198m in 2014, had been using the same iteration of Infor M3 since 2011, but was looking to upgrade in the next 18 months to improve supply efficiency and reduce lead times to support faster-moving e-commerce.
The original system, sold by Lawson Software, finished going live in 2001, and encompassed financial management, CRM (customer relationship management) and control of production. In 2011, Van de Velde upgraded to Infor, which bought Lawson the same year.
But the company is now looking for improved performance in some areas, Schockaert says. “Lead times are always getting longer and longer,” he adds. “We might need a supply chain with shorter lead times, both in terms of our suppliers and our own production. It can be 10 to 12 weeks, which is quite long.”
Although Van de Velde sells directly to consumers through a couple of retail chains, most of its trade is wholesale. Schockaert is concerned that as its retailer partners sell more online, lead times will become unsustainable.
“So far, e-commerce has not had a big effect on us – it is still relatively small,” he says. “But in the future, it will have an effect. Because consumers will not to wait 10 to 12 weeks to get the product, we have to store more inventory to provide that availability on the spot. The risk will shift to our side due to the e-commerce way of working.”
Challenges to consider
Although this points to upgrading or migrating the company’s main ERP (enterprise resource planning) system, there are a number of challenges to consider before picking a new package.
The Infor M3 system is used by about 150 employees, including staff in the finance, procurement and warehousing teams. The application starts by helping to document decisions made by designers and mapping them in the production environment. It also helps to create production steps, determine the materials needed, and set out the order of sewing.
It also takes input from a separate forecasting tool from A3, a specialist fashion industry supplier. With the input from the design and the forecast, M3 calculates how much material and capacity is needed to fulfil orders.
Read more about newer-generation ERP systems in use
- How BAE Systems Military Air and Information upgraded and unified seven ERP systems, with a project team mostly from the business.
- How Heinz has deployed SAP Hana on Virtustream’s xStream platform-as-a-service (PaaS) infrastructure to boost efficiency.
- Manchester Airports Group has opted to put SAP’s S/4 Hana ERP suite at the centre of its business efficiency plans, with Capgemini for project delivery.
Like many manufacturers, Van de Velde outsources specific segments of production, increasing the complexity of the ERP system. Materials are cut at its factory in Belgium, but each item is shipped in kit form to low-cost suppliers in China and Thailand, as well as its own factory in Tunisia.
“The biggest benefit of M3 is in the supply chain side, as it is possible to explode the number of products,” says Schockaert. “Fashion is business with a lot of stock-keeping units [SKUs]. Within M3, you can explode from a style, a variant, to the specific number of SKUs.
“The way they configured the product, it is quite easy to configure that from a rather complex set of variables, according to size, design, colour, and so on. It is a complex process that is very well supported in M3.”
But because of the pressure on lead times and inventory, Schockaert says the upgrade is likely to target supply chain efficiency. He says he is interested in GT Nexus, a supply chain network company recently bought by Infor.
“We would consider using it because visibility into the supply chain is something we are struggling with,” he says. “It would make huge improvements if we were able to connect most of the partners in our networks to such a system.”
At Inforum, Infor promised to integrate analytics from the cloud-based GT Nexus network directly within its main ERP products, in the form of plug contextual applications.
Upgrade to cloud
Schockaert is also interested in upgrading the B2B e-commerce platform to Infor’s cloud-based product Rhythm, partly to improve the user experience for retail partners, and partly to support integration in e-commerce.
Infor predicts that more than half of its customer licence revenue next year will come from cloud installations. But Schockaert is more cautious about the move to cloud because it will not support modified products.
“We have started a discussion, but we have to choose the most cost-effective option,” he says. “We have some modifications to the system and I am not sure we can get rid of them. That is something we have to check during the upgrade.”
Although user familiarity with the product and the company’s existing data structures favour an upgrade to an Infor product, Schockaert has not ruled out a migration to rival software.
Whatever the IT team chooses, the new ERP system will need to cope with the combined demands of global, outsourced manufacturing and growing expectations in e-commerce.
Well-developed ERP systems may not break, but they do not stay fit for purpose indefinitely. Schockaert expects to move to new software next year or, more likely, in 2017.