AT A GLANCE
- Retail e-commerce, Warehouse & distribution
- Rapid implementation
- System to support rapid, complex growth
- Retire multiple fragmented systems
- SAP Business One implemented by Inecom Technology Partners.
- 3-4 month implementation
- Reduced head count even with continued rapid growth
- Automation from customer order to dispatch notification
- Improved customer service with better forecasting of stock and delivery performance
FOR MORE INFORMATION
One of Australia’s fastest-growing and highest-profile online retailers relies on SAP Business One to run its business. When the company realised that maintaining the pace of its explosive growth depended on better systems, it looked to Inecom Technology Partners for the software, and today enjoys a company-wide solution which provides control and visibility across increasingly diverse operations. With the flexibility to rapidly take advantage of new business opportunities, the organisation is equipped to continue its growth trajectory well into the future.
Founded in 2006 by Ruslan Kogan (pictured), Kogan.com is the largest online department store in Australia, selling tens of thousands of products through its online direct-to-customer store. Kogan achieved a turnover of more than $201 million in 2017.
The organisation’s rapid growth has been both organic and through acquisition (adding Dick Smith Holdings’s online business in 2016) and, as of July 2016, Kogan.com is listed on the ASX under the ticker KGN.
Daniel Taft, director of operations at Kogan, explains that like many businesses which have expanded rapidly, it didn’t have a unified system used by the whole company. “There are multiple divisions within the business and each had its own systems. That made for a big job reconciling them all: finance, purchasing, sales, support; all had their own databases, with spreadsheets and workarounds that connected things together,” he relates.
Providing an idea of the scale of the operation, Taft nonchalantly says ‘it is pretty big’. “We do about 2.5 million sales orders per year. It fluctuates seasonally, but we’re processing 5 or 10 thousand orders a day, and everything that goes through our systems has associated upstream purchasing and downstream support.”
The business is multifaceted, with a combination of own-brand manufactured products, which it imports, warehouses and sells, third party branded goods which also go through Kogan’s warehouses and drop-shipped goods from distributors. The company provides other services, too – it has a travel agency, a prepaid mobile phone operation and offers insurance. “So, there is a high degree of complexity,” Taft notes.
The company recognised that if it was to continue its growth trajectory it would require a rigorous ERP solution to manage everything. “When your systems are fragmented like ours were pre-SAP, the biggest issues are data integrity and reporting. Being able to run general operations becomes a headache – just something simple, like if the support team needs to replace a product for a customer, meant multiple manual tasks, like checking inventory, getting purchasing involved, interacting with sales,” says Taft.
The upshot was that people were not only wasting time, but also making mistakes which could, ultimately, impact on customer service and satisfaction.
While Taft wasn’t directly involved at the time of vendor and partner selection, he says Kogan went out to tender looking for suitable solutions. “What impressed about Business One was that it would be the quickest to implement and get up and running,” he reveals.
This, explains Taft, was of considerable importance to the business. “After all, we’re pretty busy keeping customers happy with thousands of orders every day. We didn’t want to be caught up in a never-ending software systems implementation; we wanted to get the business running better, fast.”
Even more importantly, he says Inecom could demonstrate how the SAP Business One solution would work for Kogan. “This was notable. Other systems were too complex to even demonstrate without lots of configuration. Not only were we able to see exactly how the system would work day-to-day, but Inecom showed us how the implementation would be achievable.”
With operations that complex, and a desire to get the system in ‘ASAP’, just how long would that take? “From start to finish it was around 3 to 4 months,” says Taft, of the system which is hosted in the AWS cloud. “That is pretty quick, but this wasn’t fun and games by any means. It was at times quite challenging, and with an ERP project, things always go wrong. But it is how those things are handled which is important.”
And on that note, he describes Inecom as ‘bloody hard working’. “The support and engagement is terrific. If there is an issue, it doesn’t matter if it is night or day, they are available.”
In a word, says Taft, things have changed ‘dramatically’ since Inecom’s involvement. “We’ve been able to continue our growth path with, even, a smaller headcount than before. We have far more automation; a customer places an order and it goes straight through to warehousing, distribution and dispatch automatically, with an email sent to confirm dispatch. That’s not how it was done before, where we’d have people involved every step of the way.”
What gets him particularly excited isn’t automation for the sake of it. Instead, it is the impact on customer service which matters. “With all our data now in one place, it means we can proactively communicate with customers if we need to. We can serve customers better. We can forecast, manage stock and manage delivery performance.”
“With all our data now in one place, it means we can proactively communicate with customers if we need to. We can serve customers better.”
For a fast-moving company, there is a further competitive advantage which flows from the modern, integrated Business One solution: “We can integrate with other systems or gear our own ERP rapidly when new opportunities present themselves – and at Kogan, we are constantly looking for new ways to serve our customers,” Taft explains.
Inecom, he adds, has played an ongoing role which Taft describes as enablement. “They have trained up our developers on Business One so we are good at it ourselves, but they are also our backup if we need it. And this isn’t ‘set and forget’. We are constantly improving the way the system operates, adding in our own automations, adding new business verticals, integrating with new third parties. Across that, Inecom has always been willing to help us in whatever way required.”
This is crucial for Kogan’s dynamism: “We have direct control over our systems, including building our own reporting and running our own SQL jobs. That means we have the flexibility to do things fast, without lengthy approval processes or having to schedule work with external service providers.”
That’s the ‘innovation’ side of the coin. The other one is day-to-day operations. “In this regard, there are lots of wins all over the place. It comes down to efficiency, visibility across multiple business units and functions. With this system, we’re in a really good position now, with a strong database, excellent reporting and operations which run smoothly, positioning the business to scale further.”