Academy of Better Business

Decora: SAP for an international corporation from Poland

From the Rhine to Ural

Over fifteen years, Decora has grown from a four-person company into an international corporation, a leader in the interior finishing industry. Such companies are said to be lucky to hit the right time. In Decora, they know that fortune favors the brave, therefore the company continuously invests in the development of production and distribution networks. However, it does not confuse courage with risk – since 2007, it has been using the SAP ERP system.

The first half of the nineties in Poland is not only a period of building a democracy. It is also the time when shops are full of goods for the first time in decades. Despite the inflation and increasing unemployment, the consumer spending is constantly growing. We buy not only new TVs and home appliances. Poles want to have nice interiors, therefore the demand for interior finishes and decorative products as well as furniture is growing.

So when in 1994 in Środa Wielkopolska four people set up the company Decora sp. z o.o. and start producing ceiling coffers, it is a bull’s-eye.

A similar opportunity is used by many entrepreneurial people, who establish small companies that import or manufacture goods in demand, and at the same time, carefully watch a changing market situation, trends and tastes of customers. Those of the pioneers of capitalism who survived are now usually leaders in their industries.

Decora has also a similar history. During the first years, its offer was constantly and consistently ex-tended to include new groups of products, the pro-duction plant and warehouses in Środa Wielko-polska were enlarged and the distribution network was expanded. The years 2004 and 2005 are cru-cial. The headcount is 500 people.

The company introduces its own consumer brands of products: Vidella, Arbiton and FixPrix and, with time, another brand – Carlo Conte. Furthermore, the company is transformed into a joint-stock company and has its debut on the Warsaw Stock Exchange.

In recent years, Decora been steadily building its position in Europe by establishing new distribution companies in the Czech Republic, Russia, Lithuania, Ukraine and Bulgaria, as well as by acquiring distribution companies in Croatia, Romania, Germany and Hungary.

Today, after fifteen years of operation, the compa-ny’s offer includes ca. 6000 floor finishes as well as window and ceiling decorations, which are available under four brands recognizable in many countries worldwide. Decora Group consists of 13 companies, employing in total over 900 people in 11 countries.

At present, almost three-fourths of the company’s production is exported to nearly 40 countries worldwide. The key markets are Eastern European countries, including Russia, Ukraine and Belarus, which are buyers of more than one-third of the total sales volume of the company.

Decora, which included the expansion in these markets in its further plans, opened a manufacturing plant in Vitebsk, Belarus in 2009. Looking at the history of its parent plant in Środa Wielkopolska, it can be expected that the company will use well its eastern foothold.

Decora sees the most important sources of its competitive advantage in the customer relationship management and the distribution model, which provides for an extensive and effective distribution network that enables a direct communication with the market and a fast reaction to its needs. Also the production scale influencing the cost reduction, and the organization of logistic processes enable the company to maintain its leadership position in its industry.

The success of such an operation strategy depends, to a large extent, on applied management methods and tools used for this purpose.

This brings us to the SAP system, which since 2007 has been a basic management system used in Decora.

The position of SAP in Decora

Initially, the SAP system was implemented in the company’s headquarters in Środa Wielkopolska and covered all key operation areas of the company, i.e. finances and controlling, materials management, production planning, sales and distribution, as well as HR management. At the next stage, the data warehouse functionality and tools for warehouse management were deployed.

By deciding to select SAP, the company gained a recognized management system standard, which includes world-class best practices. Right from the moment of the system implementation, which was carried out by 7milowy – a company from BCC Group, it was assumed that the system would be a central tool for handling all business processes.

In order to reap the full benefits of integrated management, right at the start of the implementation work it was decided that the prepared template of the system would be finally a corporate standard, which would be used by all the entities of Decora Group. Since the beginning, the system development proceeds along two paths – through the implementation of new SAP tools (including, for example, SAP WM or Business Intelligence tools), and through rolling out a corporate template to further companies of the Group.

The SAP system implementation supports the achievement of strategic goals of Decora Group. The new system enabled the processes to be precisely put in order and results to be aggregated. The fast information flow ensured by the integrated operating system allowed significant savings to be made, and streamlined logistics and sales processes.

Operational excellence

One of major projects relating to the SAP development was the implementation of warehouse management tools. The expanding Distribution Center in Środa Wielkopolska, an increasing assortment and a necessity to streamline the operation of a high-rack warehouse forced changes in the organization of logistics processes. SAP WM was deployed as part of introducing process management in a supply chain.

The implementation partner in this project was BCC.

Decora’s specific requirements regarding the handling of warehouse processes, and an extensive use of terminals and bar code readers entailed the need to prepare many extensions of the system going far beyond standard SAP tools. The development of these tools constituted a significant part of the project work. The effect is a solution using the latest RFID technologies that meets the specific expectations of Decora and facilitates a warehouse operation as much as possible.

At present, all warehouse processes are managed in SAP, and the solutions prepared for terminals and bar code scanners significantly streamline and accelerate the process of picking and posting of deliveries, and printing of documents required for delivering goods to a customer, i.e. invoices, goods issue documents , bills of lading and transportation labels.

During implementation works, several specific tools in the ABAP language were also prepared. They are used to optimize the process of issuing goods from a warehouse, and enable the selection of a carrier as well as optimization and settlement of payments collected from a customer.

The multi-stage picking process allows not only the distribution of work among people working in a warehouse, but also early preparation of shipment so that only loading is made when a vehicle is made ready. Each of the steps is tracked separately, which results in reviewing a shipment status.

Putting in order the supply chain and logistics, warehouse and production processes was an important and necessary step that was a condition of the success of plans relating to winning new markets. The SAP system allows a competitive advantage in the interior finishing industry market to be increased and helps the company win new markets each year. Every day, Decora increases the quality of its customer service. Implemented solutions enabled, for instance, a significant reduction of time of shipping goods to a customer and minimization of a number of errors made while picking goods for shipment.

A template from Wielkopolska

As early as in the second half of 2007 and at the beginning of 2008, in cooperation with companies from BCC Group that were an SAP implementation partner in Decora from the beginning, rollouts of the system to distribution companies in the Czech Republic, Croatia, Bulgaria, Hungary, Ukraine and Romania were started. In April 2010, the SAP system in a Russian company and in a production plant in Vitebsk, Belarus, went live.

The basic objective of rollout projects is to standardize activities of individual entities within the frame-work set by one system and its common corporate template.

However, the greatest challenge of rollouts are differences.

Differences in the configuration of functionalities being implemented arise from different business profiles of individual entities, and in the case of rol-louts to companies in other countries – also from different legal regulations (mainly in the labor and financial law). The effect of a good rollout is a solution that is compliant with the law of the country in which it operates while being as close as possible to a corporate template.

In the course of projects works, it is important to identify and implement necessary extensions to the template resulting from local specific features of a company that is being included. For example, during a rollout to a Romanian company of Decora, it was necessary to prepare solutions that met legal requirements regarding financial reporting (VAT, Intrastat etc.) and local specific features of execution of business processes (e.g. bonus invoices in SD or a different way of posting corrections of financial documents, the so-called red-ink entry).

Using the experience gained in projects delivered for other customers in Romania, BCC consultants themselves carried out works to adapt Decora’s cor-porate template to legal conditions in this country. However, a common practice in rollouts is to use the assistance of local specialists, who are engaged to build extensions that take into account legal differences. In Decora, such support was used, for instance, in a project in the Czech Republic and Hungary, as well as in recently completed projects in Russia and Belarus.

In addition to a professional knowledge and a carefully thought-out implementation concept, it is necessary to take into account such “mundane” issues as differences in the mentality of the projecparticipants, the resulting difficulties in communication or organization of work in multinational teams.

For these reasons, the proper preparation for rollouts within the company is so important.

Different levels of knowledge of a project language, which is English in international SAP projects in Decora, also matter. Language issues are also a real challenge, which Decora coped with successfully. Minimization of language and mental barriers are factors which, in addition to competence, were taken into account while forming work teams.

The implementation team was composed of Decora SA employees from Poland and consultants of an implementation partner. It was supplemented with persons from a local company in each of the countries covered by the project. However, the core team remained unchanged since the first works in Środa Wielkopolska. In this way the experience of the engaged persons grew with each subsequent rollout. Today, the knowledge of “veterans” is so large that they gradually take over the responsibility for successive functional areas of the implementation.

The methodology used in successive projects in Decora is based on an in-house developed methodology of SAP implementation and rollouts prepared by BCC. It is improved on an ongoing basis. This allows avoiding problems, which have already been resolved, and carrying out further rollouts more effectively and faster.

Now Russia and Belarus

SAP rollouts to companies in Russia and Belarus carried out from November 2009 are projects of special importance for the development of Decora, first of all because of the size of those markets and plans of their further expansion. Secondly, works for the Belarusian company included also a rollout of tools for production planning, which had been until then used only in Środa Wielkopolska.

And, finally it was necessary to face a very large number of specific legal requirements that had to be taken into account while adjusting the system. The extensive red tape and complicated tax and customs system in Russia and Belarus required many changes in the SAP corporate template of Decora.

In the case of the implementation in Russia and Belarus, conspicuous features are a multitude of documents and their printouts, which were implemented according to a standard imposed in advance, and also the intricacies of tax procedures (e.g. a property tax). All this required that BCC consultants applied in the system additional extensions to the SAP standard.

Another example is the special GTD numbering of imported materials in the Belarusian customs procedure. This numbering had to be taken over into the SAP system together with the goods receipt in a warehouse, and used while printing warehouse documents and invoices. Another important difference which is worth mentioning is the lack of an adjustment invoice.

Since the beginning, Decora has been working on the SAP system version that uses the character coding standard UNICODE. Thus, it has no problems with operating the tool and generating documents in national languages in which there are special characters, including of course in Cyrillic.

Building own competencies

To meet and even anticipate market demands and to maximize the competitiveness, Decora focuses on the perpetual development of its team, modernization of technological solutions, and continuous operational improvements.

A characteristic feature of all SAP projects in Deco-ra is a big emphasis on the transfer of knowledge about a solution. High SAP competences gained by Decora employees translate into a strong commitment to work in successive implementation stages and taking over the responsibility for individual tasks. Such a philosophy is consistent with recommendations of the BCC methodology, in which the attention is drawn to precisely these aspects – the knowledge transfer and considerable commitment of a customer to project work.

It is a typical approach of many companies operating internationally, which aim at a dynamic deve-lopment of a sales and distribution network. It allows them to create their own SAP competence center, which brings together specialists who, in the future, can constitute the first line of support for users and initiate developmental changes in the system.

Such a strategy was adopted in Decora, where a-ready at present key system users from various de-partments of the company in Poland provide help-desk support to users in Decora’s foreign companies.

With each subsequent rollout in which they participate, the internal consultants’ knowledge about the system is increasing.

Also end users from a local company who take part in the project from its beginning are engaged in implementation works, which considerably accelerates the transfer of knowledge.

Such an approach translates into a greater responsibility of users for the company’s SAP system and a commitment to its development. It is also hard to overestimate an economic aspect. By using its own competences in subsequent projects, the company can significantly reduce the costs of external services relating to the development of SAP.

Despite the great emphasis on building its own competences, Decora uses the support provided by BCC in SAP administration and application support services. As part of the administration, the BCC Outsourcing Center consultants supervise the security and performance of the system on a constant basis. The BCC application support is the second line of support, which performs tasks requiring an expert knowledge about the system.

SAP users in Poland make up a half of the total number of nearly 400 users in the whole Decora Group. They are intended to constitute a highly competent group of specialists, who not only use the system, but also consider themselves as its owners and work on its development.

However, this does not need an expert knowledge of configuration since it will not bring an operational benefit for Decora. It is more profitable to acquire these competences outside the company. Therefore, Decora uses services of the BCC Outsourcing Center.

The increasing role of Business Intelligence

During the SAP implementation in 2007, the SAP BW business information warehouse was also deployed. However, it has been used so far in a very limited scope. Today, when almost all companies of the group operate in SAP, it is time to extend the scope of reporting from the warehouse.
 
At present, in Decora, a project of development of SAP BW tools and implementation of SAP Busines-sObjects as a tool for reporting to the business information warehouse is underway.

The main reasons for the implementation of BOBJ were analytical functions available in this tool. The need to serve a different group of target users than in the case of SAP BW was also of great importance.

From each department, two persons were selected and assigned the task of providing necessary information from a specific area of SAP. The IT department executes only more complex reports, e.g. those that require combining a scope of information with heterogeneous data sources. Bex Analyzer, available in SAP BW, is dedicated to more experienced and trained users, whereas BOBJ is a tool that is much more intuitive and easier to use.

The BW project is a multi-stage project. The primary objective of the first stage is to become familiar with available BI tools and to prepare standard data structures in the company’s SAP BW business information warehouse. It will be a starting point for the implementation of new analytics and reports by the company’s employees.
 
Then, a break is planned to allow time for stabilizing the solution. This will also be the time for becoming familiar in detail with the tool and its capabilities. The next stage of the project is the customization of available reports to ensure the compliance with target requirements.

The primary objective is obviously to provide a tool for creating any kind of consolidated reports and analytics from the whole Decora group.