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HDS Polska

Fast moving consumer goods ERP case study
Fast moving consumer goods

Over 400 press showrooms and cafes using Microsoft Dynamics AX.

HDS Polska, a network of over 400 press showrooms and cafes of Relay, Inmedio, Voyage café, uses Microsoft Dynamics AX system. The solution was additionally supplemented with software functions of ColumbusRetail, which was specially developed for companies handling retail sales and distribution.  

This was an extraordinary project. HDS Polska is a company from the FMCG sector, which is characterized with a dynamic flow of products between a supplier and consumer. In small companies, controlling a few sales outlets and managing daily operations is a relatively simple process. A manager can control and supervise them manually, in a fast and real-time way. But with a growing number of these tasks, this becomes increasingly difficult and a risk of making an error at manual entering of information from Excel spreadsheet to a database is becoming more likely.

Every month the number of such operations at HDS Polska amounts to a several hundred thousand. Over 400 outlets of Relay and Inmedio, which are located, among others, at airports, railway stations and Warsaw metro, - in other words in extremely crowded places - are visited by millions of people. They purchase among others press, cosmetics, food, batteries, tickets, fill out lottery coupons.The assortment is extremely diverse and is distributed in enormous quantities.

The IT system, which was to support the management of such high quantity of data, had to be not only effective and flexible due to high development dynamics of HDS Polska, but also compatible with all other software. – There is no ERP system on the market, which could encompass all processes being particular for FMCG sector. Both systems of SAP, Oracle, Microsoft Business Solution, as well as offered by Polish developers require additional functions, rendered available in vertical solutions. At HDS Polska the Microsoft Dynamics AX system was supplemented with proprietary solutions, which enabled among others combination of ERP with POS systems used by HDS Polska – explained Artur Stypinski, Project manager at Columbus Polska, responsible for the project of HDS Polska

The Company

HDS is an international press distributor, operating in 15 countries. In Poland the network is comprised of over 400 famous Relay outlets (the largest in the world network of retail sales of press) and Inmedio. Apart from press, the offer also encompasses among others books, bus tickets, lotto bets, as well as food products, multimedia products. Outlets of HDS are located mainly at airports, railway stations and bus stations, shopping malls and on Warsaw metro stations.  

Situation of the company

Prior to starting the implementation of the Microsoft Dynamics AX system, the business processes at HDS Polska (and not all of them) were supported by a few, non-integrated IT systems. Each of them supported only a narrow sphere of the company and data had to be manually entered from one system to another one. These operations were not only timely and cost-intensive, but also bore a risk of making an error at transferring data saved at Excel spreadsheets to another database.

When in 1997 HDS entered the Polish market and purchased two, first, local companies with expertise in press distribution in Gdansk and Łódn such a solution was sufficient, but this proved to be effective only in the short term. Already one year later, HDS took over an additional 68 local companies and is currently comprised of over 400 sales outlets in the most crowded places. Each day they are visited by a several tens of  thousand of customers.

Along with the rapid development of the HDS Polska network, which plans to open additional and new sales outlets each month, it was becoming very urgent to implement a single, integrated IT system, which could effectively (and comprehensively) support complicated and numerous processes accompanying retail sales. Each day consumers purchase in Relay and Inmedio outlets press, bus tickets, beverages, as well as cosmetics and batteries for multimedia music players. The assortment is extremely diverse and each day it is distributed in hundreds thousand pieces.

- With such a scale of operation, the risk of making an error e.g. at the level of manual posting or calculating a margin is very high. HDS could not let this happen and thus it expected that the new system would enable running precise control of each process – said Artur Stypinski, project manager at Columbus Polska, responsible for the project of HDS Polska.

Control was to be initiated at the moment of making and approving orders with suppliers (e.g. whether price placed on the invoice is coherent with delivered offer), monitoring daily sales (whether and which point of sales needs urgent in press distribution in Gdansk and Łódn such a solution was sufficient, but this proved to be effective only in the short term. Already one year later, HDS took over an additional 68 local companies and is currently comprised of over 400 sales outlets in the most crowded places. Each day they are visited by a several tens of  thousand of customers.

Entrusting the new system with monitoring and control would take some of the burden off HDS employees who now – instead of focusing on e.g. verifying invoices each time – could focus on results of enormous amount of processed documents. In this way one would reduce to a minimum the risk of making an error (due to human weaknesses that can be seen e.g. at posting), but would also refine the mechanism (of faster) calculation of competitive margin on products at HDS outlets (in FMCG sector this has strategic importance).

- Without a single, integrated IT system along with a vertical solution designated for retail trade this would not be possible. One could however employ more persons who would be delegated to new tasks, but such tactics would generate additional costs in the company and boost the risk of making an error, growing along with the increasing number of employees – added Artur Stypinski.

Solution

HDS Polska directors who delegated an extremely competent and determined team for the project had a clear vision. The system was to be not only sufficiently efficient to process hundreds of thousand operations each month, but also diligent in controlling operations related to distribution and retail trade (each HDS outlets is a local company, run by a franchise holder), flexible (due to dynamic development of the company) and, equally important, compatible with external software, among others handling cash registers. There is however no ERP system on the Polish and foreign markets fully adjusted to the particularity of the FMCG sector in terms of distribution. Large companies representing this sector must process each day enormous quantity of diverse data, informing about among others revenues and volume of sales of magazines, batteries, tobacco products, books, daily reports of franchise holders, product supplies, purchase invoices in each of the outlets.

Time, in which the transfer was taking place and verification of the data, as well as posting bank statements and settlement of suppliers’ documents (which in turn affects the execution of order in time, to a relevant outlet and in relevant quantity) – has strategic importance for managing competitive prices in sales outlets. It is enough that a franchise holder does not deliver takings at the end of the day or listed a product in the offer, which does not fit company’s strategy, to shake the balance.

Initially HDS Polska assumed that these processes should be supported by ERP system of SAP or Oracle. But after carrying out a pre-implementation analysis it turned out that their implementation would be more costly and time consuming than implementation of Microsoft Dynamics AX system, which eventually replaced earlier non-integrated software in the company.

Its standard functions (similarly to SAP and Oracle) had to be however expanded and adjusted to the particularity of HDS and FMCG sector. For this purpose Columbus Polska designed a vertical solution for managing distribution and retail sales on Microsoft Dynamics AX platform.

Microsoft Dynamics AX was afterwards integrated with the use of special, equally efficient interfaces (also prepared by Columbus Polska) with external systems. Some of them include diverse software of suppliers who cooperate with HDS. Other, end systems include the so-called POS (Point of Sales) handling cash registers in outlets and cafes of relay and Inmedio. For this purpose one uses a proprietary solution of HDS Polska, which is fully adjusted to business needs, functional, easy in use and efficient.

At the end of the day, from each outlet one transfers information to the central database on what, where and in what quantity and at what pace is sold. The company can thus monitor and react to fluctuations in demand in real-time (currently Columbus Polska works on a function, which will enable among others management of product database and database of clients from the central level).

But apart from sales reports, one fully automated among others settlement of costs, posting of bank statements, payment, as well as verification of all incoming and outgoing documents, e.g. invoices issued by suppliers or reports confirming the release of product from the warehouse to a particular outlet.

This required preparing beforehand an advanced technique of posting and verifying by Columbus Polska
Thanks to this, employees of HDS do not have to personally verify each of the hundred thousand documents which in effect enables time to be saved and limiting to a minimum of the so-called human factor (e.g. the risk of making an error due to erroneously entered data). Time freed in this way can be devoted by employees to analysis of data entered into the MS Dynamics AX system. In this way they can spot within short period of time wrong data and react in a relevant way, which optimizes the decision making process as well as improves quality of work. 

It is sufficient that one of the outlets does not deliver the whole takings from e.g. telephone cards and the headquarters immediately sends a team to a given outlet to verify the irregularity registered by the system. - Reaction must be immediate. HDS develops on the basis of local stores run by franchise holders. Due to this control in the company is regarded with equal priority, as the necessity of automatic processing of enormous and diverse amount of data – explained Artur Stypinski. 

Business benefits

Solution, which was based on the platform of a single, integrated IT system of Microsoft Dynamics AX along with a functional expansion of Columbus Polska turned out to be so practical that the HDS Group considered whether to roll it out in other countries. The best recommendation are the effects of implementing it in the Polish subsidiary. The hundreds of thousands of operations, which are made by each of over 400 outlets are registered and controlled at the central level in real-time. The risk of making errors, which could have taken place before at manual entering of data, has now been reduced to a minimum. All processes (among others managerial reporting) take place in an automatic way. Managers of HDS Polska can focus solely on results of enormous amount of data. Their analysis is handled by one, central system – efficient, flexible, compatible with external software and controlling each task made by a franchise holder (release from the store’s warehouse and selling at least one product is automatically registered in the headquarters).

“Implementation of the Microsoft Dynamics AX system was a key issue for us, but it was also a huge challenge for the whole company. In the initial phase, key users of the system actively joined the project, while the end users joined it afterwards. This did not cause any disorder in the functioning of the company thanks to the involvement of consultants of Columbus Polska – said Grzegorz Drozd, project manager at HDS Polska. – After six months of work, I can boldly say that the implementation ended in a success.The implemented system meets the majority of our expectations in the areas of functioning of the company, which are so far encompassed by it.Thanks to perfect cooperation with consultants of Columbus Polska we shall soon further develop the system and implement the following modules.”

Categories: Retail, Microsoft Dynamics AX