McLeod speeds along path to new ERP

The decision to change ERP systems came after McLeod, a wholesaler managing more than 12,000 SKUs (Stock Keeping Units, or individual items) was acquired in January by auto parts giant Repco. Its previous owner, diversified marketing company Alesco, itself bought McLeod in 1996 and assimilated the division into its own SAP R/3 4.6d environment.

That system has been working well for Alesco's overall needs but, says McLeod distribution and inventory manager Ian Edridge, was not well suited for McLeod's fashion-heavy mix of products, which includes helmets, gloves, and other clothing in addition to handlebars, chains and other motorcycle parts. Like any type of clothing, these fast-moving products come in many styles and colours, and are rapidly cycled through shops according to constantly changing fashion trends.

"SAP is much more geared for manufacturing type operations," Edridge explains. "It manages basic inputs and outputs, but it's not suited to short lifecycle, high-cycle, long lead time products and didn't allow enhancement to suit what we actually sell. It's purely set up to handle SKUs, had no ability to manage fashion products all, and its demand planning and distribution planning are not suitable for our business. Newer versions of SAP are better, but they represent an upgrade path that's torturous and full of risk."

As McLeod was progressively assimilated into the Repco business, it considered adopting Repco's inhouse-developed business management system, but found it a poor match. The choice was made to look to alternatives, and -- after evaluating products including Microsoft Business Systems Navision, PRONTO ERP, a newer and retail-focused version of SAP's mySAP, and local developer Bass Software's Apparel 21 -- McLeod decided to migrate its back-end environment to the Java-based Movex system.

The ensuing implementation, which began in September and will end with go-live on April 1 next year, is expected to cut operational costs by up to 30 percent and provide a more flexible platform to support the company's long-term growth plans. "It's no good just getting a quick ROI if you have to do it again in three years' time," says Edridge. "Repco have been exceptionally willing to allow us to have a system that supports the development and growth of this business."

He knows how important it is to get the right support: in a previous job, he was involved in implementation of SAP at another large auto accessories supplier, and recalls with a shudder how that 10-month project required seven full-time team members and up to 21 consultants working onsite at any given time.

Now halfway through implementation, McLeod's two-man IT team -- supported by representatives from Intentia and the larger Repco IT organisation, which is also hosting McLeod's Movex implementation from its premises -- has found the design of the new platform means it is already living up to many of the company's expectations.

Easy access to Movex source code, for example, has made the implementation "a lot more open-ended" and use of open standards has spurred creation of a highly responsive electronic supply chain, says Edridge. "The Java design facilitates supply chain collaboration from overseas distributors right through to our retail partners," he says. "That makes interaction easy and, we expect, relatively inexpensive for both our trading partners and us. You don't need to have a massive investment to make this work."

Because McLeod is a relatively small company and Repco management is committed to helping it get the system in place, the project has so far enjoyed the kind of direct involvement that has helped it to come together relatively smoothly. Having experienced the dangers of heavy customisation in the past, the project team has worked to keep customisation to a minimum, instead focusing its attention to the smooth integration with systems such as the Revolution retail system used at many of McLeod's 26 major partners.

Also playing a role in McLeod's new system is Repco's own data warehouse, which along with the company's data centre is among the key system assets that are being provided to support McLeod's implementation. With its infrastructure clearly planned, McLeod will also soon be looking to extend Movex with salesforce automation software that will eventually feed its own representatives' mobile field devices.

The smooth rollout is allowing McLeod to turn its sights away from the limitations of SAP R/3 towards a more flexible future, but even R/3 has offered some nice benefits. Because it has already been running the ERP system for years, Edridge says, the company's data is quite consistent and clean -- free of manual entry errors, duplicate entries and the many problems that typically plague ERP migrations.

"Had we been pulling together this system from legacy systems, it might not have been so easy," Edridge says. "But I've spent many hours with other platforms saying why doesn't it do this, and why doesn't it do that in this way," says Edridge. "It's a really satisfying feeling to see that this just works. We've made some very determined promises, and have the utmost confidence that it's going to be possible."