Princes Group

Company: SAPCustomer: Princes GroupSubmitted by: HarvardAt a time of increasing competitiveness in the fast moving consumer goods (FMCG) industry and while high profile national debates about Genetically Modified (GM) food have attracted consumer and business interest, food and drink manufacturers and suppliers find themselves faced with great challenges. These burning issues plus the need for tighter control throughout the supply-chain, competitive pressures and an expanding business plan, made the Princes Group realise the need for a fully integrated and modernised IT infrastructure. The Princes Group turned to SAP UK and Compaq for a cost-effective, business-critical solution to support its operations and help the Group maintain its leading position in the UK and worldwide. The new business solution has helped Princes respond to strict requirements and regulations whilst ensuring business profitability.Princes Group is one of the UK’s major packaged food and soft drinks companies and part of the multi-billion dollar Mitsubishi Corporation.

It is ranked number 21 among UK companies, as the leading supplier of food and drink to the UK retail trade and a growing force in UK food service. Based in Liverpool, the group has two major activities: trading and manufacturing. The Group’s trading operation is responsible for the importing side of the business and interfaces with a complex and extended supply chain. The manufacturing operations produce a wide range of food and drink products at five locations around Britain.In October 1996, the Group concluded that it’s incumbent AS/400 bespoke systems were not able to adjust to the rapidly moving FMCG market and respond to the needs of its two major divisions.

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The manual intervention required when shifting data was too time-consuming and the system could not support the changes the business was going through. As competition grew, both divisions faced even more IT challenges. The trading division needed to support and manage complex trading between 250 factories, in 35 different countries, using 12 major currencies, 25 shipping lines and 17 ports. The manufacturing division required a system offering full and ongoing support across all sites and a system that could guarantee virtually constant “up-time”.In addition, these systems couldn’t be easily or cost-effectively upgraded and thus the Princes Group management team decided that radical changes in IT strategy were the solution and key to future profitability.

“Our IT system is no longer simply a tool for our business, the system is our business. We needed a robust IT infrastructure to support, facilitate and optimise the way we do business. The only type of software system that could offer us this reliability and integration was an Enterprise Resource Planning (ERP) system,” said Derek Knowles, IT Director at Princes Group.Once it had made the decision to implement an ERP software system, Princes Group felt that SAP was the obvious choice. SAP’s investment in Research ; Development and its industry references, which included many leading players in the food manufacturing industry plus Diagonal’s implementation methodology led the Group to choose SAP as the preferred ERP vendor and Diagonal as the implementation partner.

At the beginning of 1997, Diagonal was invited to draft an initiation study detailing the costs and benefits of an implementation which, the Group authorised towards the end of March. The implementation commenced in May. The plan was to implement all SAP modules, except HR, and Diagonal confirmed they would deliver in time and within budget.The Princes Group evaluated hardware offerings from several major vendors but the strong relationship between Compaq and SAP and the online disaster recovery offering by Compaq, made the Group’s management team chose Compaq’s ProLiant NT servers.The Princes Group opted for a wall-to-wall approach and went live in January 1999.

The system went live simultaneously in seven different sites, with a total of 250 end-users. The implementation process was smooth, the training took place internally and only 18 months after signing the contract the SAP solution went live. Now, both divisions are reaping the benefits of the Group’s new and fully integrated system. Prince’s manufacturing division has a highly available system that allows it to react quickly with upgrades and changes in any part of the supply chain. Simultaneously, the trading division operates a tightly integrated and automated supply chain. SAP’s solution provides the appropriate decision support, allows stock level reports to be drafted and underlies an automated purchasing process.

Integration has allowed immediate access by authorised users to accurate information in real time. Streamlining business operations has reduced the time needed to process orders, transactions and complete deliveries. In addition, SAP’s global solution enables cross-border transactions in different currencies, adhering to different, country-specific law and regulations. This has proved of great importance especially since the Princes Group is growing through acquisitions in many different countries. For example, since go-live the Group has already entered in to a joint venture (JV) with an Italian manufacturer and SAP’s infrastructure enabled and supported the IT requirements set by this JV.Commenting on the successful partnership and SAP implementation, Paul Goodwin, SAP customer manager for Princes Group, said: “The synergy between Princes, Diagonal and SAP has led to a smooth and successful implementation and go-live.

The Group has started realising the benefits an integrated business solution has to offer and we have already introduced the initiative to the Group, which will be critically important to the Group’s competitive survival in the new e-economy.”SAP’s solution has web-ready and web-enabled interfaces allowing Princes Group to easily migrate from traditional EDI to full web-based electronic procurement, further integrating the group’s supply chain by allowing smaller suppliers, that cannot justify the cost of EDI, to trade online with the group from a desktop PC.”We understand that IT improvements must be an ongoing process if our business is to stay ahead of the competition,” commented Derek.Knowles.

“We are now looking towards a trading future where an effective e-commerce strategy will be crucial to the way our Group does business. We are planning to develop a consumer website and we are currently in negotiations with SAP with regards to SAP’s Business-to-Business procurement solution. I can officially reveal that we have just signed a contract. We are a UK first! opens up great opportunities for our business as we will have access to a great range of new tools. Our focus is on business collaboration and signifies a strategic move forward.”