Chip Industry: Operation Streamline

While superb sales management and an entrepreneurial spirit helped fuel the company's impressive top line, cracks were beginning to appear in the back office. The problem was they had never updated their accounting systems, and were still operating with the same DOS-based technologies they started with -- until it was bursting at the seams trying to cope with the quantity of transactions they were handling every day.

“Like other more progressive retailers, we're always looking for ways to provide our customers with more products and greater variety of products. But with our old IT infrastructure, it simply wasn't possible -- it was maxed out. To continue to grow and to provide better value to our customers, we needed greater control over the distribution and logistics, and a clearer view of all the transactions taking place within our system,” explains Stanislav Mihajlov, General Director of Chip Industry.

For an operational standpoint, the old system was clearly inefficient. For example, it took as long as ten minutes to generate a single invoice for goods shipped internally from the warehouse to a store.

What's more, store sales data were transferred by a file exchange, and then manually processed in Microsoft Excel and Access. This created enormous challenges for accounting, and making even small modifications to the systems was an extremely complicated ordeal.

And, because of the lag between actual results and reports, timely analysis of inventory turnover was virtually impossible.

Reliability, staffing costs and timeliness of key business data weren't the only factors that made Stanislav and others in the company realize that an overhaul of their systems was long overdue.

Together with marketing director Ivan Mezhevikin, they saw an opportunity to go beyond simply replacing the accounting system – they saw this as an opportunity to combine basic accounting functions, stock and warehousing management, and human resources in a single system, thereby providing a complete picture of business inputs and outputs.

The four primary goals of a new system were:

•  Automate all accounting related data collection from all stores and warehouses.
• Enable the company to better manage inventory, thereby increasing return on investment in stock by increasing turnover.
• Give them a better handle on accounts receivables, allowing the company to reduce settlement times and improve cashflow.
• Finally, with CRM, as an integrated component, they could strengthen relationship with key customers and identify unprofitable accounts.
• While several ERP systems held the promise of being able to deliver on one or more of these goals, Stanislav and Ivan evaluated all the systems against three additional criteria:
• How closely matched was the system's core feature set with the company's n