Acco is a Fortune 500 distributor of office products and accessories. Although they have a significant share of this market place, they face increased competition from online retailers who have a lower cost base and are more flexible in their product offerings.
Over a period of time ACCO had established a transfer pricing structure that, although ensuring each trading entity bore its fair share of central costs, had limited the ability to adapt to a changing market. Further complexity and cost was being created by VAT triangulation issues. Goods were dispatched through one set of geographical regions whilst the legal ownership flow was going in a different route depending on who owned the region and the customer.
This structure caused issues for ACCO in a number of ways. The significant amount of intercompany trading and the complexity around customer and supplier business flows was driving higher than industry average transactional finance costs and advisory fees. In addition the way the company had been structured, with sales belonging to each country, did not make the most efficient uses of losses in separate countries to minimise the overall company tax burden.
ACCO operates Movex v11.3 across their European operations and approached Anthesis for support and direction in this project. Anthesis appointed Michael Stride who has over 15 years’ experience in both consultancy and project management on Movex/M3. Michael managed this Movex migration to a restructured environment through to a successful go-live over a six month period.
ACCO operates one centralised DC in Benelux and one in the UK. There were smaller warehouses in Italy and Spain. Sales orders were taken in ten countries across Europe.
The initial project scope was to move seven facilities so that they were contained within the Benelux division. In this way, there would still be a legal entity in each country for legal purposes and for local purchases, but the order processing flow would be simplified and all European invoicing would be driven from the Benelux division.
ACCO is subject to Sarbanes Oxley reporting requirements. This meant throughout the project, changes in processes and company structure needed to consider the implications on user security, segregation of duty and reporting.
Project approach and solution
An initial workshop assessed the impact of carrying out a fundamental system restructuring by changing the division against the facility records in the live environment. The workshop demonstrated the change was possible and allowed a detailed project plan to be created. As a result of his Movex/M3 experience and through the testing programme Michael was able to guide ACCO along the path of configuration changes required to deliver this project.
The list below summarises some of the challenges overcome during this project:
- Project timescales were impacted by team members having full-time roles that limited1their availability.
- Documentation of existing modifications was incomplete.
- Full testing was required to assess the impact of changes on the live warehouse management system.
- The business had limited knowledge of its 4existing processes, to which significant changes were required.
- Lack of clarity on ownership of data.
- Test environments for the many impacted systems and interfaces had to be set up.
- New EDI records were required from suppliers.
Making fundamental changes to an ERP system whilst it is live and supporting operations across Europe is fraught with risk. This is further compounded when that ERP application integrates with separate Warehouse Management Systems.
The key to managing this project was to understand the inter-relationships within the systems and identify the areas potentially affected. This required close liaison with the key staff who held the business knowledge, the creation of a test environment and test scripts that would be used for acceptance testing of the end solution. Detailed project planning and governance around roles, responsibilities and reporting were key to driving this project through to completion.
The restructured system went live in November 2012 and achieved the stated aims, including a reduction in the volume of intercompany invoicing and VAT and customs triangulation issues. It has eased the process of financial consolidation and removed some modifications that the business learnt it could live without.