Creating a firm foundation by upgrading systems to support rapid growth
Xaar were growing fast and had made big commitments to ramping up that growth still further. They knew their current systems needed to be changed to support this growth and they were close to making a big ERP investment which could well have proved to be an expensive mistake. We were called in to review this decision and quickly set them on the right course to creating a firm foundation for continued growth.
“We made the classic mistake of reviewing potential solutions too early, without having properly identified the problems we wanted to solve. Berkeley helped us to go back to clearly define the issues we needed to address, which enabled us to review potential solutions against a detailed set of requirements. The result was the selection of a solution which was right for our needs.”
Finance Director, Xaar
Fast growing manufacturing company, Xaar, had invested in increasing their capacity to meet current and future demand for their innovative printing technology. But their systems had not kept pace – there was a lot of manual re-keying for example, and a hugely complex set of interfaces between their accounting system and their factory control system.
The main issues were inaccurate production and inventory accounting; an inability to support effectively material requirements planning and production planning; and limits to some core processes, such as picking and shipping and part-payment of purchase orders. These issues contributed to high inventory levels, a lack of control over yield and lots of non-value-added time spent. So the systems weren’t fit for the current business – they were adding to costs and dragging on margins, and as the business continued to grow this would only get worse.
Xaar knew they needed to invest in new systems to support their continued growth. They had embarked on selecting a solution and had got down to a shortlist of two major ERP suppliers. Before making such a big critical investment, they took the wise decision to double-check that they were doing the right thing, which was where we came in.
We were brought in by the Board to carry out a review. We worked quickly and closely with the Finance Director, talking to key people and building up our understanding of the situation, their requirements, where they’d got to and what best to do.
Our main objective, as ever, was to help our client get it right for them. We focused on being collaborative and constructive – looking for the critical issues and making practical recommendations rather than simply problem spotting.
In a matter of days, we were ready to give our formal feedback and recommendations. Xaar were growing fast but their business remained relatively simple in terms of core processes and products. The last thing they wanted to do therefore was over-complicate matters, or invest in something which was too big or expensive.
Given their scale, cost and functionality, it wasn’t certain that the solutions they were close to committing to were the best match for Xaar. So our key recommendation was for Xaar to pause and clarify exactly what they as a business wanted to do and therefore what they required from their new system. We helped them question and define their starting point in terms of the operating model, including opening up possibilities to simplify and improve the way they did things. And we also helped them see the value of documenting their requirements and then going and doing a methodical exploration of the market.
We made our recommendations in a formal paper for the Board and the Board accepted them. As a result, Xaar put the negotiations with the suppliers on hold, produced a requirements document, carried out a new selection process and chose another supplier to implement an ERP solution that more closely matched their specific requirements. Moreover, one that was less expensive than either of the two previously shortlisted solutions.
When Xaar were close to choosing the solution, they asked us back in to carry out due diligence on their final selection. We were happy to oblige, clarifying for example what Xaar would be getting in terms of support from the supplier and how best to build internal expertise.
In a short space of time, we were able to deliver a great deal of value for Xaar. Above all, the value we delivered was in resetting Xaar’s direction and making sure there was a good foundation for investing in the right solution to support their continued growth and success.
We prevented Xaar going down the wrong route of investing in systems that were too big, complicated and inflexible for their business, and too costly.
Moreover, we set them on the right course of investing in a new system and ways of working that would truly support their current business and future growth in the most effective, cost-efficient way.
The solution they chose was not only less expensive but also a better fit in terms of some of their core needs. Yield accounting, for example, was difficult with the old system and questionable with the system they had been close to choosing but for the solution they selected it was a clear deliverable.
The new solution has proved to be a good one for Xaar: two years after our work, they more than doubled their annual turnover.