In 2007, the first small e-cigarette batch was sold, and six years later, sales reached PLN 80 million. Providing information about the number of eSmoking World points of sale is a risky business, since this number is growing almost each month. Currently, there are more than 1,100 retail outlets – mainly proprietary and franchised stands and shop-in-shops in shopping centers. Moreover, there are 27 thousand points in convenience stores, fuel stations and newsstands.
The company is also doing well online – the eSmoking World e-commerce platform supports thousands of Polish and foreign customers. The owners are keeping up the momentum – at the beginning of this year in Ostrzeszów, where the company’s headquarters are located, they opened a modern production plant with a research laboratory.
SAP Business One as a central system for retail
The Chic Group became a major player in the e-cigarette market in Poland and Europe in just a few years. The dynamic growth of the sales volume, the need to manage an increasingly large network of points of sale, as well as the desire to shorten customer service time and improve its quality influenced the decision to invest in an integrated system.
The main objective of the implementation project was to optimize business processes and support the key business area – retail.
The new system was supposed to replace the ERP solution from a Polish manufacturer, which was unable to keep pace with the dynamic development of the eSmoking World business any longer.
It was decided to choose SAP Business One as a stable, flexible ERP system that has been proven in many companies and that streamlines business processes and delivers reliable management information that is also acquired from other IT solutions critical for the customer’s industry (e.g. industry-specific systems, proprietary solutions). SNP Poland, a company specializing in providing SAP solutions for small and medium-sized businesses, was selected to be an implementation partner.
The scope of the project was prepared during the pre-implementation analysis carried out by SNP Poland. Sources of problems in the company’s current operations were defined, retail processes requiring support were identified and goals to achieve were established.
The project started in August 2013, and SAP Business One went live in July 2014. The scope of SAP Business One implementation work was wide and included:
- finance and accounting,
- domestic, foreign and online sales,
- a warehouse and a packing center,
- points of sale (POS),
- complaints and customer service (CRM),
- reporting (Business Intelligence).
SAP Business One became a central platform “fastening together” business management. However, due to the specific nature of the retail industry, it was also important to integrate with SAP the applications supporting POS, an online sales portal, and a B2B portal for serving large customers (e.g. fuel stations).
Therefore, in addition to implementing SAP Business One, a significant part of the work done by 7milowy was the delivery and implementation of a solution for managing eSmoking World points of sale (Positano), as well as the integration of the online sales platform and the B2B wholesale portal with SAP Business One.
As part of the project, 7milowy also prepared the functionality of SAP Business One developed according to the needs of the Chic Group. The solution called SAP Packing Center is used for order picking – handling the preparation and shipment of goods from the central warehouse in Ostrzeszów to points of sale and individual customers throughout the country and abroad.
As Hubert Urban, a member of the Chic Group Management Board, points out: “We are still in a phase of intense growth. We enjoy this process, but on the other hand, such a rapid development presents many challenges. The number of processes we need to plan, data to be processed, and business decisions that we have to make is growing almost each day. We have more and more employees, business partners, customers. This complex dependency network cannot be managed without reliable information available in an integrated system. We expected that SAP Business One would be an opportunity to streamline and unify business processes – from sales of a single e-cigarette to the overall financial result.”
We expected that SAP Business One would be an opportunity to streamline and unify business processes – from sales of a single e-cigarette to the overall financial result.
A double project challenge
In the Chic Group project, it was not the wide range of tasks or the complexity of integration that was the biggest challenge. When the work was underway, the company recorded a very intense growth. The number of employees increased, the target number of SAP users and points of sale located across the whole country that needed to be covered by the implementation doubled. A partnership with chains of stores and fuel stations was also established, which greatly increased the number of customers and sales volume. The company continued to open foreign branches in Europe, which also require IT support.
The project was demanding from the beginning. It was not a classical implementation of the ERP system but a full computerization of the company’s business.
“The project was demanding from the very beginning. It was not a classical implementation of the ERP system but a full computerization of the company’s business. In addition, the scale of the project dramatically increased compared to the original assumptions. We had to actively respond to changes, for example to verify scopes and deadlines of individual stages. We have proven our high competence in project management, which guarantees safety of work for customers,” commented Michał Lorenz, Project Manager at 7milowy, responsible for the implementation.
Scope of work done
SAP Business One implementation
Delivery of SAP licenses
Development of proprietary SAP Business One functionalities
Delivery and implementation of the POS solution
Integration of the SAP system and POS
Integration of the SAP system with the e-commerce platform
Integration of the SAP system with the B2B platform
Positano – support for points of sale
The success of eSmoking World is based on a dense network of retail outlets. The model of cooperation with business partners assumes almost cost-free launching of points of sale and low costs of operation and servicing.
The proprietary POS solution prepared by the implementation partner, SNP Poland, fits in well with this strategy. Positano has a dual role – it supports sales processes at points of sale and provides information to the central ERP system thanks to the integration of both solutions.
As a typical POS system, it allows for quick recording of sales, including the monitoring of inventory levels. The sales are documented with printouts from fiscal printers, and the program keeps a record of basic cash register operations. Importantly, the program has been designed in such a way so that the operator can access all functions from the main screen. The solution has a user friendly interface and is intuitive to use — it does not require any complicated training for employees. The platform enables points of sale to update products, price lists and inventory levels, to download information about current promotions, and it provides Chic’s operations center in Ostrzeszów with an ongoing insight into sales data.
Not only did the solution improve the operations of retail outlets, but it also contributes to the rapid growth of the entire network. As far as IT support is concerned, to be able to open a new point of sale, you need only to have a laptop, to load Positano whose installation program can be sent by email, and get Internet access twice a day (when opening and closing a change) to update products and prices, and to upload a sales report to the system.
Integration of SAP with the e-commerce platform
By integrating the www.esmokingworld.com e-shop with the SAP Business One system, the company has gained full online control over the availability of goods in stock, which improves customer service by reducing order processing time, eliminating mistakes and delays, and reducing the number of complaints.
As far as operations are concerned, the main benefits of integrating the e-commerce platform and the SAP Business One system are:
- automation of business processes,
- updating inventory levels in real time,
- increasing the productivity of employees (by eliminating repetitive tasks such as multiple entry of the same data).
For companies that like eSmoking World sell online, integration of an online store with an ERP system is a business necessity. The integration platform prepared by 7milowy ensures a fast and accurate exchange of data between these two solutions. During the integration work, 7milowy used TaskCentre software from Orbis Software.
SAP Packing Center: one step behind a warehouse
In Ostrzeszów there is a modern central warehouse with an area of over 1500 square meters, which serves all Chic Group business partners. Every day, the company sends several hundred packages prepared according to orders. There are nearly 3,000 products at the disposal of customers, including disposable e-cigarettes, sets, batteries, accessories, cartridges and liquids of different brands, different capacities, strength, taste …
A wide range of products is what attracts customers, however it is quite a big challenge to ensure the fast and correct fulfillment of orders. In order to streamline the picking process and shorten time from ordering to shipping goods to the customer, 7milowy has prepared a proprietary extension to SAP Business One: SAP Packing Center.
Central warehouse employees use intuitive SAP interfaces connected via a data bus to the central SAP Business One system. The system provides information on the time of packing, taking into account the order size and variety of the assortment, and measures delays against the adopted standard. Based on this data, you can generate reports, e.g. with information on average shipment preparation time, employee productivity.
The SAP Packing Center is integrated with the central warehouse functionality, which allows inventory levels to be tracked in real time and inventory to be replenished on an ongoing basis.
eSmoking World with SAP Quality Award 2014
The implementation project in the Chic Group has been recognized in the fifth edition of the international SAP Quality Awards competition for Central and Eastern Europe. The SAP Business One implementation carried out by 7milowy has been rewarded in the “Rapid Delivery" category. The category includes projects covering less than 500 users and lasting no more than 1,000 person-days.
A international judging panel selects the winners on the basis of strictly defined criteria, such as the quality of implementation, the methodology applied, the comprehensiveness of support from partners, the innovativeness of implemented solutions and the transparency of communication channels. According to the verdict of the judging panel, the decisive factors for recognizing Chic with the award were:
- results of the project: a successful integration of the ERP system with POS and the e-commerce platform and building custom functionalities of a packing center in the SAP Business One system,
- the quality of the implementation: the use of a pre-implementation analysis and the ASAP methodology,
- business benefits: improving the efficiency of processes, increasing employee productivity, improvements in the logistics area,
- the project challenge: a dynamic growth of the company during the implementation.
Hubert Urban, a member of the Chic Group Management Board, emphasizes that the SAP Quality Award has been earned by the whole team implementing the system. “I would like to express my appreciation to our partner, 7milowy, a company that is an author of the implementation and our success. The company has had the opportunity to test itself in demanding business conditions and has proven that it applies high standards of work. We achieved the goals set during the pre-implementation analysis, the cooperation with 7milowy was very good, and the consultants proved their competence. I am glad that the independent jury also appreciated this.”
SAP Quality Award 2014 is a competition rewarding companies that have demonstrated the best approach to carrying out implementation projects. It was open to all SAP customers from Central and Eastern Europe whose projects were implemented in 2013 and 2014. In the fifth edition of the competition, awards were granted in five categories: cloud innovations, mobility and HANA platform as well as the shortest time of implementation and the greatest business benefits.
Retail processes at the European level
One of the main objectives of the project was to optimize business processes with a special focus on the computerization of retail sales. And this goal was achieved. Increased employee productivity and logistics improvements are further important benefits of implementing SAP Business One.
The integration proposed by 7milowy for all key applications under the umbrella of SAP Business One as a central system has enabled retail processes to be handled with maintaining high standards and low costs. In addition, as a result of connecting SAP Business One with the POS solution, the company has gained full control over the retail business. It is possible to track inventory levels from the central warehouse to a single point of sale. Every day, a detailed report of sales volume and profitability is available. It provides accurate information in selected cross-sections up to the level of the selected point of sale.
The Chic Group has significantly reduced the time needed to obtain key information. The system collects data and statistics showing, among others, the number of packages sent each day, the productivity of the packing center broken down by a single employee, calculated based on the number of packed lines, pieces of goods. If necessary, you can quickly obtain cross-sectional information such as average order fulfillment time and the number of complaints.
With the rapid growth of the Chic Group, the efficient central IT SAP system has allowed the results to be systematized and their actual value to be measured, taking into account capital expenditure. By streamlining business processes in the ERP system, the company has gained a rich reporting platform that allows you to view business data: from a general level (aggregated information) to a detailed level (e.g. sales data of a selected shopping stand).
Although the implementation project ended in mid-2014, it became evident when it was underway that further development of the system would be necessary. Launching its own production in a new plant at the beginning of 2015, opening up companies abroad and new sales markets, as well as the continuous expansion of the sales network in Poland generate new needs regarding IT systems. The Chic Group continues to work with 7milowy.
The Chic Group owns Europe’s largest chain of stores and specialized eSmoking World points of sale, including over 1,100 retail outlets and an international e-commerce service center, which fulfils online orders to more than 24 countries around the world. The Group also comprises one of Europe’s most modern plants producing nicotine liquid for e-cigarettes, and its own research laboratory. In Poland alone, eSmoking World products are available in over 27 thousand points of sale where more than 1.5 million people buy their e-cigarettes.