Pretoria, 28 Nov 2014
Phenomenal growth, together with an outdated legacy system, saw Livestock Services Zambia in dire need of an entire IT infrastructure overhaul. With each business function running on separate systems, this complete lack of integration was not only hampering daily operations, but more critically, was prohibiting management from having an accurate and real-time view of the business.
Livestock Services Zambia
Founded by Zambia's farming community in the 1990s, Livestock Services' core function is the supply of quality products at the lowest possible price and the provision of free technical services to local farmers. The liberalisation of the Zambian economy had seen the closing of many parastatals, thereby creating a need in the marketplace. Consequently, Livestock Services was founded to ensure a steady supply of much-needed products for Zambia's farming community. Although not profit driven, an almost competition free environment for the first few years had seen Livestock Services enjoying not only unprecedented growth, but significant profit margins as well.
Business case
However, its original technology and infrastructure had remained the same. "We were running on a DOS-based system," says Dilip Kapadia, General Manager, Livestock Services. With one system for sales and stock and additional separate systems for both the debtors and general ledgers, there was a complete lack of integration within the business.
"It was almost impossible to get a full set of accounts more than once a year," says Kapadia. In fact, the business was so disparate that the last 20 years had failed to yield a single financial audit that could be verified as being a true reflection of the business. "Our margins were heavy and we were experiencing significant stock losses. There was a need to enhance the control environment," says Kapadia.
Finding a solution
Livestock Services' need for a new IT system and infrastructure was business-critical. With a strong background in corporate restructure across Zambia's banking and retail industries, Kapadia is emphatic on the need for a proper IT environment. "If companies do not have the right IT platform, they are wasting their time," he stresses. "It is fundamental for a healthy business, and will be what sets you apart from your competitors."
Following a due diligence process involving various vendors, Livestock Services settled on SAP Business One, from 4most, as its chosen solution moving forward. "We were confident it would provide the best functionality, flexibility and scalability in terms of meeting our requirements," says Kapadia.
A leading supplier and implementer of SAP Business One and ERP software and technology, 4most has an established track record of successful implementations across South Africa and Africa, including Zambia. "The powerful SAP Business platform is perfectly suited to provide Livestock Services with all the necessary functionality required, while offering seamless integration throughout its business," says Eugene Olivier, 4most's Business Development Director.
Getting it right
After conducting a full scope of requirements, 4most submitted a detailed project and implementation plan to Livestock Services. However, despite the urgency, it was absolutely essential to spend the necessary time getting it right. "Garbage in, garbage out," says Kapadia. Therefore, the need to input correct data into the new system was crucial. "It was probably my most challenging implementation to date, due to the state of the data we were dealing with," continues Kapadia. "We needed to set up a database from incomplete records, yet with all account and inventory information 100% correct in order to guarantee data integrity."
This required the cleaning up and verification of all debtor and supplier balances. In addition, with minimal stock counts having been conducted for at least eight years, it proved to be a time-intensive, and at times overwhelming, process.
Implementation and change management
Late 2012 saw the 4most project team ready to begin implementation. "It was challenging," says Kapadia. Employees were comfortable with the old way of doing business, making it difficult for them to accept and become familiar with new controls and processes. "The training we received from 4most, though, was of huge benefit to our users," continues Kapadia. By the time Livestock Services rolled out its new platform, its team was comfortable with the new environment. "And there's been no looking back," he adds. "The ability to access reports and information instantaneously, and in any format, has converted every single one of our users."
To meet Livestock's retail requirements, 4most made use of solution extension partner, Cistech. The offering, built on proven methodologies and interoperable with SAP Business One, was able to provide the necessary functionality. "While a few initial features proved slightly problematic, with additional integration required, it has since been resolved," says Kapadia.
A whole new world
Functionality and operational efficiencies:
"It's a whole new world," says Kapadia post implementation. For the very first time, Livestock Services has an environment where all financial, logistics and dispatch information are completely integrated. And with all business processes carried out exclusively within the SAP Business One environment, no single transaction is able to be processed from start to finish, by only one person. "The resulting financial integrity is enormous, and reassuring," continues Kapadia.
Greater controls within the IT infrastructure led Livestock Services to further implement additional structures across its organisation. "We now have enhanced processes within both our stock and financial departments, resulting in proper and more efficient paper trails and leading, once again, to improved data and financial integrity."
A game-changer
"The benefits are changing our business," continues Kapadia. Integration between the stock department, inventory management and sales function ensures the receipt of goods in order across all five warehouses in different locations. Further, the improved logistics module now supplies an accurate forecast of what needs to be purchased. "This has significantly reduced the carrying of unnecessary stock, resulting in improved cash flow within the business up to as much as six times what it previously was." Similarly, Livestock Services has also seen huge improvements across its debtors' management.
Greater management control
But the greatest impact has been on management. With enhanced controls and greater business transparency, a comprehensive and thorough real-time view of the business is now possible. "Within 36 hours of quarter end, we were able to send the board a complete financial and technical report," says Kapadia. This is in stark contrast to previous years, which saw board members lucky to receive anything at all, let alone timeously.
Proof is in the audit
And exactly 14 months after 'go live', end December 2013 saw Livestock Services' auditors confirming that accounts supplied were indeed a true reflection of the business. This, for the first time in 20 years.
All-round savings, increased volumes
But, most significantly, the huge turnaround in business efficiencies and operations has seen a direct and tangible link to Livestock's revenue and across its customer base. Greater controls in the business, including stock and inventory management, enabled Livestock to reduce its product mark-up by as much as 50%, resulting in only a 1% decrease in gross revenue. "This is of huge consequence," says Kapadia. "And all as a result of operating within a controlled environment."
Although Livestock Services imports from countries around the world, its retail prices are now lower than what is currently offered in South Africa. This has led to increased volumes, with Livestock Services now supplying customers as far afield as Zimbabwe, Malawi, Tanzania, the DRC, Namibia and Angola.
The increase in foot traffic has also grown by 24% in the last 18 months to approximately 14 000 per month. A few years ago, Livestock would provide technical services to approximately 180 customers per month; this has increased to 3 600. "While we have employed additional staff and refurbished the relevant areas to cope with this demand, there is no doubt that it is 4most's technology allowing us to easily cope with this increase."
As to the relationship with 4most: "We very rarely need to see them," says Kapadia. While very active in the early days, the system has settled down well, running almost on autopilot with limited support required.
"SAP Business One is not only changing our business, but the marketplace as well," continues Kapadia. A few years ago, Livestock Services expressed interest in buying out the competition. "More recently, we were approached by the same competition," continues Kapadia. "But this time, with a request for us to buy them.
"We have never looked back," adds Kapadia. SAP Business One, from 4most, has placed Livestock Services firmly in control of every single aspect of its business. "We have exactly what we wanted," he continues. "An integrated and controlled environment, with absolute transparency and data integrity."
"It has definitely given us the edge," he concludes.
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