Chromagen Case Study

Key Challenges

• A business growing at greater than  40%annum
• A ponderous order and stock tracking system, impacting on customer relationships and cash flow
• Support for a nationwide network of warehouses
• Need to track government Renewable Energy Certificates and rebates for Solar Hot Water systems

Project Objectives

• A redesign of Chromagen’s
  business processes
• Mapping of these objectives
  onto Business One with no
  customisation
• Construction of accurate and
  complex Bills of Material
• Controlled devolution of
  management to state operations

Solution & Services

• ERP Solution
• Business and Implementation
  consultancy from Inecom Pty Ltd

Key Benefits

• Stock variance reduced from
  5% to less than 0.4%
• Reduced distribution costs
• Current staff can handle
  substantial business growth
• Increased revenues from strong
  control of the service and
  repair business
• Rapid customer acceptance of
  all aspects of the new processes
  supported by Business One

Web Address

• www.chromagen.com.au

“Business One has given us
measurable business benefits in every area of our business. Staff efficiencies alone in Customer Service paid for the total project
in less than 8 months.” Operations
Manager, Jeff Feldman 

The Company

Chromagen has expertise in marketing and distributing products that harness the sun’s unlimited energy for the purpose of heating water and generating electricity. Because of the global imperative to reduce greenhouse gasses, the company is well-positioned to take advantage of a burgeoning marketplace and is growing rapidly. Chromagen is based in Braeside Victoria, where assembly of its solar power products also takes place. It has distribution warehouses, sales and service resources in every state.

Chromagen works together with the construction industry as well as through a national network of dealers and retail outlets, providing expertise in system design and installation for both single units and for central installations such as in apartment houses, hotels, hospitals and industrial plants.

The Information Gap

Chromagen’s business plan recognised the major opportunity presented by the drive towards green energy supported by both Federal and State Governments, to counter the effects of global warming. However, its information technology capability was unable to provide stock tracking, pricing, order status, accuracy and timeliness to support a business planning to grow at an annual rate greater than 40%/annum. Analysing ERP offerings such as Microsoft Dynamics, Chromagen selected SAP’s Business One to be the application engine for growth. One important parameter for this selection was that implementation and support had to be available from several major distributors of Business One to provide insurance into the future. Systems Integrator Inecom was chosen because of their reference sites, responsiveness and business knowledge.

What has already been achieved?

Chromagen’s Operations Manager, Jeff Feldman, worked with Inecom to specify a totally new suite of business processes to cover a corporate restructure into a centrally controlled organisation, yet giving each state the management of its own sales channel and distribution warehouse. This was able to be rapidly mapped onto the functionality of the selected software with no customisation, so that – even including data cleansing and conversion, and the building of over 600 Bills of Material from 2000 stock items for products and packaging – the whole project took less than 6 months.

With more than 50 licensed users, the implementation has already delivered:

• Tight stock control over seven warehouses so that variance at stock-taking has reduced from 5% to less that 0.4%
• Order tracking and delivery planning which improves warehouse management, controls delivery phases of one order, consolidates multiple deliveries to one location, reduces distribution costs and provides an accurate status to respond to customer queries.
• Accurate sales and stock control reports at the click of a button
• Flagging of any unusual activity for management review – such as any document not being produced within the laid down time-parameters
• Significant savings from the use of the Service Module which issues Works Orders to the field staff and subcontractors. Because the warranty status is clear, this has reduced the cost of warranty claims and has increased the amount of out-of-warranty service revenue.

A salient contributor to Chromagen’s business is the Renewable Energy Certificate (REC), where Chromagen, on behalf of the end-user, registers the certificate with the regulator and takes ownership of the REC – which is a commodity, tradeable, for example, with the power distributors. This is a growing part of the company’s activities. Business One has enabled Chromagen to treat these as stock items. With inhouse designed procedures and Business One’s database management functions, Chromagen has been able to streamline the administration of RECs from a full time role to two days per month. This has freed up a valuable resource to further develop this part of the business. The financial management is now simply a by-product of the invoicing system.

The Engine for Growth

The decision to implement Business One has been underwritten because of its demonstrated capacity to support the expanding requirements of Chromagen. As Jeff Feldman says,

• We have total control of our supply chain so that our customers have total confidence in the service which we provide. We can aggressively market our products and services with confidence.
• As we grow, there is no major disruption or step-function in procedures.
• There is almost no expansion in staff numbers to handle increased volumes
• We have more than tripled the productivity in our customer service area while at the same time substantially improving our customer service
• We now have standard procedures across the whole organisation – so the interface to the customer is consistent, accurate and up-to-date