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Improving cashflow & slashing admin costs with SAP

Supplier: Evolution Future Solutions
11 February, 2011

With large areas of Australia still experiencing low rainfall and drought, efficient management of valuable water resources has become a top priority for local governments around the country.

A major part of this requirement is the monitoring and control of everything from reservoirs and dams to pipelines and pumping stations. Staff need to be aware of any operational issues as they occur so corrective steps can be taken immediately.

New South Wales company, Rad-tel has carved out a lucrative niche in the monitoring and control of water delivery plant. Since starting operations some 20 years ago, the family-run firm has grown to the point where it now provides water and sewerage automation and control systems to more than 100 local government authorities and water companies around Australia.

With its specialist staff members, the company assesses requirements for clients before providing them with the hardware and software needed to do the job. Working on both existing infrastructures as well as in the design of greenfield sites, Rad-tel has become a leader in this technically challenging field.

Challenges posed by an ageing IT infrastructure

Approximately 12 months ago, Rad-tel realised that its back-end IT systems supporting the day-to-day operations were no longer up to the task. General Manager, Adrian Nisbet said staff were constantly wrestling with laborious processes that severely hampered their efficiency.

The company was using MYOB for financials and an in-house designed database for inventory management. A third stand-alone system was use for purchasing and order processing.

In the company’s factory, equipment is assembled against customer orders, with the antiquated systems blowing out lead times to around six weeks.

"We didn’t have effective communication between the sales people and the factory," said Nisbet. "If a sales person was on the road for two weeks the work might not start on their orders until they returned.

"We finally got to the point when we recognised we needed better financial control of the company overall. This was really the straw that broke the camel’s back."

Moving to SAP Business One

After completing market research and examining a number of options, Nisbet said the decision was made to replace all existing applications with SAP Business One. Nisbet said that SAP had not initially been on the short list, as he had traditionally thought of its software as being relevant only to larger organisations. However, after examining SAP Business One’s capabilities, he realised it would be a perfect fit for the company.

Working with SAP partner Evolution Future Solutions, Rad-tel completed a blueprint of its exact requirements to ensure SAP Business One could be configured to suit the company’s operations. During this process, every existing internal process was reviewed to determine what value it actually delivered to the operations.

"We realised that some of the ways in which we had been working were not the best," he said. "Evolution gave us some examples from their experiences of better ways of doing things. We ended up removing quite a few processes which subsequently eliminated a lot of work and greatly helped efficiency."

Software customisations to SAP Business One were kept to a minimum. Of those required, most were in the assembly and production area where the user-defined fields were simply configured to suit the company’s assembly activities. The rollout itself was completed within three months. All existing company data was transferred into SAP Business One and the old systems turned off.

Immediate business benefits

For Rad-tel, the benefits flowing from the SAP Business One rollout were immediately obvious. Cumbersome manual processes had disappeared and the efficiency of all staff was dramatically increased.

"From the financial side, the biggest benefit by far has been a phenomenal improvement to our cash flow," said Nisbet.

"We have had a bank overdraft account for 20 years which we used constantly. Since we went ‘live’ with SAP Business One, we haven’t had to use it at all."

Nisbet puts the dramatic change down to a more efficient invoicing and accounts receivable process. Where previously some orders would not be invoiced for more than a month, now as soon as equipment goes out the door the invoice immediately follows. As a result, company cash flow has never looked better.

The company’s suppliers are also happy as they’re now paid faster via electronic banking. Rather than spending several days making payments by cheque, SAP Business One allows all payments to be completed in just one hour at the end of each month.

In the factory, lead times have been reduced from more than six weeks to less than just two weeks. If orders are urgent, they can now be turned around in a single day – something that would have been unthinkable before SAP Business One.

Company reporting has also improved.

Describing it as "chalk and cheese" when compared to pre-SAP operations, Nisbet said he could now have an accurate picture, instantly accessible, of exactly how the firm was performing.

"It used to take a lot of work to get the kind of overall picture I can now get on a daily basis. You can click a button and see what you have in open quotes and invoices – it is really powerful."

Nisbet said that, with the solid platform provided by SAP Business One now in place, Rad-tel can look forward to continued business expansion well into the future.

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