Distribution around the world is facing the same challenges, especially as it relates to technology. Companies face issues about keeping their system “current”, managing the system (and the cost of managing it from a people and maintenance expense viewpoint) as well as utilizing technology as a revenue generator through eCommerce adoption as well as considering other value-added services where technology can contribute to the customer experience.
Vallen, a division of Sonepar, recently addressed these challenges in is Asian markets. While Sonepar here in the US is on Eclipse, the company is open to either “best of breed” or local / regional decision-making as it is on the Infor platform in Asia.
According to an article in the Taiwan News,
“Infor, the industry cloud company, today announced that Vallen has rolled out Infor CloudSuite Distribution Enterprise solution across four countries and 15 locations in Asia to better manage the complexities of owning and managing inventory. In the process it has reduced TCO by 30% while achieving increased visibility, agility and innovation across the company, as well as creating an additional revenue stream with the launch of its e-commerce business. Key to the company’s digital strategy is a nimble and highly-scalable platform afforded by Infor’s multi-tenant SaaS solution to support growth spurts and increase customer intimacy. The company is expecting to grow at a CAGR of 25% over the next five years.
Vallen operates in a differentiated market with a robust demand for the outsourcing of the supply chain for indirect materials, the success of which is underpinned by an innovative technology-driven model. In order to maintain a high level of operational excellence and deliver on its customer promise, whilst ensuring flawless execution, the company has been working with Infor as its strategic technology partner over the years to carve out a digital roadmap that supports business growth, change management, customer value-creation and overall customer satisfaction.
A responsive business model to capture market opportunity for Vallen
“Five years ago, Vallen went through a huge growth spike. It took us years to digest it. We missed a tremendous market opportunity because our platform, systems and capabilities were not robust enough to scale quickly and support the demand for our solutions and services,” said Andrew Bennett, CEO, Vallen – Asia. “With Infor CloudSuite Distribution Enterprise, we will be better poised to capitalize on those market opportunities in a way that doesn’t require us to stop. The business is able to scale quickly and effectively as it’s not resource-intensive, and we’re already seeing the results. We run bespoke integrated supply customer programs for our customers, and we are now more robust and efficient in our service delivery because of the Infor technology and platform. The first couple of programs that have launched witnessed seamless customer onboarding and enhanced automation. Ultimately, we want to achieve scalable growth with Infor’s partnership and innovation. This will be a true measure of success for us.”
Vallen’s digital strategy for growth
Vallen started its journey with Infor being an on-premise customer. “On-premise we were heavily modified and supported out of our Australian business,” says Bennett. This was not ideal as the nature of the Asia Pacific business is very different from Australia’s. “We weren’t in control of our own destiny in terms of having the system work the way we wanted it to support our business. We also had to deal with the whole cycle of upgrades, which became just too hard with the customization and cost prohibitions, so upgrades got delayed and never happened.”
“Single-tenant was only a stepping stone to get us to multi-tenant because at the end of the day, we wanted a performance asset that will help us drive the business, that aligns to our business goals of having the right platform to achieve what we want in the market with our customers,” Bennett shared.
Why Infor?
Bennett said that they had selected Infor for the upgrade because of the continuity it enabled. “Our team are familiar and comfortable with Infor M3, so change management was less. Secondly, we understood and agree with the vision that Infor had put forward with CloudSuite, which isn’t just ERP but an all-encompassing solution – business analytics, e-Commerce, and now we’re also evaluating warehouse management (Infor WMS) capabilities as well. It’s an ecosystem that we could invest in and build up on as we scale the business. This aligns with our company growth plans.”
The third reason was the extensibility feature that Infor offered. Vallen had targeted to go for a vanilla version of ERP. On the multi-tenant cloud, it is able to take advantage of auto-updates to the latest versions. A pre-condition for leveraging Infor’s extensibility platform is to be as vanilla as possible and the organization has chosen to change a few business processes by doing so, but Bennett notes, “It’s a good time for us to do it. It’s a good foundational thing to do.”
Business outcomes and e-Commerce new revenue stream
Apart from enabling scalable growth, the pivot from using an in-house shared service centre in the early days to a fully SaaS model today has enabled a TCO savings of 30% for Vallen. Dedicated IT support cost is kept to a minimum with a lean IT team of only two to three to support the company across Singapore, Malaysia, Thailand and China. “In the SaaS model, we really rely on Infor to provide us that support in a multi-tenant environment optimized for AWS for ERP and all those connected solutions – this ensures we’re deriving full value from the Infor applications purpose-built for our business. That leaves us to focus on our core competency.”
Productivity has increased with the ability to automate and streamline much more of the business using BI that is closely integrated with the Infor CloudSuite Distribution Enterprise solution. “Whether it be our finance team for month-end reporting, or different financial reports that took many hours to create for different stakeholders – these can all be automated through workflows now and help us digitize paper processes and be more efficient — be they customer orders, quotations or purchase order approvals,” says Bennett.
Harnessing SaaS technology to create an additional revenue stream in the new e-Commerce platform is a big plus and aligns with the strategic intent of Vallen’s digital plan for growth. The company’s integrated e-Commerce platform allows seamless management and ease of overall configuration for the onboarding of new customers and managing new business opportunities, without having to deal with the complexities of other third-party applications. “It allows us to be “always on” and to be highly-responsive to scaling business needs and customer wants,” says Bennett.
Going forward, Vallen will assess how to derive further value from its digital investments and augmenting its value proposition to customers, whether it be on the e-Commerce front or digital portals for customers, or integration with third-party systems such as vending machines, made possible by the openness of Infor’s digital platform.
“Infor is proud to be a strategic business partner for Vallen all these years. We are excited to continue supporting them in their digital agenda and leadership as they grow and transform their business,” said Fabio Tiviti, senior vice president & general manager, Infor ASEAN & India. “We are confident that we can help drive innovation for our customers with our Infor CloudSuite solutions that are purpose-built for specific industries and finely-tuned in the cloud.”
A couple of interesting takeaways:
- Every distributor thinks their business is unique, however, Vallen recognized that the cost of uniqueness, and making the software specific to them was more costly, perhaps more inefficient, than reviewing their processes and adjusting them to fit the software. This was the “vanilla” approach. So, is software (especially ERP) a differentiator or is how you use the system?
- The cost savings from going cloud-based appears to be significant. Only 2-3 IT people to support 12 locations in multiple countries (and we don’t know the roles of those individuals, could be only network administrators)
- Vallen felt comfortable with Infor’s eCommerce platform. Perhaps due to integration. Perhaps functionality. Rarely do we see distributors use the same software provider for ERP and eCommerce.
- Going forward, agility is key as is identifying ways to monetize ERP systems as well as the data housed within your ERP system.
And granted, industrial supplies business is different than the electrical distribution business,
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