German shoe manufacturer Birkenstock is perhaps most famous for its comfortable footbed, making its sandals a household name across the globe. What consumers don’t know is the manufacturer recently completed a greenfield implementation of SAP S/4HANA for its Canadian sales and distribution channels.
“Canada didn’t have a corporate presence or an ERP system,” said Head of IT Applications at Birkenstock Americas Joshua Milos. “So, this was a greenfield implementation in its truest sense.”
In Europe, Birkenstock runs on SAP ECC. In North America, the U.S. runs on a highly customized AS400 solution. Milos noted that the U.S. will move to SAP S/4HANA next, followed by the rest of the world. But for now, Canada leads the charge. “If it weren’t for COVID-19, we would likely already be moving along. We are currently discussing the road map and creating a revised game plan for next steps,” he said.
ASUG sat down with Milos, who has more than 20 years of experience working with SAP solutions, to discuss the project, lessons learned, and ROI so far. He and his team worked closely with the implementation partners as well as the business users before, during, and after go-live.
Sharon: Why did you decide to stand up an ERP in Canada with SAP S/4HANA and why on a private cloud?
Joshua: Generally speaking, we are an SAP shop. We also have teams in both our U.S. headquarters as well as in Germany that have a lot of SAP experience. It made sense to start with SAP as the vendor of choice.
We ultimately decided on SAP S/4HANA because of the functionality it offered. In the fashion industry, most of the improvements, enhancements, and new functionality that we know we will need to use—especially when we think of things like omnichannel capabilities, stock protection, and inventory allocation—those functions are standard in SAP S/4HANA. It also helped that our implementation partner had a preconfigured template already set up to allow us to go live with the best industry standard practices in a quick time frame. We actually had a legal time requirement to be live by a specific date. And so, SAP S/4HANA made sense.
We decided on a private cloud implementation because we wanted to take advantage of the ability to quickly scale as we grow. I don’t think we’d have that opportunity if we had the system in-house. Another reason is that from a cost perspective, it made more sense to let another organization handle maintenance and support while we focus on the application.
Sharon: How did IT and business functions work together to complete this project? What challenges did you encounter, if any?
Joshua: This was certainly a business-driven project and IT played a support role. I was hired just as the project started, and I hired my team as we went along during the project. What was clear from the beginning was that this was driven by a “sales-first” mentality, and that we would be building a global template focused on sales.
When you build a global template, you need to remember that there will be interaction with other functions such as purchasing and manufacturing, which means we needed to make sure our master data was not only accurate, but also used in the same way across the company. There were opportunities in having those discussions with our headquarters in Germany as well as with the various business teams involved. We needed to agree on how we were going to build things in a way that we didn’t configure ourselves into a corner, but remained flexible. Ultimately, communication is key.
Sharon: Can you walk us through how you created best practices for business processes that other locations could then adopt as they go live with SAP S/4HANA?
Joshua: If we’re looking at best practices throughout Birkenstock, the U.S. operations lead the company in business processes for sales functions. So, we looked at that first, and then put that into the context of the fashion best practices that the vendor brought. We knew we couldn’t replicate all the U.S. processes for this project, but we wanted to make sure that those country-specific processes fit within the standard processes that were delivered in SAP S/4HANA and the vendor’s template. We spent a lot of time mapping the Canadian organization’s needs into the newly defined template and best practices.
With that, Canada will become the sales template and we will continue to operationalize that template as we move to the U.S. We will continue to build on it and expand it into other regions.
Sharon: How long did it take you to get to a steady state of operations post-implementation? How has being live on SAP S/4HANA allowed operations to continue in the current business landscape?
Joshua: The entire project took about nine months to complete, and we went live on Oct. 1, 2019. From October to about December, we were getting our bearings. This wasn’t like moving from one ERP to another where it’s like jumping from one moving train to the next at full steam. We had a bit of run time we needed to get through after go-live because it was a brand-new company. But by December and going into January and February of 2020, things were cooking. I’d say we saw a lot of growth for the company; there was movement of product, and operations, generally speaking, were stabilized.
In light of the current business landscape, it’s even more important now that we’re able to see where the inventory is, see what the consumer demand is, and how to position our inventory to support those needs. SAP S/4HANA allows us to do that. It’s real-time information from a single source of truth.
Sharon: Have you adopted any intelligent technologies with your SAP S/4HANA solution?
Joshua: We are looking at robotic process automation (RPA). We see real value in RPA as it relates to order-to-cash processes, especially within customer service. There are some real good uses cases for it. We should have had that implemented already, but the pandemic stalled things temporarily. The plan is to pick it back up later this year.
We’re also planning a pilot project on SAP Data Warehouse Cloud. We have great operational reports, but we want to get to that to the next level. We want to take the real-time data on sales, inventory, and purchasing from SAP S/4HANA and mash it together to really look at it from an analytical view. We want to allow the business to make even better decisions in real time.
Sharon: Can you discuss user adoption and training? Was there a strategy in place?
Joshua: We were very lucky in that the Canadian team had prior SAP experience, so we weren’t really starting from scratch. Also, because this was a greenfield implementation, we were able to define a lot of the processes. The change management came in the form of training everyone on the new functionalities. We held a two-week training session on-site in Montreal to go through all the new processes and functionalities.
It’s important to note that the team was involved in designing the processes early on, so they were already familiar with what was coming.
Outside of the Canada office, we had to address change management with our headquarters in Germany because they own the data that flows into our SAP S/4HANA solution. So, we needed to all get on the same page. It involves open communication and flexibility.
For the most part, training is completed. As we introduce new technologies or new functionalities, we will of course continue to provide education and training where it’s needed.
Sharon: To what extent does your new system deliver the benefits outlined in your original business case? Where does it fall short and how do you plan to address that?
Joshua: In our original business case, we outlined the need for a real-time view into our data and financials, as well as the ability to grow into an omnichannel brand. I’d say overall, we are already seeing the benefits outlined in our business case.
I think the pandemic has perhaps accelerated the conversations around other channels besides wholesale. This platform definitely allows us to grow in that direction.
We are still growing the system and looking into the different ways we can do that. Overall, SAP S/4HANA has delivered on expectations.
Sharon: What are some lessons learned you can share with other ASUG members?
Joshua: We are having a lot of internal discussions right now as far as how we will roll SAP S/4HANA out to our U.S. and European locations. We are going to apply the lessons learned around how we operationalize the master data as well as how to further enhance the template to support our businesses in the other regions. It’s important to spend time upfront on both of these things, especially if you’re working on a global template.
Another thing that is super important is testing. You can’t do enough testing. And you need to have all parties involved, especially the business users. As you’re doing this, be flexible. Flexibility from a project management standpoint is probably the most important lesson learned. You will run into speed bumps and roadblocks. It’s inevitable, so just be ready to move with them.
The last thing I will say is to be collaborative. We completed this project pre-COVID-19, so we had the opportunity to be face-to-face and work together. It will be interesting to see how that will transpire going forward, but no matter what, find a way to collaborate.
Join us June 22–25 for ASUGFORWARD to learn, exchange ideas, and gain information you can put into practice immediately. Register for the sales and e-commerce track, taking place on June 22–23, to hear more of Birkenstock’s story, learn how your peers are conquering today’s challenges, and ask questions about their experiences.