Snieżka Digital Transformation

Śnieżka, a manufacturer of construction chemicals, is after a transformation project of several years. What was its purpose? When did it start and how did it proceed?

Śnieżka Group carried out a project to streamline processes and increase their efficiency

Mikołaj Marszycki, ITWIZ, 09.2022

We talk to Marek Niziołek, CIO, Digital Transformation Director at Śnieżka Group, about the details of the digital transformation project that the company has undergone, the implementation of the SAP S/4HANA solution and the biggest challenges associated with it, the benefits that digitisation has brought to the company and its further transformation plans, as well as the cloud computing solutions used by Śnieżka.

Śnieżka, a manufacturer of construction chemicals, is after a several years’ transformation project. What was its purpose? When did it start and how did it proceed?

The main objective of the digital transformation was to increase the market competitiveness of  Śnieżka Group. But four framework objectives were also set, which were to increase customer satisfaction, improve the business model, streamline current processes and make them more efficient, and provide modern IT tools to support both current and future processes. This was our main implementation indicator.

In designing the process of our digital transformation, we knew it would be ground-breaking for our company, and we paid a lot of attention to designing every detail of the journey. The key objectives, the transformation priorities and the main expected benefits were developed in an internal workshop jointly by the board and key directors of the areas planned as priorities for transformation. Together with an external partner, we detailed these main objectives in a series of workshops in the form of several hundred specific requirements for individual areas. However, when starting the project, already after the supplier had been selected – using the Customer Journey Method (CJM) – we had the opportunity to carry out a comprehensive stakeholder survey of our business processes.

Through joint analysis, we have confirmed what in our processes is very well received by customers and other process stakeholders. We also discovered where the main flashpoints and further optimisation needs were. We have created a tool to prioritise tasks, identifying the most important ones.

As a result of the digital transformation, we have moved and digitised even more deeply, using SAP modules and other IT tools integrated with them, a wide range of key processes in the organisation from sales, customer service, launched cloud-based solutions for customer relationship management, tools to support marketing activities. The transformation included logistics and transport processes, advanced warehousing activities, production, purchasing, quality management, planning and execution.

Have the objectives been achieved? Which processes have been digitised and how? What was this breakthrough?

In accordance with the adopted methodology, as part of the implementation of the various stages of the transformation, as the implementation team we verified in detail – both in the mode of unit tests, sprint tests and final user acceptance tests – the qualitative correctness of the solutions. After each stage, we accounted in great detail for each requirement. Finally, at the end of the project among the board of directors, the directors defining the requirements, together with the implementation team, we evaluated the effectiveness of the project implementation. We recalled decisions agreed upon at transformational project steering committees and explained to each other instances where, during the implementation, we decided to change the originally defined assumptions and requirements. More than 95% of the detailed requirements have been accurately implemented. At the same time, in the course of the project we managed to realise 53 changes to the basic defined scope – partly modifying it, partly extending it.

Together, among the board of directors, key executives, as well as the other participants and beneficiaries of the project, we confirmed our positive assessment of the transformation carried out, recognising that the vast majority of the objectives set have been achieved in a very satisfactory manner.

As a result of the digital transformation, we have moved and digitised even more deeply, using SAP modules and other IT tools integrated with them, a wide range of key processes in the organisation from sales, customer service, launched cloud-based solutions for customer relationship management, tools to support marketing activities. The transformation included logistics and transport processes, advanced warehousing activities, production, purchasing, quality management, planning and execution. There was further digitalisation with SAP tools of the company’s controlling, finance, accounting, fixed asset management, processes for handling incoming invoices, their analysis, decreeing, pairing with orders and authorisation up to payment. Subsequently, changes have entered the HR areas through the digitalisation in an integrated, state-of-the-art SAP tool environment of HR, working time and payroll management processes.

The key milestone changes achieved as a result of the transformation include:

• implementation of new processes, functionalities and modifications to existing ones, such as those that were an effective response to the complaints reported by our customers and other participants in sales related processes, provision of self-service tools enabling self-service of some of the process steps, implementation of a unified omnichannel customer service by providing a modern, integrated customer service platform that works on multiple systems, including mobile devices. In particular, this involves improvements in the areas of customer acquisition of information about our products, advice, facilitating product ordering, monitoring completion progress, providing better customer care by sales representatives, warranty service and implementation of marketing activities. Also ground-breaking is the fact that the sales and customer service part is fully integrated with a set of tools in the so-called back office to fulfil these orders (procurement of raw materials, packaging, production, packing, warehousing, transport and timely and complete delivery to customers) in a way that meets the customers’ expectations as defined in the ordering process;
• building analytical and reporting tools providing, mostly online, up-to-date information on all processes carried out within the integrated platform;
• implementation of highly innovative tools that integrate standard manufacturing company processes with wholesale and retail (retail) processes, including online B2B and B2C versions, also available on mobile devices;
• to build tools ready for further development and expansion of the organisation and to establish an interdisciplinary team within the company, made up of experts from different executive and management levels in the company, and to implement it for effective project and maintenance collaboration;
• providing enormous flexibility and great potential for further development in the hardware and application platform built by running tools in the private cloud and in the clouds of market-leading IT tool manufacturers.

What technological solutions were used in the transformation project?

Following this conceptual work, we looked at the solutions available on the market and decided to use those offered by SAP.

We chose the SAP S/4HANA solution, a rich set of inter-integrated ERP system modules for the operational management of the business. We also invested in SAP C/4HANA as part of the package. It is a set of tools related to sales support, such as: Hybris E-commerce in B2B and B2C, CRM in the cloud version of C4C and SAP Marketing Cloud. To speed up the implementation and engage the team efficiently, we used the SAP Activate methodology and the Chemicals Company model.

SAP experts presented us with a ready-made, configured model, on which our prioritised – during the workshop – requirements were then analysed. We also agreed on five further sprints, during which we worked out further solutions. This agile working methodology has proven to be very effective. It also developed a team of experts during the implementation. They were responsible for the implementation one the content and business side and, during the successive sprints – designing the solutions in detail and then meticulously testing them, reporting errors for improvement until approval – they also became experts on the SAP tools being implemented.

Four framework objectives for the digital transformation of the Śnieżka Group:

• increasing customer satisfaction,
• improving the business model,
• streamlining current processes and making them more efficient,
• provision of modern IT tools to support both current and future processes.

What competencies did the digital transformation process require of Śnieżka employees?

Above all, business competence was needed. But it was also about building a team of people who are flexible, open to change, and in particular open to SAP best practice.  We needed effective ambassadors for change in the organisation. We also did not want to modify SAP by adapting SAP business processes under our own specifications where this was not necessary. Because such modifications to the standard represent a significant cost of implementing the changes, the risk of sub-optimal performance of the integrated solution and a strong limitation of possibilities, increasing the cost of implementing further innovations proposed by SAP in the next versions of the system. We wanted to get a good idea of what the standard looks like and make the most of it.

With these types of agile projects you also need Product Owners, people who represent the organisation but are heavily involved in the project. Together with SAP, we developed a solution for such ‘brick-and-mortar twos’, which consisted of a leader of a particular area, from whom we required verification of requirements and decision-making, and a trusted person, a specialist delegated by them, who was able to commit 100% to the project at crucial moments. This arrangement has worked well for us. We also use it for other projects.

What are the biggest challenges – concerning the technology and business – that you have encountered during this transformation of several years?

We realised that in order to provide certain functionality for our customers, we needed to have a strong link between what is at the interface of the e-commerce front-end and our back-end related to production and supply chain planning.

When we tried to do this before – without tools such as SAP S/4HANA – we faced huge difficulties. However, there appeared to be too many interconnections. So the biggest challenge with this project was integration. Except that it related not to technical flipping, but to designing, commissioning and – in many places – changing processes or adapting them to SAP standards.

How have you dealt with this?

We started by organising the sales front-end, i.e. the basic data of customers, suppliers, individual components within the supply chain and regarding products. We have built the foundation to be able to move smoothly from replacing the sales elements to replacing the entire interior of the systems – the back-end.

At an early stage, we also launched SAP S/4HANA as an ERP engine, but only for the core data scope. It worked at the interface with our existing system and with the new sales package. Based on this foundation, we developed everything else. Then, we replaced the previous ERP system – which we had highly customised – with a new one.

Why did you decide on SAP S/4HANA in particular, rather than a new version of the existing solution?

This type of solution was considered, but the issue of advanced production planning – combined with marketing planning – and advanced sales related and CRM tools led to the choice being made for SAP.

It is worth mentioning that, although we are a manufacturing company, the nature of our cooperation with distributors and our development plans meant that we actually needed to launch two models at the same time. On the one hand, SAP for Manufacturing, and on the other SAP for Retail, a tool dedicated to wholesale. Based on the retail model, we created a data warehouse and an analytical and reporting system.

We also use the SAP S/4HANA-based Customer Activity Repository (CAR) tool. It is the aggregate to which all retail sales data from individual points with full cash analytics goes, and where it is complemented by a set of related data on internal transactions – purchasing, warehousing, production, transport and finance and controlling. We therefore have an analytical tool for the full detail. On the other hand, the already aggregated sales information at the main points is sent to the ERP system in order to make the ERP system more efficient.

CAR is therefore a kind of data warehouse with us, into which we also download data from distributors. All of this is in turn made available to one of the highest-rated tools for data analysis and visualisation: Tableau. We therefore have a heavily analytical and reporting team with data cubes drawn primarily from the SAP toolkit. With the CAR aggregation base, the team also has access to integrated tools surrounding SAP and reports from distributors. All of this information is made available to the business and business analyses are created from it. Such a model works well.

Śnieżka is a company managed largely by data, which forms the basis for its decisions. Thus, a significant benefit of this implementation is that we have tools providing us with all kinds of data on an ongoing basis across the entire cross-section of the company’s operations, and the analytical and reporting package based on SAP CAR – supported by ergonomic Tableau tools – allows us to optimise and build further KPIs. In this way, we support the entire business, but also IT, in a meaningful way.

However, Śnieżka’s activities are not only production and sales, but also storage and distribution. What IT solutions have you dedicated to supporting these tasks?

As far as logistics support is concerned, in addition to the standard SAP S/4HANA package – which has, among other things, production, warehouse and transport modules – we also decided to implement SAP Extended Warehouse Management. It is a tool that is used for advanced warehouse management, including at the individual site level.

It is worth mentioning that in our industry, part of the sales are those requiring large-scale pallet picking. On a single pallet, for example, several or a dozen products of different sizes and shapes have to be arranged, often in multiple layers (up to eight). This is quite a challenge. With the EWM solution, we have been able to completely automate this process and divert specialists from it to other tasks.

We launched SAP S/4HANA with the EWM module in 2020, and in 2022 our new large logistics centre took off. It links all production sites on the EWM module mentioned above. This is an example of how, through the execution of a major digital transformation project, we have prepared strong enough tools and an effective implementation team that we can quickly adapt them to meet new needs.

What else has changed at an organisation-wide level following the implementation of SAP S/4HANA?

Above all, we met all the needs for the B2B channel and prepared an ergonomic, modern, self-service toolkit that works well with the back-end. Importantly, providing analytics to optimise operations.

Śnieżka is a company managed largely by data, which forms the basis for its decisions. Thus, a significant benefit of this implementation is that we have tools providing us with all kinds of data on an ongoing basis across the entire cross-section of the company’s operations, and the analytical and reporting package based on SAP CAR – supported by ergonomic Tableau tools – allows us to optimise and build further KPIs. In this way, we support the entire business, but also IT, in a meaningful way.

The test of the implemented solutions for us was during the Covid-19 pandemic. During the 2020 lockdown, people started doing renovations on mass scale, resulting in a huge sales and production peak in our area. We were able to meet this challenge precisely because of the SAP tools we implemented and integrated.

Another benefit is improved customer service before and after the sale. In contrast, our multi-channel (omnichannel) sales are characterised by consistent solutions and a high level of adaptation to mobile devices. Our IT tools also significantly supported last year’s process of changing the business model, in which we spun off a new company within the group.

We have also implemented solutions to facilitate the work of so-called hard HR. Crucially, we also finally have access to real-time information on business processes. Anyway, we have succeeded in meeting most of the challenges we set ourselves when we started the digital transformation.

It is worth noting that the implementation of SAP solutions also represents a huge change in thinking and the entire organisational culture within the company. This includes changing the ways in which the various teams involved in this project, which consisted of more than 100 people, operate. With this project, Śnieżka has risen to a higher level, not only technologically, but also in terms of the way it manages, collaborates on projects or works with data.

Śnieżka cares strongly about IT security. Being aware of the challenges in this area, we were able to come to the conviction with the management that, although they say ‘My home is my castle’, when it comes to cybersecurity we are not necessarily able to build ourselves such a secure ‘castle’. A higher level of security for cloud solutions will be provided by hyperscalers, for example, even if only because they are able to invest incomparably more resources in cybersecurity.

Digital transformation is a process that – supposedly – never ends. In what direction, then, will the further digitisation of Śnieżka take place?

We are currently preparing to launch an even more advanced method of production planning, i.e. a PPDS module that also runs under SAP S/4HANA. In the new logistics centre, meanwhile, we will carry out further automation and digitalisation of processes.

As part of the digital transformation, we have also built the foundations to be able to make even greater use of one part of the Industry 4.0 concept of Predictive Maintenance in the future. Yet, currently, maintenance processes have been designed and implemented, outside SAP. The core of the implemented ERP systems is poised to further integrate the tools currently in use with the SAP platform and harness the power of a fast columnar database and advanced predictive tools to optimise the maintenance expenditure and downtime costs of our production facilities. However, these activities would not have been feasible without the prior implementation of the entire toolkit mentioned earlier, creating a stable platform for the introduction of new projects and solutions.

I would still like to ask about the cloud. This is because it houses all of Śnieżka’s IT systems. Do you use a single cloud? Is it a public or private cloud? Why did you decide on this solution? And what does it give to Śnieżka?

Let’s perhaps start by saying that we needed the cloud solution for two purposes. Firstly, to ensure high performance, full scalability and high flexibility in terms of availability of server resources.

Secondly, Śnieżka cares strongly about IT security. Being aware of the challenges in this area, we were able to come to the conviction with the management that, although they say ‘My home is my castle’, when it comes to cybersecurity we are not necessarily able to build ourselves such a secure ‘castle’. A higher level of security for cloud solutions will be provided by hyperscalers, for example, even if only because they are able to invest incomparably more resources in cybersecurity.

We currently use the Amazon Web Services cloud for SAP solutions. But we also practised on it how to migrate a set of our integrated data to other cloud solution providers. Initially, this was quite a challenge. Especially given that we also have SAP Marketing Cloud in the SAP cloud and Office 365, Microsoft Azure cloud tools.

We are now able to do rapid Disaster Recovery for such a complex environment. We also practised Google Cloud, Microsoft Azure, AWS and Polish local providers’ solutions for efficiency. As a result, we ultimately obtained satisfactory prices for access to cloud solutions.

Source ITwiz