Building supply chain resilience with cloud ERP

Running the materials supply chains of companies across multiple industries using an on-premise enterprise resource planning (ERP) system proved to be untenable for Vallen Asia, a supplier of outsourced supply chain services.

As demand for its services grew, the company, which supplies materials that its customers do not make on their own, started grappling with scalability issues, especially for large enterprises with supply chains that span the region.

The tipping point came when it secured a large aviation contract from Raytheon Technologies, one of the world’s largest suppliers of aerospace products, that required it to manage a material supply chain across several sites in Asia.

“It almost brought our business to a complete halt,” said Andrew Bennett, CEO of Vallen Asia. “Doing this big implementation sucked up all our resources, and we had to turn down several other opportunities because we just couldn’t scale and didn’t have the resources and bandwidth, mostly because of our technology platform.”

To be sure, Vallen Asia had been facing scalability issues for a while now, as its business model requires it to cater to diverse customer requirements, whether it is e-commerce fulfilment or supplying third-party vending machines onsite.

“All those things were different factory to factory, we just couldn’t keep up, and to do it took a lot of manual workaround processes from invoicing to planning. Not to mention the analytics and data reporting and other things that our customers required,” Bennett said.

Vallen Asia was using Infor’s M3 on-premise ERP system to do all of that, but decided to switch to Infor’s CloudSuite Distribution Enterprise, a software-as-a-service (SaaS) product designed for large wholesale distributors that is part of Infor’s M3 cloud ERP offering.

As with any ERP system, Vallen Asia had heavily customised its on-premise M3 system. To migrate directly to a multi-tenant cloud application would be too onerous, and so it started with a single-tenant implementation that took six months, followed by a move to a multi-tenant environment which took another six months.

Given that CloudSuite Distribution Enterprise has a fundamentally different architecture from on-premise M3, Vallen Asia not only did a lot of heavy lifting in the initial phase of the project, but also took the opportunity to tweak some business processes.

“We took a dynamic and ruthless approach to make sure we didn’t have the tail wagging the dog,” Bennett said. “If we had to change our processes to work within the confines of the system, then we would do that. There would be no customisation – extensibility was something we knew we’re going to rely on later to give us that last mile of flexibility where required.”

Bennett said it helped that CloudSuite Distribution Enterprise, as an industry-specific offering focused on distribution, has standard industry processes covered, and “for us it was what we could utilise to make new standard functionality”.

The biggest challenge, Bennett said, was in supporting financial processes that had been developed over time and thus more difficult to unwind. “That took more time, effort and consultation with some of our subject matter experts more deeply to work through other ways to skin the cat,” he added.

So far, the move to a cloud ERP system has reduced Vallen Asia’s operating expenditure by 30%, with part of the savings coming from the lower headcount required for buying, planning and other manual processes.

Besides CloudSuite Distribution, Vallen Asia is also using Infor’s Birst business intelligence platform to automate the flow of information, whether that be through customer portals or its finance team. “Utilising Birst to automate that became a good net productivity gain for us at the end of the day,” Bennett said.

In addition, it has built an e-commerce storefront using Infor Rhythm for Commerce that its customers can use to source for indirect supplies. Bennett said the service is aimed at non-contract customers that would like a consumer-like e-commerce experience with approval loops and procurement controls.

Amid the pandemic which has disrupted the global supply chain, Vallen Asia’s cloud ERP move is timely, enabling it to better meet the shift in supply chain dynamics, from a just-in-time to a just-in-case approach where safety stocks are prioritised.

In that regard, Bennett said one area where CloudSuite Enterprise has played a critical role is demand planning, adding that optimising safety stock levels, freight considerations and dynamic lead times are examples of the complexity that Vallen Asia has successfully managed for its customers.