Canningvale managing director Jordan Prainito says it is common to hear about "lofty transformation programs" at companies, but what are the practicalities of actually making that work? How do you scale up and choose the software options that fit with where your business is now, and where you want it to be?
Prainito and Belgian Delights general manager Christophe Verstreken addressed these questions and more in a webinar last week offering a mud map to success, drawing on their experiences staying ahead of the curve with technology to rise above market headwinds.
From family companies that have changed significantly in recent years, Prainito and Verstreken shared their personal business growth stories, providing insights that will no doubt apply to any entrepreneur or manager embarking on a new chapter to upscale.
The webinar is embedded further below, but if you'd like to read a summary we've distilled it down to four key tips to get you on the right track.
1. Automate the journey
Towel and bedware company Canningvale has come a long way since it was founded in 1977, with the business model overhauled in the mid-2000s when a strong Australian dollar forced it to either shut up shop or become an importer-exporter with manufacturing overseas.
Fast-forward another 10 years and the bulk of Canningvale's business was supplying leading retailers such as Myer and David Jones, but it was increasingly selling to growing online giants like Catch.com.au and Kogan.com (ASX: KGN).
"It was fast becoming a significant chunk of our business. At that point, that's about a year after I joined the business in 2017, we looked and went 'hang on, if these guys can do it, why can't we?" Prainito said.
"So we embarked on a further modernisation piece which was about rather than servicing online retailers, how can we become an online retailer and be vertically integrated across all our systems so that orders come through and flow as seamlessly as possible?
"That enables us to achieve efficiencies, save money and provide better value to our consumers at the end of the day."
Today, 90 per cent of sales come through Canningvale's own website, but it is not a transformation that happened overnight.
Melbourne-based Prainito highlights an "automation first" policy that was embraced and continues to be ingrained in everything his team does. The strategy started small with the basics, and as the business grows and technology improves, new functions can be automated, allowing Canningvale to be more scalable with a reduced cost of doing business.
The company was able to reap the fruits of these efforts when the COVID-19 pandemic began. Factors like quality assurance (QA), minimum order quantities (MOQs), inventory management and more were embedded into Canningvale's NetSuite system, which helped navigate the supply chain disruptions in autumn 2020.
"For forecasting purposes, for ordering, supply chain management, we had to push out change what the system's parameters were to ensure we had enough time up our sleeve to make sure we were landing product in order to capture our sales," Prainito said.
"We were growing at about 100 per cent per annum prior to COVID. COVID hit and April sales were 400 per cent up year-on-year.
"It was incredible, and we were able to take Target's [cancelled] containers and swing them into our warehouse, and then fulfill the product and fulfill the orders that we had.
Having an automated system supported by the cloud also helped Canningvale catch the end of financial year sales period in June-July, and set it up for success for Christmas sales.
"I would say hands down that's the most important aspect that it really helped, and I'm sure for any business having to work from home, if you weren't on a cloud-based system, and you have to log into a physical server or anything to access your business documents, it's been a nightmare."
The transformation of Gold Coast-based chocolate maker Belgian Delights has been completely different. For a start, when the Verstreken family came out to Australia from Belgium and founded the company in 1987, they actually didn't make chocolate but rather imported the product that it sold at retail.
While Canningvale eventually made the switch from manufacturing to retail, Belgian Delights moved in the opposite direction in the mid-90s. After forging their niche as a specialty supplier to hospitality and predominantly five-star hotels like Hilton, Marriott, Sheraton and Hyatt, the family took the plunge to become a fully fledged chocolatier.
"The locally made stuff was affordable and at a good price, but the quality wasn't there or the consistency," Christophe Verstreken said.
In 2007, right before the global financial crisis (GFC), Belgian Delights changed tack and made two important decisions. It stopped supplying major department stores in order to focus on its core business, and Verstreken also made the call to adopt NetSuite to better organise the company's systems.
Before that he was running two separate systems that were out of sync, leading to mix-ups in areas such as labelling and nutritional information.
"Now I just do a report with all the data, and I drop it into the inbox in a folder, the printing software picks that up," he said.
"We've got a central database, what I call a single source of truth, and it's brilliant."
Verstreken describes the GFC as an unpleasant surprise for Belgian Delights as hotels cut back on giving away free chocolate to guests, but he decided to invest in a high-tech new chocolate-making machine despite the challenging environment.
"By 2009 everything was back to normal, profits were up again," he said.
With a big vision to produce better chocolate on a larger scale, he highlights NetSuite has enabled Belgian Delights to take a two-pronged approach to its systems, focusing on customer service on the one hand and more technical features of the trade on the other.
"All the information is there - traceability, best before dates too are super important of course," he said.
"If someone has a problem with the product, I just type in the code and see what other products we make with that batch within 10 or 15 minutes we've got full reports, we've got traceability happening, and that's the beauty of NetSuite."
2. Harness staff insights to get the best results, upskill and attract talent
It is all well and good to automate business processes, but one message from the webinar guests was that you will get less out of the endeavour if you don't proactively involve staff in the shift.
Prainito advocates clear accountability throughout the business so that staff can prepare for and support any major changes towards automation.
"Something I think is critical in any businesses is the people, so being able to keep that resident knowledge and upskill that into this new way of trading was where we started," he said.
"It was about creating an internal recurring process that looked at what we did as a business, and anything that was repetitive or a duplication, we took that aside and really had a critical look at it.
"Are we paying people to do quite menial tasks? That's not enjoyable for them. Customer service team members - their time could be better spent talking to customers, being on live chat, giving style advice."
He said Canningvale has taken a real bottom-up approach to automation by finding out what staff disliked doing.
"Day-to-day we had these conversation with the frontliners of the business, and the plan was there. They really easily prioritised what should be fixed, what should be optimised, where should we be more efficient, because it directly affected them.
"When you give your people a voice, they typically really take advantage of that in a good way.
"A lot of those lofty transformation programs will have been replaced by focusing on short term revenue generation, cost cutting, and empowering management to make decisions quickly to help motivate anxious team members in the new normal that we're in."
Prainito added training and recruitment is a major part of modernising towards more automation.
"We had to hire the competence, we had to find the right people to help us on this journey. And that wasn't one person, there's never a silver bullet to these sorts of things.
"You'll need to get consultants or advisers that know about what you're trying to do. For example, supply chain management and inventory management is very different to automating your order processing in an e-commerce environment."
As many will know though, recruiting talent is not always so easy.
"Find the right people to work with. Unfortunately it's been a little bit up and down, not very consistent," Verstreken added, noting it took him around 10 years to find the right person to integrate the desired shipping integrations with Belgian Delights' ERP system.
"Sometimes it's better to spend some more money but it's not always guaranteed you're going to get the better results. It's like with anything - align with the right business.
3. Be careful with integrations, be patient
Another key take-home from the webinar was the importance of choosing software add-ons that can be integrated successfully with an ERP solution such as NetSuite and the most successful approach will vary from business to business.
Two of the most important integrations for Verstreken have been a freight app and an e-commerce app. Adoption of the latter 1.5 years ago has led to a doubling of Belgian Delights' e-commerce sales, making it now account for 15 per cent of total revenue.
Unfortunately, he notes some app providers make a lot of promises but when push comes to shove they either can't deliver or they can but with extra charges.
"That's always a bit of a letdown for me but that's why I've learned to wait, be patient, listen, ask questions - a lot of them," he said.
"Don't just jump in the deep end like I've done."
Meanwhile, Prainito learned early on to be wary of custom integration.
"The thing we learned early on was, if you could get a what they call a native integration or an API [application programming interface] integration, those were much better and much more seamless, for want of a better word, than having to build a custom integration," he said.
"Anything custom today, and a few years ago, would present a whole host of challenges - a few being if you had to build something custom you were essentially kind of locked into that provider or that developer or that consultant.
"So rather than trying to get the 100 per cent right best thing which you can only do by having a custom integration, we looked to providers in the market that had an integration that could take us from a one out of 10 in automation to maybe a five or a six out of 10 in automation."
He says this approach allowed the team to rely on that app developer to want to innovate and make their tool the best it can be, and every time the ERP provider does an update you don't need to worry that your integration will break when that is released.
"Do really avoid custom integration if you can. Look at API integrations, native integrations, that's critical."
4. Push boundaries, diversify in increments, but remember your core business
The final piece of the puzzle is something ERP software can't do for you, and that is to be bold. For Belgian Delights, that has meant researching and upgrading to the best possible manufacturing machinery.
"Our machine was due for either an upgrade or a change, and an upgrade is just over $100,000," Verstreken said.
"We made the change to the next level machine which was four times the amount of money, so then you can go again to the next level...$1.5 million."
He said the company hasn't looked back since as the quality has soared compared to competitors with lower-grade machines.
"We're talking texture, flavour, smoothness; when you eat chocolate it melts in the mouth and you don't feel any particle sizes. That's a sign of good chocolate," Verstreken said.
"The beauty is we've tapped into the health food market, because they're not as price conscious, because it's niche," he added.
The latter point reflects the executive's approach to moving into new verticals but never losing sight of core competencies.
"In the good times you try and diversify a lot but you still have your core business," he said.
"It's good to have ancillary things happening, and dabble and learn, just in case the trend might go there for your product or the service you're doing. But for us, the core business is manufacturing - I need to keep the machine moving.
"I'm always trying, like Jordan, to push the boundaries, how can we improve things, how can we streamline things? And I think it's super important as a business. Otherwise, if you don't do that, you're moving backwards."
Prainito's vision for business transformation is evident in the company's successful pivot to online, but he too emphasises the importance on remembering what makes a company great in the first place.
"I think at a strategy level, I'd encourage businesses to be focusing on getting back to core - getting rid of the unnecessary weight, the bad habits that you can accumulate in the good times that we've had sort of prior to COVID.
"A way to do that is making sure there's really clear accountability throughout the business...having the best people in the best positions for them where they can execute well. Play to their strengths."Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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