Galamart Uses 1C ERP To Reengineer The IT landscape of Enterprises in Russia and China.
Go to description of ERP implementation in China
The transformation of its supply chain, and the launch of new sales formats and channels required a comprehensive overhaul of Galamart's IT landscape. The goal was to replace multiple disparate systems with a unified, modern platform.
At the heart of the new IT landscape is 1C:ERP, a powerful solution that has consolidated the functionality of five legacy systems. This approach helped to centralize inventory management, logistics, and import operations, as well as automate order fulfillment, stock reservation, and delivery processes. The system now handles an impressive 400,000 transactions per day.
Established in 2009, Galamart has grown into a leading home goods retailer in Russia, operating over 500 stores across the country. With a vast product assortment exceeding 30,000 SKUs, Galamart caters to a diverse range of household needs.
Galamart boasts a robust supply chain and logistics infrastructure, ensuring seamless product delivery and customer satisfaction. The company maintains a strong presence in China, with five offices, contract manufacturing facilities, engineering divisions, a distribution center, and partnerships with 3PL providers.
Stuck in the Old Ways
Driven by market demands, Galamart embarked on a comprehensive transformation, revamping its supply chain, launching new warehouses, restructuring its logistics infrastructure, and establishing product sourcing from China. At the same time, the company expanded its sales channels, introducing fixed-price stores and hard discounters, strengthening its online presence, and launching new brands and private labels.
This extensive modernization highlighted the need for an overhaul of their IT infrastructure, which at the time comprised 16 separate systems. Several processes relied heavily on manual labor by specialized personnel. Additionally, over the years, a multitude of unconnected microservices had been created, and the IT specialists who could support these services were no longer available.
The heart of Galamart's material management system was hopelessly outdated. Worse yet, their existing IT tools were a jumbled mess, making integration with the new logistics system a logistical nightmare.
This fragmented IT landscape acted as a major roadblock for Galamart's ambitions. Their current setup simply couldn't handle the increased product flow, faster data processing needs, or the modernization they craved. In essence, they'd hit a growth ceiling.
The answer was clear: a single, unified platform. This streamlined solution would empower Galamart to adapt to changes with agility and scale their business for the future.
Selecting the Right System
Faced with the complex task of selecting an ERP system to streamline operations, Galamart partnered with their trusted IT advisor, Korus Consulting, who has a proven track record of success in implementing retail and wholesale IT solutions.
"We collaborated with Korus Consulting to launch the ERP's material management solution," explained Pavel Kazanovsky, CEO of Gala Center Group of Companies. "Their expertise in this area, along with their deep understanding of our business gained through previous collaborations, gave us confidence in their ability to leverage our competitive advantages."
At the heart of the system lies the robust 1C:ERP solution. The key challenge was selecting the right configuration. While initially considering 1C:Trade Management, Galamart quickly recognized the need for a comprehensive ERP solution to automate management accounting and financial processes within a unified system. This would not only support product flow but also encompass financial management. Additionally, with a complex multi-entity structure, the project aimed to streamline and consolidate operations under a single accounting framework. 1C:ERP offered the perfect solution for achieving these goals.
Navigating the IT Maze: Unraveling Galamart's Complex IT Landscape
The project's objectives were clearly defined:
- Automate operational and management accounting using 1C:ERP.
- Unify and consolidate accounting processes across the company's business units.
- Automate product movement and logistics operations, considering the unique aspects of the business and supply chain.
- Reduce the total cost of ownership associated with multiple IT systems and integrations.
The project commenced with a thorough examination of Galamart's IT architecture and processes. The primary challenge lay in the vast number of information systems, the lack of documentation for many of them, and the outdated state of the primary accounting solution, which hadn't been updated in around 17 years and had numerous modifications and workarounds. As a result, the Korus Consulting team, in collaboration with Galamart's IT department, had to meticulously "excavate" the IT landscape to fully understand the intricacies of each process.
Following the comprehensive analysis, the project team embarked on the next phase: modeling the prototype solution. With a clear vision in hand, they crafted a detailed technical specification that served as the blueprint for development.
Unlike the traditional waterfall approach, which progresses sequentially through phases of analysis, design, implementation, testing, integration, and support, the team adopted an agile methodology. This meant breaking down the development process into manageable process blocks and releasing incremental improvements every two weeks.
This iterative approach allowed for continuous user feedback and refinement. Instead of waiting until the end of the project to address all feedback, the team addressed critical issues in each release. This ensured that the solution remained aligned with user needs and expectations throughout the software development cycle.
A Comprehensive Rollout and Explosive Launch
Galamart embraced a comprehensive Enterprise Resource Planning (ERP) system, transforming a wide spectrum of business functions. This powerful platform now centralizes critical processes, including pricing, both domestic and import purchasing, certification, labeling, product movement, wholesale and retail sales, claims handling, cost calculations, and centralized data management.
The system also automates fulfillment, reservation, and delivery for seamless integration with e-commerce platforms and marketplaces.
"The project presented unique challenges in internal logistics, particularly in automating multi-leg transit order chains," explains Vasily Malykhin. "Given Galamart's extensive network of stores, orders are assembled at warehouses considering multiple delivery routes. These routes can involve material transportation from point A to point B via point C or D, with some cargo repackaged at each stage and some remaining unchanged. Now, this entire chain can be tracked and controlled within the ERP system."
The new system empowers Galamart to fulfill complex orders, initiate deliveries from various warehouses, and automatically generate the corresponding transfer orders.
Integrating the 1C:ERP system with 1C:Retail, 1C:Document Management, 1C:TMS, and other solutions was a significant achievement.
With the development phase complete, the project team meticulously prepared for the system's launch. This involved data migration planning, rigorous load and end-to-end testing, and comprehensive role configuration.
The entire project of 1C:ERP implementation took 15 months, with nine months dedicated to solution development and modification and six months for the pilot phase. The system went live in a "big bang" approach, meaning both operational and financial aspects were launched simultaneously.
Korus Consulting's experts took the lead in automating day-to-day operations and management accounting, while Galamart's IT team handled the ERP integration electronic document exchange (1C:EDI) and 1C:Accounting.
Now at the core of Galamart's IT infrastructure, the system seamlessly manages product movement and logistics operations, unifying processes across key business units in Russia and China under a single, streamlined platform. Korus Consulting's specialists continue to improve the solution and provide ongoing support.
ERP Implementation in China
The ERP system implementation in China was conducted remotely, with primary communication centered around the company's office in Yiwu, a major international trade hub and market known as the "World Supermarket." This is also the location of the main warehouse where goods are consolidated before shipping to Russia. While Galamart also has offices in Guangzhou and Shenzhen, their involvement in the project was less extensive.
"The five-hour time difference between Moscow and сhinese cities necessitated aligning our work schedules with those of our colleagues from China," explains Vasily Malykhin. "Due to differences in business processes and accounting principles, we initially faced challenges in determining whether to implement the solution across a single database for all company business units or in silos. After careful analysis, the decision was made to adapt the functionality and integrate the Chinese offices into a unified system, ensuring complete data and process centralization. Today, the business units in China operate seamlessly within 1C without any functional limitations."
IT specialists customized a new VAT calculation mechanism, modified pricing calculation tools, and enhanced functionalities related to goods export operations in accordance with PRC legislation.
The 1C:Enterprise platform proved adaptable to the unique aspects of PRC legislation and business practices.
A significant portion of the customizations involved addressing logistics complexities. Galamart procures goods from factories and reserves production capacity for up to half a year or a full year. Finished products are shipped in batches to the consolidation warehouse in Yiwu and then transported to Russia.
The project team task was to automate the tracking of goods movement by containers, ensuring the transparency of the supply chain and traceability of costs from sourcing to sales. This feature empowers the network to maintain optimal cost efficiency.
A dedicated automated workstation was developed to handle supplier orders, container assembly, customs documentation, and other import-related tasks.
During the launch phase, Galamart's IT team members traveled to China to provide on-site support and assist the Chinese office in implementing the system.
While language barriers sometimes posed challenges during user training, everyone gradually adapted to the new system.
Reaping the Rewards: A Unified Digital Landscape for Galamart
The project's primary challenge stemmed from Galamart's vast and diverse operations, encompassing product manufacturing, logistics infrastructure, and a multitude of sales channels. Integrating these intricate aspects into the solution's architecture was crucial to preserving the company's competitive edge and minimizing the system’s total cost of ownership. Prior to the implementation, business processes were fragmented across disparate databases and systems.
Extensive customizations were required to enhance ERP mechanisms across various domains, including material management, international operations, and procurement.
The project's unique characteristics included the sheer volume of tasks, the company's expansive global footprint spanning multiple time zones, and a large project team that peaked at 100 members.
The system is designed to accommodate 650 concurrent users and currently processes approximately 400,000 shipment records daily (data as of December 2023). The implemented 1C:ERP has replaced five accounting systems, providing Galamart with a versatile tool that can be continuously refined to align with evolving business needs.
Management can now access reports and quickly make rapid decisions based on current and relevant information. The system has unified company business units in Russia and China within a single digital environment, streamlining business processes and enhancing transparency.
A Strategic Choice with Tangible Benefits
"Putting in the 1C:ERP system was definitely the right move for us." asserts Pavel Kazanskiy. "It's brought everything together, streamlined our accounting across the company, and given us much faster access to the information we need to make good business decisions."
