Taking off from SMB

Sometimes the way to grow a small to mid-market business (SMB) is to actually turn business down. Tumi, who was about a $100 million company five years ago, and has aspirations of being a $1 billion company in another five years, has turned down a significant amount of business to protect the integrity of its brand, according to Jim Walsh, vice president of information technology for Tumi.

"As you open globally you must really make sure you're positioning your products in the right fashion," he says. Selecting the right partner and placement is essential here; the presentation must be consistent from its own stores to department and specialty stores, across geographies. These high standards, along with the superior quality and innovation of Tumi products, are supported and driven by effective business processes and efficient technology for success.

The Products

Tumi is a niche product, designed and fashioned with the traveler in mind. Walsh notes that the customer who buys Tumi owns three or four bags; he or she is the traveler who wants to take their suit out of their bag and have it not be wrinkled. The products range from luggage, business cases, golf bags and backpacks to handbags and wallets. Other accessories include PDA, phone and card cases, key chains, pens and pads and travel essentials, like electrical and modem adapters. Tumi has leveraged findings from the airline and automotive industries for smaller and lighter materials in its products, and tracer technology in many of the items allows for lost products to be tracked.

Back in 2001, when Walsh joined the company, Tumi had an outdated ("legacy") system that could not handle the expansion Tumi was undergoing. Fulfillment rates were not being met at a high level; the company wanted to move into e-commerce; it was moving into Europe for warehousing and distribution. Additionally, it was starting to import goods from overseas manufacturers. "All these challenges started to bundle up and there was an open IT list that was already three years long," explains Walsh.

Wednesday used to be "report" day, where "60 inches" of paper would be coming out of every printer. Walsh explains there was no real-time visibility -- it was very reactive-- nothing was really being accomplished through this process.

As Tumi looked for solutions and started laying out what features they required, many of the smaller solutions would say that it was "possible" that a particular goal could be achieved through their technology. Walsh was not about to commit to "possible." He wanted a proven solution, which turned out to be SAP.

"Obviously it is a big jump for a company Tumi's size to say, 'hey, let's take a look at an SAP product,' but we kept coming back to the way SAP handled the process," explains Walsh. He continues, "SAP understood the complexities of a company that was just starting to grow, and with its track record we felt that we were making the decision that this will be the last software choice Tumi will ever make."

Walsh mentioned that he had heard the typical "horror" stories about the logistics of implementing a big system. But he says, it turns out that the more you put into the system the better results you are getting on the back end quickly. In fact, "go live" day was basically without a hiccup and because of the structure of and team in place at Tumi, there was no resistance to the change. He says that the "switch" went on, it was live and waiting for the customary problems -- none ever came up.

Sponsorship And Teamwork

The initiative was a cooperative effort among all factions of the business and fully supported by the executives, which is critical to success, says Walsh. He says Tumi has a very good management team in place. "There are no department rivalries under these walls, which is a rarity." He also emphasizes training and communication. "Keep your user-based community very informed and very well-trained."

Hard results were easily measured. Inventory levels were down 30 percent; sales increased 25 percent; higher fulfillment rates; order volume increase by 25 percent (no staffing increase); wider and more diversified customer base (e-commerce); month end closing reduced by five days; increased visibility to inventory control; managed expenses across channels; higher visibility to demand changes; real-time analysis and reporting; improved accuracy and control over purchase orders; complete vendor compliance; increased pack/ship accuracy and so on. A particular example of this comes from the warehouse management arm of the business. Within the first year, it achieved 99.98 percent accuracy at the serialized level.

Perhaps the best soft result is the ability for IT to do its rightful job. With this system in place, the growth of the company will not have a negative effect on the department.

"The last five years have shown that it [Tumi] will grow from $100 million back then to $250 million to $500 million and to a $1 billion company, and no one is talking about what the impact on IT will be," says Walsh.

Ultimately, the role of IT is to recommend how something should be processed. Now the business channels can turn to IT with requests that will help them become more successful. With this and future growth, Walsh says that now it is simply a matter of rolling out the process, not launching an entirely new initiative.

Beyond SMB

Tumi just concluded its first year of a "value enhancement" project, in which it revisits each process over and over again to find out what has changed and where it can cut down lead times. For example, Tumi will partner with vendors for repetitive manufacturing and share the information that comes from forecasting. They turn out better and better forecasts because of the new system, and sharing with suppliers lets Tumi procure common components. Tumi is able to hold off on the purchase order until almost the last minute -- resulting in lower inventories, getting the right products, in addition to fewer out-of-stocks.

Realistically, Walsh thinks the company is only at about 60 percent of the system's capability and it is still finding ways to add ROI. Although Walsh still goes to tradeshows and sees what else is out there, the latest features and newest technology, it keeps coming back to: "Was that the right decision we made in 2001? -- Absolutely," he affirms. He occasionally fields calls from others in the SMB space who are seeking direction with their initiative. He is still surprised when he hears them say they are revisiting the issue every three years because their system is not keeping up.

The way an SMB can benefit when deciding on a system or process is to "leverage what has been done." Take the proven vision from the big companies with the big budgets. Walsh explains, "I won't do anything unless I see that it has been proven somewhere else. This is why small companies can leverage big systems." Walsh also suggests trying to be one step ahead of the problems, and if one does arise, react to it quickly. "Don't band-aid anything -- if you have an issue, understand what it is. Speak with all those involved, come up with a resolution and make it a solution that will last."

Walsh also urges business leaders not to focus on the "little headache areas." Have some "firemen" to deal with this, but stay the course to take the company to the next level. Don't get sidetracked -- make sure there is always something being accomplished.

"You can definitely, with a big system, get results if you just do the work.," he asserts. And to that next level that Walsh speaks of, Tumi is certainly on the way there.

The company's 65th store -- up from a total of five in 2003 -- will open next month in Rome.