Wheels of Fortune
Fads, trends and holidays aren't the most reliable tools to predict accurate inventory levels, so for many game manufacturers, a roll of the proverbial dice determines success. Tired of playing the guessing game, New York city-based Pressman Toy Corporation, the third largest game manufacturer in the U.S., was determined to find a better way to manage its working capital, increase forecasting visibility and improve inventory levels.
In early 2003 Pressman went live with an SAP deployment to streamline its financial and operational processes. The company currently uses mySAP Financials, including modules for accounts receivable, accounts payable, general ledger and fixed assets. With the help of Answerthink, a business and technology-consulting firm, Pressman spent several months assessing its requirements before developing a template for the design and functionality of mySAP Financials. As part of the software sales process, Answerthink worked with Pressman to develop projections for how the implementation of SAP solutions would generate ROI, implement financial best practices and help the company streamline its entire business process.
Alan Novak, director of information systems for Pressman, provided a set of parameters, products, customers and vendors that related directly to the company for piloting and testing purposes.
"We didn't want to see how it works at a bicycle company," says Novak. "We wanted to see what an order would look like with our products."
Pressman products include recently released table versions of "Jeopardy", "Wheel of Fortune", "Who Wants to Be A Millionaire" and a line of Scooby-Doo games and puzzles. In 2002, Pressman produced a line of games and puzzles based on the wildly popular "Spider-man" movie and in 2003 the company will unleash a line of licensed products based on "Hulk-The Movie."
Rapid Results
According to Novak, mySAP Financials is starting to eliminate spreadsheets for Pressman. While the company has not tapped into a more graphical, executive information system, Novak says he is still able to obtain a substantial amount of drill down capability.
"What's really great about SAP is that almost every screen hot links to other information," says Novak. "If you're looking at an accounting document, a sales document or customer invoice that you're paying and you want to know if it was paid, you can quickly navigate through and find out what it's for."
Mike Koscinski, vice president of finance at Pressman also notices a significant change due to the SAP tool and says the company can now address problems in accounts receivable much faster than before.
"Since we can get to the problem accounts faster we have seen a drop in our past dues," says Koscinski. "Our client base has stayed the same and our accounts receivable in total has been proportionate to our overall sales."
What has changed, says Koscinski, is that Pressman now has better information and better reports to access and manage receivsbales.
"By process of elimination, if everything else stays the same then the new technology is what enabled us to more effectively manage our working capital," says Koscinski.
Logistics Leap
The second phase in Pressman's strategy targets a streamlined protocol in logistics. With the help of SAP the company deals with problems before they occur.
"The biggest benefit we're looking for from the logistics phase is to be able to manage our inventory better," says Novak. "We're a domestic toy manufacturer, which is rare in the toy industry. We're competing with people who are only importing, so we have to keep our inventory lean. There is no way to keep track of thousands of product numbers and inventory levels without some type of integration."
When selling to retailers, a critical step includes an EDI (electronic document interchange) system where retailers send purchase orders and in return, manufactures send notices about their shipments. According to Novak, the EDI interface with SAP provides a great deal of visibility.
"You can see right away where the problems are with orders," says Novak. "If there is a discrepancy on price or terms, ship date versus inventory or production plans, as soon as the orders come into our system we can see the immediate impact onto our production plan and the MRP area."
The Big Gamble
Novak views the toy industry as "one big gamble" because like, many companies selling to retailers, a majority of selling activity hinges upon the fourth quarter.
"We're sitting here in June and sales are up. Should we be happy? Unfortunately, we won't know until October or November. Our challenge is to make sure we have enough of the right stuff when the time comes," says Novak.
Pressman did not invest in SAP, according to Novak, because it would "make things go faster" but because it encapsulates the best business practices. It has enabled the company to change operational standards first and foremost while learning how to tackle issues in a more streamlined approach that makes economical sense.
"Everything is integrated, which is a really nice feature for a company of our size," says Novak. "We have limited manpower, and the toy industry is a very competitive industry so we're not heavy on personnel. We rely on our systems to do a lot of work, and so far we have been thrilled."
In the future, Novak will keep an eye on his industry's "tightening supply chain," which will ultimately force more manufacturers to participate in a rising amount of electronic marketplaces.
"Now we have the confidence in knowing that we have SAP behind us for whatever we are going to need in that area," says Novak.