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Colombia ERP Business
Requirement Gathering
Prepared By Agustin Ramirez
19-12-2012
Context & Overview
2
Rich de Colombia SAS (RdC) is the third largest Rich’s operation in Latin America, with annual sales of around $15M usd. The growth rate expected for the next 3 years indicates that RdC will require a robust back office including business processes and ERP System. RdC is currently using a local small ERP (SIIGO) to support its back office operations and was implemented in early 2010; the local system implemented is mainly Finance and Accounting software with some Sales and Distribution functionality, however is not as robust as the leading ERP systems available in the market. The level of business growth during the last 2 years is adding complexity to RdC operations; new customers mainly in the ISB channel will be added and new product codes will be introduced into the Colombian market, this will require more control and enhanced ERP functionality to support the Demand Fulfillment business processes .
Customers & Sales
3
• Estimated total sales in 2012 of $12M USD.• Estimated total sales in 2015 of $25M USD• 35 Customers (Sold-to)
– ISB – 4 customers (Olimpica, Carrefour, Exito, Makro) – Major supermarkets in Colombia– Distributors – 3 customers (TEAM, Santillana, Calsa)– Key Accounts (Major Independent Bakeries) – 25– Wholesalers – 3 (only Flavor Right skus are sold to them, 7 FR’s skus)
• 300 Ship-to locations for the 35 customers (mainly stores).• New ship to locations are created on demand requested by the Sales team.• 600 sales orders per month, 5 lines average per sales order.• 600-700 invoices per month.• Electronic invoice is not a mandatory government requirement.• Distributors customers are invoiced in USD but the AR collections are in COP (Colombian
Pesos) using the exchange rate of the day of customer’s payment. • Key Accounts customers have a 6% commercial discount applicable to the invoice total
amount.• All the sales operations are with credit, 30 – 45 days.• Financial discount of 1% is applicable if the customer pays in advance during the first 8
calendar days of delivered product date.
Sales – in country sales zones and distribution coverage
4
Centro Zone Antioquia Zone Barranquilla Zone
Santanderes Zone Eje Cafetero y OccidenteZone
RdC Sales & Gross Margin Jan – Oct 2012
5
Cases Net Sales (Millions COP*)
Gross Margin
Average Exchange Rate: 1USD = 1,800 COP (*Colombian Pesos)
Product Sales Mix
6
•40 SKU’s, Product sales mix: 80% Toppings (Frozen) 20% Others (Dry - fillings, Icings, premixes, etc.)
Product Sales Mix (Acum 2012)
•RdC does use the same FG product codification as RPC does.
Sales order
• Sales orders are received in a daily basis by phone and email from Sales team and from the customers.
• For ISB customer, the order is received by EDI but manually integrated into the system.
• 600 sales orders per month, 5 lines average per sales order.• Orders typically entered at 3 pm every day.• Every day RdC sends to the 3rd Party Logistics (Colfrigos) a consolidated file with the
orders which has to be delivered.• With this information Colfrigos pick the product and prepare the trucks, then they
confirm to RdC the product loaded in order to prepare the invoice for the customer.• The invoice is printed in the RdC office and then is sent back to Colfrigos in PDF
format by email.• Colfrigos do the distribution and product/invoice delivery, and get from the customer
the delivery evidence that is used for the Finance AR team to support the collections.• There are not back orders, a new order is entered for backorders.• All orders are CIF, direct ship orders to the customers, delivery date is most of the
time in 24 hrs, few routes takes more time, from 2 to 5 days at the most.
7
Returns and Cancellations
• Customer returns product unexpectedly or damaged to the warehouse with a return note in the invoice. Product is added to inventory.
• Customer Service send a notice to AR to make then aware of the return and apply the adjustment during the collections process.
• A sales order can be cancelled before its been invoiced, inventory its not affected at this point, no additional notification to Finance is required.
• An invoice can be cancelled during the current month, a reverse movement in the system is required to do not affect inventory and receivables, this has to be approved by Finance Manager.
• An invoice can be cancelled during the following month, but in this case a credit memo has to be released to apply the credit to the customer. This process also has to be approved by Finance Manager.
• Additional freight charges are incurred when a return took place.8
Samples and Free Goods
• Samples sent to Customers. This gets treated as an order. Although these are no-charge orders, there is a fiscal rule that the price must be stated on the invoice so government can collect tax on the goods. But customer is not charged for the product.
9
Accounts Receivable
10
AR as of October 2012
past due AR target = less than 10%
1 to 30 Days
31 to 60 Days
61 to 90 Days
More than 90 Days
Current
Sourcing
11
•RdC does not have local manufacturing facilities
•RdC sources their finished products from US, México and Colombia
•90% are imported products•10% are locally sourced from Colombian producers
• Origin of the imported products (trade transactions in USD)– 95% from US– 5% from México
Around 15 -16 containers are imported per month.
Supply Planning is based on Demand planning (forecast) for the next 3 months, including inventories level and suppliers lead times analysis.
Sales Orders to import products from US are placed weekly in SAP by the Latin America CS&L team based in México.
Local Vendors & Accounts Payable
12
•50 vendors including FG suppliers and back office/admin suppliers
•250 indirect vendors (indirect vendors which do not create an account payable but all transactions with them has to be reported to the Fiscal government office, this is mostly for travel expenses).
•Most payments are made by electronic transfer, very few checks are created in a monthly basis.
•Around 50 payments per month.
•The payment term is 30 days.
•2 bank accounts – BanColombia (one in COP Colombian pesos and one in USD)
General Ledger
13
•RdC accounting procedures and journal posting are based on the PUC (Plan Unico de Cuentas or Unique Accounts Plan) which is a local accounting regulation.•Chart of accounts is different than RPC ones.•RdC chart of accounts must comply with PUC requirements.•In order to present Financial reports to RPC, RdC do the match manually and in excel every month.•Basic Cost center definition, budget by individuals for sales and SG&A by department.•Basic profit center definition.•Financial RdC calendar is a monthly calendar.•All transactions are reported in COP, for those in USD are reported at the exchange rate of the day of the transaction.•There is just one entity: Rich de Colombia, S.A.S.•Financial reports: trial balance, aging reports for AR & AP, P&L’s at Gross Margin level, inventory and sales reports are required.•P&L’s are reported to RPC in Excel.•Payroll interface will be required.
Fiscal
14
•Value add tax (IVA) is 16% applicable to all of our products•Colombia localization requires 3 more tax id’s:
– Rete IVA– Rete Fuente – Rete ICA
•These tax conditions are applicable at the invoice depending on customer specific data, it mostly depend on how the customer was set up in the government tax office (DIAN)•These tax conditions are specific % applicable to specific rules based on the amount of money invoiced.•Additional tax regulation requires to RdC to report on a monthly and detailed basis to the DIAN all the transactions (expenses or payments) indirectly made mostly for travel expenses; ex gasoline, meals, hotels etc.
Fixed Assets
• Fixed assets – Finance run a calculation of the depreciation monthly and book the number every month.
• Straight line depreciation – ex: IT equipment is 4 years – monthly at 1/48 per month - starting with the next month.
• Book and tax are the same depreciable life. • Fixed assets may have residual value.
15
Demand & Supply Planning
16
Distributors
Supermarkets
Wholesalers
Supply Planning
17
Product is received the third month, to cover fourth month demand
Monthly sales distribution
Week 1 20%Week 2 20%Week 3 25%Week 4 35%
Week 2 Week 3 Week 4
2 Cont 2 Cont 3 Cont 4 Cont
Month 3
* Cont = Conteiner
Week 1
Week 1
Month 1 Month 2
Week 2 Week 3 Week 4 Week 1 Week 2 Week 3 Week 4
Local Products (Fillings)
Deployment to distribution
centers
20th – 25th each month
Month 1 Month 2 Month 3 Month 4
Ordered after the forecast consensus (Sales & Logistics) meeting with a three-month horizon
Imported Products
Ports where RdC imports product
18
Route Port (Barranquilla / Santa Marta) – Bogotá (1,000 km)
Route Port (Buenaventura) – Cali (122 Km)
Warehouse & Distribution
19
Barranquilla:Warehouse and Distribution hub for Costa zone (Port)Medellin:Warehouse and Distribution hub for Antioquia zoneBogotá:Warehouse and Distribution hub for Centro zonePereira:Warehouse and Distribution hub for “Eje Cafetero” zoneCali:Warehouse and Distribution hub for Occidente zone
Warehouse and Distribution is a 3rd Party service:•Warehousing: Colfrigos (95% of the operation) and Frigoper (5% of the operations)•Distibution: Colfrigos (90%) and FrigoAndinos (5%), Others (5%)
Warehouse and Distribution
• Distribution costs are defined based on the size of the truck and distance.
• Routes and route scheduling is clearly defined but managed manually in excel.
20
Inventory Management
• FG inventory is managed by Colfrigos• Daily inventory conciliation between RdC and Colfrigos'
systems is made in order to keep inventory accuracy. • The conciliation is made manually based on daily
inventory reports from both systems.• The inventory control has to be made by warehouse (5
different locations around the country).• All inventory transfers from and to warehouses has to be
made through the system.• There is frozen inventory and dry inventory, 80% of the
inventory is frozen.
21
Organization Chart / Current and incremental 2013 headcount
22
Coordinador DespachosC. Claves
Carlos Polanco
46
?
PasteleroExito
5
PasteleroCarrefour
5
PasteleroOlímpica
5
Gerente Servicio al Cliente y Logística
Camilo Torres
Gerente FinancieroAdministrativaPatricia Conde
Gerente MarketingNuevos Proyectos
Vacante
Gerente Nacionalde Ventas Rich´sRene Rodríguez
Gerente Nacionalde Ventas Presto /
Flavor RightAlbert Bravo
Gerente Nacionalde Ventas Cadenas de
SupermercadosBibiana Montero
Gerente de ServiciosTécnicosVacante
Gerente ComercialVenezuela
Raúl Ramírez
Planeador de Demanda Abastecimiento
Iván Pedraza
ContadoraGinna Rondon
EjecutivaC. Claves
Paola Mejía
Asesor Técnico Olímpica
Roger López
Coordinador DespachosCadenas
Romulo Rico
Importaciones / Cartera
Diana Valbuena
Auxiliar de CarteraY Administrativo
Vacante
Asesor TécnicoCuenttas Claves
Jhon Eduar Cortes
Asesor TécnicoCuenttas ClavesAlejandro Sierra
Asesor TécnicoCuenttas Claves
VictorAraque
Asesor TécnicoFlavor Right
Adrian Garcia
Temporales Temporales Temporales
? ?
Gerente GeneralEver Varón ?
Auxiliar ContableCarolina Vieira
Asistente ComercialVacante
Organigrama Actual(Vacantes)
Telecomm Infrastructure
23
InternetFastEthernet Link4 MBPS
Fortigate 55B
Switch CISCO 24 ptos
Modem NTU
Gateway de VoIP
PBX Panasonic3X8
Multifuncional HP
FileServer SIIGO Server
VPN to RPC- Email
VPN to Mexico HQ-DNS-VoIP
Access Point
4 Troncales analog
ColfrigosVPN to Colombia Office from Colfrigos office in Bogota-Access to SIIGO by Terminal Services
RPC
México
Colfrigosin Bogota
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