SAP must deliver shareholder value!

Italtile Ltd reviewed group results for the six months ended 31 December 2014 Final as at 13 February 2015:
Steven Freemantle | Mar 11, 2015
  • System-wide turnover up 19%
  • Trading profit up 21%
  • Headline earnings per share up 27%
  • Dividend up 33%

Chief Executive Officer, Nick Booth says:

"The improved performance reported is primarily attributable to continued implementation of the business optimisation programme in key areas including IT systems, human resources management, the supply chain, and in-store efficiencies, to enhance the customer shopping experience."

A part of Italtile’s business optimisation journey began with an SAP Health Chain check in February of 2014.  The decision to proceed with SweetThorn’s Business Maturity Optimisation (BMO) programme with two of Italtile LTD’s suppliers (ITD and Cedar Point) was quick and easily justified by the value opportunities unpacked in the Health Check.

The BMO programme was intense and focused, and underpinned by a strong desire of both businesses to change, understanding that SAP can be used to drive and sustain significant supply chain improvement.  There were many motivators, one of the simplest, yet most poignant, was the realisation that using spreadsheets to drive supply chain decisions is hugely time consuming, risky and down-right soul destroying! (when compared to the power of SAP).

The spreadsheet driven stock replenishment tools were quickly switched off, resulting in all stock replenishment activity being brought into SAP.  By doing this, ITD and Cedar point now had visibility of their supply chain, from customer to supplier, all the while using SAP to drive and validate stock replenishment decisions.

In both organisations the introduction of daily routine to meet customer expectations and manage supplier performance, has been entrenched.  Each company begin their day, every day, without fail, responding to SAP’s recommendations to keep demand and supply in balance. This is done in a very short period of time (most days), a far cry shorter (and more accurate), from the days, if not weeks it used to take using spreadsheets, gut feel and guess work.

An important step in SweetThorn’s BMO programme is the instituting a “basket” of inventory performance measures.  Often stock measures are very one-dimensional: total stock only, or turns only or days of cover only.  Using standard SAP reports to track and measure inventory performance; SweetThorn was able to assist Italtile’s ITD and Cedar Point to take control of their inventory at a day-to-day operational level.  Italtile’s half-year financial results have shown that driving 5 basic, operational inventory performance measures will ultimately have a very real and tangible impact on organisational performance indicators that excite Shareholders.

We are proud and excited to be continuing our engagement with the next phase of BMO roll-out to Italtile’s stores (Click here for a January 2016 update: Italtile investments, optimisation paying off).  Our Business Maturity Optimisation programme, ITD and Cedar Point have demonstrated to the Italtile Executive that SAP can be used to make for a superb customer experience, and ultimately deliver shareholder value.  Through-out the programme we were continually thrilled by ITD and Cedar Points extremely plucky, “let’s-take-on-this-beast” attitude.  An attitude that prevails at the stores we are working with now.  Italtile shares should definitely be on your shopping list!

Click here for an Italtile earnings press release: Engineering News February 2015

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