Accommodating Growth

New York-based trend designer and manufacturer of fashion bags, Yak Pak, may be young -- its origins only reach back to 1989 -- but the company has already endured and conquered many business and IT issues challenging growth-hungry small and mid-sized businesses.

In addition to the YAK PAK brand, the company designs, produces and markets under exclusive licensing agreements all Dickies, MTV, Penguin and Wrangler bags. All products are designed at the YAK PAK headquarters in New York City and are manufactured at its wholly-owned factory in El Salvador. Yak Pak's brands reach consumers through one of three channels: e-Commerce, wholesale or retail. Key retailers include Pacific Sunwear, Sam Ash, Tilly's and Urban Outfitters.

Growing Pains
Yak Pak was struggling to accommodate a 35 percent compound growth over three years with a financials package that reached its growth limits and without a formal warehouse and inventory management system. "Our FoxPro-based system would have basically imploded after one more year of growth," says Richard Haugen, COO of Yak Pak.

In fact, the company had seven servers handling core business processes such as e-Commerce, EDI, shipping and accounting. Some of its more serious dilemmas included inventory turns at 13 times per year (most companies are in the five-times-per-year range); 15,000 ship-to
points increased to 75,000; and an increase in active customers from
800 to 3,600.
The company realized that without new systems, it was going to spend a lot of money and man hours just to maintain the status quo, not too mention nothing left to fund future growth. "Our IT staff spent almost 60 percent of its time just maintaining the system and ensuring communication between servers," says Haugen.
In tandem with plans to relocate its distribution operations from Brooklyn, New York, to a modern warehouse facility in the less expensive Houston, Texas,
Yak Pak began shopping around for an affordable business management software.

Enterprise Strength
Yak Pak was the first consumer goods firm in its size class to stumble upon the American Express Alliance Program -- American Express Tax and Business Services' initiative in partnership with SAP America and IBM to provide small and mid-sized business with easy, affordable and powerful industry-specific business management technology solutions.

In January, Yak Pak implemented SAP Business One - The American Express Edition for Wholesale Distribution: a key component of The American Express Edition Supply Chain Suite. It was developed to improve and streamline business owners' financial management and distribution operational functions, with a roadmap towards RFID and other emerging technologies. Yak Pak deployed the solution in just four months, concurrent with the relocation of its warehouse to Texas.

Bagging the Benefits
Within days of implementation at the new warehouse, orders were being shipped without a glitch, despite having mostly inexperienced staff on hand. "SAP Business One -- The American Express Edition has absolutely transformed every major business process in our company," says Haugen.

Yak Pak realized the following benefits since the roll out of SAP Business One -- The American Express Edition:

• Reduced EDI and shipping charge backs

• Mispacked shipments down 70 percent. "We saved $100,000 just here," says Haugen.

• Manpower to pack orders decreased 20 percent.

• Yak Pak now ships 98 percent of its orders complete versus 92 percent complete before implementing SAP Business One - The American Express Edition.

• Online customer service costs were cut 60 percent.

• Sales reps increased selling time 32 percent.

• Total shipments increased 20 percent in the first month since implementation alone. By the end of the second month they shipped 20 percent more product verses the previous year.

• The largest benefit, according to Haugen, is that inventory turns have continued to improve due to better inventory management made possible by the American Express Edition.

Yak Pak also reduced the number of servers handling its core processes from seven to two. "With this new system, I have complete visibility into every aspect of our supply chain," says Haugen who is based with Yak Pak's Brooklyn operations. "Our business is no longer dependent on where our computer is located."