The Management of Complexity as a Business Strategy:
The Case of the ARNEG
Knowledge-based Quote-to-order Sales Configurator
Alberto Bortolin, of DATA CONSULT Sistemi Informativi, describes why the
ARNEG GROUP, the Italian-based multi-national and one of the world's largest
manufacturers of commercial refrigeration and shelving units for supermarkets,
chose to implement their quote-to-order sales configuration system using the
XpertRule eSales Configurator.
An Italian version of this case study is
available on request.
What do people associate with the word "Supermarket"?
A vast choice of consumer products, price wars, loyalty cards,
busy shoppers, filled shopping trolleys. Very few of us however
stop to think about all the essential equipment and fittings inside
every supermarket we visit; which enable us to see, evaluate and
buy their diverse range of products. If we turn our attention to
the hundreds of meters, if not kilometres, of supermarket aisles,
we can begin to see the huge variety in designs, sizes, materials,
display styles, capacities and lighting: From shelving systems
that display fresh and packaged food, to glass counters that display
perfumes and jewellery; from racks for the in-store bakery, to
racks for displaying a variety of clothes and footwear; then there
are the refrigeration units; and here again there is no lack of
variety; from special cabinets for displaying dairy products to
self-service food counters, fresh meat and fish counters, frozen
food units, … we can obviously go on and on. And of course
at the end of it all there are the checkout counters, through which
everyone must pass. If we think of all these examples on our next
trip to the supermarket, we could certainly spend plenty of time
appreciating the variety! Also we must not forget all the support
equipment needed behind the scenes, for example the refrigeration
cells that maintain products at the right temperature or the refrigeration
facilities that link the cold storage cabinets (imagine how many
thousands of household refrigerators would be necessary to store
all the products of a single supermarket). All of these, and much
more are essential to our ability to carry on and enjoy our everyday
shopping in a supermarket. Meeting all those needs is the mission
of the Arneg Group (www.arneg.it).
The Arneg Group was founded in the1960s close to the town of
Padua, in the heart of the Veneto region of northern Italy and
quickly began to embody the high entrepreneurial spirit of the
area. Like many local industries of that era, Arneg were driven
by a love of innovation, a passion for excellence and an obsessive
dedication to customer satisfaction. This was combined with the
willingness to invest for the long-term and the courage to confront
the challenges of an increasingly global market.
In particular, the Arneg Group developed highly specialized
and technologically advanced niche solutions, which managed to
capture the leadership position at a global level and thus set
the standard in the production of furnishings and refrigeration
systems and their related services for modern retailers.
Some of the key factors in the success of the Arneg Group have
been its capacity for creativity, a highly developed service
strategy and an absolute dedication to their customer’s
individual needs. This resulted in the range of products they
offer becoming extremely diversified, thus leading to a huge
number of customization possibilities from a virtually infinite
number of theoretical combinations.
Modern retailers are extremely demanding, constantly changing
and looking for new ways to differentiate themselves. In many
cases, product quality and price being equal, supermarket customers
are drawn by the quality of the shopping experience, or as some
would call it, retail therapy!
Arneg employs the vast experience and knowledge it has gained
of the retail industry, to respond to these changing needs by
turning the diversity of its product range to the competitive
advantage of its retailing customers.
As with any complex, configurable, customisable product, a crucial
phase in the sale cycle is the formulation of a quote that is
accurate, complete and competitive.
As well as providing accurate and definitive answers to the
customer, the sales process should encourage the customer to
explore variations and be presented with ideas for better alternatives.
Although in most cases, the ultimate configured product can only
be perfected after several revisions by the client, it's vitally
important that the first revision is viewed favourably by the
customer.
Most such sale processes present opportunities, as well as risks.
The risks include not producing the quote on time, overlooking
a better solution, incorrectly over-pricing or under-pricing
the product. Some of those risks can be minimised by submitting
this process, to the small number of highly experienced experts
of those products. This reliance on “super experts” can
clearly lead to a bottleneck in the sale process, introducing
delays and increasing the cost of creating such quotations.
A strategic decision was taken by Arneg to empower an increasing
number of its sales personal, both within the Arneg Group and
among its subsidiaries and distributors, which led Arneg to review
its quotation system. The review resulted in a decision to replace
Arneg’s existing manual quotation system with an automated,
knowledge-based system, which captures and applies the expertise
of its most experienced product experts.
Arneg then reviewed several software tools, solutions and quotation
environments, to establish the solution that would most meet
its needs. Following this review, Arneg chose XpertRule’s
eSales Configurator
for its powerful and highly flexible capabilities in the following
areas:
- Its ability to handle the highly complex product configuration
knowledge.
- Its ability to generate an exact and detailed output to meet
the high expectations of the sales staff.
- Its ability to integrate the solution with Arneg’s
existing platform, the AS/400.
- Its ability to work off-line and provide a facility to import/export
quotations to the Arneg database.
Thus, XpertRule eSales Configurator represents a different approach
to the problem of product configuration; rather than a pre-canned
solution which would be difficult to adapt to Arneg’s needs,
it provides an integrated and highly graphical development environment
for creating and managing complex rules, relationships, dependencies
and constraints by the experts, without the need for specialist
IT skills. This provides a high level of knowledge transparency,
which allows this knowledge to be maintained and extended by
the same experts.
In addition to these unique knowledge representation features,
XpertRule’s eSales Configurator provides complete openness,
which allows Arneg to integrate it with its business databases
and communication tools.
The eSales Configurator proved to be powerful, not only in implementing
a complex quotation system, but for modelling the other knowledge-rich
business processes. This lead Arneg to gradually expand its aims
beyond the automation of the existing quotation process, to include
improving its effectiveness by making knowledge available to
all those employees that interact directly with the customer.
All the above considerations lead Arneg to choose the eSales
Configurator to create a quotation system that is in line with
the strategic aims of the group, and in particular to "knowledge
sharing" both inside and outside the company.
To ensure the rapid and successful implementation of the project
Arneg chose to take advantage of the extensive experience and
expertise of Data Consult Sistemi Informativi, the exclusive
distributor for Italy of XpertRule’s products. With more
than 25 years of experience in the design and creation of integrated
information systems, Data Consult was able to respond to the
design needs of the Arneg Group. In many ways, Data Consult Sistemi
Informativi had itself taken a path similar to that of Arneg
Group. With a long track record in the successful design and
implementation of information systems for manufacturing enterprises,
using their MAGIA ERP system, Data Consult was aware that configuration
of complex products and services was not just another ERP "software
module".
In fact, this awareness grew after several attempts by Data
Consult to build and integrate such solutions, when they realized
that managing complex product data and parameters was not straight
forward and that there was a need to manage knowledge and not
just information.
This lead to the partnership between Data Consult and XpertRule
Software, guided by the purpose of using a tool to represent
and manage the knowledge within the corporate information systems.
In order to ensure the best utilization of the eSales Configurator,
the Arneg Group requested the direct involvement of consultants
from XpertRule Software in this project. This proved to be very
beneficial for the project, as well as an opportunity to share
best-practices and to validate the architecture and design of
the overall solution, the involvement of the tool’s vendor
ensured that any new requirements that emerged during the project
could be taken onboard by Xpertrule Software and be included
in future releases of the tool.
To this end, Arneg established the QUASAR project (QUotation
ASsistant for ARneg group), which has seen the involvement of
a joint team of staff coming from
Arneg Group, Data Consult Sistemi Informativi and XpertRule Software.
Within the Arneg Group, the project required the involvement
of staff from different areas such as product and design experts,
sales personnel, EDP staff, and production management specialists.
The contribution of the Arneg Group staff was fundamental in
relation to the philosophy underlying the project, consistent
with their desire to bring the company expertise and know-how
to the pre-sale process. This involved the following needs:
- Identifying all possible requirements expressed by the customer.
- Matching these requirements with the features and options
available across a range of products.
- Present alternative features.
- Propose further options.
- Allow the Configuration knowledge to be enhanced over time,
for example for new products and new options.
As a sign of the early participation of end-users in the project,
no additional training was needed as by the time the system was
deployed, end-users had already gained experience using the system.
In addition to the "core" requirement for product configuration,
based on the concepts mentioned above, the Arneg quote-to-order system had to have
a number of important features such as:
- Ease of use.
- Integration with output tools (e.g. office suite).
- Close integration with the corporate ERP system (standard
configurations, price lists, options, accessories).
- Automatic processing of confirmed quotations into orders
(and, since Arneg deal with specific products, automatic generation
of bill of materials for committed work).
The degree of integration achieved was complete and seamless
to the end-user, demonstrating that "hard integration" is
possible and that the main challenges are more conceptual and
design-driven than technical, and that the major improvement of business processes is possible without
replacing the company’s ERP system.
After several months of using the system, the results were extremely
positive. Uniformity among quotations, data consistency between
quote and order, drastic reduction of errors and, above all,
the ability to execute the full process by an increasing number
of people that do not possess special technical skills are tangible
benefits, in view of the fact that Arneg Group pursues continuous
and synergistic improvements in all its processes, from the pre-sales
to the product design, from production to quality assurance to
after-sales, which together constantly improve the corporate
performance.
The logical and obvious consequence of this successful project
has been the emergence of ideas for further projects and the
decision to pursue further development plans, to which the Arneg
Group is now committed, together with its partners Data Consult
Sistemi Informativi and XpertRule Software.
The most important side-effect of this project is that the concept
of "knowledge sharing" is now penetrating deeper within
Arneg: after starting as the means of enhancing direct contact
with the customers (for the complex quotation process), it is
now gradually affecting more upstream processes, and staff are
becoming increasingly aware that decisions cannot be based on
data or information alone, but must instead be based on all available
knowledge. |
