Successful SAP S/4HANA implementation at Boxy Logistics Ltd.

Introduction

As it is well known, the live operation of Boxy, offering state-of-the-art outsourced logistics services for domestic online stores, was launched on August 1, 2022. Their main activities are e-commerce fulfillment and customized logistics services, supported by robotic warehouse technology and a complex IT architecture.

Our company, Onespire Ltd., has played a twofold role during the development of the IT background. On the one hand, the implementation of the SAP S/4HANA Cloud ERP solution, and on the other, system integration were our two main tasks.
In our article, we review Boxy Logistics Ltd.’s formation and the experience gained during the implementation of various IT systems.

Trends and challenges on the Hungarian e-commerce market

As of today, approximately 20,000 domestic webshops sell various products online. While before the coronavirus disease, internet shopping in our country showed subdued and slow growth, due to the pandemic, e-commerce in Hungary has also started to develop extremely dynamically in recent years. Besides the huge interest experienced on the demand side, companies operating online stores are forced to face several challenges.

On the one hand, domestic webshops are also strongly affected by global issues, such as the shortage of raw materials, the vulnerability of supply chains, the ever-increasing expectations of customers, and increasing competition.

On the other hand, labor shortages, constantly increasing wage demands and employee fluctuation are becoming more and more noticeable in the domestic market, which is a burning problem for both small and large companies, especially in terms of logistics processes and physical labor.

What kind of solutions are available for problems related to the logistics processes of online stores?

Automation and robotization can be one of the answers to the challenges related to human resources, which is why, according to surveys, huge growth is expected in these areas. However, these are only economical above a certain size, and their entry cost is also quite high. In addition, warehouse automation and robotization require special software and knowledge in addition to the necessary capital.

Therefore, for small and medium-sized online stores, outsourcing their logistics processes, the so-called fulfillment, can be a solution if they want to avoid falling behind in the competition for cost efficiency.

What is the Fulfillment service?

Fulfillment in logistics is an outsourced service that covers all tasks related to the execution of orders, during non-store, typically online sales. So fulfillment services are performed by a specialized provider, not by the merchant.

Fulfillment is, in fact, a full-scale contract warehousing that meets the unique needs of e-commerce, which includes the receiving of products in the warehouse, the management of orders, the preparation and packaging of the orders, the delivery, the invoicing, and the handling of returned goods.

Using fulfillment services, companies selling products can perform their logistics tasks efficiently without making a major investment.

It is important to point out that professional warehouse fulfillment services make the same efficiency available to even the smallest webshops, which until now was only available to the largest e-commerce companies, at practically the same cost level. In this way, even the smallest online store can compete with larger ones in the field of logistics, without an independent investment.

Introducing Boxy Logistics Ltd.

The company’s mission is to provide its customers with world-class outsourced logistics services based on robotic warehouse technology and automation, with its own vehicle fleet capable of same-day delivery. Their two main fields of activities are e-commerce fulfillment and customized logistics services.

Boxy’s warehouse, which is being built in multiple stages in Üllő, on the southeastern border of Budapest, currently has a 10,000 square meters floor area, which is planned to be expanded to 62,000 square meters by 2029. The 12-meter-high building has BREEAM certification and uses renewable energy sources. Upon reaching its full extent, the investment will be the largest and most modern fulfillment center in the region.

With the help of their flexible outsourced logistics services, they can meet the diverse and even unique needs of e-retailers, from the smallest webshops to the largest online stores. In the first period, the facility will serve Budapest and its surroundings, but later it can cover the entire country.

Boxy’s system provides webshops with the opportunity to synchronize their master data and track orders in real time, which is also available to their customers.

The technologies of the highly automated warehouse, realized with an investment of tens of millions of euros, are provided by Geek+, Körber, Libiao, SAP, Microsoft and FarEye, among others.

The IT background of Boxy Logistics

As it is apparent from the above, in addition to the various physical components, such as the warehouse building or the delivery fleet, the IT background is the determining factor in Boxy’s operation.

In addition to robotics and to the automated and manual warehouse tools, IT brings together the entire architecture, covering sales, contract management, order management, warehouse management, transport organization, delivery, return goods management, document management and various back-office and financial processes.

The IT structure created for Boxy offers its partners unique automation opportunities. Through its well-defined interface, orders are managed without human intervention.

As a result of a complex automated process, the order placed in the partners’ webshops calls the robot that performs a significant part of the warehouse work. Therefore, compared to traditional logistics processes, the automated process system offers a faster, more accurate and significantly more cost-effective solution.

The system comprises many elements, for which we used integration solutions based on Microsoft Azure. The advantage of the solution is its scalability, which makes the peak loads of the logistics service manageable (Black Friday, Christmas period).

Our company, Onespire Ltd., carried out the implementation of the complete, complex integrated IT environment.

Integrated environment based on Microsoft Azure

Boxy’s complex, integrated IT environment was created on an Azure basis. During the platform selection, we examined several criteria: stability, performance, scalability, and cost-effectiveness.

The integrated environment is provided by an Azure webapp portfolio built around a central decision engine. An Azure-based messaging queue solution also ensures efficient communication between the various software components. External connections are managed with a universal interface service that can establish an effective connection with the webshop engines used on the market, regardless of technology or platform. The entire integrated system is controlled by a monitoring service based on Azure, which can provide an immediate signal if a process is stuck or any interface connection indicates an error.

The integrated system is connected to the professional systems of many large industrial manufacturers, such as Geek+, Körber, Libiao, SAP, or FarEye. Therefore, it was important that the components ensuring integrated operation were on the same platform. As a result, the operation and maintenance of the completed system would be more straightforward. Solutions built on the Azure base correspond to this.

The role of the SAP S4/HANA solution in the operation of Boxy Logistics Ltd.

One of the most important criteria for Boxy, in addition to system integration, was scalability. In the specification phase, more than five hundred requirements of the various business areas were identified, and then from the many solutions examined in the request for proposal stage, the company finally decided on the SAP S/4HANA cloud-based ERP solution.

When obtaining the SAP software licenses, Boxy chose the RISE with SAP service package. This solution made it possible for the company to create and use the necessary SAP infrastructure without the need for a significant hardware procurement and an operation team.

In addition to supporting general back office processes, SAP’s solution also covers many core activities. These include invoicing, management of customer current accounts, procurement of packaging materials and inventory management, and controlling as well.

The experience acquired during Boxy Ltd.’s SAP S4/HANA implementation project

The final IT architecture was determined in July 2021, and the detailed plans were completed by mid-November. After the development of the prototype, testing and end-user training, the live launch took place on August 1, 2022.
The next significant milestones for the processes that are now in place will be the key periods at the end of the year, Black Friday and Christmas.

Despite the large number of systems and suppliers and the unique needs, the project was delivered on time, with the support of our company, Onespire Ltd., in accordance with the original plans and without modifying the budget and functional scope.

This was greatly facilitated by the fact that with the help of the solutions offered by the RISE with SAP service package, the implementation was much faster and more efficient compared to traditional SAP implementation projects:

• The cloud-based infrastructure was available much earlier, there was no need to purchase and configure further hardware elements.
• Due to the standardized services and templates, the installation of the SAP system was also easier.
• With the help of the available sample and the best practice set, the system plan was created faster.
• The configuration was done in a significantly shorter time due to the best practices and the transportable settings associated with them.
• Due to the standardized services, the system’s Base support was stabilized earlier.
• Based on the experience of the SAP experts of Onspire Ltd., using the traditional method an SAP S/4HANA implementation project takes at least 10 months. With the help of the RISE with SAP service package, this was shortened to 6.5 months, which is a significant result in terms of turnaround time.

During the project, the execution exceeded Boby’s preliminary expectations in most cases:

• Boxy has defined particularly high requirements for the performance of the system, and the solution exceeds them in practice both in terms of program executions and response times.
• Although there were no major expectations in the field of functions, according to Boxy’s experts, the changes implemented in the system regarding the Universal Jurnal and the controlling are particularly beneficial, and the business partner transition actually introduces new opportunities.
• Based on our client’s view, the Fiori interfaces are well thought out in the developed solution and, compared to their expectations, represent fewer compromises in terms of functionality, however, their performance could be further optimized.
• During the implementation of SAP S/4HANA, our client was satisfied with the competence of Onespire’s consultants, and with the execution of the implementation and the integration tasks.
• Regarding the system support, the RISE with SAP package was particularly valued by Boxy, in their opinion, the services are available in an extremely simple and user-friendly manner along the specified SLAs. Support tasks are performed proactively, quickly and accurately by SAP.

Summary

Onespire Ltd. is proud about the successful execution of the project and staying within the set constraints, which was also the first RISE with SAP S/4 HANA implementation in Hungary.

In addition, our company played the role of the system integrator during the development of the complex IT environment, ensuring the perfect harmony of suppliers and their solutions.

We would like to thank Boxy Logistics Ltd. for their trust, and the professional cooperation of the suppliers and employees involved in the project during the introduction of SAP S/4HANA Cloud ERP.

Do you have questions about the SAP S/4HANA ERP system, the cloud SAP solutions, the RISE with SAP service package, our custom software development or system integration services?

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