RSM Resources

YAK PAK, the leading trend-designer and manufacturer of fashion bags, grew from a small start-up to a midsized company in the period of a few years.

Targeting the teen market, YAK PAK (www.yakpak.com), hasdistinguished itself through its exceptional ability to respond to consumers’constantly changing tastes and preferences, delivering the latest fashiontrends. YAK PAK distributes its bags, along with designs that it markets underexclusive licensing agreements for Dickies®, MTV® and Wrangler®, through an ecommercesite, a concept retail store and through image-oriented retailers like PacificSunwear, Sam Ash, Tilly’s and Urban Outfitters. The company has a distributionwarehouse in Houston, Texas,and manufacturing factories in Chinaand El Salvador.

The challenge
“Over the last threeyears, we experienced 35-percent growth and were on the cusp of moving our newwarehouse to support increasing wholesale, retail and e-commerce sales,” saidRichard Haugen, chief operating officer, YAK PAK.

“We realized that if we were going to keep growing at thisrate, we would implode if we did nothing about our legacy technology infrastructure.”

During this period of growth, the company expanded itschannel and product lines, doubling inventory turns and increasingship-to-points from 15,000 to 75,000 and the number of active customers from400 to 3,600. Additionally, as YAK PAK was growing into its own, havingrecently reached the milestone of “midsized business,” the company needed tocontend with market dynamics forcing small and midsized businesses (SMBs) tocompete with mega-brands in a global economy. Lacking was an enterprise-classtechnology solution to tie its manufacturing and distribution operationstogether.

To support this growth and help the company compete on a globalscale, the YAK PAK executive team identified Houston as an ideal place to relocate itsBrooklyn, New York-based warehouse to obtain more square footage and loweroverall costs. Such a move, however, would be impossible without a sophisticatedtechnology infrastructure in place.

Fortunately for YAK PAK, the same market dynamics impacting SMBswere equally transforming the enterprise technology vendor landscape. Enterprise resourceplanning (ERP) and customer relationship management (CRM) companies like SAP, Siebeland Oracle were developing ways to make their packages, once only accessibleand affordable to large businesses, relevant for the growing SMB market.

The solution
“When evaluating a replacementfor our FoxPro-based system, we looked to the best practices and systems ofsuccessful multinational companies,” said Haugen. “Time and again, we found SAPas the ERP backbone of choice for these companies. While we wanted the sameenterprise-level sophistication, we needed a system that was affordable andleveraged our core competencies as a mid-sized wholesale distributor. That’swhat led us to RSM McGladrey and the Supply Chain Solutions for SAP BusinessOne®.”

The Supply Chain Solutions for SAP Business One are a set ofindustry-specific solutions focusing on all phases of the supply chain cycleand specially developed to enable growing businesses to manage and controltheir business processes and compete on a global scale.

In January 2004, YAK PAK deployed the first solution in thissuite tailored for the specific needs of wholesale distributors, the DistributionEdition for SAP® Business One. “The implementation went so smoothly, we didn’tlose a single order during deployment,” said Haugen. “This was an impressive featin itself, considering that we simultaneously moved our warehouse from New York to Houstonduring the integration process.

Prior to implementing the Distribution Edition for SAP®Business One, maintaining a warehouse in Houston and a design headquarters inNew York City would have proven a difficult, if not impossible, undertaking fora business of YAK PAK’s size.

The Distribution Edition gives YAK PAK the same capabilitiesas larger companies with robust IT infrastructures, connecting the company’sheadquarters to its distribution center in Houston. By moving the distributionoperations to Houston, YAK PAK is able to usesea transport rather than air freight allowing the company to save on shippingcosts when transporting goods from its overseas factory in El Salvador.

The results
“There is not abusiness process I can think of that the Distribution Edition for SAP® BusinessOne did not significantly improve,” added Haugen.

“As efficiency increased, costs have decreased across theboard. With the ability to run our new warehouse from New York, we saved on every single cost ofdoing business from real estate to shipping while maintaining our roots in the designcapital of the world.”

One month after the implementation, YAK PAK was shipping 20 percentmore than it had the previous month, keeping pace with the business’ growth andconsumer demand for its popular bags. The company nearly doubled its ability todeliver product to the retail store shelf, further increasing inventory turns.

Furthermore, with higher warehouse efficiencies andincreased visibility into inventory levels, YAK PAK was able to further reduceshipping costs by analyzing the best days and times to transport goods to itsdistribution warehouse and then on to the retail floor.

Completely automated reporting functionality has armed YAK PAKwith more accurate demand predictions and better forecasting and trendinginformation. YAK PAK’s designers and other managers now make better-informeddecisions based on near real-time data.

The Distribution Edition for SAP® Business One automatedvirtually every aspect of YAK PAK’s business, allowing the company to redeploy employeesonce tasked with number crunching and paper pushing into more strategic roles.

“Prior to this, it was all we could do to record and trackdata on sales and order histories,” said Haugen. “Credit card processing alonewas one person’s entire job. Now we can devote time to analyzing incoming datato inform strategic business decisions.”

Today, YAK PAK’s human resources are used more efficientlyand strategically. Selling time for sales representatives increased 32 percentand the time managers spend running reports decreased 90 percent. On thewarehouse floor, manpower required to pack orders decreased 22 percent, whilemis-packed shipments were all but eliminated, resulting in a savings of$100,000.

YAK PAK has also increased its “ship-complete” percentagefrom 92 percent to 98 percent. Business-to-business communication costs, likeelectronic data interchange (EDI) charge backs incurred from mistakesexchanging data with retail partners, are no longer an issue. Perhaps, mostdramatically of all, customer service costs are down an astonishing 60 percent.

“The Distribution Edition for SAP® Business One hasfundamentally changed our business by empowering us to do businessdifferently,” said Haugen. “YAK PAK is now properly positioned for the nextphase of growth.”