Based in Ipswich in the UK, Frugalpac is leading the charge when it comes to innovative bottles and drinks holders that have less of a negative impact on the environment. What started as an idea in a shed just a few years ago, is now set to become a £50 million business in five years time (if all goes according to plan).
The Frugal Bottle, for example, is made from recycled paperboard with no chemicals and has a carbon footprint up to six times lower than a glass bottle. And more than a third less than a bottle made from recycled plastic. The Frugal Bottle's water footprint is also at least four times lower than glass.
Frugalpac has been in an R&D phase for the past two or three years, bringing its eco-friendly products to market, and is now starting to commercialise and scale up its operations. With this in mind, Frugalpac needed to professionalise its operations, move away from manual processes and migrate to a cloud-based ERP system that would not only bring greater efficiencies, but also offer functions within the business more insight into their data.
We spoke to Luke Bennett, Chief Financial Officer at Frugalpac, about the company's recent migration to SAP Business ByDesign, which was carried out alongside implementation partner Sapphire Systems.
Bennett explained that Frugalpac is not only manufacturing the bottles and cups in makes, but has also manufactured the machines that make the bottles and cups. It supplies an international customer base - namely to key wine growing regions - and the business' complexity is growing. There was a need, as a result, to shift away from manual systems and processes that were sucking up resources. He said;
Obviously, early on, we used manual spreadsheets and separate finance systems, which were okay. But it starts to become quite problematic as you grow. We have quite a lot of high transactions and throughput from a purchasing perspective, and therefore the business really wanted to go to the next stage and have more control around that framework.
What we were finding is that a lot of our staff time was being facilitated by doing a lot of ad hoc admin work, taking information from spreadsheets, putting it into another spreadsheet, then moving the process manually on to the next person in the organisation. And with that comes a few issues, obviously efficiency being one key drive, but also control and the safeguarding of data.
As noted above, Frugalpac anticipates that the business will grow to become a £50 million company over the next five years. And therefore it needed an ERP system that could scale with this growth. Bennett started the tender process with a list of 50 possible solutions, which eventually got whittled down to two or three.
SAP Business ByDesign was chosen because of the breadth of the capability, according to Bennett, whilst Sapphire Systems impressed with a professional approach. He explained:
We wanted to implement an ERP system that could really take the business to the next step - invest in the long term and put in place a system that we aren't going to have to upgrade in two years time. Go through that transition now, get it in early so that the business has a sound platform and the processes are refined. Then as we start to grow over the next few years, the business can focus on the core value added activities.
Sapphire all along were very diligent and very prompt, showing excellent professional behaviour, which gave us comfort during the tendering process. If they act like that in the tendering process, there's a good chance they'll follow that through to deployments.
From an SAP perspective - for such a small business, we touch every aspect of an ERP system. We've got core finance, but we've got project management, we've got manufacturing, we've got international sales. From a ByDesign perspective, that gave us real comfort that it had all the functionality for what we needed. That system can evolve with us.
Building for a better future
The shift away from manual processes at Frugalpac, according to Bennett, will allow the business to expand its data use beyond finance. He explained that previously finance would run reports for functions upon request, but that this created friction for managers that were trying to plan. Bennett said:
What I wanted was to bring a system into the organisation where all the different functions can access the same data. At the click of a button, each budget owner can go and see their own budgets, can see how much they've spent, what they're looking to spend, give the whole business that kind of total visibility. Having that ability allows each function to really improve their own reporting and planning. And the ability to automate processes - if you do it more than once, can you automate it? To make the business more efficient as we go along.
Since implementing Business ByDesign, which went live in September, Frugalpac now has a semblance of a ‘single source of truth' that's accessible across the business' head office and its two manufacturing sites. Bennett added that it was important that the company sought a commercial cloud provider, in order to take advantage of advanced compliance, data and cyber security capabilities. He said:
To leverage a world class supplier that has all that infrastructure in place was particularly important to us.
From his position as CFO, Bennett is already starting to see a positive impact on people working within his function. He added:
I can see that the administration work is starting to fall away from my staff. And then I can see that I can give them value added work in terms of what I want them to do, which they couldn't do previously, because they were effectively processing.
The other benefit that I'm really starting to see, which is a little bit unmeasurable, is the overall feel within the complete functions towards the system. People are starting to look at things in more detail than they normally would. For example, the engineering manager going into the system and looking at what his spend is. Historically he would have had to come to me and we'd have had to produce that - it wasn't seamless.
Frugalpac unfortunately started its implementation of the ERP system in March last year, just as the UK's first COVID-19 lockdown hit. However, Bennett and Sapphire decided to proceed and carry out the implementation remotely, which was largely successful - it still came in on time and on budget.
That doesn't mean that the project didn't come without its challenges, however. User understanding of the system is still a work in progress and Bennett urged anyone taking on a similar implementation to consider getting users involved in the very early stages. He explained:
Putting a new ERP system in is always challenging. The biggest challenge was around user understanding. For me the priority was to get the core processes in place, get it functioning and really start to see the benefit around those core processes. And then what we can start to do as an organisation is start to refine in areas outside the core, as we start to introduce more functionality of the software.
We've been using the system for six months now and we're night and day from where we started, in terms of that user understanding. The more you understand, the more efficient you become. The processes that we know well now have become extremely streamlined, where we can really start to see the value add the system is bringing.
The biggest piece of advice I could give is to not underestimate how much involvement you need from your team during that process. You need that involvement to get the best out of your system when you start. Make sure you have enough time to do your user acceptance testing, so that you can test all areas of the business and really understand the demands that that's going to have on your business.
If you don't do that, the project will be delayed or the system won't work as well as you need it to.