Business Print Australia

www.bpaustralia.com.au

Executive Summary

Business Print Australia (BPA) is a family owned company established in 1989 to provide printing and related services for medium to large businesses Australia wide.

Based in The Lakes Business Park in Botany, New South Wales, BPA employs 15 full-time staff.

Guy Watson, Director, initiated the company's e-commerce strategy in early 2000.  Guy aimed to take advantage of business opportunities arising from customer demand for e-commerce as it was quickly developing as a prerequisite to winning tenders. The company decided to move its entire operation online with an automated electronic system based on the Internet. The main goal of the system was to create an online value chain with clients and suppliers.

BPA integrated e-commerce into the business through an incremental strategy.  The first stage involved developing a website with the assistance of an external web developer and Internet Service Provider (ISP). The second stage involved adding inventory management and online ordering functionality.  Finally, accounts, ordering, purchasing, proofing and inventory automation were integrated with the online system.

The company makes use of Electronic Data Interchange (EDI) in order to exchange business data across the supply chain. Both customers and suppliers are able to log on to the website to access order details, inventory levels, place and track orders, and review product history.   In addition, clients are able to generate up to 11 report types including product history and order fulfilment.

The new system contributed $494,000 to gross profit in the first year of operation. 

System efficiencies improved staff productivity and prevented stock losses, producing total cost savings of $114,700.  Business Print Australia achieved an overall net operating benefit from e-commerce of $512,350.

The Business

Business Print Australia is a family owned company established in 1989 to provide printing and related services for medium to large businesses Australia wide.  The company has since developed into a major outsourcing firm offering print products and services, warehousing, design, e-commerce and mailing services.  A majority of BPA's customer base comes from the communications, hospitality, retail, Information Technology (IT) and manufacturing industries.

Based in The Lakes Business Park in Botany, New South Wales, BPA employs 15 full-time staff.

Getting Started

Director Guy Watson introduced e-commerce into the company in January 2000. The change was motivated by an observation that new tenders increasingly required the use of e-commerce.

E-commerce was integrated through a three-stage process starting with the commissioning of a web developer to build the company website.

The second stage began in October 2000 and involved development of the website to include inventory management and an online ordering system for clients called Formstar. This enables customers to select and pay for products online by selecting from a range of templates with the results being sent directly to the printer. This avoids the time consuming typesetting and proofing requirements used in a manual system.

The third and final stage involved completing the automated system by moving the remaining business functions online. Accounts, an internal quote and order system, purchasing, inventory management and proofing were incorporated into the existing system by November 2001.

As BPA's system is completely web-based, timely and reliable access to the Internet is essential for the efficient operation of the business.  The system currently services 350 users, generating approximately 100-250 direct enquiries weekly. To sustain service, BPA have adopted a two-pronged connection strategy employing both ISDN (Integrated Services Digital Network) and ADSL (Asymetric Digital Subscriber Line) technologies. These broadband connections were selected for their speed, cost effectiveness and ease of installation.

Supply Chain Integration

Supply Chain Integration focuses on the strategic sharing of information in order to promote synchronised planning and workflow coordination amongst business partners.  The Internet provides the ideal technology to achieve these business goals.

As a customer, BPA uses an internal quote and order system where orders are placed and tracked electronically from suppliers such as Print Approach. This allows the company to coordinate its printing production and warehousing with suppliers in a real time environment. Both staff and clients of BPA use the Internet to research products before purchasing.

As a supplier, BPA allows customers to log on to the website using passwords to browse products, check inventory levels, make orders and pay using a credit card. Once ordered and proofed online, the order is forwarded directly to the printer, bypassing typesetting and proofing requirements used in manual systems. Customers can then track the progress of their order and produce up to 11 different report types such as order fulfilment, order history, product history, and supply quantities remaining etc.

Current e-commerce strategy

Business Print Australia's goal is to establish a completely automated, online system where correspondence and information distribution is fast and effective.  It is designed to facilitate communication and rapid information dissemination, enabling online product research, ordering and delivery to be quick and easy for both staff and clients.

Clients are provided with login access to the website and can order products using a credit card, they can check product history and inventory levels, proof an ordered product before production, and produce reports on product orders (e.g. quantity shipped, supply quantity etc.).

For internal staff, many day-to-day operational functions are now performed online. Orders and quotes can be processed online, client database information can be managed electronically and inventory is tracked online using barcoding of received goods. Banking, payroll and creditor payments are all performed electronically, saving time, bank charges and administration costs.

Due to the vulnerability of sensitive online information, BPA has made a considerable investment in security. In addition to physical security and a firewall, Secure Socket Layer (SSL) and encryption technologies are utilised to protect information on the servers. A Virtual Private Network (VPN) is set up between two onsite servers and two servers stored offsite for backup and data storage purposes. Nightly tape backups and regular password changing routines are also in place. The company's security is reviewed on a weekly basis.

Revenue and Costs

* Note: Capital Expenditure was amortised over a four-year period

Financial Analysis

BPA's integration of suppliers and clients into its electronic value chain has been successful in producing financial results.  The company generated additional revenue of $1,900,000 in 2001.  BPA's e-commerce initiative contributed a total of $494,000 to gross profit, more than double the initial outlay of $227,000. A further $114,700 in savings resulted in a net operating benefit of  $512,350 after deducting ongoing expenses.

Total cost savings attributed to e-commerce amounted to $114,700 in 2001.  Increased stock control efficiencies afforded by the automated system prevented stock losses of $36,000. Improvements in staff productivity in after sales service saved $60,000 whilst staff efficiency in communications has saved $11,000.  A decreased reliance on postage and freight services saved $500 for the year and the use of electronic communications reduced printing costs by $7,200.

With its website as its key communication hub, BPA allocated a major component of its $227,000 establishment cost on website development. After spending 45 hours ($4,500) on preliminary research, Guy recruited an external web developer to develop the website at a total cost of $190,000. The company invested $4,000 in offline media advertising to launch the website.

Hardware costs accounted for the majority of initial set-up costs, including $11,000 for the four servers, $3,000 for a server box, and $4,000 for a computer.  Security measures in three locations cost $1,500, which includes lines, software, hardware and tapes. A disaster recovery plan was implemented costing $1,000.  Systems training was also undertaken costing $3,000.

The total ongoing cost for e-commerce in 2001 was $96,350.  System maintenance expenditure and Application Service provider (ASP) hosting services cost $23,400 and $2,400 respectively.  Online security cost $2,400 and ongoing software licencing fees cost $1,800.  Capital expenditure is amortised over four years at $56,750 per annum.

Non-financial Benefits

Both customers and staff have benefited from the new system.  The streamlined communication methods and online ordering system have improved the company's after sales service and are empowering clients, who are now able to be more involved in the print management and production processes. Providing online access to inventory levels and reporting functions has also facilitated greater visibility across the supply chain and provides more information from which customers and suppliers can make business decisions.

Staff satisfaction and productivity has been enhanced as staff can easily communicate with clients and respond more efficiently and quickly to enquiries.

Challenges

Guy found it difficult to design the system to meet the exact needs of staff and clients and it was a challenge to allocate the budgeted establishment costs to ensure that user requirements were satisfied.  The establishment costs were partially offset by receipt of a $35,000 dollar for dollar grant.  These design issues were managed through careful planning, research and the use of a professional web developer. 

Future

BPA have completed implementation of their e-commerce strategy and are now focusing on continued development and maintenance. The system is reviewed on a monthly basis to ensure it is aligned with client and staff requirements.

Guy's advice to other companies embarking on an e-commerce initiative is not to get "too carried away".  Guy believes it is important to set goals and find financing before starting the design work.