ERPNext Implementation at CVS Group, UAE

JOURNEY TO ERPNEXT

Background

This story is about a group of companies, that are geographically spread over 3 countries. Catering to 3 different financial and regulatory standards it was critical for us to find a solution that would be standardized, web-based, with flexibility to customize to the local tax requirements. All 3 companies are in the manufacturing industry with local plants and serving both local and international markets. 

Before implementing ERP Next, each company was using desktop financial systems for posting and tracking purposes, with inventory and invoicing done manually using Excel. A brief overview of the 3 companies is provided below.

Country: UAE

Industry: Manufacturers for HVAC Product

Old Financial System: Tally ERP

Current Financial System: ERP Next

Website: www.cvshvac.com

Country: Qatar

Industry: Manufacturers for HVAC Product

Old Financial System: Tally ERP

Current Financial System: ERP Next 

Website: www.cvshvac.qa 

Aftab Engineering Services 

Country: Pakistan

Industry: Manufacturers for Auto Parts

Old Financial System: Quickbooks

Current Financial System: ERP Next 

Website: www.aftabengg.com

Search for ERP:

When I joined the company in January 2017 as the Finance Director for the group of companies, I was given the responsibility of managing and providing financial oversight for all 3 companies. At that time, this was a challenge as I did not have live access to the companies’ financial data. Also, after assessing the financial processes at each company, it was apparent that 70% of the business processes were done manually. This was not only inefficient, but also increased the probability of mistakes, and inaccuracy of financial data. 

Within a month’s time, it was apparent that we will require a web-based system, that should be integrated between the 3 companies and able to provide us with consolidated reporting. 

Our search for the perfect ERP started in February of 2017. In April 2017, one of the Managing Directors of the UAE company asked me to asses the viability of ERP Next. We bought our first license in end of April, and started testing the software. 

Testing Phase

We began testing in the software in May and June of 2017. During the testing phase, we decided to focus on the critical components, i.e. what are we currently doing manually that can be replaced thru the ERP. Our initial focus was not to use 100% of its features, but to understand what we can use and implement immediately and what the software limitations are. Some of the key components included in our testing phase, and their outcomes are provided below:

Testing Criteria

Financial Integrity

We wanted to ensure that the impact on General Ledger for each voucher was accurate and per our expectations.

Expectation met - Yes

Data Collection

To ensure that we can build a data base that is useful for management decisions making.

Expectation met - Yes

Reporting

To ensure reporting for financial statements can be sent directly from ERP.

Expectation met - No. Limitations in selecting specific period in financial statements.

Work-around - Export in Excel and re-format

Sales Cycle

To ensure quotations to sales invoices can be generated from the system along with the ability to customize the print formats for customers at each stage.

Expectation met - Yes

However, only works for Sales Orders with specified quantities. Unable to accommodate open contracts approved for unit prices only. (Blanket Sales Orders)

Purchase Cycle

To ensure all processes from material requisition to purchase invoices can be generated from the system along with the ability to customize the print formats for customers at each stage.

Expectation met - Yes

However, since purchase invoices are not linked with material requests, some material requests have to be tracked and closed manually.

HR Module

To ensure if payroll can be run for overtime and can address the local requirements for end of service and leave.

Expectation met - No. Upload of O/T is not available within HR Module, but in Manufacturing module. The process becomes very time consuming.

Production Module

To ensure if production module can be used for all 3 companies.

Expectation met -

Yes, for auto-parts manufacturing company.

No, for HVAC manufacturing company.

Online Approval

To ensure if online approvals of documents can be done in the system

Expectation met - Yes

Based on the above, we decided to proceed with ERP Next implementation using a phased approach. We had strong faith in the integrity of the system, and with the technical support received, we were confident that the system will evolve further, and will meet all our requirements in the near future. 

Implementation Phase – CVS Doha and CVS Sharjah

In June of 2017, we decided to begin implementation in the live environment. We started setting up the data in both companies, but in we went live in July and August 2017 in CVS Doha and CVS Sharjah respectively. Since the Finance Operations for de-centralized with each company running under a different Finance Manager, we decided it was best to set-up individual instance for each company. The goal was to move all of 100% of the Accounting in ERPNext, and run ERPNext simultaneously with Tally for the first 3 months. 

Some of the immediate achievements for both companies included:

Customer Quotations

Before ERPNext - In Word and PDF shared with Customer. Version control in PDF.

After ERPNext - Saved as PDF from system and e-mailed. Version control in ERP Next.

Sales Orders

Before ERPNext - Customer’s purchase orders and deliveries against it tracked in Excel.

After ERPNext - Tracked in ERP.

Delivery Notes & Invoicing

Before ERPNext - In Excel, and only final invoice based on GL was posted.

After ERPNext - Printed from ERPNext. Accessibility to sales information including pricing, quantities and product type for each customer.

Inventory

Before ERPNext - In Excel, and adjustment made in the Tally at month-end based on physical count.

After ERPNext -  Inventory is 100% tracked in ERP Next thru stock entry and/or purchase receipts.

Implementation Phase – Aftab Engineering Services Ltd. (“AESL”)

The implementation of ERP Next in AESL started in April 2018. This was a bigger challenge as AESL was using Quickbooks as the Accounting Module, and a customized ERP for the Inventory and Purchasing modules. However, the two systems were not linked. Our goal was to provide single system that would reflect both financial data and stores data. 

Some of the immediate achievements for AESL included:

Sales Orders

Before ERPNext - Customer’s purchase orders and deliveries against it tracked in Excel.

After ERPNext - Tracked in ERP.

Delivery Notes & Invoicing

Before ERPNext - In Excel, and only final invoice based on GL was posted.

After ERPNext - Printed from ERP Next. Accessibility to sales information including pricing, quantities and product type for each customer.

Inventory

Before ERPNext - In Excel, and adjustment made in the Quickbooks at year-end.

After ERPNext - Inventory is 100% tracked in ERP Next thru stock entry and/or purchase receipts.

We were able to implement the Accounting Module, Selling, Buying and Stock Modules. However, we are currently in the process of implementing the Production Module. We are awaiting the Version 11 upgrade to finalize the Production Module Implementation

Conclusion:

"Overall, we are very satisfied with our decision to move towards ERPNext. It has made the processes more efficient, reduced chances of errors, and provided us with data required for management decision making. We are hoping to work more closely with ERPNext in the future to add further improvements and fit to our needs."