Hunter Douglas Gets Illumination from SAP S/4HANA Consolidation

by Joe Mullich, Contributing Writer

If you’ve ever opened a window shade, you might well have interacted with a product from Hunter Douglas. The 100-year-old company, which invented the aluminum blind in 1946, is now regarded as the leading maker of custom window treatments. Over the past century, its offerings have expanded from simple shade-providing products to sun control solutions, ventilated facade systems, and suspended ceilings.

The $3.2 billion company has grown through a continuing series of acquisitions. The pitch that the company makes to business owners who enter the Hunter Douglas family is compelling: maximum accountability but minimum interference. While there were clear benefits to that approach, the decentralized model also presented problems, particularly in areas like managing the supply chain and consolidating purchasing power.

The answer was an initiative called “OneHD” that consolidated Hunter Douglas business processes and three instances of SAP ERP into one cloud-based SAP S/4HANA solution. The internal tag line for OneHD was “enterprise visibility for better decision making.” The results have been like opening a window shade in a dark room, allowing employees across all functions to see operations more clearly, work more efficiently, and serve customers better and faster.

The Driving Force for the OneHD Initiative

The true impetus for the digital transformation at Hunter Douglas began in 2015 when the company performed a supply chain assessment. Interviews were conducted with more than 100 people throughout the organization, and several recurring themes emerged. Across the board, it was clear that the business desired improved collaboration across divisions, better availability of materials and parts at the precise time when needed, and real-time insight into production status to provide customers with more accurate delivery dates.

“To follow the proverbial saying, we wanted to ensure the right hand knew what the left hand was doing,” explains Michael Westphal, Senior Director, Strategic Initiatives for Hunter Douglas.

The company’s information stores had been maintained in two instances of SAP ERP. One instance was used by the component manufacturers that provided the parts for shades, and the second was for the fabricators that sell, assemble, and ship the shades. “Having two instances created a lot of data duplication and some integration issues as well,” Westphal says. Each instance had its own master data, which meant different units often had their own nomenclature for the same item and weren’t speaking the same language. “This affected our ability to understand inventory and purchasing behavior,” he says. “For example, one division might buy a part from a manufacturer at a different price than another division paid for that same part.”

The ripe timing for a transformation intensified in March 2016, when Hunter Douglas purchased the Levolor and Kirsch window covering business and brands from Newell Rubbermaid. The acquisition brought a third instance of SAP ERP into the fold, in addition to a service-level agreement that Hunter Douglas would need to migrate off Newell’s platform within 24 months.

This pressure, along with the findings from the supply chain assessment, paved the way for OneHD. “It was clear and obvious that there were opportunities and a need to streamline business processes and handle handoffs throughout the organization more efficiently,” Westphal says. “We knew we could employ technology to eliminate many workarounds and tasks that were not adding value.”

Finding Ambassadors

Westphal had already managed several global ERP implementations, and he always found that strong buy-in and alignment at the top was critical to success. The OneHD initiative was spearheaded by Gary Piscatelli, Senior Vice President and CFO for Hunter Douglas. “He garnered the support, aligned the key stakeholders, and made the business case,” Westphal says. “He was a true change champion.”

To push the project forward, Hunter Douglas worked closely with SAP and relied on a number of important partners to assist with evaluation, system architecture and change management. To help with user adoption, the team developed a plan that included careful training and mapping of user roles.

Westphal says another key element to the project’s success was developing an enterprise-network of “ambassadors” for the initiative. The network was made up of a representative from each of the divisions, who could be a vice president, director, or manager.  “We met with the ambassadors regularly and included them in a lot of communications and meetings,” he says. “They were able to identify unique divisional challenges and concerns, which gave us a huge advantage in gaining buy-in and adoption at each of the divisions.”

For OneHD, Hunter Douglas developed hundreds of hours of training modules for employees. Different divisions had employees who came from a wide range of nationalities and spoke many different languages.  The ambassadors guided the team on the most effective way to usher employees in the different units, such as whether training materials needed to be bilingual and whether information might be more effectively presented in videos, webinars, or other media.

The project team put much time and attention toward making sure the SAP users were comfortable using the new technology. While users in the front office were mostly technically savvy — as this area was more heavily automated than other parts of the company — in other areas, such as the shop floor, employees were accustomed to more manual processes and had fairly rudimentary software skills.  Quite a lot of effort and training was directed at changing the company culture toward a more connected, collaborative approach.

“True cultural shift happens one conversation at a time,” Westphal says. “We spent a lot of time managing up, having conversations with senior executives, and pushing our ambassadors to do the same, and I invested time to mentor our functional leads to spend time with the right people.”

Achieving a Single Source of Truth

The OneHD initiative focused on gaining a single source of truth by using one solution and a standard set of processes for master data management. By implementing a common language for all the organization’s data, Hunter Douglas was able to do better enterprise planning and plan production activities more efficiently.

The largest benefits achieved were around inventory reduction and consolidated purchasing. The company now had a clear understanding of its financials, and divisions had consistency around material costs. “There were no more artificial costs, inefficiencies, and extra work to determine the real cost of products,” Westphal says.

With the consolidated SAP S/4HANA solution providing clearer insights, materials now move between divisions with transparent visibility into cost. Purchase orders and sales orders between the divisions have been eliminated. “We have less paperwork and spend less time untangling the finances,” Westphal says. Hunter Douglas can now determine the true cost of products, allowing it to see product line profitability and margins.

Enterprise planning is another key benefit area from OneHD. Previously, divisions didn’t have the data to accurately plan for future production activities, making it difficult to determine the right amount of inventory. One location might have too much inventory, while another would not have enough. Without visibility into data to plan and schedule far enough into the future, divisions would schedule small runs, which was not optimizing efficiency. Additionally, one facility — a plastic injection molding facility that produces white end caps for several other facilities — did not have insight into when other divisions would need what quantities and therefore frequently ran multiple production orders. By using SAP Integrated Business Planning for Supply Chain for better enterprise planning, Hunter Douglas could take advantage of larger production runs and fewer change-overs, according to Westphal. “If this facility saw enterprise demand, it could consolidate and produce one order, reduce change-overs, and ultimately cut costs,” he says. “With OneHD and the establishment of an enterprise planning business function, we will have a consolidated demand plan made up from information across all divisions — giving us complete visibility — so we can purchase and share materials, ensuring that we have the right materials at the right time.”

Prior to OneHD, Hunter Douglas operated 20 locally managed shop-floor systems with a variety of technology that didn’t always talk to each other. “Now that we have shop-floor standards in place, it is much easier to measure business performance enterprise-wide,” Westphal says.

As part of OneHD, Hunter Douglas has deployed the SAP Manufacturing Suite across 20 plants. This technology helps link manufacturing processes with business operations to enable collaborative manufacturing, optimizing their processes by connecting their shop floor with ERP processes. It delivers useful and actionable information that helps boost productivity.

Now that the information about materials and fabrication are kept in the same system, it is easy to provide customers with accurate information about delivery times.  The company can determine in real time what parts and material are in stock or on back order. “Instead of making multiple phone calls or look ups in the system to find the status of an order, we now know what material is available,” Westphal says. “We can confirm production, ship, and delivery dates with the confidence that we can keep our promises to the customer. When the service team gets a call from a customer, we know exactly where the order is.”

Touching Every Part of the Company

SAP S/4HANA is used by employees in virtually every business area, including supply chain planning, customer service, warehouse management, purchasing, and receiving (excluding sales). Customers do not interface directly with the SAP system. However, notifications from the SAP system provide the ability to give those customers order status updates and other key information.

Hunter Douglas remains early in the OneHD transformation. Westphal describes the process using the common “crawl, walk, run” formula. The company is just emerging from the crawl stage into the walk stage and is looking forward to the run stage. “We have established new processes, and we are looking to institutionalize the processes and make them repeatable so we can focus on optimizing them.” He believes the company has just begun to experience the many benefits that will come from “the left hand now knowing what the right hand is doing.”