Sporting goods maker finds a way to cut administrative costs, improve business intelligence and speed the way distributors order products.
MGI Spa is a family-owned manufacturer of sport bags and apparel. The company successful moved beyond its home city and by early 2004 had three factories in China along with dozens of distributors throughout Europe.
With an eye on expansion, it wanted more distributors in more locations. That wasn't going to be easy with the business plan it had.
Sales of the company's products were made to distributors in person, by the MGI sales staff. This required the sales staff to travel, constantly. It also meant they had to speak English, the international language of business in most European countries. "It was a painful process and a big problem," says Moretti.
Another business challenge was how to more accurately forecast which products and styles would sell in each country. One item can come in seven sizes and 10 colors—70 variations. "We needed better business intelligence," he says. "We had to develop a system that could tell us which colors were popular in which countries, so we could plan better. Because we didn't have that kind of business information, we'd make decisions and simply hope for the best. It was guesswork."
Removing the guesswork
The company had been using a proprietary system for tracking inventory that didn't give the business data it urgently needed. "When we saw NetSuite (San Mateo, Calif.), with its Web-based access and its Matrix items feature, our first reaction was, this is too good to be true," says Moretti.
Using NetSuite, MGI Spa has simplified and improved the way it interacts with its distributors. The sales staff no longer travels to each distributor's location. Instead, the distributors order inventory online. "We no longer need to have salespeople in Sicily, Scotland and so forth," says Moretti. "Even our Italian distributors buy through the Web store."
The program also enabled MGI Spa to build a two-tiered Internet presence; one for its distributors and one for consumers. Different products and price points are displayed for each group.
For distributors, the online purchasing that NetSuite enables means faster, easier ordering. For MGI Spa, this isn't simply a convenience; it's a sales tool, helping it attract new distributors. Location and language are now irrelevant. No longer must distributors wait for sales people. Orders can be placed immediately, at any time, from any place, via the Web connection. Distributors can be up and running much sooner, as well. "All we have to do is send them a password they can use to log into the customer center to become a distributor," says Moretti.
NetSuite also provides the business intelligence that MGI Spa so urgently needed. Using the Matrix module, sales are tracked for each variation of a product in each geographic location. Trends are quickly pinpointed and exploited.
"We learned a lot of things, such as in Northern Europe, people don't like bright colors," says Moretti. "This lets us know what colors and sizes are popular in each country and plan accordingly. That's crucial when you are an international business."
Along with real-time sales data and better forecasting, Moretti says the company has seen a 30 percent savings on administrative costs since the program was launched a little more than a year ago.
Distributors can now check inventory in the central warehouse online, in real-time. Moretti says two employees who were needed to constantly report inventory levels over the phone have been reassigned to other duties.
"It's difficult to think that there is something out there that is your back office, Web store and marketing campaign all together," says Moretti. "But this program does it, and it has automated our whole global selling process."