Implementation of SAP S/4HANA Private Cloud for Safia

LeverX assisted in the successful digital transformation of one of the largest confectionery chains in Uzbekistan.

Customer

Safia Cafe&Bakery is one of the largest confectionery brands in Uzbekistan, specializing in baked goods, cakes, cookies, and desserts. The company's products are renowned for their high quality and variety, featuring a menu of over 500 items, including French pastries.

A Bit of History

The story of Safia Cafe&Bakery is one of love and dedication to the art of baking, intertwined with the journey of an entire family. It all began in 2001 when Mukhaia Ayupova decided to follow her heart and pursue her passion for making sweets. Together with her husband, Akmal Ayupov, they started preparing treats in their home kitchen. Their humble endeavor quickly gained popularity, and the family business began to flourish.

Inspired by her parents’ success, their daughter Madina opened the first store in 2008: "Madina's Bakery House." She immersed herself in the new venture, bringing her whole family along for the journey. With Madina's unique ideas and original recipes, the quality of their products noticeably improved. By 2015, they had expanded to three bakery shops, and their sweets had become true customer favorites.

In 2015, Madina's son, Bekzod Samigzhanov, proposed transforming the family business into a full-fledged brand. This is how Safia Cafe&Bakery was born, quickly becoming a symbol of quality and exquisite taste. The bakery shops evolved into cozy cafés with a French flair, where visitors could enjoy baked goods and spend time in a warm and inviting atmosphere.

Since then, Safia Cafe&Bakery has rapidly grown, expanding its presence in Uzbekistan and beyond. Over the past nine years, the brand has opened 125 branches, including three in Kazakhstan. Today, Safia is one of the largest confectionery factories in Central Asia, employing thousands of staff and delighting hundreds of thousands of customers every day.

The Beginning of the Digital Journey

As Safia Cafe&Bakery rapidly grew, new business processes emerged, the product range expanded, and the number of retail outlets, logistics chains, and employees increased. This growth led to the realization that for effective development, the business needed a modern, comprehensive system that would help:

• Automate core processes such as production, sales, logistics, finance, etc.
• Ensure business scalability.
• Enhance competitiveness and enter new markets.
• Keep data up-to-date for timely decision-making.
• Manage product assortment and lifecycle in real time.

To make a well-informed and economically sound decision, the client directly negotiated with multiple companies and announced an internal tender. This process allowed them to analyze existing solutions and proposals from integrators, ultimately leading to the choice of SAP S/4HANA Cloud Private Edition and LeverX.

Project Implementation Process

The implementation of the project involved migrating from the client’s existing ERP system to SAP S/4HANA Cloud Private Edition, as well as integrating the new system with key business processes, such as retail operations, product assembly, and shipping. The project comprised several key stages that increased business efficiency and reduced risks associated with human error and data fragmentation.

The first important step was harmonizing the material master data. During this phase, types and classifications of inventory were defined, raw materials and semi-finished products (such as flour and sponge cake bases) were optimized, and outdated items were removed. This simplification facilitated the search for materials during planning and logistics, as well as in financial and controlling operations.

One of the primary tasks for the LeverX team was to implement a cost accounting and product costing function. This requirement was addressed using the SAP Controlling module. Its functional scope allows for considering all necessary components for accurate calculations, including material prices, labor costs for employees involved in production, and various overhead expenses.

Implementing a multi-level variance calculation and redistributing manufacturing overhead costs enabled the precise allocation of these expenses to the product cost. The company's financial results are now generated considering all cost components, including production costs, revenue, discounts, and markups.

In addition, during the production phase, our team organized information on specifications and recipes, allowing for more accurate cost calculations at all product lifecycle stages. Special attention was given to cost tracking and managing production processes for each inventory item.

To eliminate discrepancies and errors, our team assisted in automating warehouse processes using data collection terminals (DCTs). Now, all information for each product is collected automatically and displayed in reports based on specific documents, such as supply orders, production orders, and inventory documents. This automation enables tracking of goods movement at all stages.

Another important step was implementing batch tracking for raw materials, semi-finished products, and finished goods. This allowed for monitoring expiration dates, selecting products based on the FEFO (First Expired, First Out) principle, and significantly improving quality and safety control.

LeverX specialists also assisted the client in integrating existing point-of-sale (POS) management systems with the central SAP system at the plant. To achieve this, a universal tool was developed that facilitated data exchange between the systems and allowed for real-time synchronization of all operations, significantly enhancing data accuracy within the system.

This integration also improved the planning of finished goods requirements. The production plan is now generated based on data collected at the retail outlets and transmitted to the central plant. The system automatically selects the appropriate planning method according to the product type.

Additionally, the capability to deploy machine learning algorithms for forecasting future demand was implemented after collecting sales data. Demand forecasting became one of the project's key advantages, as the integrated algorithms accounted for spontaneous fluctuations in demand during specific periods.

Results

The project significantly improved Safia's manageability, ensured transparency in business processes, automated warehouse operations, and enhanced the efficiency of product costing calculations. In terms of individual business areas, the implementation of SAP S/4HANA Cloud Private Edition helped improve the following key metrics:

Procurement

• Transparent and mutually beneficial relationships were established with suppliers.
• Product quality was improved due to ongoing testing of goods and raw materials.
• Procurement management now relies on best practices from the FMCG industry.
• The client has access to complete and up-to-date information about inventory levels, enabling timely procurement of necessary raw materials.

Sales and distribution

• The scalability of the business aligns with its growth rate.
• Customer loyalty increased due to personalization.
• Access to detailed sales performance information facilitates informed management decisions.

Production

• Accounting for all the nuances and complexities of the physical production process.
• Using materials created in SAP has enhanced the recipe preparation process, simplifying the updating and monitoring of recipes within the system.
• Material consumption calculations have been streamlined, as all information can now be accessed from a single transaction.
• The control and tracking of urgent production have been simplified.

Warehousing

The implementation of the warehouse management system (SAP EWM) for cold storage and shipping areas enables:

• Monitoring expiration dates and avoiding overstocking.
• Timely adjustments to inventory levels.
• Implementation of FIFO and FEFO strategies, ensuring adherence to their principles during picking, storage, and receipt of goods.
• Ensuring seamless product delivery to counterparties.

Finance

The project implemented the following functions:

• Automated mass input of expenses from bank statements, along with verification of receipts based on payment type.
• Detailed reports on fixed and variable costs, as well as calculations of total product costs.
• Invoice generation.
• Balance sheet preparation.
• Payment scheduling.

Controlling

The implementation of SAP CO helped to:

• Achieve a segmented view of costs, enabling precise expense analysis and improved cost management.
• Identify inefficiency and high costs, allowing for corrections that enhance operational profitability.
• Provide a deep understanding of financial metrics and detailed costs for each product through tools such as cost center reports, sales and profit analysis, and product cost calculations.