Invenio create Universal Music Group's own supply chain solution

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Publish Date:
1 Jan, 2021

Universal Music Group (UMG) is the world’s leading music company. Since their incorporation in 1934, they now own and operate a broad array of businesses engaged in recorded music, music publishing, merchandising and audiovisual content in more than 60 countries.

Universal Music Group and Invenio

Invenio have been working with UMG since 2010 on multiple projects including their SAP migration to HANA, implementation of the Invenio P2P solution, SAP roll-out to new countries, COPA redesign, SAP Finance rollout internationally, Solution Manager CHaRM implementation, integration developments and support, as well as their SAP Finance global support to name a few.

The Business Challenges

At the time UMG first contracted Invenio, there was an imminent risk that their only strategic distribution partner would cease to trade. Their distribution partner had previously handled all international products on behalf of UMG, using a heavily customised SAP system to integrate with UMG systems and perform many key functions. Without their partner, UMG would no longer be able to purchase physical stock and distribute finished goods, which would create a significant hole in the business itself and lead to billions in lost revenue. In order to combat this, UMG needed to create their own supply chain solution.

The challenges UMG faced could easily be broken down into 3 phases, which reflected both the imminent and long term effects of this change and the challenges they faced if they undertook these functions themselves. The first major challenge was to create a medium-term solution that would allow UMG to continue operating in the physical market if their distribution partner stopped trading. This solution would need to include:

  • Recording of purchased stock, its reception and the related payable invoices
  • Stock visibility within the business
  • Inter-company invoicing
  • Fully compliant VAT and Intrastat reporting, to comply with EU norms
  • Creating a scalable model that fully considered UMG’s multi-distributor, multi-supplier approach

Once the initial issues had been addressed, a longer-term strategy needed to be designed for the existing SAP landscape, so that it could meet the following advanced supply chain objectives:

  • Returns, scrapping and inter-company process functionality
  • Manage efficient stock transfer processes within multiple warehouses
  • Create a direct delivery model in order to save on distributor costs
  • Automate the accounts payable invoice process using EDI (electronic data interchange) over all group companies

Invenio's Solution

UMG approached Invenio to assist them in implementing a new global SAP system. This system would be used to manage multiple interfaces, including finance and business warehouse instances by a specialised enterprise services team. Included in this system was the ability to integrate taxation and statutory reporting for all warehouses, reconcile stock using a Business Intelligence module and automate accounts payable invoices, saving time and man hours. The team also implemented purchase information file updates to create purchase information records automatically and enabled inter-company accounting using inbound IDOC shipment notifications. Invenio’s team also implemented:

A material master inbound interface

This was used to create and update the SAP finished goods material master using XML messages received from delegated subsystems.

Purchase Order inbound interface

This system automatically creates, updates and cancels purchase orders received from Microsoft Dynamics.

Stock movement inbound IDOC interface

This interface is used to update stock movements within the SAP system every 15 minutes to replicate the warehouse stock.

Invoice feed inbound IDOC interface

This creates a daily invoice feed from manufacturers, which undergoes 3-way matching against PO and goods receipts to account for invoices. All matched invoices are linked to SAP invoice information.

By combining all of these functionalities in one easy to manage system, Invenio were able to implement a comprehensive solution without disrupting the existing systems. This system provided real-time stock level analysis and a single source of truth for UMG to undertake different kinds of calculations. These functions also gave UMG extensive reporting capabilities thanks to the Business Intelligence module, along with the ability to handle multiple distributors in multiple countries without the need for extra complex coding. Overall, Invenio’s solutions allowed finance and commercial teams within UMG to spend more time doing quality analysis and improving business processes, instead of reconciling data.

The Results

Invenio’s solution was implemented successfully with no major disruptions, and soon UMG were able to completely manage their own supply chain needs. This solution allowed 6 warehouses across Europe to be fully managed using one internal SAP solution, with around 90K of products handled by each warehouse. Not only that, but 3 of their foreign plants had their VAT registration numbers fully managed using a standardised SAP ‘plants abroad functionality’. This means that UMG were able to fully manage their overseas warehouse facilities and meet all tax and regulatory requirements, without creating separate companies in each foreign location. Also:

  • Close to 11k inter-company invoices were automated within an 8-month period, where previously they would have been raised by an outsourced company and processed manually for each territory. This automation lead to more efficient inter-company reconciliation.
  • Daily invoicing was automated, reducing the month end closing period from 5 days to 4.
  • Stock reconciliation reporting function meant UMG were able to run comprehensive reports of stock availability worldwide, reducing stock write-off and cycle count differences.

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