The Client:

Our client provides LEDs (light-emitting diodes) solutions. They offer a wide range of world-class, environmentally responsible LED solutions and systems for signage, architectural, transportation, display lighting and general illumination applications. When compared to older, traditional lighting sources, their robust LED technology enables: Greater reliability, Substantial reductions in maintenance costs, Longer life, Up to 90 percent energy costs savings. These performance achievements are of particular interest to such sectors as retail, restaurant, hospitality or grocery, where companies look to drastically reduce energy and maintenance costs across hundreds or even thousands of locations around the globe. The company LED value proposition also resonates with Federal, State and Municipal government agencies responsible for signaling operations that are relied upon to keep both vehicle and pedestrian traffic moving safely and efficiently 24 hours a day, 365 days a year.

The Opportunity:

The client, a six year old company, has experience rapid growth from an entrepreneurial initiative into a medium size organization. The company recognized that their current business processes did not align well with the size of the organization, the current supply chain and distribution model, and their multi-national reporting requirements. The company embarked on an ERP software upgrade initiative in early 2007.

The company has operations in the United States, Canada and Mexico. The US operations includes an Ohio office with senior management, customers support, finance and accounting, product management and engineering and information technology and a distribution center in Texas. The Canadian office provides research and development services as well as operational oversight for the Mexican operations including materials planning. The Mexico facility assembles LED products to support the product lines of the business.

From a financial standpoint, the company’s reporting functional currency for all operations is US dollars. The company has two financial reporting entities; a US entity and a Canadian entity. Finally, there are transfer pricing models in place to account for the inventory that was sold or transferred between the US and Canadian Entities. The company has statutory reporting requirements in Canada in local Canadian currency.

Logan Consulting was engaged to perform a Project Management role for the ERP upgrade initiative, as well as subject matter export support in finance and distribution.

The Solution:

Specific to the financial reporting requirements of the business, the company and Logan Consulting developed a single database multiple domain configuration. The operational domain includes both the US and Canadian Entities, all the planning and inventory sites as well as supports the business for all the manufacturing, distribution and financial reporting requirements (to the parent company in US dollar functional currency). The Canadian Domain is a financial account domain only. The Canadian entity in the Operation domain is consolidated and translated (from US dollar currency to Canadian currency) to the Canadian Domain.

The Results:

  • The operation domain configuration allows the company to eliminate the transfer pricing model from the operation transaction set, thereby provided easier analysis from a gross and contribution margin standpoint.
  • Built a sound transfer pricing model in the Canadian reporting domain for statutory reporting to the Canadian government.
  • Eliminated the need for transaction intensive arms length transactions in favor of DRP replenishment model\
  • Business processes in operations and finance are streamlined and scalable for this rapidly growing business.