Dynamics 365 gives SanMar a modern design

The values-based, wholesale apparel supplier may very well have supplied the t-shirt you’re wearing right now. It’s a multi-generational family business that credits more than 50 years of success and growth to a simple, yet powerful, philosophy: Tell the truth and be nice. Helping to create a feeling of unity and pride, SanMar delivers the goods—literally. Their 1–2-day shipping promise requires quick collaboration between sales representatives and SanMar’s eight distribution centers. The expedited process ensures swift delivery to decorators enroute to the end customer.

From polos and hats to medical scrubs and outerwear, SanMar is also one of the largest buyers and manufacturers of apparel in the US. But this employer of 5,000, which also generates employment opportunities all over the world through contract manufacturers, doesn’t promote itself as much as it promotes connection and community. In fact, Chief Information Officer Mike Knapick likes to say SanMar believes a t-shirt “is not just a t-shirt—it is a canvas for good. From supporting our communities and customers to reducing our environmental impact, every decision we make is rooted in our commitment to creating positive change.”

Growing pains

SanMar’s commitment to being a positive force is paying off. They generate more than $2B in annual sales with no signs of slowing down. But their homegrown ERP wasn’t suited for scalability. It required SanMar to build customizations on their own. Reliance on the legacy system’s custom solutions and internally developed business applications presented hurdles to the velocity with which the company wanted to grow. It was also difficult to match resources and partners able to use the niche tool, leaving the company in a constant state of technical debt.

With their sights set 10 to 20 years down the line, SanMar saw an opportunity. Digitally transforming their processes would streamline operations and enhance financial decision-making, while maintaining the customer service and relationship management SanMar customers have come to expect.

The undertaking spurred the apparel giant to reevaluate all their business processes. There was a large effort early on to determine where they were going to adopt out-of-the-box functionality and where SanMar would customize to maintain their uniqueness. 

Stitching together a plan

SanMar certainly did its due diligence when it came to picking an ERP solution. Contenders like SAP, Infor, and industry specific FDM4 simply couldn’t measure up. The Dynamics 365 technical approach was superior, but it was the relationship the Dynamics 365 team developed into a true partnership with SanMar that sealed the deal. As CIO Knapick tells it, “Every company is going to tell you they’re committed to your success,” but the personalized relationship Microsoft established through programs like FastTrack stood out from the competition.

That close partnership was a key differentiator from competitors because this wasn’t just an IT project for the complex apparel company. The project would transform and modernize the entire enterprise. Almost every group in the organization would be affected. This was a business-driven endeavor, and SanMar needed a partner they could trust to make the disruption of an ERP switch more than worthwhile. The partnership with Microsoft was instrumental in ensuring the new solution met the company’s business needs.

In January 2018, a team consisting of members of SanMar’s business and IT teams, consultants from Microsoft Industry Solutions, and other partners began the two-year modernization journey. The company implemented Dynamics 365 Finance first. Capabilities like accounts payable, accounts receivable, cash and bank management, and general ledger provided enhanced financial decision-making without requiring any customizations. The Finance team enjoyed a new, more robust tool set from day one.

Suiting up with Dynamics 365 and the Microsoft ecosystem

The project went live in May of 2020, when the world was still in the early phases of adapting to COVID-19 restrictions. Typically, the cutover would be an all-hands-on-deck event, with the project team on-site around the clock. Quarantine restrictions made this impossible. Fortunately, SanMar had recently rolled out Microsoft Teams, which facilitated remote implementation. Initially apprehensive, SanMar sees this pivot as a win. Being cloud-based, Dynamics 365 and Teams enabled seamless collaboration and enhanced engagement. “We’ll never do it another way,” says Knapick.

Sometimes what Dynamics 365 doesn’t change for the business is just as important as what it does. For SanMar, the fact that Dynamics 365 is flexible and could mimic its old ERP in some ways meant easy adoption and fewer new processes to learn. As before, once an order is approved, it’s routed to the warehouse management system, ready to be picked and packed at the distribution center. Integration using Azure Service Bus, Logic Apps, and Function Apps allows Dynamics 365 to continue to get orders to the distribution centers as quickly as possible by creating near real-time interaction with the warehouse management system.

With the old ERP, finance and operations weren’t integrated. Business reports were entered into the financial system manually, leading to inefficiencies and increased room for error. The integrated finance and operations apps in Dynamics 365 provide the finance team with up-to-date information on operating performance, available instantaneously. The heightened visibility reflected in the reporting and analytics enables the finance team to turn insights into actions. As Knapick says, “It provides us with more granularity than we had previously, so if you talk to our finance team around costing of a product, or some margin calculation, we went from a very rudimentary ability to do those calculations to being more easily able to analyze the financials of the products we sell and the business we do. That has led our finance team to be able to bring to light things that were harder to see in the old world, which informs better decision-making.”  

Another immediate benefit the company has realized with Dynamics 365 is simplified, consolidated invoices. Even if orders are fulfilled from multiple distribution centers, customers receive one invoice for all orders shipped on the same day. SanMar would have had to build that functionality in their old ERP. It’s provided out-of-the-box with Dynamics 365.

Integrated systems drive increased efficiency

As a company that prides itself on its interactions with stakeholders, SanMar knew that optimizing the order entry experience for the sales team—and ultimately customers—was imperative. The distributed order management (DOM) capability in Dynamics 365 Commerce equips the 400-person sales team with new, more robust tools to immediately improve customer interactions with optimal speed. Previously, an order taker had to look across multiple warehouses manually. DOM provides a fulfillment proposal based on customer preferences—at the push of a button, including quickest time to ship, shortest distance, and fewest shipments—this all happens in real-time while the customer and order taker are on-the-line. This was a fundamental change to how the sales team operates and was a huge win for productivity. Today 92% of orders are fulfilled using DOM, meeting customer expectations in a fraction of the time.

That win extended to saving time across multiple departments. The data-intensive month-end closing process that used to take three to four weeks has shrunk to less than two weeks—and is still shrinking—with Dynamics 365. And accounting functions that once required laborious data entry and review, like validating vendor pricing against purchase orders, are now automated. Thanks to the three-way matching available through the easy integration of Dynamics 365 with ISV AGR and Infor Nexus, the company’s accounting team no longer has to review thousands of invoices individually; now they only manage exceptions. AGR’s Advanced Demand Planning uses sales and inventory details from Dynamics 365 to create the supply forecast, which feeds back to Dynamics 365 Supply Chain Management where purchase orders are created. The ease of integration and visibility into data that Dynamics 365 provides breaks down silos and enables a collaborative process. Now everyone has a window into sourcing, vendor interaction, and planning. The slowdowns that resulted from the old system’s reliance on opaque email interactions have been eliminated.

Operational improvements, like a new workflow for product creation that includes merchandising, planning, and forecasting, product development, marketing, and compliance, increase efficiency and collaboration. Previously, the process was heavily dependent on having one gatekeeper to enter all the information into offline spreadsheets. Now they have a workflow that orchestrates new product setup from start to finish with transparency—and simplicity too. The same simplicity enables new user training to be completed in just a few days, allowing for quick onboarding of new staff. 

Another transformative simplification is the returns process. Returns are now easier for customer service representatives and quick and easy for customers. A multi-step process that once took 10–15 minutes is now a simple remediation reduced to 2–5 minutes, depending on the size of the order. Under the old system, returns required representatives to search for the old order, manually key in a new return order, and then reference the old order. Now they pull up the old order, auto-create a replacement order, and easily add and remove line items as needed with pricing that matches the original order.

Doing $2B in annual sales is impressive for any company, but the number itself isn’t representative of the strain on SanMar’s system. Behind that $2B in sales is a robust B2B eCommerce site, direct integrations with larger customers and a team of salespeople processing upwards of 50 orders per day, each order requiring quick logistical calculations to ensure expedient and cost-effective shipping to route the items for decoration and then on to their destination. All that complexity demands a highly functional and friendly interface. Dynamics 365 has allowed SanMar to maintain a high level of customer satisfaction and improve the end-to-end experience for users. 

The possibilities are endless

The ripple effect of the Dynamics 365 implementation is vast. In fact, an entirely new team has spun out of the ERP transition. SanMar’s Enterprise Portfolio, Program, and Project Management Organization (E3PO) was initially devised as a group charged with making sure all the right people were at the table for big, technically challenging projects like the Dynamics 365 implementation. But now, E3PO is chartered with ensuring successful change management whether the projects include technology or not.

Where the legacy ERP was a constraint, Dynamics 365 is an enabler. SanMar is free to focus on solving business problems and pursuing new opportunities with the confidence that Dynamics 365 can handle growth, process, and market changes with speed and ease. With Dynamics 365 supplying SanMar with their canvas for modernization, SanMar can more efficiently supply the rest of us with their canvas—for good.