Huabao sniffs out the ultimate efficiency formula

BrandPost By Keith E. Greenberg, SAP Contributor
Aug 14, 20235 mins
IT Leadership

China's largest aromatics enterprise, the Huabao Group, met the challenges related to rapid growth by building a digital platform with SAP S/4HANA Cloud, Private Edition as its digital core, setting innovation standards by unifying and streamlining its business processes.

woman smelling flowers
Credit: iStock

This is the story of how one aromatics leader found a way to make a digital bouquet in the cloud.

With 128 international companies under its corporate umbrella, China’s largest aromatics enterprise, the Huabao Group, has struggled with updating its technology to meet the challenges and opportunities that come with rapid growth.

Up until 2021, it often fell short – and for good reason. Even as the Huabao Group expanded, its digitization effort lagged.

Major finance and business information, along with sales and subcontracting documents, were processed manually and offline. Without visualized analytics, it was difficult to bridge the void between expectation and accurate analysis. Nor was there a comprehensive understanding of changing consumer trends.

Huabao had no choice but to implement drastic change: building a digital platform and launching itself into the cloud. It was the only way to unify and streamline business processes and standardize data across all the company’s varied operations.

Yet, as complicated as this sounded, the tools were in place to accomplish this in a stunning amount of time.

Scents of the future

Based in Hong Kong, the Huabao Group was established in 1996, specializing in research and development (R&D), production, and sales of fragrances and flavors. These include everything from ingredients and condiments to aroma and tobacco raw materials. 

As the platform was being constructed, the company – along with enterprise resource planning (ERP) software trailblazer SAP – revolutionized the aromatics industry with the development of Arobot, a consumer-focused fragrance creation tool utilizing machine learning (ML) to deepen understanding of customer preferences, generate formulas, and develop new scents catered to specific personalities.

The AI fragrance application trimmed years off what had been a lengthy process, based largely on human “hit-and-miss” calculations, enabling the company to manufacture and market new products while demand was at its peak.

The collaboration between Huabao and SAP continued as plans for a new foundation to support corporate development and business model transformation gathered speed. The objectives were lofty: integrated, scalable, and replicable enterprise management; streamlined business processes; and visualized risk control, among other aims, all fully integrating finance, logistics, production, and sales.

Participating partner Ernst & Young (China) was brought in to assist Huabao with constructing the digital landscape.

Rise with SAP S/4HANA Cloud, Private Edition, an ERP tool for large enterprises, would be utilized as the digital core of the new platform. Capitalizing on SAP’s in-memory database, the solution is renowned for meeting the exact challenges Huabao hoped to address navigating uncertainty and refining business results.

Along with Arobot, SAP Sales Cloud, SAP Analytics Cloud, and SAP Business Planning and Consolidation (BPC) would be among the solutions used to create a platform that would set new industry standards for technological innovation.

Coming up roses

Despite the daunting scope of the undertaking, SAP S/4HANA Cloud, Private Edition; SAP Sales Cloud; and other vital solutions were implemented and went live in approximately one year.

As planned, the unified digital operational platform stretched across the Huabao Group’s 128 companies, enabling the enterprise to avoid growing pains as it continued to expand.

Today, analytics efficiency has improved by 30 percent, with the system automatically providing visualized reports and key performance indicator (KPI) statistics to support business decisions and help management contemplate new directions for their respective units.

With business and financial documents instantly integrated into the platform – along with a user-friendly interface – the massive human workload that existed under the manual system has been reduced and, in many cases, eliminated. Likewise, manual mistakes have declined.

The platform has upgraded both the subcontracting and order tracking processes, augmented response times to sales demands (resulting in a 98 percent increase in the order fulfillment rate), allowed for more effective manufacturing, and established a new benchmark in supply chain collaboration – all while cutting costs.

Accounting departments report that the system finalizing monthly financial activities can be closed two to three days earlier than in the past.

Perhaps most impressively, the Arobot solution shortens the fragrance invention process from weeks to as quickly as three minutes.

These are among the factors that led to the Huabao Group winning a 2023 SAP Innovation Award in the Transformation Titan category. You can freely access their Innovation Awards pitch deck here.

And it’s only the beginning, according to Dexu Zhao, Huabao’s Vice President and Chief Digital Officer: “We hope to deeply link the industry ecosystem through data…collaboration, operational efficiency, and innovation,” he said, “and bring people a more personalized, high-quality, more convenient, affordable, and delicious life. “