How Digital Transformation Future Proofed AMF Magnetics

Technological advancements are rapidly happening. One of the biggest concerns of businesses is how to not be obsolete in the process. How digital transformation future proofed AMF Magnetics is an amazing success story. 

Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. So how does digital transformation look for an admittedly analog business pre-transformation like AMF Magnetics?

Before Digital Transformation

AMF Magnetics is an Australian company that specialises in selling permanent — or “rare earth” — magnets. They’re now the largest supplier in Australia, with a range of something like 1500 products” 

To most people, magnets are just what you use to pin takeaway menus to the fridge. But there’s a lot more to these mysterious little objects. Magnets, literally, make the world go round. Magnets are found in almost every electronic device that exists, from headphones to computers to MRI machines. 

“It’s a very niche product, but it’s needed by all segments of society in one facet or another,” saysMark Kapo, owner of AMF Magnetics. “ We’re very fortunate that we’re in this space.” 

AMF Magnetics was an established business that had been running since the early 1980s, when Mark bought it in 2006. Back then, it was very much an “analog outfit,” as Mark puts it.

“I’m from the analog era. I’m old school. But I decided that we had to push the online side of things — we were running blind. It wasn’t easy to decide what to do.”

Mark’s desire for a digital transformation was complicated by the fact that the magnet business was inherently complex.

What Happens When Your Customer Is Everyone?

AMF Magnetics is multichannel. It supplies all kinds of customers — from large Business to Business (B2B) orders of hundreds of thousands of items, to specialist medical equipment with specific high quality requirements and tight deadlines, to casual retail customers (DTC) who just want some magnets to play with.

On the supply side, there are multiple suppliers in multiple locations. Plus the complexity grows with AMF’s uncompromising approach to customer service. The ability for access to customer information is essential.

“We deal with everyone equally, and we take it pretty seriously. Being from a family that’s very hospitable, service is important to me. That’s not just a word, it’s not made up. We actually do care. If the customer’s not happy, we’re not happy, and that attitude just runs through the whole business.”

When Systems Are Holding You Back

Over seven years, Mark managed to grow the business, but he found that inefficient operational processes were holding things back. They had managed to implement digital systems to some extent, and were working with MYOB desktop software to manage inventory and accounting — but still found they had gaps in their systems that prevented them from reaching their potential.

“We had MYOB, and we deal in multi-currencies, and frankly, MYOB’s management was too slow to go into the cloud and work with multi-currencies. That really held us back,” Mark says.

“But all that said, I was very comfortable with it, and it’s pretty scary transitioning from a system that you know, to one that you don’t know how to navigate.” 

Even though he didn’t know for sure what the business needed in terms of its digital transformation, Mark knew it was about getting the right people around him. He made two important choices: hiring an exceptionally talented in-house marketing and IT team with modern software skills, including a new Marketing Manager (later CEO), Catalina Rodríguez— and working with external experts, includingSMB Consultants. 

The Successful Digital Transformation Transition

As CEO Catalina Rodríguez learned quickly. She led a team of developers, IT professionals, customer service team members, and external consultants to get AMF Magnetics running as efficiently as it possibly could. One of the key steps Catalina took was to move the business from MYOB toXero. 

With Xero as the accounting system of record, things started  running more smoothly across much of the business. There was one exception: inventory management. Xero, by design, is not inventory management software, and Catalina and Mark both knew that to really power up the business they’d need to couple Xero’s powerful accounting capabilities with a best-of-breed inventory management solution.

To find the best inventory management system for their needs, they turned to SMB Consultants. SMB Consultants got to understand their business through an in-depth scoping session where they took time to understand AMF Magnetics circumstances and their particular business requirements. 

“AMF were using a server-based system called FileMaker before they came to us,” says Deepak Stevens, an integration expert at SMB Consultants. “Our job was to understand their needs, and recommend a platform that would set them up for the next ten years at least. It was quite clear that Cin7 would be a good fit for AMF Magnetics, because we were confident the system would be able to adapt to any specific needs they have.”

After the initial scoping session, SMB Consultants put together a proof-of-concept using Cin7 running to AMF’s specific requirements.

“SMB advised us that Cin7 was a perfect fit for where we wanted to take the business in the future,” Mark says. “We wanted to optimize email marketing, social media, and paid advertising, and we needed our websites to work at their very best in order to do that. And we needed the inventory system live and helping us with the accounting side of things. Cin7 covered a multitude of these areas, which other systems we looked at didn’t do.”

Working with the SMB Consultants team, Catalina and the AMF Magnetics team unanimously agreed on a hybrid solution. Together with another consultant out of Sydney, they integrated Cin7 with Xero, and built a custom integration between Cin7 and Shopify that suits AMF Magnetic’s variety of customers and specific operational requirements. Thanks to SMB Consultant’s expert guidance, and the understanding gained through the interactive proof-of-concept process, all the moving parts fit together seamlessly.

“When we did Cin7, I was a bit scared. It was going to be a big change. But to be honest, the transition was very easy,” Catalina says. “The proof-of-concept was really good, because it helped us mitigate the risks, and showed us the impact the new platform would have for the business. It was done on a weekend, and in one or two days, we were operating.”

Full business efficiency realised

In just over a year since adopting Cin7, and implementing their custom-built Shopify integration, life has become easier for both the owners and operators of AMF Magnetics.

“It’s all seamless,” Mark says. “Suddenly, we’d gone from this clunky system of typing all the invoices and printing them out. Now, orders are coming in 24 hours a day. While I’m sleeping, wherever I am in the world, there’s an order popping through. And the staff just go to work, pick it up, and start packaging it. It was really transformational”

Working with international orders, multiple currencies, and multiple websites is now effortless. Cin7’s flexibility means that they can tweak their inventory system of record to work the way they need it to. Catalina and Mark talk about the multiple successes Cin7 has enabled, in everything from using its Bill of Materials and virtual stock functionality to push products to Ebay, to changing their inventory accounting method from LIFO to FIFO.

“What I like with Cin7 is the flexibility,” Catalina says. “We did look at other inventory management systems, but they didn't have that flexibility that Cin7 gives you.”

AMF says their move to Cin7, and the powerful automations they’ve put in place with SMB Consultants’ help, have saved them hundreds of hours, made their systems more efficient, and enabled them to move more product and grow faster.

“Reconciliation used to be quite a painful process, when dealing with multiple websites and sales channels, but getting that into one system has saved at least an hour a day,” Mark says. “Cin7 has allowed us to put more products on more sales channels. And the connections between Cin7, Shopify, Xero and Hubdoc are fantastic for accounting.”

Moving to this modern software stack with Cin7 at the center has added up quantifiable time savings across the business.

“In terms of the savings we made, we’ve almost doubled our sales without really increasing our headcount,” Mark says. “And we’ve done that because of this fantastic software, which I might add, is itself always evolving.”

CEO Catalina agrees. She says that before Cin7, simply reconciling sales across two brands, multiple Shopify websites, and other sales channels like Ebay would have taken a full half-day. “With Cin7 we can do all the reconciliation of all the websites and marketplaces in one hour. Also, before we were manually updating the inventory on the websites, needing to export and import spreadsheet files. Now, it all happens automatically.”

Mark says that thanks to Cin7’s deep level of integration with Shopify, they’ve been able to swiftly spin up new websites with almost no effort or time required.