Heritage furniture firm launches into the 21st Century
Microsoft's Dynamics NAV provided luxury furniture retailer McKenzie & Willis with the 'big picture' of its operations from supply chain management through to the point of sale...
McKenzie & Willis began life more than a century ago, as a service provider to the South Island’s farming community. Now McKenzie & Willis is a high-end provider of luxury furniture with stores throughout the South Island and a Natuzzi branded store in Auckland.
Until 2000, each branch carried out its own accounting, which meant the company struggled to obtain the “big picture”. The tools for getting such a picture simply weren’t there.
“We had six computers in the whole company based at back office, with none of them talking to each other,” says McKenzie & Willis director Tim Willis. “There was a combined creditors and general ledger program, and a separate debtors system. The debtor system was reasonably sophisticated, it could've gone point of sale.”
A crucial weakness of the system, however, was the inability to keep an accurate record of inventory, supply chain management and calculate the most vital KPI of all - gross profit. “When you buy a lounge suite from us, you’re buying a frame from one supplier and the fabric from another supplier, and then we’ve got to sell them together,” says Willis. “You think the price is one price, and then it comes through at a different price for various reasons. You've made the sale, so you want to be able to adjust the gross profit on the individual sale retrospectively.”
A fully integrated accounting solution was needed to realise the opportunities for McKenzie & Willis. “We felt there were huge efficiencies that could be gained in terms of taking processing away from the branches and bringing it to head office, but to do that we needed an integrated system,” explains Willis.
“The main driver was, we weren’t getting good information out of our old system.”
Flexibility was a key requirement for McKenzie and Willis as the company went to the marketplace to find an answer. “We were caught in the middle – there are the big national chains, Smiths City or Harvey Normans, Farmers, Briscoes… at those levels they had their own software specifically designed for them. And then you had the small retailers, who have much simpler needs than us.”
After presentations from prospective vendors, McKenzie and Willis decided to partner with Ernst & Young’s software division, now known as Intergen. Towards the end of 2003, Intergen implemented the accounting software package Navision, now rebranded as Microsoft Dynamics NAV.
Today, McKenzie & Willis is a changed business. There are more than 60 computers in use throughout all the branches, and most importantly they all talk to each other. Dynamics NAV provides all the integration the company was looking for, from supply chain management through to point of sale.
The implementation has also shifted the burden of administrative work from the branches to head office in Christchurch. “Once they receive the goods down in the branches and record that in the system, they don't have to deal with any other paperwork,” says Willis. “We’ve removed the admin away from the branches and given them better information to work with.”
Even banking is also automated through the software, with the POS part of Dynamics NAV creating deposit slips and till reconciliation reports automatically.
Although McKenzie & Willis haven’t installed the CRM module of Dynamics NAV, it is using the basic information available to identify and market to its most profitable customers. “We use NAV for interrogating the database to pick out who are our best customers, when they purchase, how much they purchase, and then we market to those accordingly,” says Willis. The company also uses this information to run a loyalty programme using a custom-generated form. On the customer service front, the ability to track customer orders for items not in store is a helpful tool too.
The ability to analyse margins per sale also means the retailer can identify the most profitable products or combinations of products. In fact, they’re now able to obtain full sales reporting by branch, site, department, salesperson, brand, franchise or product group.
“The information is all there, sometimes it takes a bit of creative report writing to be able to get it out, but the way it's been structured, the data is in there,” says Willis. “We've never come across a scenario where we haven't captured that information, so we can't get it out.” Willis says that was an important part of working with a firm like Intergen in setting up the right data structure to start with.
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