Paykel cuts costs for customers with integrated supply chain

A New Zealand based engineering supplies company, Paykel identified an opportunity to gain a competitive advantage by making e-commerce an integral part of its supply chain...


Using Microsoft Business Solutions-Great Plains, in conjunction with Microsoft BizTalk Server 2000, SQL Server 2000 and Commerce Server 2000, Paykel developed an internet-based B2B supply chain solution in partnership with Olympic Software. Branded PaykelConnect, the solution automates and simplifies the purchasing process for trading partners and is reducing the procurement costs for a number of leading New Zealand companies that have adopted the system, including Richmond Ltd.

Taking the supply chain electronic

Paykel logistics manager Alan Menzies explains that the company had been looking to grow its business and needed to be competitive in the B2B markets to achieve this goal. "We recognised that electronic commerce was becoming an integral part of supply chain management," he says, "and could create cost-efficiencies for our clients." To gain competitive advantage, the company began working towards providing an integrated end-to-end supply chain encompassing all customers and suppliers in February 2001.

"We wanted to make existing clients' business transactions more effective," says Menzies. "Initially, our objective was just to automate the process for customers ordering from us, and the company ordering from its suppliers. But full B2B automation eventually became essential to our continuing success in bidding for large contracts."

Legacy solution short of the task

At the time, Paykel were running Citadel for their financial requirements - including distribution, accounts receivable and accounts payable. Menzies says that although Citadel is an efficient system, it could not deliver the B2B supply chain to an electronic environment.

"We looked at a variety of products but decided that Microsoft Business Solutions-Great Plains e-commerce functionality was the solution that could help us progress towards our goal," he says. "The package was pitched at the just the right level - as we'd found many of the alternatives were far too complex for our needs.

"Looking ahead, using Great Plains would also enable us to take advantage of Microsoft's .NET strategy for collaborative supply chain management systems.  It could integrate easily with our other Microsoft systems as well as Citadel, which was very important." Menzies adds that the company also wanted to work with Olympic Software, as it had a very good reputation in the market place. "Having a great partner is vital to the success of any IT project," he says.

Paykel began developing its internet-based supply chain solution in partnership with Olympic Software early in 2001. Ultimately called PaykelConnect, the architecture allows for seamless data and information transfer amongst suppliers and customers - and automates the purchasing processes for trading partners via the Web.

Winning ways for customers

Critical for solution to be deemed a success is an increase in customer acquisition and return on investment. To date, Menzies says PaykelConnect has definitely increased the company's competitive advantage through being able to demonstrate business efficiencies to prospective clients. Paykel has also won a number of major contracts as a result of the new system.

"There's a fear among companies that e-commerce is expensive, difficult and problematic," he says. "With PaykelConnect, we're demonstrating the advantages to our customers and showing them that it's much easier and beneficial than they think."

Since April 2002, Supply Solutions, a division of Paykel specialising in integrated Maintenance Repair Operations (MRO), has been using the PaykelConnect system to enable Richmond Ltd to source and purchase the company's engineering MR. products and services electronically. "More than 350,000 products are hosted online via PaykelConnect," says Menzies, "and available to Richmond staff to purchase electronically.  "The system is also very user-specific. It provides Richmond staff with a personalised view of their product catalogue, depending on the division they work for."

Menzies explains that once a user at Richmond places their order, the PaykelConnect system automatically caters for the remainder of the purchasing process, resulting in a significant reduction in the company's procurement costs. "Once the customer has placed their order, PaykelConnect authorises the sign-off, disseminates the order to vendors, provides an online update on the estimated time of arrival and integrates with external freight tracking systems if a courier is necessary. "The solution also provides Richmond staff with on-line reports based on the company's cost codes and allows them to maintain direct relationships with vendors."

Looking ahead

Menzies notes that based on the success of PaykelConnect, Paykel plans to continuously develop system enhancements in conjunction with Olympic Software. "We are keeping a close eye on Microsoft's .NET development," he says, "and how it can be applied to collaborative supply management, which is the next step to further developing PaykelConnect. We've formed a very close working relationship with Olympic Software we're looking forward to working with them to add to and upgrade our existing Great Plains software."

June 2003

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PaykelConnect Delivers

  • Processing standard e-commerce transactions
  • Transacting with other portals via catalogues on the portal - or running a virtual catalogue on a portal
  • Raising purchase orders to suppliers
  • Ability for vendors to raise orders on behalf of customers
  • Viewing the status of orders online to answer customer queries
  • Electronic communication with freight forwarding companies to verify order pickup and integration with external freight tracking systems
  • Procurement stock ordering and service procurement


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