In only five years, Old Fashioned Foods has grown from being a steamed pudding manufacturer supplying local supermarkets to a global exporter employing 75 staff in New Zealand, and opening subsidiaries in Australia and the United Kingdom.

Operating in an increasingly competitive market, the company quickly realised it needed a robust business management solution to support its planned growth and ongoing business expansion. By implementing Microsoft Dynamics AX (formerly known as Microsoft Axapta), Old Fashioned Foods has experienced 20 to 30 per cent increases in turnover in the past two years alone.

Old Fashioned Foods also enjoys greater control over the manufacturing process, better sales forecasting, and faster processing of sales orders, leading to more satisfied customers.

Pressure from the market spurs growth
Wayne Upton, financial controller at Old Fashioned Foods, explains that with competition in the FMCG market intensifying, the company has entered new markets and diversified its product range in a relatively short period, placing enormous strain on its IT systems. In response to demand the company introduced a range of new products including Aunt Betty’s Wheelies, a popular biscuit treat for children, and Aunt Betty’s Creamy Rice, a canned pudding that flies off the shelves. Even with these popular additions, the company’s main customers, supermarkets, are constantly demanding new product innovations and, more importantly, uninterrupted product supply.

“Most supermarkets are demanding. Once they decide to list your product they need to make sure it's going to be in stock all the time and generating good profits for them. If it's not then it’s out - so we need to keep developing new flavours and packaging so customers keep coming back,” says Upton.

Growth creates new challenges
In 2000, a significant amount of capital was raised to invest in the business and at that point, Upton says they realised it required an IT system that could support growth.

“It's all very well looking at the factory and seeing the number of puddings coming out the other end but we need to make sure that we're making money and selling the right products.

“We needed greater control of the manufacturing processes. The current software we had was just an accounting-based package with little inventory control and wasn't going to satisfy future demands.”

A number of alternatives were considered before the company selected Microsoft Dynamics AX in 2001. By centralising accounting, manufacturing, inventory control and financial reporting processes, the solution has provided the company with the business intelligence it needs to succeed.

“At the time, it was quite a new product on the market but we knew it would last right through to a $100m plus turnover company,” says Upton. “We were doing $8 to $10m turnover so it was far bigger than we needed then but we did a lot of forward thinking.”

Upton says another benefit of the business application is that it required very little modification: “One of the things we've found with Axapta is that it's fully featured. We've basically got to where we are now without making any modifications to the product. We’ve also been able to grow with the system without adding specialised in-house IT staff.

“Another good thing is that it is a Microsoft product now. The transparency between the different Microsoft programs is great, and we’ll see more advantages as Microsoft continue to develop the product.”

The company selected Microsoft-certified partner Koorb Consulting to review its systems and procedures in 2002. “Koorb provided guidelines to help staff after discovering we were only using a fraction of the functionality of the product,” Upton explains.

“Working with Koorb Consulting has been a critical factor in the system’s success. They understood our goals and what Axapta could deliver. With the right training, Koorb turned users’ initial reluctance into confidence.”

Future-proofing and scalability
Upton points out that the company has grown substantially since implementing Microsoft Dynamics AX.

“We've been able to move from being a manufacturing company to an importer and distributor, and doing a whole lot of other things we weren't doing three to four years ago.

“The system has enabled us to grow the business over a short period of time. We’d be struggling without it.”

Control through increased visibility
The real value, according to Upton, comes from having a complete overview of the business – knowing when things are not on track and being able to tweak the production process. Prior to fully implementing the solution, the company had many disjointed systems and separate databases resulting in duplication and information silos.

“With Axapta, the value comes from having everything in one place, being able to capture all that information and have multiple users access it. It has given us more control over what we're doing and more visibility into the numbers, also helping us to justify decisions when launching new products.”

Centralising operations eliminates duplication
For a global business like Old Fashioned Foods, the integrated solution has also meant it does not have to duplicate systems or IT providers across countries. It now has a single database held on a server in New Zealand which overseas offices access. Upton can sit at his desk and see the UK and Australian transactions happening in real-time because of common accounts, systems and procedures.

“We don't have to duplicate our system in overseas offices and have another set of service providers. We’ve been able to manage our global IT system without anyone else except our New Zealand technology partner Koorb. We still have separate companies with independent transactions happening but we have visibility across the whole business.”

Microsoft Dynamics AX has allowed the company to grow rapidly without adding unnecessary expenditure like additional accounting and administration staff.

“Most of our increase in headcount has been on the factory floor, which is where you want your money spent. You want to have people making the product rather than just managing the processes. We've been able to get where we are with modest growth in management.”

Forecasting sales and production
Old Fashioned Foods has also recently started taking advantage of the product’s manufacturing functionality, enabling staff to estimate demand and generate work orders by putting sales forecasts from all three global regions into its production module.

As Upton explains: “We can now see what sales people are going to sell and can make sure they have product to sell while taking into account lead times, different locations and promotions and so on.”

Improved customer service
Overall, Upton says that his customers have noticed a more regular supply – a critical aspect in supplying supermarkets – since deploying Microsoft Dynamics AX. This ability to meet demand has been a result of better sales forecasting, greater control over the manufacturing process and faster processing of sales orders.

While Old Fashioned Foods is still trying to integrate more business information into the system, including new product and market activity and a potential subsidiary arrangement in the US, Upton says he is confident that Microsoft Dynamics AX can meet future demands.

“If we change direction we know we can easily change the reports and formats,” he says.

For more information about this case study contact
Anne Frith
09 362 5865
askdynnz@microsoft.com
Microsoft New Zealand
P O Box 8070, Symonds Street, Auckland

Koorb Consulting
Tel: 09 361 1304
Web: www.koorb.co.nz

June 2006

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