At Last ERPs Geared for Local Needs

A two part analysis by Keith Newman
A few years ago if your organisation wanted an enterprise resource planning (ERP) system it would most likely require massive re-engineering and an IT budget the size of Telecom's latest profit

There are about 278,000 organisations in New Zealand, the majority small to medium businesses with less than 200 employees, yet the majority of ERP packages have been geared to US or UK companies or what New Zealanders would call large enterprises.

The challenge of internet-based systems forced the big ERP players to offer scaled down versions but these largely remained inflexible and unwieldy. Over the past five years that's changed and new players have entered the market with 'mid-market' products far more relevant to the New Zealand scene.

All have their strengths and weaknesses, some are focused on niche industry areas others try to be everything to everyone. Some have strength in the financial area and have built on that to move outward, others have their roots in manufacturing and distribution and added the back-office and front office functions later.

All will tell you they're looking out for the future of your business and urge you to make decisions now based on where you want to be tomorrow and who you want to connect with.

In an effort to help potential customers spot the difference iStart takes a two part in-depth look at what's on offering from four of the leading contenders Geac, Microsoft Great Plains, Navision and Lawson who're offering a full range of ERP modules to help get smaller supply chains on-line.

Part One: Navision and Lawson

 - Flexible enterprise offering

Navision provides mid-range financial, logistics, manufacturing, CRM and e-commerce solutions and has about 60 clients in New Zealand with an average annual turnover of around $15 million.

It develops and maintains two product lines, Navision Attain and Navision Axapta which cover everything from food and beverage manufacturing to warehousing and distribution, retail as well as local and central government. Navision has alliances with Microsoft, Siebel, IBM, Compaq and Citrix.

Locally those using its systems include Masterpet, Advantage Group, Independent Liquor, Chequer Packaging and Environment Canterbury.  Last year Environment Canterbury installed Navision Attain to try and reduce the amount of paper needed to run the business.

The $50 million organisation wanted a flexible enterprise business system that could manage all its projects - related to managing the regions natural and physical resources - with one piece of software from one database.

Ernst & Young provided consulting services to scope out the requirements and installed Navision Attain, a mid-market financial management solution customised to meet specific needs of Environment Canterbury. It has a license for general ledger, accounts payable and receivable, bank, stock, project, fixed assets and resources modules.

The organisation has more than 300 projects on line at any one time varying from increasing the region's water quality to monitoring air pollution to providing flood protection and pest control to soil conservation and coastal management. A strong project accounting capability was needed to manage all projects simultaneously, says financial services manager, Neil Mayo.

"We needed to look at key dates on every project and drill down on details and budgetary needs so we could report back to the people of Canterbury.  Navision Attain was the only software that could do that easily - it's very smart," says Mr Mayo.

Project-based accounting

As well as providing better accountability, Navision Attain has enabled Environment Canterbury to significantly reduce the amount of paper used in their offices. Crystal Report Writer allows staff to drill down to technical data on screen and send reports via email rather than having to print them out on paper.

This has meant the council has been able to move to three dimensional project management by adding general ledger and non-financial accounting capabilities. "On any project, we may have 10 staff from different departments who's time now gets charged to that project," says Mr Mayo.

"Each staff member's time is also allocated to tasks which then creates the budgets enabling us to produce reports that tell each person how their time is budgeted each month.  It's a very clever system."

Independent Liquor chose Navision Axapta software which went live in November 2001 after the company found its existing manual system was not keeping pace and there was a need for automation.

Bob Lewis, Independent Liquor operations director says it was taking three days a week just to do a physical stock take in the warehouse. "We needed a system that could automate large stock-takes on our entire warehouse system and give wider management control."

Accurate and timely information was required to make informed business decisions from a single package. Independent Liquor also wanted this to integrate with its current financials package, Exchequer, and eventually swing across to its own financials suite.

Integrated warehouse management

Navision Axapta offered all this as well as adaptability.  It could be easily modified to meet business processes, now and in the future. Auckland-based Independent Liquor, which manufactures and distributes spirits, beer and wine and is developing new products now has integrated warehouse management with radio frequency (RF) capability and materials requirements planning (MRP) system.

Mr Lewis's vision was to install the pilot of Axapta in the Auckland head office followed by roll out at subsidiary Independent Distillers sites around the world, first in Melbourne followed by Sydney, Perth, London and Vancouver.  "The system has the potential to grow with us worldwide."

The warehouse management system has already made short work of the stock-take problem. Using barcode scanners to count stock electronically has reduced the three days it used to take to between two to four hours.

At any given time, the managers at Independent Liquor know exactly what stock they have in the warehouse.  The previous system only tracked quantity rather than locality. Navision Axapta also has the ability to track the distribution of product from the warehouse to its destination.

A carrier management system and planning and forecasting modules have also been built in. These enable the company to more accurately plan quantities of raw materials from suppliers and order the stock at the optimum time.

Lex Paterson, Independent Liquor IT manager, said forecasts were previously done on spreadsheets and it's a laborious task to create more spreadsheets and calculate how much stock is needed in order to buy in raw materials.  "We've installed it as a platform to support us as we grow over the next five years rather than having to replace it every two years." 

Spotlight on Lawson

 - All the tools for the task

Lawson specialises in manufacturing and distribution companies "people who make and deliver stuff" and need to manage logistics or transportation. The company came from a purely midrange computing background focused on IBM's AS/400 but re-written in Java the software is now available on Microsoft NT and SQL database, Sun's Solaris platform for Oracle database as well as IBM's RS/6000 and DB2 database environment.

To date its Movex ERP system has been purchased by 21 New Zealand organisations with an annual turnover of between $50-$500 million. Movex includes financials, manufacturing, distribution, e-commerce, business intelligence, maintenance repair and overhaul, service and rental and asset management modules. Hosted ASP access is an optional extra. The niche is food and beverage, dairy, meat processing, fashion and apparel, distribution and pharmaceutical companies.

Most clients are still in the late implementation stage although Tegel Foods was a pioneering site shortly after Lawson first set up here four and a half years ago. Other key customers include Montana Wines, Cerebos Greggs, New Zealand King Salmon, Vertex Pacific (formerly Carter Holt Plastics) and in the fashion and apparel industry Kathmandu and Longbeach.

"Most people buy Movex because it is an integrated solution. We avoid the integration nightmare of many other products because we have a sufficiently large footprint covering manufacturing, distribution, transportation management, financials, customer order management, CRM, partner management the whole gamut of business requirements," says Lawson New Zealand CEO Dougie Beck.

Consulting is a key step ahead of implementation. "We go in and evaluate the 'as is' and 'to be' business processes. One of the tools we have is a process modeling kit which is already populated with best of class business practices targeted to each of the areas we focus on including fashion, food and beverage or automotive distribution," says Mr Beck.

He says most companies buying Movex are replacing legacy systems and begin with the basics of manufacturing, distribution, customer order management, inventory control and financials to help get the infrastructure and back office systems in place. The next step is collaboration with suppliers and customers.

Financials just a tick in the box

While the ability is there for customer and suppliers to access their data on the web through the Movex system, Mr Beck believes most haven't gone far enough down the collaborative value chain to allow that to happen. Cerebos Greggs is perhaps the most advanced using the web technology with their Robert Harris franchisees accessing ordering information and check their accounts on-line.

While not its key focus, financials is not a hurdle for Lawson. "It's robust and essentially just a tick in the box. We rarely sell on a modular basis, we tend to sell full footprint." There are a few exceptions including Kathmandu and Longbeach which have no need of a manufacturing system as they've sub-contracted this function to Asia.

Another exception is Auckland-based Argent Metals suppliers of aluminium wheels and structural components to Ford Motor Company and Mazda in the US and Australia which had an urgent need for a new financials system when it changed ownership in August 2001.

The company was previously part of Ford but sold to the ION group and needed an integrated system to bring its corporate information together which had strong reporting capabilities. Argent which has a turnover of NZ$140 million and employs 550 people was pleasantly surprised when it chose the financial module from Lawson's Movex suite and had it up and running within a month.

According to Ross Petrie, Argent's finance and administration manager, the implementation went smoothly and the package is doing a lot more than he originally anticipated. "It will cut out a lot of reconciliations which are time consuming for our business."

Vertex Pacific manufactures rigid plastic packaging for the industrial, food, food service and animal health industries locally and offshore and recently signed up to take on Movex e-collaboration module.

Vertex sought a core system that was separate from that of its previous owner Carter Holt Harvey which had a centralized SAP application and required fewer resources to manage with a high degree of user control.

Elimination of manual processes

"We believe Movex provides a broader range of cost-effective functionality combined with relevant features such as advanced production planning and business warehouse compared to the current SAP configuration," says Vertex Information Technology Manager, Dee Ankersmit.

"Our business objectives for a new core system included the elimination of manual processes, streamlining the workflow from receipt of raw materials to distributing the finished product delivered by a system that could be implemented on time and on budget." The full suite of Movex is expected to be up and running by June. The enterprise system will serve 150 users. Vertex has a manufacturing operation that involves 3500 stock items, 1500 sales orders per month and services 880 customers.