Rich Products is a global food producer with 7,500 employees and annual turnover of $3bn. Its UK arm supplies leading supermarkets and high street coffee shops with sweet bakery goods which it makes from sites in Hampshire and Worcestershire. Rich UK has doubled its turnover to £30m in four years with the ambition of ingraining change into its culture.
Before embarking on its change initiatives, the company identified what it needed to be working towards. “We need to be world class at innovation, customer service and delivering products,” says Rich UK’s supply chain manager Steve Brown. “We don’t need to be world class at the speed with which we raise an invoice or how attractive our purchase orders look. The things that set our business apart are the flair, the innovation and the product.”
Industry–specific factors which make efficiency even more important in food and drink production. In baking, stock shelf-life is typically four to six days so effective stock control is vital. Over-producing and holding stock is therefore not an option — order lead times are day one for day two.
Until January 2009, Rich Products had been running an MRP system which consisted of an accounting package with a manufacturing module from a different vendor attached to it.
No further IT development was being carried out by either software company and the system did not include a host of features that over time the company had realised it needed to secure the optimised efficiency it sought, including forecasting, fixed asset control and holistic inventory control. In addition, data extraction was slow and unreliable and the interface was not user-friendly enough to teach staff how to use it properly.
So Rich UK sought a fully integrated ERP system; one which included a single repository for all business information, enabled management decisions to be made based on data, and encapsulated all business processes; from order-tocash, procure-to-pay, and throughout the manufacturing process. Before implementing a new ERP system, the company evaluated all of its processes to ensure that it would not simply be implementing a new system based on broken ways of working. “We looked at our business processes as they were and went through a massive change management programme to eliminate inefficiencies,” says Brown. “The last thing we wanted was to customize a new system to a process which was determined by the old, ineffectual system. So we went through everything, took out any duplicated efforts and introduced the RACI matrix (Responsible, Accountable, Consulted and Informed) against all our standard operating procedures.”
To do this, experts from Rich Product’s US parent company were brought in and some of Rich UK’s employees were trained in process mapping. All of the stakeholders in each process were involved in qualitative and quantitative research in how to streamline these business needs. “It was this initiative that really put change into the hearts and minds of our people, meaning we were then primed for the benefits that a better IT system could provide.”
The company then set on the journey to introducing the ERP software it had chosen — Microsoft Dynamics AX with Columbus as its partner. The software was chosen based on best practice guides from other global companies in the Rich group that had already found high flexibility in the product.
“We found that certain other products are more rigidly structured and this means tailoring the business processes to the ERP system,” says Brown. “Dynamics AX can be scoped to the way our business runs.” As for the partner, Rich Products felt that Columbus offered the best option in terms of the business consultancy, configuration and after-service support for the solution. Brown adds: “We were impressed with the industry expertise that Columbus could offer, the number of manufacturing customers they already had and we felt confident that they understood our business requirements fully.”
Two Columbus consultants worked on the project for six months leading up to going live; this involved customising the product, running pilots on processes and training key users. “That half year’s preparation culminated in a weekend of blood, sweat and tears across the team as we changed from the old system to the new,” Brown adds. Then, at 2am on January 5 the company began to manufacture through Dynamics AX and it has never looked back.
We’ve been able to take out large quantities of safety stock because we know what we’ve got and what we need.” Steve Brown, Supply Chain Manager, Rich Products
Mary Hunter, managing director of Columbus, says: “Rich Products are a great customer to work with. They have a clear vision around manufacturing excellence and I am delighted that through our expertise in manufacturing and the benefits achievable through the functionality and flexibility of Microsoft Dynamics we are helping turn their vision into a reality.”
Rich Products UK has enjoyed numerous benefits from the new system: raw materials inventory has been reduced by 10%; On Time In Full (OTIF) service levels have increased by 1% to 98.5%; and indirect headcount — those not involved in manufacture — has been reduced by 15%.
“We now have visible stock. Whereas before people had to go around counting things and we’d get an update perhaps once a day, now the system updates in real time,” says Brown. “We also don’t need to run such intensive stock taking procedures at month end and we’ve been able to take out large quantities of safety stock because we know what we’ve got and what we need.”
Yield figures are also live which means any problems can be identified quickly and amendments made.
Employees report that they are able to do their jobs more effectively. For instance, Theresa Pickard, finance manager, says: “Since the implementation of Microsoft Dynamics AX in 2009, the finance department have experienced a number of time saving benefits. This has directly resulted in reducing the time required to complete our month end process by one day. We find AX to be a user friendly system with a wide range of easily accessible reports.”
Part of the efficiency drive was to give ownership and accountability of certain core processes to specific individuals. This requires cross–functionality, something Microsoft Dynamics provides. The system allows disparate groups of people to work together and have the same visibility. For instance, Theresa wouldn’t usually be able to view orders as they are placed so could not effectively manage the order-to-cash process but the new system allows that visibility and thus allows her to own the process. The efforts have been recognised externally too. The company was made Bakery Supplier of the Year in 2009 at the Bakery Industry Awards, sponsored by Sainsbury’s.
Overall, the biggest benefit is not the specific changes that have occurred, it is the fact that change is now possible. “It’s about working smarter, not harder,” says Brown. “We had to change. If we didn’t, the last 18 months could have been very difficult for us. In tough market conditions, knowledge is power. Our ambition was to find new ways of looking at things and inspire better ways of working which are beneficial to everyone within the business. Dynamics AX is the platform which has liberated us to make that happen.”