4-page Case Study - Posted 8/15/2007
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Distribution company helps employees improve the flow of goods and gain visibility to manage stock levels
Magna Pacific, the leading independent DVD distributor in Australia and New Zealand deployed a computerised supply chain management solution to help their employees manage the shipment of DVDs and videos to retail and rental chains and independent retailers across Australia. The system gives them a real-time view of inventory across their organisation enabling them to better manage stock and deliver far superior customer service. The introduction of automatically generated orders in the warehouse, integrated with radio frequency (RF) guns to scan and display the required goods has introduced other ‘people ready’ benefits. Most notably, improving the efficiency of their operations with warehouse staff now able to ship four times as many orders with 99.99% accuracy through a greatly streamlined picking and packing process. The new solution is also helping them build better customer and supplier relationships because staff know immediately if and when they can deliver on orders, and they can easily scale to accommodate requirements.
Situation
Brisbane-based Magna Pacific is the leading independent DVD distributor in Australia and New Zealand with a catalogue of over 1400 DVD and video titles.
The company has alliances with a wide range of leading film and television production companies whose products it distributes into national rental and retail chains as well as to independent retailers, newsagents, stores, and direct mail houses. In 2006, as they planned their expansion from a 1400 square metre site to a 4000 square metre distribution centre, Magna Pacific decided to simultaneously upgrade to a world-class supply chain management solution in order to gain full visibility across their supply chain.
At the time their paper-based system was slow, cumbersome and inefficient. More importantly, its employees couldn’t keep pace with growth and was severely hampering productivity and the bottom line. Chris Bailey, National Operations and IT Manager explains: “The move provided an ideal opportunity to transform our supply chain management and give us the visibility and tight inventory control we needed.”
Solution
Magna Pacific was already using Microsoft Navision for their Enterprise Resource Planning (ERP) database, which tracked their DVD and video inventory. So, after consultation with Manhattan Associates, their Microsoft Certified Partner, they decided to integrate this with a new supply chain management solution, Integrated Logistics Solutions, running on a Microsoft® SQL Server™ 2000 database. Built on Microsoft .NET, Integrated Logistics Solutions steps beyond the traditional boundaries of a warehouse management system to include slotting optimisation, labour management, supplier and customer enablement and performance management functions. The result is a system that can help Magna Pacific’s employees reduce operational costs, increase profitability and ensure that end consumers receive their goods when they expect them.
With an end-to-end solution they can also balance supply with demand because when orders are generated in the supply chain management system, data is synchronised in real-time with the ERP system, automatically updating inventory details for the employees to make timely decisions regarding stock reordering.
The new supply chain management system also introduces a new level of sophistication and automation into the ‘pick and pack’ process for the workers in the company’s warehouse. Once an order is generated, a label is automatically printed in the warehouse. Using wireless radio frequency (RF) guns, warehouse staff scan the label and a small screen on the device displays what size box to select and which titles are required for the order in their particular zone. The box then travels to the next of three warehouse zones where staff repeat the process, adding any required products until the box arrives at dispatch. At this point dispatch staff close the box and scan it one final time to automatically generate a paper invoice, which is then sealed into the package. The execution, integration and orchestration of these processes is supported by a range of Microsoft products.
Benefits
Integrated Logistics Solutions, Magna Pacific’s new supply chain management solution, immediately provided the company with a wide range of cost and productivity benefits. Most importantly it provided its employees with the much-needed visibility right across their supply chain, which in turn has helped them to be more responsive.
More accurate orders
One of the most notable achievements of the new solution has been the reduction in packing errors. Packing accuracy is now 99.99%, which is a vast improvement. Bailey attributes this to the RF guns, which have changed the way that staff work in the warehouse. “Previously people moved around the warehouse as they picked and packed orders, now they move the order itself through four zones, and staff in each zone can quickly see in the display on their RF gun, which stock is required to complete the order.”
Faster throughput of orders
Using the solution staff have been able to quadruple the speed with which orders can be processed. Bailey says: “Before deploying the system we struggled to complete 300 orders a day, now we can ship 1200. And that’s with four fewer staff members who were not replaced when they moved on.”
Easier to use
Job satisfaction has also increased as the process of selecting and picking orders has been streamlined. With the RF guns, staff were able to learn the new system very quickly with minimal training. Warehouse Manager Jason Chellew comments: “Most of the staff were up and running in under ten minutes because familiar icons and the Microsoft interface makes the system really easy to learn and use.”
End to end visibility
Another essential benefit has been the ability to see the status of orders and inventory from one end of the company to the other. Bailey comments: “With the solution, the whole company has a very accurate representation of what stock we have and where it is. Our sales teams have a small Web-based Applet and when they key in an order number they can see its status at a glance. This has improved our customer service levels and enabled us to be far more responsive as an organization.” When Magna Pacific migrated their stock to the new system they discovered a lot of unaccounted for inventory. Now that everything is logged and tracked in the new system, they can avoid expensive overstocking and storage of unnecessary quantities.
Return on investment
The savings in terms of overhead and the increased operational efficiencies have enabled a very rapid return on the company’s investment. Michael Brand, Chief Financial Officer comments: “ We’re eight months into using the new Microsoft-based supply chain management system now, and we can now accurately forecast that it will return on investment in under twenty months; which is faster than we anticipated. We’re very happy with the results.”
Prepared for future growth
As a successful and thriving company, Magna Pacific is now in a position to grow its retail channel and its customer base. As Bailey explains: “Having a well managed supply chain gives us the visibility and the confidence to take on new clients or new shipments with the knowledge that we can definitely deliver what we promise.”
The People-Ready Business.
A people-ready business is one where people can apply their unique skills, insights and experience to create new products and services, work responsively with customers and partners, and drive operational excellence in every aspect of the business. People-ready businesses support people with knowledge, practices and tools so that they can add the extra value that helps differentiate successful organizations in a competitive, fast-moving global economy.
www.microsoft.com/peopleready
This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published August 2007
Keywords: Automation Devices
