4-page Case Study - Posted 12/1/2008

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Map Coffee

Coffee Distributor Counts Beans Faster with Microsoft Dynamics GP

Melbourne-based Map Coffee supplies restaurants, cafes and the corporate market with coffee, coffee-making machines and coffee-related products. The company wanted to develop its ‘bean-to-cup’ business proposition, under which Map Coffee places machines on corporate premises and charges according to the volume of coffee consumed. To do this, the company needed its sales force to work to a new franchise and distribution model, but did not believe this was practical using its existing mix of spreadsheets and an accounting package. Working with Microsoft® Gold Partner Oakton, Map Coffee installed Microsoft Dynamics® GP, with a mobile PDA data interface based on the Windows Mobile platform. The company gained a finance and inventory tracking system that kept pace with its business development, and supported the new franchise and distribution model. The system also significantly reduced the workload for Map Coffee’s administration staff, and has provided the company with the business management information it needs to expand quickly in Australia and prepare to launch its business abroad.

Situation

Map Coffee began business in Melbourne, Victoria, in 2002, supplying and servicing cafes and restaurants with premium quality Italian roasted coffee, coffee-making machines and associated products such as cups and flavourings. Following a change in ownership, the coffee wholesaler developed an additional business model which would allow it to deliver coffee directly to corporate customers, rather than through retail establishments.

The ‘bean-to-cup’ concept is based on vending machines, situated in corporate premises, dispensing freshly brewed coffee. Map Coffee charges clients on a ‘per cup’ basis, according to the volume of beans used in a period. The machines are serviced by staff who visit the customer premises.

“We’ve been growing rapidly,” explains Dale Morrison, Map Coffee’s financial controller. “And the shift to ‘bean-to-cup’ proved very popular. In fact, we expected bean-to-cup to be our main source of revenue in the future.”

Map Coffee relied on a combination of accounting software and spreadsheets to manage its inventory tracking and finance. An independent business review concluded that the system was inadequate.

“Our IT set-up simply wasn’t coping,” Morrison says. “The accounting package we used crashed frequently under the more complex workload of the bean-to-cup model.”

Staff were not easily able to track invoices for coffee against the machines that were placed at corporate sites, so administration staff needed to collate information manually.

“Naturally, this proved unreliable and haphazard and made the entire bean-to-cup business model exceptionally difficult to track and administer,” says Morrison.

Besides developing the new business model, Map Coffee wanted to incentivise the staff who serviced those customers with franchise-type arrangements.

“We saw commissions and royalties as a way of encouraging sales reps,” says Morrison. “Besides driving our business, if they were accountable for their clients, that would also simplify our back-office operations, because they would have the responsibility of keeping those accounts in order.”

The expansion of Map Coffee’s businesses also complicated its accounting needs.

“The business was crying out for a new system to handle the expansion of Map Coffee into other states, as well as the introduction of new product lines,” adds Morrison. “While we wanted to be able to sell more products, we hadn’t anything in place that could manage more complex warehousing. It was not unusual for us to lose track of a palette of coffee every month.”

Solution

We saw Dynamics GP as the best way to integrate the different aspects of the business and remove some of the manual processing. Dale Morrison, Financial Controller, Map Coffee

Oakton evaluated a range of potential software products, including MYOB, SAP B1 and Microsoft Dynamics® GP 10.0.

“We held a series of workshops to establish Map Coffee’s requirements,” says John Mallon, Oakton’s business development manager. “Then we conducted a series of demonstrations on Dynamics GP, which established that the product had the capabilities that Map Coffee were looking for and could be integrated with their other systems and business flows.”

Map Coffee selected a Microsoft Dynamics GP package with a number of key modules: core financials, sales distribution, contract administration, financial reporting (FRX), Smartlist querying, and SQL server reporting. “We saw Dynamics GP as the best way to integrate the different aspects of the business and remove some of the manual processing,” says Morrison.

“We held pilot sessions with the key users to define the current and future business flows, and modelled various scenarios in Dynamics GP,” says Mallon. “This enabled us to identify how we needed to customise the product to achieve the cost reductions. This also ensured that the product would deliver benefits and cost savings to the customer for the planned expansion.”

To ensure that the system could support the mobile requirements of the new franchise model, Oakton partnered with Sydney mobility solution provider Spectrax to design a PDA interface module for Dynamics based on the Windows Mobile platform.

“Using Microsoft Dynamics GP, we designed a procedure to capture and synchronise transaction documents, such as invoices, backorders and cash sales,” Mallon explains. “The information for these documents is entered into a driver’s MC 35 Motorola PDA and sent, via a national GPRS data network, to the back-end finance system.”

“The data is used to produce a Driver Activity Statement,” Morrison says. “This calculates weekly commissions and franchise charges. Although the franchise model presented a radical change from the way we did our accounting, the mobile interface for Dynamics GP handled it perfectly.”

Benefits

Microsoft Dynamics GP has given Map Coffee the ability to grow in exactly the way it wants. Dynamics GP has helped make its franchise servicing model work and improved visibility on finance and inventory.

Efficient business and asset management

Map Coffee can now keep a careful track of the 250 machines it has placed with customers on bean-to-cup contracts, and invoice each without excessive administration.

“In Dynamics GP, we attach a serial number to each machine as part of the customer contract, which means we know where it is at all times,” says Morrison. “There’s no way that it can fall through the cracks. When we receive coffee sales information from the field, we can immediately identify the machine by its serial number.

“Now we know exactly what to bill the customer according to their contract. This is important because within our bean-to-cup business model, each corporate contract is structured differently. We can match up the contracts that our staff negotiate with all of the orders that come in for a particular machine.”

Revenue assurance

Knowing where its machines are and that they are correctly assigned to customers and contracts has another upside. It ensures Map Coffee isn’t missing out on money owed, which constitutes a significant danger when machines move frequently between customer sites.

“By tracking a machine by serial number and attaching a contract to it, I am not going to miss out on revenue,” Morrison says. “Previously I had no way of knowing whether we were losing revenue. With Dynamics GP, we can’t help but keep track.

“For instance, I can create a Smartlist on all machinery and discover immediately what’s been invoiced to make sure nothing is missed. The Microsoft solution helps bring integrity to the business processes of our new model. We can be sure that we are invoicing the right customer against the right machine.”

Previously, we would have had to hire extra administration staff as we grew. With Dynamics GP, we expect to save on one or two people. Without taking into account the additional things we can do, the system should pay for itself within two years. Dale Morrison, Financial Controller, Map Coffee

Improved processing and reduced administration

Dynamics GP has played a crucial part in automating processes that were once managed manually. In particular, it has enabled the company to move confidently to the driver-franchise business model, devolving account responsibility onto the field staff. Since data is entered automatically onto PDAs, the company has less need for back-office staff to process sales.

“Under the franchise plan, the driver takes responsibility for stock and cash transactions. He holds onto the cash, and we don’t have to reconcile it,” says Morrison. “The advantage is that it cuts down on workload, especially with inter state business administration. It simplifies the way we do business.

“Previously, we would have had to hire extra administration staff as we grew. With Dynamics GP, we expect to save on one or two people. Without taking into account the additional things we can do, the system should pay for itself within two years.”

Financial clarity

According to Morrison, Dynamics GP has provided Map Coffee with a clearer view of its finances, especially business conducted outside of Victoria.

“We can see more clearly what is happening in other states,” he says. “We can run them as separate profit centres, which we couldn’t do previously. We can also accurately work out the cost of servicing our customers, taking into account their location, which gives us a better understanding of our bottom line.”

In addition, Dynamics GP is – according to Morrison – a ‘whiz’ at handling complex financial calculations. At the touch of a button, the software calculates the monthly depreciation on all of Map Coffee’s machines.

“It just makes the business more visible, so we can see each key area is being properly managed,” he adds.

Business expansion

Lastly, Map Coffee is now better positioned for long-term growth.

“We’re really only at the beginning of our expansion plans,” says Morrison. “We have talked a lot already about expanding into overseas markets. We’re not there yet but it was important we had a robust, reliable solution in place that could be scaled as we grew.

“We didn’t want our financial reporting to be inhibited in any way. We wanted to be able to consolidate business lines by region or, if it happens, by country. Having that flexibility is a crucial part of our future success.”

Microsoft Dynamics

Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.

For more information about Microsoft Dynamics, go to: www.microsoft.com/australia/dynamics

For More Information

For more information about Microsoft products and services, call 1800 197 960. To access information using the World Wide Web, go to: http://www.microsoft.com/australia/dynamics/

For more information about Oakton services, call 03 9617 0200 or visit the Web site at: www.oakton.com.au

For more information about Map Coffee products and services, call +61 3 9695 1666 or 1800 239 438 or visit the Web site at: Mapcoffee.com.au or beantocup.com.au