“Optimizing our inventory levels and costs will help us become more competitive… With Microsoft Dynamics, we are able to better manage our inventory by accurately determining key inventory parameters such as optimum stock procurement volume, average inventory turnover, costs of carrying slow-moving items ..”
Mr Johnny Chin, Senior Materials Manager, Warehouse/Inventory Department, Aqua-Terra Oilfield Equipment & Services Pte Ltd
Aqua-Terra Oilfield Equipment & Services Pte Ltd (Aqua-Terra) is focused on material procurement of oil and gas consumables for the oil and gas, marine and mining industries.
A one-stop solution provider of both hardware and customized engineering solutions to the energy sector, Aqua-Terra wanted to improve the management of its large inventory with 12,000 line items encompassing 120 brands. It needed an integrated system to streamline its operational processes, integrate its business information, reduce its inventory costs and improve management visibility. Previously, with disparate financial, sales, purchasing and inventory systems, consolidation of business figures for management reporting was tedious.
Microsoft Dynamics™ GP helps Aqua-Terra enhance its inventory management and reporting capabilities, streamline sales and financial processes to improve management visibility.
Headquartered in Singapore, Aqua- Terra Oilfield Equipment & Services Pte Ltd (Aqua-Terra) is an integrated supply and procurement specialist focused on material procurement of oil and gas consumables for the oil and gas, marine and mining industries. A wholly-owned subsidiary of the SGX main board listed Aqua-Terra Supply Co. Limited and a member of KS Energy Services Limited (KS Energy), Aqua-Terra started in 1972 as a trading house for consumable products and tools, and has since grown into a onestop solution provider to the energy sector, offering both hardware and customized engineering solutions.
The company currently holds 17 authorized distributorships for over 120 brands of consumable products ranging from high pressure flow control equipments, fluid connector assemblies, professional heavy-duty hand tools to oil country tubular goods, wellhead lubricants and offshore cargo nets. Aqua-Terra achieved 2007 revenue of about S$ 40 million and employs around 70 staff.
With the vision to be the “preferred procurement specialist and value-add partner” for its customers in the oil and gas, mining and marine industries, Aqua-Terra maintains a comprehensive inventory of more than 12,000 line items to meet its customers’ needs.
To enhance the operational efficiencies and reduce inventory costs , Aqua-Terra wanted to improve its inventory management system. The management also required greater visibility to determine optimum stock procurement volume, average inventory turnover, costs of carrying slow-moving items and more. In addition, with disparate financial, sales, purchasing and inventory systems, consolidation of business figures for management reporting was tedious and fraught with reconciliation issues.
As part of the company’s expansion into new market segments and territories such as the Middle East and China since 2005, the Aqua-Terra management saw the need for an integrated enterprise resource planning (ERP) system to enhance the financial and operational efficiencies of its fast-expanding global business.
Seamless integration and an easy-touse interface are key criteria in Aqua- Terra’s selection. “Besides costefficiencies, we are looking for a system that is tightly integrated to help streamline our business processes across our key functions and enable closer collaboration amongst the staff,” said Rodney Tan, General Manager/Director, Aqua-Terra Oilfield Equipment & Services Pte Ltd.
According to Jessenia Lee, Senior Finance Manager, Aqua-Terra Oilfield Equipment & Services Pte Ltd, “A tightly integrated system will also enable more data accuracy and better financial consolidation. This will ensure easier analysis of figures for management and ad-hoc reporting.”
Indeed, as Aqua-Terra staff are already familiar with using Microsoft® Office as its office productivity tool, the familiar Windows-based user interface of Microsoft Dynamics GP tipped the scale in Microsoft’s favour. “By choosing Microsoft Dynamics GP, we are assured of time and cost savings on training. The seamless integration with other Microsoft products we are already using ensures seamless data sharing. The intuitive roles-based design of Microsoft Dynamics makes it so easy for our staff to learn the new tool and benefit from it in their day-to-day work,” said Johnny Chin, Senior Materials Manager, Warehouse/Inventory Department, Aqua-Terra Oilfield Equipment & Services Pte Ltd. The industry-leading Microsoft brand name and its market presence further convinced Aqua- Terra of its selection of Microsoft Dynamics GP.
Due to the implementation failure of an earlier ERP system, Aqua-Terra took great care this time to select a consultant that has proven results in the field. Explaining his choice of Davidson Business Systems Pte Ltd (Davidson), a Microsoft® Gold Certified Partner, Rodney said, ”With Davidson’s 100 percent focus on Microsoft Dynamics solutions, we are assured of in-depth domain knowledge and expertise. We are very pleased with both the implementation and the ongoing support provided by Davidson. In fact, we are pleasantly surprised that the implementation took less than three months!”
Aqua-Terra implemented the Financial Management and Supply Chain Management modules of Microsoft Dynamics GP, in addition to a comprehensive range of Microsoft office productivity and business solutions. These include Microsoft® Office, Microsoft® Office SharePoint® Server, Microsoft® BizTalk® Server, Microsoft® Visual Studio®.NET, Microsoft® FRx, Microsoft® Windows Server® System, Microsoft® SQL Server®, Microsoft® Windows Small Business® Server and Microsoft®.Net™ Framework. The system went live in July 2006.
With Microsoft Dynamics, Aqua-Terra successfully enhanced its inventory management and inventory reporting capabilities. Sales process controls are also improved, in addition to streamlined sales and financial processes, which help to increase management visibility.
Enhanced Inventory Management
As a company focused on the material procurement of oil and gas consumables, the efficient management of Aqua-Terra’s massive inventory -- made up of 12,000 line items across 120 product brands with a monthly value averaging between S$ 8 and S$ 10 million -- is the mainstay of its business.
“Optimizing our inventory levels and costs will help us become more competitive, while enabling us to better fulfil our customer orders. With Microsoft Dynamics, we are able to better manage our inventory by accurately determining key inventory parameters such as optimum stock procurement volume, average inventory turnover, costs of carrying slow-moving items and more,” explained Johnny.
Aqua-Terra maintains three separate site locations in MGP for its Active, Trading and Consignment stocks. Using the Stock Count Cycle Assignment window in Microsoft Dynamics, Aqua-Terra is able to specify the frequency in which certain stock items should be counted, with different count frequencies set for different item-site combinations. For example, for items stored at a newer warehouse location where inventory control procedures might not be fully implemented, Aqua-Terra enjoys the flexibility of setting a higher count frequency. This has enabled the company to accurately track its stock items across multiple locations and improve its picking efficiency.
“With Microsoft Dynamics, we are now able to track fast versus slow-moving items to adjust our procurement re-order points to optimize inventory turns. We can also allocate the stock quantities to the most logical warehouse, which helps to streamline our warehouse processes and minimize the delivery lead-times to our customers,” said Johnny.
As some of its stocks are “kits” made up of numerous component items, it is important for Aqua-Terra to track the availability of each kit component. This way, its staff can make decisions to initiate immediate assembly of available components or place orders for components whose stock levels fall below the minimum. In addition, Aqua-Terra also needs to manage the complexity of preparing the sales documents for these kits, as most customers only wish to see one final product (the kit) on their invoice, rather than the list of components that make up the kit. The complication arises as some of these components are noninventoried items, which are not maintained in the item master record.
To cater for this special requirement, Davidson helped to customize a functionality allowing Aqua-Terra to update the unit costs of these noninventoried items, while linking it to the purchase order and the corresponding sales invoices to enable accurate posting. To ensure the unit costs of these non-inventoried items are only modified by authorized personnel, any staff who wants to modify these unit cost fields will be prompted to enter a valid password.
Increased Inventory Reporting Capabilities
Using its previous system, Aqua-Terra found it difficult to determine key inventory indicators such as: optimum stock procurement volume, average inventory turnover, costs of carrying slow-moving items and more. This meant that, during every month-end closing, a physical stock take was required to reconcile the large variances in the inventory figures represented in the financial statements versus the actual counts in the inventory reports. This process often took up to one week to complete. Moreover, any ad-hoc requests for inventory reports also meant getting help from its IT department. Depending on the availability of IT resources, these reports could take up to two weeks to generate.
“With SmartList Builder for Microsoft Dynamics, we can now “self-service” our queries on the inventory data without relying on the IT department. The ability to create our own custom SmartLists allows us to link data from Microsoft Dynamics and analyze these information according to our criteria. With real-time data analysis, Aqua- Terra staff can now customize the views to discover the relationships among the information pulled from various sources,” said Johnny.
He added, ”After implementing Microsoft Dynamics, our inventory figures are now more updated and accurate. Physical stock takes have been reduced to once a year, from the previous monthly frequency. More importantly, Microsoft Dynamics has helped to increase our visibility and speed up our decision-making process.”
Echoing the same sentiments, Rodney added, ”The use of SmartList Builder has certainly helped to relieve our IT department from such ad-hoc requests. Microsoft Dynamics has helped to optimize our IT resources and enable us to focus on more value-added IT functions.”
Streamlined Financial Processes
According to Jessenia, month-end closings are now a breeze with Microsoft Dynamics. “Instead of spending up to a week for month-end closings, our staff now require just a few hours to do the same. With Microsoft Dynamics tightly integrated financial management modules, we are ensured of accurate up-to-date figures with minimal reconciliation,” said Jessenia.
Building custom reports to meet adhoc requests from the management is now eased with the use of Microsoft FRx with Microsoft Dynamics. Its tight integration with Microsoft SQL Server ensures that more accurate, robust and flexible reports can be created without worrying about double entries and human errors. More active analysis of the business information can be conducted by exporting the Microsoft FRx reports to Microsoft Office Excel® PivotTable® and PivotChart®.
“Using Microsoft FRx with Microsoft Dynamics, we are empowered to build more detailed reports in less time. The report building process has been simplified with the elimination of timeconsuming processes for updating and maintaining reports. It is now so much easier to prepare our consolidated monthly financial reports for KS Energy,” explained Jessenia. With streamlined financial processes, staff overtime has also been reduced, translating to additional time and cost savings for Aqua-Terra.
Improved Sales Process Controls
To enable accurate sales performance tracking, Aqua-Terra management requires the tracking of Profit and Loss by Business Sales Division, Sales Person and Product Category. With Davidson’s customization to confine General Ledger (GL) accounts during Sales Transaction processes and allocate appropriate costs and profits to divisional GL Accounts, some minimal setup was required to assign the salespersons to their respective divisions. This in turn, enables the automatic allocation of costs and profits to the correct divisional GL accounts. Aqua- Terra now enjoys precise and timely tracking of sales performance, which eases both high-level financial position management reporting and detailed single transaction queries.
With Microsoft Dynamics, Aqua-Terra also gained more control to prevent the transfer of sales item lines from one sales order to multiple sales invoices due to oversight. Aqua-Terra’s complex business requires the production of multiple finished products assembled from a number of components in the Sales Order Module. Tight controls are critical to ensure that multiple invoices are not created erroneously due to the unmanageable number of sales lines to be fulfilled before being transferred to invoices. By devising a control customization, Davidson helped Aqua- Terra successfully eliminate the ineffective steps of having to re-create Sales Orders and void Delivery Orders and Invoices by its Sales, Warehouse and Finance departments.
To improve the data integrity of its costing information, Aqua-Terra also needed a way to automatically capture the costs of its non-inventoried items for Sales Order upon creation, linking and receiving of Purchase Orders and GRN. With Davidson’s customization, Aqua-Terra’s staff no longer needs to manually track the costs of these noninventoried items, which are not recorded in the Item Master, in the Purchase Order and Sales Order modules. With up-to-date costing information available at the Sales Order stage, accurate Profit reporting generated at this stage empowers Aqua-Terra’s sales managers to accurately appraise the profitability of each sales transaction. For lossmaking deals, quick decisions can be made to disapprove these transactions.
“With these controls in place, Microsoft Dynamics has enabled us to accurately track our sales performance by our sales territories, down to every individual salesperson. The ability to drill down to the Profit and Loss of each territory, instead of just looking at the company-view, provides the Aqua-Terra management with more insights to make decisions to support our expansion plans into the global market,” said Jessenia.
Enhanced Management Visibility
Indeed, overall management visibility has increased with Aqua-Terra’s enhanced reporting capabilities. Microsoft Dynamics easy-to-use drilldown functionalities reduces the Aqua-Terra management’s reliance on its accountants for ad-hoc requests.
“When running the business on a dayto- day basis, sometimes the management team just cannot afford to wait for a report to be generated for a specific piece of information required. With Microsoft Dynamics familiar interface and easy-to-use drilldown functionality, the management team is now able to “self-service” by accessing the required information easily to help them make quick decisions anytime, anywhere,” said Jessenia.
For more information on Microsoft Dynamics, visit Microsoft www.microsoft.com/asia/dynamics email: email@example.com
For more information about Davidson, call 6773 0100, email: firstname.lastname@example.org visit: www.davidson.com.sg
For more information about Aqua-Terra Oilfield Equipment & Services Pte Ltd, call 65 6319 4666 visit www.aqua-terra.com
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