Kokoh Inti Arebama was formed in 2004 to provide a nationwide distributorship service for building materials from KIA ceramic tiles. The company’s biggest challenge was to maintain the ability to control and manage the operation of its growing number of branches. It needed to ensure that the branches follow every rule including the terms of payment for each individual customer. To drive growth and attract more principals, it also had to accommodate their demand for timely market and other data. The requirements were met when it replaced its older, in-house developed application with Microsoft Dynamics AX. Today, financial reports are available in realtime, and principals can make timely decisions based on accurate data. The company also has the ability to minimize its risks of bad debts, etc., through direct control over its distribution channels.

Situation

PT Kokoh Inti Arebama was established to fill the need of Indonesia’s leading ceramic tile maker KIA. Another business goal was to leverage its network of branches and customers to become the trusted distributor for a much wider range of building materials.

Over the years, it was appointed the distributor for Kansai Paint and Claytan Sanitary Ware from Malaysia. Both are for certain areas in Indonesia. Currently it has 17 branches in the major islands of Indonesia, serving around 5000 customer outlets. When the company was first getting started, it relied on an application that it had developed in-house to maintain its financial records. Soon it became obvious that this application could not support the growth of the company.

First, it did not have what it took to ensure strict control over its growing number of branches. Every branch, for example, must follow the credit policy set by the Head Office. This included the allowable limit of credit amount an individual customer had and his maximum time limit. The branches do not have the authority to change these limits, only the Head Office does.

The problem was that the old application did not have the functionality to allow the Head Office to closely monitor the sales activities at the branches, and there were times when the credit policy was not followed.

Second, the principals needed realtime financial data for decision-making purposes. Using the old application, Kokoh Inti Arebama typically took one month to get all the data together, rendering it unusable to them.

Third, the principals also needed access to market data to find out which products were selling well in which regions in the country so that they could work out more effective strategy.

It was a requirement that Kokoh Inti Arebama had to fulfill to attract more principals. Finally, Kokoh Inti Arebama also had to keep track of the sales at the branches so that they could manage their inventory more effectively and efficiently and organize the shipment in time to meet local demand.

Clearly, a more powerful business management solution was necessary to replace the old application and solve these business challenges.

Solution

By the end of 2004 it became critical that Kokoh Inti Arebama replace its legacy application with company with a perfect record in manufacturing and distribution sectors, was appointed as the Microsoft partner to implement Dynamics AX at Kokoh. With its deep understanding of Kokoh’s business, it was able to deliver a client specific solution and localization using Axapta Dynamics Xcelerator (ADX).

Benefits

A distribution business is known for its slim profit margin while the risk level is high. Therefore it is crucial that the Head Office can manage risk properly, maintain strict control over the branches and foster the confidence of its principals. Microsoft Dynamics AX enables the company to collect sales data in real time from the branches and then manage its business risks.