PT Pigeon Indonesia manufactures high quality baby products for local and export markets. In 1995, it started as a small joint-venture operation owned by PT Multielok Cosmetic of Indonesia and Pigeon Corporation of Japan. With only a small factory to operate, it did not require an automated financial solution. However, as the business grew and it began to supply its products to Pigeon Singapore to be distributed across the Asia Pacific region, a powerful financial application was required. With the help of Tectura, a Microsoft Gold Certified Partner, Pigeon Indonesia implemented Axapta, which is today known as Microsoft Dynamics AX. The application replaced the manual, Excel worksheet-based financial reporting that the company had used since it started operation. The reporting time is down from 15 days to real time. Accuracy has been maximized and production control is now automated Microsoft Dynamics AX.

Situation

More than Twenty years ago, all Pigeon’s baby products sold in Indonesia were imported from Japan by a trading company PT Multi Indocitra. In 1995, a decision was made to set up a joint venture company called PT Pigeon Indonesia. PT Multielok Cosmetic controlled 65% of the share, while the remaining 35% was owned by Pigeon Corporation of Japan. The structure of ownership has not changed.

Based in Serang, Banten, Indonesia, the company started its production with a onemachine factory. It began by producing nipples for the local market. As the operation was still very small, the company had no problem handling its finance and production manually using Excel worksheets.

However, in the years that followed, the company grew rapidly in size and became a production base for the regional market. Its product lines include baby nursing bottles, feeding sets, training cups and pacifiers. Some of the products are shipped to Singapore, to be distributed by Pigeon Singapore to the rest of Asia-Pacific market (excluding Japan).

It now has around 350 employees and theproduction machines are running almost 24x7 to meet demands. “In 2005, our production activity was stopped only for three days,” recalled Kandhaga Dharma Gatha, President Director, PT Pigeon Indonesia.

As the operation grew in scale and complexity, Pigeon Indonesia began to feel the need to have an integrated system to manage its production and finance. Excel worksheets no longer served its needs. “We required a powerful system that would automate a lot of our financial reporting processes and streamline our production control,” explained Kandhaga.

has always lived by. The old manual system, which relied on Excel worksheets, was still used in parallel with the new Microsoft Dynamics AX system until December 2006. It was in January 2007 that the company started using only the new ERP solution. “It was very important for us to make sure that the system worked as expected, since it was a pilot project for the entire group,” said Kandhaga.

In early 2007, Pigeon Indonesia received the Dynamics Hero Award from Microsoft Indonesia for their successful adoption of Microsoft Dynamics AX.

Solution

The selection of the solution was made by the group that Pigeon Indonesia was part of. Standardization across the group was a must, as eventually the systems in the individual companies would have to be linked together. In 2004, the group decided to go with Axapta, which is now known as Microsoft Dynamics AX.

“The decision to go with this solution was mainly based on the fact that it was a Microsoft product,” admitted Kandhaga. He alluded to another company he was familiar with that chose a different product and had yet to see the return on their investment.

Pigeon Indonesia was selected as the first site within the group for the implementation of the solution because its processes were the most straightforward. “We are a manufacturing operation, and we can use Microsoft Dynamics AX without substantial modification,” said Kandhaga. He also underscored the need to avoid too much modification in any ERP implementation, as it would usually lead to prolonged implementation and even project failure.

His company decided to work together with Tectura, a US-based company that specialized in implementing Microsoft Business Solutions.

Characteristically, Pigeon Indonesia was very careful in every step that it took. During the negotiation period, for example, it requested a presentation from Tectura. To convince the company, Tectura brought their own customer to give a testimony regarding Microsoft Dynamics AX.

The implementation started in mid 2005, and the Go Live took place in mid 2006. The long implementation process again reflected the discipline Pigeon Indonesia activities. “Day-to-day data, such as the bill of materials, is already stored in the system. There is no need for manual data reentry. The production line simply follows the sales order,” said Kandhaga.

Benefits

Today, Microsoft Dynamics AX provides PT Pigeon Indonesia with the tools to maximize the accuracy of its financial reporting, cut the time needed to prepare the necessary reports, automate production activities and keep track of production costs. “In the past, with only Microsoft Excel to work with, we couldn’t keep up with the demand of our fast expanding operation. Microsoft Dynamics AX gives us all the tools to turn ourselves into a world-class manufacturing company,” said Kandhaga.