“Our key objective from day one was to reduce manual data entry and duplication of work. Microsoft Dynamics NAV has helped us to achieve that.”
Tang Koon Fook, Managing Director, S&P Food Industries (M) Sdn Bhd

Situation

S&P Food Industries (M) Sdn Bhd (SPFI ) pioneered the manufacturing and production of instant coconut milk powder in Malaysia. When it was first marketed in 1983, it became the first food of its kind in Malaysia and currently is still Malaysia’s leading brand.

SPFI is Malaysia’s largest producer of coconut milk powder and has a maximum plant capacity of 4,000 metric tonnes annually. Some 80 percent of its products are exported internationally to Europe, Americas and Asia.  SPFI has some 120 employees at its manufacturing facility in Perak, and in its headquarters located near Kuala Lumpur.

The company had been using an accounting solution from Sun Microsystems for a number of years. However, it was not integrated with its manufacturing system and could not cope with SPFI’s growth, in particular its sales which had tripled since 2002.  Many of the company’s business processes were manual and required human intervention. As its business and manufacturing systems were not integrated, data had to be re-keyed into disparate applications.

To enable it to compete at the global level and integrate its operations, SPFI decided in 2004 to replace the existing solution with an enterprise resource planning (ERP) solution, said SPFI Managing Director Tang Koon Fook.

“Competition is very stiff and one of our key challenges is to control our cost. As we grow bigger, any cost savings can turn out to be a large sum in absolute terms. We felt it was time to deploy an ERP system to control our cost and help us work more systematically and efficiently,” he adds. The company subsequently decided to deploy an ERP system developed by a local software vendor. However, the move proved to be a disaster as the solution failed to meet SPFI’s expectation. “The system was giving us a lot of problems. It was too basic, checks and controls were not there, and the response from the vendor was slow.”

“We knew then it was a mistake and decided to scrap that system after using it for about nine months. We told ourselves the next system we acquire must be from a reputable software company,” says Tang.  SPFI sourced extensively for ERP solutions from international vendors before deciding on Microsoft Dynamics NAV.

Solution

Tang said the company opted for Microsoft Dynamics NAV because of its comprehensive features, user-friendliness, cost-effectiveness and availability of resources familiar with the software.

A major plus point was that Microsoft Dynamics NAV, being a Microsoft solution, had the familiar look and feel, and user-friendliness that is a hallmark of the Microsoft platform. “As we are operating on the Microsoft platform, our workers are very familiar with Microsoft applications,” says Tang.

“Microsoft Dynamics NAV is very versatile and is able to meet our business requirements. There are many companies well versed in Microsoft Dynamics NAV, so getting support is not a problem,” he adds. Tang was also assured that the resources of an industry-leading software company like Microsoft meant that the solution would be regularly upgraded and improved. SPFI appointed Microsoft Certified Partner Advance Infosys Sdn Bhd as its consultant to design and implement Microsoft Dynamics NAV solution based on its unique business requirements. Implementation of the project’s first phase commenced in November 2006 and was completed by April 2007. All the key modules including manufacturing were implemented in the first phase of the project. Subsequently over the next few months, Advance Infosys and SPFI’s IT team worked to fine-tune the system and address any issues arising. Phase 2 of the deployment will commence in 2008 with the implementation of the advanced manufacturing including capacity management module.

The Microsoft Dynamics NAV 4.02 solution runs on Windows Server 2003 and Microsoft SQL Server 2003 as its database. The servers are located in the company’s headquarters and users at its factory in Perak access the Microsoft Dynamics NAV system via remote connections. The system is currently used by some 20 to 30 operational users.

“One of the key objectives when SPFI started the project was to integrate their production and control system to Microsoft Dynamics NAV,” says Lock Wai Choong, Advance Infosys’ Business Manager. Automation and reduction of duplication of work were the bywords for the project.

“The management really set the tone for the successful implementation of this project. They shared their views on how this ERP system can help the company make better decisions and where the company can become more efficient and competitive,” he adds. All decisions were carefully evaluated and objectively decided after extensive discussion and planning with the key users.

Benefits

Improves decision making
Microsoft Dynamics NAV provides SPFI with deep insight into its business and manufacturing operations. By integrating its financial, inventory and manufacturing operations, the company now has a wealth of real-time information on which to base its business decisions.
The system provides a comprehensive range of reports with in-depth information which the previous system was unable to provide. “Now we get more information from the Microsoft Dynamics NAV system, and can get it faster. We have more reports and this is vital for effective decision-making and improved customer service,” says Tang.

“For example, we never had comprehensive aging reports previously. Now, with these reports we are able to improve our credit control. We also have stock and manufacturing reports which allow us to manage our stocks more efficiently,” he explains.

Having access to accurate and updated information is crucial for SPFI, which is competing in a global arena. “Making the wrong decision can be very easy if it is based on wrong data. The management needs timely and accurate information to make key business decisions,” says Advance Infosys’ Lock.

Tang says: “We have to react fast to changes in the business environment, for example, the fluctuations in coconut prices. Our decisions to reduce or increase our product prices can affect our business survival.” Microsoft Dynamics NAV, he adds, gives SPFI a competitive advantage by enabling it to make speedier and better decisions.

Cuts wastages
The introduction of the Microsoft Dynamics NAV system has helped SPFI reduce wastages resulting from the inefficient management of its raw materials. The comprehensive reports available enable SPFI to keep track of its inventory levels and manufacturing processes.

For example, Microsoft Dynamics NAV enables stock reports to be generated real-time when the system is updated, typically at month end. Previously, generating stock reports, a mainly manual process, took two to three months. “Getting the reports faster means we can see what are the stocks available and to make a decision on selling it at a lower price,” says Tang.

Likewise, the real-time information available from the Microsoft Dynamics NAV system allows the company to know if ingredients are due to expire. “If we have excess stocks, we may decide to sell off some of the ingredients rather than keep it for too long.”

“If the ingredients are past their expiry dates, we’ll have to throw it away. Microsoft Dynamics NAV enables us to manage our stocks of ingredients more effectively and reduce wastages,” he adds.

Timely replenishment
As stock replenishment is an integral component of running a successful manufacturing operation for a food-based company, the Microsoft Dynamics NAV system has proven to be a boon for SPFI.

“One of the key concerns was to strengthen our ability to avoid out-of-stock situations,” says Tang. Previously, the monitoring of stock levels was a highly manual process – it entailed having an experienced employee going to the warehouse and physically checking the stock of the relevant raw materials.

“That was very inefficient. We were very dependent on these staff to visually check the stocks and to alert us if the raw materials needed replenishing,” he adds. If the raw materials were not replenished in time, the company would suffer losses as production would grind to a halt. “The Microsoft Dynamics NAV system generates reports and issues alerts on what needs to be replenished, so we won’t run short,” he says.

Automates processes
By integrating its key business and manufacturing processes, Microsoft Dynamics NAV has eliminated the problem of double entry of data and reduced manual work processes. Eliminating the duplication of work with Microsoft Dynamics NAV has freed SPFI staff from the tyranny of tedious and unproductive work.

Previously, when the headquarters received a sales order, an employee would key it in and then fax it to the factory where another staff would re-key in the details for a production order. “There was a lot of paperwork and re-keying in of data,” says Tang.

Now with Microsoft Dynamics NAV, a sales order is input into the system which is then converted into a production order. “Only one person does the keying in of data. The moment the information is keyed into the system, the factory staff will know about the sales order, details of the customer and how much to produce,” he adds. “Our key objective from day one was to reduce manual data entry and duplication of work. Microsoft Dynamics NAV has helped us to achieve that,” he adds.

The deployment of Microsoft Dynamics NAV has spurred SPFI to look at various ways to improve its business processes. “When we started using it, we realized we had to improve our work processes. At the end of the day, our operations and management has become much more efficient and our decision-making has also improved significantly,” Tang concludes.

Overview
Country or Region: Malaysia
Industry: Manufacturing

Customer Profile
S&P Food Industries pioneered the manufacturing and production of instant coconut milk powder in Malaysia. It has some 120 employees at its factory in Perak and its headquarters near Kuala Lumpur.

Business Situation
SPFI used an accounting solution which was not integrated with its manufacturing system and could not cope with its rapid business growth. This impacted on staff productivity and decision-making.

Solution
It deployed Microsoft Dynamics NAV because of its comprehensive features, user-friendliness, cost-effectiveness and availability of resources familiar with the software.

Benefits

• Improves decision making
• Cuts wastages
• Timely replenishment
• Automates processes

For More Information
For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to: www.microsoft.com/malaysia

For more information about Advance Infosys Sdn Bhd products and services, call +(603) 7723 2278 or visit the Web site at: www.advanceinfosys.com

For more information about S&P Food Industries (M) Sdn Bhd products and services, call +(603) 6157 2226 or visit the Web site at: spfood.com

For other case studies in this series, visit www.microsoft.com/malaysia/business/casestudies