Next-generation ERP: the right mix

Here is a recent article that I co-wrote for our manufacturing enterprise industry magazine PRIME. It continues our look at key manufacturing verticals for our Microsoft Dynamics AX solution – this time looking at the chemicals vertical specifically.

On 1 August this year, Microsoft Dynamics AX 2012 was made publicly available to 25 countries in 23 different languages. Originally unveiled at the Microsoft Dynamics event, Convergence 2011, the new enterprise resource planning (ERP) solution attracted significant interest in the build up to the launch, with early adoption programmes providing evidence of the incredible value and business agility that can be achieved from this latest version. Explaining at Convergence what the solution can do, Kirill Tatarinov, president of Microsoft Business Solutions, said: “Microsoft Dynamics AX 2012 frees customers from the electronic concrete that has plagued the ERP industry for so long. Customers want flexible yet powerful and cost-effective business applications that work the way they do instead of being forced to adapt to the software.” With more than 1,000 new features and enhancements across core ERP and industry capabilities for the manufacturing sector alone, Microsoft Dynamics AX 2012 is helping to provide more business value faster, enable agility and insight, and drive faster adoption for the customers – all through a continued emphasis on simplicity.

In recent years, manufacturers in the chemicals industry have been forced by many business and economic trends to find new efficiencies in  production planning, design and execution. Dynamics AX 2012 offers them the ability to better manage their increasingly complex supply chains and improve collaboration across their business. In actual fact, the chemicals industry is one of the most competitive and dynamic in manufacturing, with companies constantly having to evolve to meet the challenges of shifting global demand, the commoditisation of products, and pricing volatility in energy and raw materials. Other complexities in the chemical industry stem from globalisation, where, in many cases, manufacturers have moved from operating at a regional or national level to managing manufacturing processes across several countries. As a result, the overall supply chain has become more complex, multi-tiered in some cases, and interruptions in one link in a tier can affect the supply of raw materials or vital parts and impact product delivery times. It also goes without saying that producing and processing chemicals is inherently hazardous, which means manufacturers in this space face strict regulatory requirements. Dealing with all these pressures can be particularly difficult for those organisations that are still using legacy IT systems.

Applications that have been acquired over many years or built in-house using different technologies and platforms can not only be difficult to support, but usually run in silos and are costly to integrate. This makes it difficult to execute business processes that often span multiple applications, some of which may be outside the organisation boundaries. Many are also faced with the reality of dealing with mergers and acquisitions – a trend which has become increasingly common over the last decade or so. In these instances, combining additional IT systems and integrating processes can be close to impossible. These technical challenges create unnecessary complexities and offer reduced functionality, which in turn leads to a lack of insight into operations and poor collaboration.

As Tom Bruhn, vice president of Advanced Manufacturing Solutions at Maverick Technologies, concurs, many ERP systems have never actually moved beyond managing the administrative dimension of the business – tracking general ledger, payroll and HR – while the real operation of the business is managed elsewhere. Based in North America, Maverick is a Microsoft Gold Certified Partner and has been deploying solutions worldwide using Microsoft Dynamics AX for over ten years. The company – which concentrates solely on manufacturing with over a fifth of its business focused on the chemicals industry – believes its industry-specific expertise and manufacturing operations-centric approach to delivering IT differentiates itself from its competitors. Speaking about his company’s philosophy and why it chooses to work with Microsoft Dynamics AX, Bruhn explains: “At Maverick we are all about manufacturing operations and our aim is to help our customers achieve true enterprise interoperability. That philosophy permeates everything we do, which is why we work with Microsoft technology. Microsoft Dynamics AX 2012 is different to other ERP solutions because it is able to effectively cover both the administrative and operational requirements of the business. It does this by delivering rich, prebuilt, industry-operational functionality out of the box, with proven capabilities for chemical manufacturers. Not only that, but because we understand how Microsoft technology integrates to create an overall solution, we are helping our customers to achieve a truly connected enterprise. We have many examples of clients that are using Microsoft Dynamics AX combined with other Microsoft technology solutions to successfully flow data synchronously and effectively throughout their enterprise. This allows them to realise significant cost savings and process efficiencies.” Dynamics AX 2012 is not just the next release of a great solution, it is, in fact, a generational shift in business software, delivering new levels of capability, unmatched agility, and a compelling and empowering user experience. Developed to be a global solution, Dynamics AX meets traditional as well as emerging challenges for the manufacturing industry and the chemicals space. “Compared to its predecessor, one of the biggest improvements in Dynamics AX 2012 for the chemicals industry is the integration of the process manufacturing functionality in the core offering,” says Bruhn. “Now, chemical manufacturers have the ability to capture attributes and test results for each batch, manage co-products and by-products in formulas, as well as yield planning and tracking, adjust formula quantities based on attributes of raw material, optimise picking and integrate production with quality testing and control.”

At the heart of Microsoft Dynamics AX 2012 is a set of unified, natural models. Limitations that forced workarounds and compromises in older ERP products were lifted, and new capabilities were added to provide an even richer software representation of a business and its structure, processes and policies. This makes modelling simple businesses fast and easy, and yet still provides the richness and flexibility to represent the most complex organisations. As Bruhn points out, one of the biggest challenges for chemicals manufacturers is working out how much it is going to cost to manufacture a product. For many, he says, they don’t find out until after they’ve made it if they’ve achieved a profit or a loss. “Microsoft Dynamics AX 2012, however, gives them the visibility they need early on,” he explains. “It allows them to cost everything up and gain visibility of the entire manufacturing process so they can manage product/formula anomalies in advance.” As such, this allows chemical manufacturers to manufacture profitable products, adapt to changing process and regulatory requirements with model-driven methods, improve responsiveness to customer demands, ensure sustainable operations with lean manufacturing, and track waste, water usage, energy consumption, carbon footprint, and related costs with the Environmental Sustainability Dashboard. These unified, natural models extend even further into the Microsoft Dynamics AX 2012 industry capabilities. For example, the system now supports traditional discrete, process and lean manufacturing modes. Historically most applications supported only one of these models. Most chemical manufacturers, on the other hand, often need a combination of these modes. Until now, the disparity between software and the real world has forced users to either work with multiple applications or create awkward workarounds to use an application to represent a process that is outside its capabilities.

Microsoft Dynamics AX 2012 breaks through this limitation as it is now possible to model production processes of each type in a single instance. Ultimately, Microsoft Dynamics AX 2012 has been designed to be powerfully simple. Business software is powerful only if it empowers users – increasing their productivity and providing strong insights that help them make better decisions. Offering a role-tailored user experience, Dynamics AX 2012 is designed to be easy to use and is especially simple for those already familiar with the Windows operating system and Microsoft Office productivity suite. On a management level, the solution is simple enough to deploy for a single business unit in a single country, but it also supports the unique requirements for business systems in 36 countries – all from a single-instance deployment of the software. Multiple currencies, multiple time zones, multiple languages, and compliance with multiple regulations gives a business the global coverage it requires, and help it deal with mergers and acquisitions. A layered architecture and installable language packs provide the flexibility for future growth to other markets, including options for agile, partner-led localisation. In December 2010, Microsoft Dynamics AX was recognised as a leader for both vision and execution in ERP by Gartner. Microsoft Dynamics AX 2012 delivers the next step in that vision – the beginning of a new generation of business application productivity. Another core principle for Microsoft Dynamics products is a commitment to continuous customer care, ensuring a path forward to future product versions. Microsoft Dynamics AX 2012 is no exception, with tested, proven tools, capabilities and processes to help customers transition from earlier Microsoft Dynamics AX iterations to this latest version. Looking ahead, Microsoft continues to make investments in several innovations across social, mobile, visualisation, machine learning and natural user experiences. Microsoft Dynamics AX 2012 will therefore continue to renew itself from generation to generation.

Best Regards

Luke Shave
Sr. Industry Marketing Manager