Dixon Asia Pacific

IT Objectives

• Use IT tools to better control and streamline the supply chain, including the consolidation of distribution replenishment to the remote distribution centres.
• Provide field sales personell with effective tools to better respond to customer requests and to more easily manage the company’s complex pricing and discount structure.
• Facilitate substantial growth without impacting customer service and without the need for increases in human capital.
• Support in-house value added kitting and manufacturing activities.
• Simplify accounting procedures and streamline EOM and EOY processes.

History

In 2001, Dixon Asia Pacific began a detailed review of its then IT applications and the contributions these were making to its business.

At that time the company had been a long term user of general accounting software. And, as a result of a recent acquisition, it was also running a stand alone manufacturing solution.

Of principal concern, however, was the fact that the incumbent IT platform was making no real contribution to the all important areas of distribution and sales.

As an organisation committed to high customer service levels – which, wherever possible, includes offering customers Just In Time delivery of required products – this was viewed as a substantial IT shortcoming. In distribution, for instance, the biggest challenge was seen as the inability to simply and quickly consolidate individual branch requirements. A shortcoming that, among other things, compromised the central distribution centre’s ability to rapidly respond to inbound orders.

Additionally, the business works under a highly complex pricing and discounting structure. And existing IT systems were viewed as being “more part of the problem than part of the solution”, as Sales and Marketing Manager Andrew Prentice noted.

“The complexity we have results from the fact that we have some 17 different bases on which a price and discount need to be calculated. These will include such things as the type of the customer and the product group in question. We also sell into a number of different levels in the supply chain, including through distribution partners. So pricing has to be structured and managed so that we avoid ‘channel conflict’ … for example, by ensuring we do not sell to a reseller at a distributor price. From time to time we run marketing promotions and there are the inevitable price changes that also need to be made. In both instances ensuring that everyone in the operation was working to these latest prices was far from straightforward.

With no central computer pricing application branches needed to make many of their own calculations and decisions. And so it was possible for different branches to be quoting and charging different end prices for the same item. A problem that was compounded when servicing many large national clients who expect to be charged a common price irrespective of which Dixon office they are purchasing from.

It was also not unheard of for customers to ring around different branches to see if a better price could be obtained”, Mr Prentice explained.

With such issues in mind, Dixon prepared a detailed IT specification of what it wanted to achieve and how it wanted to do this. It examined possible solutions in three distinct price ranges and established a comprehensive set of selection criteria. These, in turn, were then weighted so that contributions that would be made to distribution were ranked above those for sales, which in turn enjoyed a higher weighting over manufacturing and finally accounting.

Partnering with MDS & Pronto Xi

After a detailed evaluation, Dixon elected to install the Pronto Xi ERP solution supplied and supported by Adelaide based MDS. The system went live in January 2001 throughout the company’s seven Australian locales. In April 2008, China was brought online to the same central system, India followed in October 2008 with Singapore scheduled to come online in January 2009. In the meantime, one of Dixon’s major manufacturing and sales operations in Canada have also adopted Pronto Xi.

As Dixon Asia Pacific Managing Director Simon Tape stresses, “what we wanted was a basic system that would meet all of our immediate requirements. But we also demanded an application that could deliver an extensive range of other facilities and features that we could then progressively ‘turn on’ over time.

To meet our distribution requirements, the fist essential thing was to quickly, simply and accurately consolidate our individual branch requirements from the central Wingfield DC. That was a simple aim but an all important one.

“However, we then quickly went on to roll out about 60 percent of Pronto Xi’s overall advanced warehouse management capabilities. Using hand held RF terminals this now let’s our warehouse staff follow intelligent pick paths and to also carry out multiple order picks as they pass through the DC and its 10-11,000 active stock items. The system means we can also have multiple slots for the one product which is making far more effective use of our space. The warehousing module has also made a major contribution to picking accuracy and to the accuracy of overall stock holdings.

“Most significantly, 98 percent of all orders are now despatched in the day after receipt. Previously we were achieving nothing like this: it was taking 40 minutes plus just to generate picking slips. In evaluating the new system’s contribution to distribution, Mr Tape assesses that while the number of lines the DC is handling has grown 300 percent in the last five years, the management of this has been achieved with an insignificant increase in distribution headcount.

With sales, Mr Prentice describes how Dixon now has a standard nationwide pricing and discounting system that has increased accuracy and consistency. “Anyone anywhere has immediate online access to all relevant data that they can view on a single screen. So they can advise a customer that a product is in stock, where it is currently being held and then go on to cite the precise price … that is exactly what they should be quoting. All while that customer is on the phone. Before, we often needed to calculate specific prices using a range of spreadsheets. That meant we couldn’t give our customer an immediate answer and it was one of the reasons different branches often gave different prices for the same thing.”

In the area of manufacturing, Dixon now use a range of Pronto Xi options. “At Wingfield we are principally engaged in producing value added assemblies and there are a number of key facilities in the system that are of major benefit here’, Mr Tape notes.

“For example, we use MRP and the advanced forecasting capabilities of the systems’ Distribution Requirements Planning (DRP) module to give us a real pay off in customer service. That’s obviously all about getting things to people when they want them. And so we align inventory requirements to the marketing process. And you cannot do that unless you forecast and forecast accurately. It also means that specific branch requirements need to be further consolidated, effectively scheduled and related back to the forecasts. All of which is now largely automatic.

From Mr Tape’s perspective, “another core advantage stemming from this is that it enables us to achieve our ‘lean inventory’ policy. Through better forecasting and scheduling we are enhancing ustomer service while at the same time substantially reducing inventory. We have already stripped a lot of stock, although I estimate that a further 40 percent reduction is achievable. That will be about a year off. But the cumulative end result will be savings that are measured in the millions of dollars. “Effective forecasting also readily highlights weaknesses in our own operations – such as problems in shipping to branches or not adequately managing our own supplier lead times, that in some instances may be five months or more. That’s not to say that everything can be resolved instantaneously. But if you clearly know where you have important issues you can start to make lots of small incremental changes that, over time, will get you to where you want to be.

“It’s having ready access to relevant information that has also made Pronto Xi a real boon in accounting and administration. Superficially, it’s fair to say that most systems have what we would need for our general ledger. Although admittedly it’s the way that a general ledger is designed that gives real added business value.

“But what has proved to be a real gold mine is the PRONTO Xi EIS (Executive Information Summary). Having access to such a tool was not on our initial IT shopping list. However, when we subsequently looked at the facility we readily saw it as something that would give management a new dimension in efficiency. And so it is now an essential part of the day-today way we work.

“Essentially, EIS lets anyone nominate the data they want to see. So at any time during the day they can click on EIS and the very latest information – that they need – is immediately displayed in the format they require. So let’s say I get a call from a branch manger. I click on my own relevant EIS screen and I can see at a glance such things as the branch’s sales for the day, the current month, sales year to date, sales against budget, gross profit contribution against budget and so on. It’s an ideal tool. It means I’ve got everything at my fingertips that I need and it also means I don’t have to prepare for such phone calls. Similarly, the branch manager can use the same system when he’s talking to his staff.

“But at day’s end we also see IT as a dynamic thing. And so, over time, we will continue to work with MDS to add further system capabilities”, Mr Tape indicates.

Outcomes

• A 300 percent increase in lines over the past five years achieved with an insignificant increase in distribution headcount.
• A doubling of turnover with only one additional admin staff member being needed.
• 98 percent of orders are turned around by the next working day.
• Full pricing and discount consistency across all branches.
• Enhanced customer service via faster quotations and thence delivery.
• Inventory reductions valued in the millions of dollars.
• Enhanced management business reviews and decision making.