Cannon Group drives forward with renewed confidence and reduced costs

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1 Microsoft Business Solutions Customer Solution Case Study Cannon Group drives forward with renewed confidence and reduced costs Overview Country: UK Industry: Distribution Customer Profile Cannon Group Limited is a long established, privately owned Logistics Company which provides packing, transportation, distribution and warehousing. Business Situation Cannon wanted to replace its numerous standalone systems with a new solution to enable electronic transaction processing and real-time reporting. Solution Microsoft Business Solutions Navision provides a flexible, integrated system that includes financials, order processing and warehousing, with support for EDI and web commerce. "Thanks to Microsoft Business Solutions Navision, we now have the visibility and agility to react in a dynamic way to changing demands of our business and customers." Ian Doye, Finance Director, Cannon Group In the low margin packaging, transportation, distribution and warehousing sector Cannon Group needed to replace its numerous standalone systems with a new Microsoft Business Solutions Navision system that would enable electronic transaction processing together with real-time reporting, while delivering enough flexibility for Cannon to tailor its operations to meet specific customer needs. Benefits 99%+ on-time delivery achieved High volume of online orders Solution can be bespoked Overheads reduced

2 Situation Established early last century, Cannon Group Limited is a long established, privately owned logistics company with a turnover of over 20 million and growing. Employing 330 personnel, it provides multi-user contract distribution, warehousing and packing services from its head office location in Abingdon and its warehouse facilities based in Leeds. The separate businesses were amalgamated under the Cannon Group mantle in the mid 1990's and today its automotive parts operation is well-known in the automotive arena, shipping parts not involved in the main assembly process. Finance Director Ian Doye explains: "If a company manufactures automotive parts, it either goes on a production line or on a shelf as a part to be sold. Cannon provides the packing debug." A fleet operation, which spans the UK, includes major outsourced contract transport for companies such as Bison Concrete Products Limited. A warehousing and distribution unit, meanwhile, operates from its 9,400 m/sq head office premises and the 4,700 m/sq Leeds warehouse which serves clients such as Total UK. The company also operates another 4,000 m/sq warehouse on behalf of Baumatic Limited, a leading white goods manufacturer based in Reading. Remaining highly customer focused is the constant challenge for Cannon, especially operating in a sector characterised by meagre margins where sub-optimal use of resources can impact profit margin significantly. As Doye says; "We have a resource such as a truck and it has to travel as short a distance as possible, with the most weight and make the most drops in the shortest amount of time. The profit driver is getting the highest efficiency and utilisation out of our resources. We're not working on big margins here." Investing in a highly client-centric approach meant that previously Cannon had gone so far as to develop systems specifically for its customers. However, this approach had become untenable. In 1996, the company chose Microsoft Business Solutions- Navision because it considered it the only system able to replicate the approach in a standardised environment. It added this to the Commerce Gateway; using Microsoft BizTalk Server to bring in EDI customer orders delivered via the internet. Solution Cannon was one of the first customers in the UK to use Microsoft Navision. Although originally used for financials only, this was to change when Cannon was introduced to Metaphorix, a Microsoft Gold Certified Partner. "We didn't do a lot more with it until Metaphorix became involved," admits Doye. "We didn't use it to its full potential." Today the system encompasses warehousing and distribution and also includes Commerce Gateway for bringing in EDI messages from customers. It replaces an in-house system developed with Compsoft's application development and data management tools. The internally developed applications dated from the earliest days of PC computing. "We've now moved away from in-house development so that 80 percent is a developed product and we just bespoke the last 20 percent to our own requirements," says Doye. While the product is only currently used in the distribution and warehousing operation, the company is anticipating rollout in its packaging division within the next three years.

3 Bringing the system together on a packaged application has forced rationalisation, as Doye explains; "Prior to Microsoft Navision, we had lots of standalone systems - a location system, stock system, distribution system, planning system with accounts being standalone. One of the reasons we wanted to use Microsoft Navision to bring it all together was that in an ideal world we wanted everything joined-up. And everything we've done so far has been. Any integration issues we've had have not been with the technology but with the business." Despite the obvious synergies, within Cannon's three separate divisions the individual operations perform distinct tasks. "It would not do for us to say 'here's a standard service, now buy it'. We ask our customers about their individual needs, so our product is tailored to their individual requirements," states Doye. Cannon was desperate to retain this tailoring for clients and considered Microsoft Navision to be the only product on the market capable of delivering such flexibility. Microsoft Navision's development environment, C/SIDE, built around its RDBMS database, comes with the product and both Microsoft partners and end-customers are encouraged to tailor it their needs. "What we have now is a platform that can take us forward," says Doye. "Part of the reason we chose Microsoft Navision is that in the longer term we still want to do programming ourselves, so we can be responsive to customer needs. This was the only product on the market that we could do that with. No other product gives you the same potential. From a strategic view point, that is all-important." "One of the strengths in having a customerfocused system is that you can solve a problem immediately when a customer phones up. In a normal reseller/customer environment it can take weeks. With Microsoft Navision you can easily build specific functionality - it's totally responsive, so we won't lose our competitive advantage." Benefits Working with Metaphorix, Cannon has managed to retain the customer specialisations it required while building them onto a base of common functionality. It has also connected the disparate systems. Having a common set of functionality will help in the future. Doye says; "It's given us a set of business processes to base our work on, going forward. When we were developing our own product everybody got everything they wanted. When you standardise, you say 'that person wants this and this person wants that' and you give them something they are all happy with." Because most of Cannon's customers send EDI order information, Metaphorix has amended the Commerce Gateway so that it can accept huge volumes of orders through Microsoft BizTalk Server integration product. With the new automatic feed into the backend system, taking on new clients has become far easier. "Because of the way we implemented the commerce gateway, there are a variety of maps that support a variety of information," says Doye. "Between these we capture most of the problems any customer would want resolved by standardising the end result within the system. There are usually cost and time implications in taking on a new EDI relationship. But we can take on a new client instantly, without having to go through a major planning process." The need for EDI support means the system has to be incredibly reliable - orders come in

4 throughout the day so if it were to go down, Cannon would be hamstrung. Orders received via the internet are sorted based on delivery performance criteria. The system organises the picks in the warehouse, ships product containers, then publishes order status, stock information, warehouse information and ultimately proof of delivery on the web. And using the web has in turn reduced administration even further for Cannon. "We can do things better and smarter and spend time on other things that matter. Instead of taking numerous calls per day asking where an order is, we take one call if there is a real problem and we can deal with it," explains Doye. However, perhaps the greatest benefit the system has brought is in having real-time access to essential information. In a tight margin business, this is essential to adding value for the customer. Cannon already undertakes extensive amounts of reporting on its performance metrics - revenue and cost, client, vehicle, region, type and transaction. But it also looks at deeper analysis such as taking drops, weight, value, tickets and postcode region and comparing it by product category, by vehicle or by company. analysis of processes on a day-to-day basis," says Doye. For a 20 million plus turnover private company, this analysis may prove essential in an increasingly competitive arena, but Cannon has also found it can make information available to clients that are using big-name ERP systems but are unable to get the information they require. "Our clients come to us for information about their orders. And we do the extracts to provide them with reports." Doye concludes; "We now have the visibility and agility to react in a dynamic way to the changing demands of our business and customers." Standard reporting has become easier, since Cannon can cut and paste directly from Microsoft Navision views to produce one-off reports. More in-depth analysis is conducted off-line in Microsoft SQL Server, using separate tools. "Rather than doing a large analysis exercise, we now take information out on a daily basis and can tweak things to undertake any changes. There are reasons why we run vehicles in certain ways. Profiles develop, and region and data profiles are built-up over time. Today we are able to undertake major

5 For More Information For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) In Canada, call the Microsoft Canada Information Centre at (877) Customers who are deaf or hard-ofhearing can reach Microsoft text telephone (TTY/TDD) services at (800) in the United States or (905) 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: For more information about Metaphorix products and services, call or visit the Web site at: For more information about Cannon Group Limited products and services, call or visit the Web site at: Microsoft Business Solutions Microsoft Business Solutions offers integrated business applications and services that allow small and mid-sized organizations and divisions of large enterprises to connect employees, customers, and suppliers for improved efficiency. The financial management, customer relationship management, supply chain management, and analytics applications work with Microsoft products such as Microsoft Office and Windows to streamline processes across an entire organization, giving businesses insight to respond rapidly, plan strategically, and execute quickly. Microsoft Business Solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to a company's needs. For more information about Microsoft Business Solutions, go to: Software and Services Solutions Microsoft Business Solutions Navision 2005 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, and Microsoft Business Solutions Navision are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners. Document published May, 2005