CASE STUDY XAPT - HANSA

CASE STUDY XAPT - HANSA

Microsoft Dynamics AX based warehouse management solution by Hungarian FMCG company improves its efficiency and competitiveness through Microsoft Dynamics AX based warehouse management solution. At its new logistics center, the wholesaler that set up the CBA and Partner networks and services thousands of stores increases 50% its sales volume with the same amount of staff. Hansa-Kontakt, one of the biggest players in the Hungarian FMCG market wished to eliminate the risk of using a custom developed system when decided to introduce a new ERP in 2007. At the same time, it was also planning to merge its sites (located at the time in 4 cities, Szeged, Kecskemét, Makó and Csongrád), as well as construct a new logistics base and further expand its network of partners. Accordingly, it looked for a solution that would enable a more efficient operation and seamlessly manage the changes resulting from the transformation. Hansa-Kontakt delivers in four counties in Southeastern Hungary as well as the southern part of Pest County in the field of the wholesale and retail of foodstuffs, beverages and chemicals, and had created CBA and the Partner chain of stores. They decided implementing Microsoft Dynamics AX ERP based intelligent Supply Chain Management (iscm) industry specific solution developed by XAPT. This resulted in a change from the previously used paper-based operation to the use of an online system involving the use of barcode-reading PDAs in the warehouse. As a result of this it continued to be able to service the needs of its turnover, that grew 50% following the consolidation of the sites, with the same amount of personnel. The number of incorrect goods pickings and deliveries has been minimized, and the company is able to flexibly adjust its warehouse staff numbers in line with seasonal changes to the sales volume. The training period for new employees has been reduced from several days to just one hour. The availability of real time data in the Dynamics AX system has also enabled the exact measurement of employee performance, better utilization of loading capacity of trucks, the development of a more efficient business control system from planning through to control, and the support of further developments. 1

The ability of Dynamics AX and iscm to increase efficiency is perfectly illustrated by the fact that at our center in Szeged, where the system has been launched, we have been able to service 50% increase in sales volume, resulted from the consolidation of our other sites, with the same amount of personnel as before. Zoltán Varró Warehouse Manager Hansa-Kontakt The Client Hansa-Kontakt, which supplies four counties in Southeastern Hungary as well as the southern part of Pest County in the field of the wholesale and retail of foodstuffs, beverages and chemicals, and which had created CBA and the Partner chain of stores, was established in Szeged in 1995. The company, which has an annual turnover of nearly 30 billion HUF and 390 employees, is a key logistics services partner of Dreher Breweries. In the autumn of 2009, the company moved to its new logistics base, with a floor area of 28,000 square meters, which was built with an investment of 4 billion HUF (~ 13 meur) at the Szeged Industrial and Logistics Centre. CBA is one of Hungary s leading food retail chains. The chain consists of 2400 stores, over 800 Hungarian small enterprises and 20 medium-sized ones, which together provide work to nearly 30,000 employees. Another 250 stores belong to the Partner network. Hungarian-owned Hansa-Kontakt is proving successful in the competition against the multinational players of the market. According to the executive manager of the company, György Lekeny, staying competitive requires developments. All company developments over the past one and a half decades have been aimed at achieving the same level of cost-effectiveness as that of the company s competitors, who faced the starting line among far more favorable circumstances. The Business Problem For Hansa-Kontakt as a trading company, the most important processes are purchasing, sales, and warehouse management, that aim, the speedy and punctual servicing of its clients. Therefore it is of vital importance that these processes are supported by a system that guarantees precise and up-to-date traceability of which goods are being sold, in what type of packaging, at what price, and in which quantities. This is indispensable for the quick and punctual delivery of orders. Any errors will have direct financial consequences: if the quantity delivered is higher than that ordered, then this will result in a loss for the company, while the opposite is an even worse scenario, since it will lead to the dissatisfaction and loss of clients. 2

On the other hand, the system must provide detailed and reliable information in order to allow Hansa-Kontakt to enter into annual framework agreements with its numerous partners regarding the quantity and scheduled deliveries of the goods they order. This is essential not only for the purchasing department, but also for sales, since it serves as the basis for determining the prices quoted to partners. Last but not least, efficient organization of freights requires intelligence already at the time of receiving the order about which vehicle will transport the given goods, during which delivery. Previously, Hansa-Kontakt used an own-developed system to support these processes, which was tailored to its needs and for a long time it fulfilled the requirements of the company. However, coping with the dynamic growth of the company and its network of partners and with the accompanying continuous innovation and management of changes gradually became an increasingly difficult task for this system. Another problem was caused by the fact that this system operated offline, due to which the warehouse staff had to use printed picking lists, goods storage recommendations and other worksheets, which not only represented a bottleneck in terms of outbound information, but also made it more difficult to register any changes that may have occurred, since this involved a vast amount of manual labor. All this slowed down the process and rendered it excessively resource-intensive, while information was not up-to-date. For example, the Purchasing Department could only discover in the system after a delay if a given item was present in an insufficient quantity on the shelf indicated. Any own-developed, unique system also carries an inherent risk in that the relevant know-how is possessed by only a couple of people. Should anything happen to them or were they to leave the company, this would also impact the operation of the company itself. Therefore, it is a general tendency among companies to replace these systems even if they meet their requirements. Hansa-Kontakt, too, wished to eliminate this risk when in 2007 it decided to introduce a new ERP system. At the same time, it was also planning to merge its sites (located at the time in 4 cities, Szeged, Kecskemét, Makó, and Csongrád), as well as construct a new logistics base and further expand its network of partners. Accordingly, it looked for a solution that would enable a more efficient operation and seamlessly manage the changes resulting from the transformation. Thanks to the barcode-reading PDA system we are no longer dependent on factors related to human resources: even seasonal employees are able to commence work immediately, which, combined with the flexible adaptation of staff numbers to the needs of our sales volume, results in considerable savings. The online system also minimizes errors and the resulting financial or prestige loss. The Solution A lengthy period of preparation preceded the selection of the system to be implemented, during which the ERP systems of several international suppliers were examined. It soon became clear, however, that the arguments were in favor of the implementation of Microsoft Dynamics AX. One of our important requirements was that the new system should provide us with a data link to Dreher s SAP said Zoltán Varró, warehouse manager. Nonetheless, we opted against SAP, as we found that Microsoft Dynamics AX together with the industry specific iscm solution developed by XAPT allow us to track the multi-site, dynamically changing logistical processes that characterize wholesale activities faster, more efficiently and more flexibly in terms of costs and resources. 3

The multi-award winning iscm supply chain management solution developed for wholesalers by XAPT, a partner of Microsoft, consists of several modules: through their industry specific functions, iwms and itrans provide assistance in the field of warehouse management and delivery organization, while ifmcg in the field of complex pricing, special deals, promotions, product combining, price discounts, line discounts, as well as the management of excise tax and of pallets and returnable packaging materials. Based on these considerations, at the end of 2007 Hansa-Kontakt commissioned XAPT Hungary with the implementation of Microsoft Dynamics AX and iscm, and in February 2008 the project was launched. The intense pace of the implementation of the system required a great deal of attention and close cooperation from both parties. The new system, which operates online and uses wireless barcode readers opened up a new dimension in the activities of Hansa-Kontakt, while XAPT offered solutions based on experiences in the field of storage, logistics, and transportation for the special requirements characteristic of FMCG. More than 60 warehouse employees received PDAs equipped with a barcode reader as part of the solution. The worksheets and delivery notes, which list what quantities of which product from which shelf must be loaded onto which truck and which order and delivery these products form part of, are transmitted to these PDAs from the Microsoft Dynamics AX via an online link. iwms, which assists the use of the barcode-reading PDAs, contains a logical task allocation control module that tracks the number of employees and their qualifications (e.g. able to drive a forklift or not) in any given (e.g. refrigerated, high-shelved) warehouse. Based on these data, the system which is also capable of handling exceptions automatically allocates tasks according to the incoming orders. Ensuring that these tasks be meaningful required extremely careful modeling by Hansa-Kontakt and XAPT. Dreher s ERP system transmits the orders received from its clients, together with the relevant conditions of delivery, via the interface created during the project. Hansa-Kontakt receives these data in a format that allows it to handle these orders identically to those recorded in its own Microsoft Dynamics AX system. In this regard, as well, the complex task was not the development of the interface, but the harmonization between the two parties of the economic-logistic events and processes underlying the data transmitted and of their individual business logic, with particular attention given to exceptions. Hansa-Kontakt and XAPT completed this task successfully. In February 2009 exactly 12 months after the launch of the implementation process Microsoft Dynamics AX and the iscm solution went live at the center of Hansa-Kontakt, located at the time in Szeged. The company transferred this system to its new logistics base which opened its doors in September, 20091. Results And Experiences Hansa-Kontakt also distributes seasonal products such as beer or mineral water, which results in a considerable fluctuation in personnel numbers at its warehouse. It is, therefore, a great advantage that new employees are able to learn the use of barcode-reading PDAs in just one hour, as opposed to the training period of several days under the previous, paper-based operational method. 4

Thanks to this, we are no longer dependent on factors related to human resources: even seasonal employees are able to commence work immediately, which, combined the flexible adaptation of staff numbers to the needs of our sales volume results in considerable savings said Zoltán Varró, warehouse manager. The online system also minimizes errors and the resulting financial or prestige loss. The number of incorrect pickings, commissions, and deliveries connected to in- and outbound deliveries has fallen dramatically, and the speed and precision of service is no longer dependent on human factors. Since Microsoft Dynamics AX offers inventory information accurate-to-the-minute, upon arrival of an order Hansa-Kontakt is able to determine immediately how many pallets will be required, what the load volume will be, and which vehicle will be able to perform the delivery at what point in time. This also improves the efficiency of transport scheduling, since trucks can be loaded more efficiently, while clients also receive prompt and precise information about the arrival of the goods. The ability of Dynamics AX and iscm to increase efficiency is perfectly illustrated by the fact that at our center in Szeged, where the system has been launched, we have been able to service 50% increase in sales volume, resulted from the consolidation of our other sites, with the same amount of personnel as before highlighted Zoltán Varró, warehouse manager. As a further benefit, through the use of Microsoft Dynamics AX and iscm, Hansa-Kontakt has been able to implement a comprehensive business management system, has strengthened control over the management of orders, warehousing and delivery processes, and has received efficient assistance to its planning process. The basis for these is provided by the fact that all data appear instantaneously in the online system, where managers or other users with appropriate authorization are able to view the real-time situation at any time. During the era of paper-based operation, neither such a level of control, nor the measurement of employee performance were available to us said Zoltán Varró, warehouse manager. In the online system, however, tasks can be tracked from their allocation to their completion, and so, in turn, all data are available not only for measuring individual performance, but also for the definition of requirements and forms of recognition. Employees, too, are aware of the precision of this measurement system, which in itself spurs them to excel. In any case, in a warehouse equipped with such modern equipment, employees naturally respect their own work more. The Microsoft Dynamics AX solution has also greatly simplified the extraction of information necessary for signing framework agreements far less human resource is now required for this task. If in a highly competitive situation a company is able to achieve such dynamic growth as Hansa-Kontakt has done, it means that instead of following classic practices, it invents and dictates new ones. Consequently, a large number of reports had to be developed: the link between Hansa-Kontakt and XAPT is still intensive in this area. Within reasonable limits, Microsoft Dynamics AX offers great freedom to its users: queries can be performed by Hansa-Kontakt independently, or following a brief consultation. More complex developments, however, require considerable involvement from consultants. With the collaboration of XAPT, Hansa-Kontakt has, for example, created show-room, where clients can give their orders by scanning product samples with a barcode-reading PDA, after which they can enjoy a cup of coffee while they watch the picking and loading of the goods on a big screen. 5

As we expected, using Microsoft Dynamics AX solution we are able to track the changes that accompany continuous business innovation in a flexible and cost-efficient manner said Zoltán Varró, warehouse manager. XAPT has also supported us fully in this regard. Using industry specific solutions and building on their experience, the highly qualified professionals of our partner were able to successfully develop an ERP system that fully meets our requirements in the space of a year, and are also on hand to offer their considerable expertise to our further developments. Hansa-Kontakt also wishes to enter the retail market through its own chain of stores. This expansion will be assisted by the business management and control and the efficiency achieved through the introduction of Microsoft Dynamics AX and iscm. In this area, Microsoft also offers a Dynamics AX based retail solution, therefore the opportunity exists for Hansa-Kontakt to manage these two areas within a single system. 6

Overview Hungarian FMCG company improves its efficiency and competitiveness through Microsoft Dynamics AX based warehouse management solution Country Hungary Type of Business Retail Customer Profile Hansa-Kontakt, which supplies four counties in Southeastern Hungary as well as the southern part of Pest County in the field of the wholesale and retail of foodstuffs, beverages and chemicals, and which had created CBA and the Partner chain of stores, was established in Szeged in 1995. The company, which has an annual turnover of nearly 30 billion HUF and 390 employees, is a key logistics services partner of Dreher Breweries. In the autumn of 2009, the company relocated to its new logistics base, with a floor area of 28,000 square meters, which it built with an investment of 4 billion HUF at the Szeged Industrial and Logistics Centre. Business Situation Hansa-Kontakt wished to eliminate the risk inherent in the use of a uniquely developed system when it decided to introduce a new ERP system in 2007. At the same time, it was also planning to merge its sites (located at the time in 4 cities, Szeged, Kecskemét, Makó, and Csongrád), as well as construct a new logistics base and further expand its network of partners. Accordingly, it looked for a solution that would enable a more efficient operation and seamlessly manage the changes resulting from the transformation. Benefit Handling 50% increase in sales volume, resulting from the consolidation of sites, with the same amount of personnel, the number of incorrect pickings and deliveries has been minimized, warehouse staff numbers can be flexibly adjusted in line with sales volume changes associated with seasonal products, the use of barcode-reading PDAs has allowed a reduction in the training period of new employees to just one hour, precise measurement of employee performance, more efficient organization of deliveries and utilization of transport vehicles, purchasing and planning departments can access up-to-date data, data link with the ERP system of our key partner, the system offers cost-effective support for continuous business innovation and expansion Implemented Solutions Microsoft Dynamics AX and XAPT iscm 7