StreamLining the supply chain

It's unusual for a New Zealand company to act as a beta site for new software, and when GEC entered into a contract with GEAC it did so with some reservations. The Porirua-based electrical goods supplier was looking to replace its DOS bespoke production software. Remarkably, it had been looking for something appropriate to its business since 1993.

It’s unusual for a New Zealand company to act as a beta site for new software, and when GEC entered into a contract with GEAC it did so with some reservations.

The Porirua-based electrical goods supplier was looking to replace its DOS bespoke production software. Remarkably, it had been looking for something appropriate to its business since 1993.

“There just wasn’t anything there in 1993,” says finance director Ray Offord. “It was a big shock to us. Nothing had the functionality we had built ourselves.”

Two key issues were point-of-sale — “most of the international packages didn’t support that” — and the ability to handle variables in pricing to the electrical trade. Many tradespeople have their own individual pricing structures.

“We evaluated a number of companies — JD Edwards, Oracle, Baan, CSI and SAP. But SAP, for example, would have cost twice as much as what we’re paying now. They wanted us to put in their financials and manufacturing software and to re-engineer the business. We mutually concluded their software wasn’t the solution.”

Initially, Maximise from CSI was chosen. After a year, GEC dropped the product. “CSI had agreed to modify Maximise but we bailed out because we found the modifications would be too substantial.”

GEAC had been developing a new product, StreamLine, which it describes as supply chain management software specifically designed for medium-sized companies typical of the New Zealand market. The company had a relationship with Geac, whose Tims software it uses for manufacturing.

“Though we had some reservations about being a beta site, we had a lot of confidence in Geac as a provider. It was very important that they had feet on the ground in New Zealand,” Offord says. “They also understand traders. A lot of vendors talk the same words but the words mean different things to different people. We talk the same language.”

GEC is now in planning mode for the rollout. The beta was run in parallel at three of its 27 branches — three new branches were opened during the trial period.

The plan is to roll out units of three branches concurrently, one each in the northern central and southern areas. Including refresher training, each trio will be rolled out over a three-week period, with the whole exercise taking till the first quarter of 1998.

The third stage of the project will be to elimiate running commercial functions on the existing System 36 system and to build a data warehouse. Stage four will be to introduce new financials. Currently Quill is used but the plan is to buy a standard package for the general ledger and accounts payable.

The supply chain concept is one of those new catch phrases that has suddenly been appended to various software. Offord’s understanding of the concept is: “From your vendors to your customers, which may or may not involve manufacturing.”

“StreamLine gives us the facility to record all customer requirements, establish demand patterns including minimum lead times. We will also have a much better picture on national stocking.”

Payback comes in better management of inventory. “We won’t save much in terms of headcount but the benefits will start coming with the rollout and with the new financials. At the moment we carry $20 million of inventory. The money spent on the system will be easily liquidated out of inventory.”

There will also be benefits on the debtor side. Offord says that the current system of standalone branches means there are often errors leading to the issue of credit notes. That’s because each branch does its pricing independently.

“We also expect an improvement in margin. The tools for pricing in Stream-Line are a significant enhancement over our existing software.”

GEC has more than 30,000 product lines as well as the ability to supply one-time items. “The [IT] industry generally has difficulty with one-time coding and also back-to-back trading, linking sales with the purchasing process.”

Of its $100 million turnover, just over 10% is generated from products it manufactures itself.

The company will move gradually to electronic commerce. “Our ultimate objective is for local suppliers to get an electronic feed for orders,” Offord says. “We’re trialling electronic files and invoices — five suppliers are responsible for 80% of our invoices.”

StreamLine is Internet-compliant, and Offord expects GEC will be able to do everything over the Internet within two years.

The company is installing an NT network and is currently beta testing leased lines. “The intention is to have leased lines to each site. The costs for this are at a level where frame relay would be suitable but our maximum use of the lines is 8%.

All of this makes GEC year 2000-compliant. “We’re approaching that magic time of 2000 with some confidence,” Offord says.

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