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Fast ROI for manufacturing companies and distributors from your ERP

February 17th, 2010 Sandeep Walia No comments

I was recently interviewed by a reporter from Search Manufacturing ERP on how manufacturers can get quick ROI in today's market. I've worked with quite a few manufacturing companies both in my past life at Deloitte and at Ignify. ERP, in general, is not a fast ROI project I believe there are certainly some things that a manufacturer can do to get Quick ROI.

First of all, the manufacturing paradigm in North America has changed. With a few exceptions, Manufacturers in North America are no longer doing heavy manufacturing. Most of the manufacturing work is now done with subcontract vendors in China, SE Asia etc. So the manufacturing challenge is less about managing the shop floor but more about managing the supply chain and optimizing inventory either in the warehouse, with the vendor, on the water. This is, in fact, really important because the new paradigm means that lead times have shifted and become longer with a 60- 90 day lead time to get product not uncommon. That requires better forecasting, demand planning, purchase planning and better tracking of critical inventory items.

Not surprisingly, manufacturers have not yet made that paradigm shift completely. When I do a site visit at a manufacturing site I find the focus still very much production planning and shop floor control even though now the manufacturer is just doing warehousing and light manufacturing at best. There is very little focus on the planning, forecasting, warehouse management and supply chain management aspects which burden the cost significantly. As an example of a cost burden, I surveyed a manufacturer that builds heavy engineering product often finding themselves with gating parts – i.e. parts that are not available and hold up the completion of the item. The net effect was about 6 weeks added to the production cycle. Doesn't seem expensive? Check out the math below.

Average sales price of item: $2 million (this is a complex end product)

Cost of capital to manufacturer: 10%

Cost of 6 weeks of capital: $23,000 (2 million * 6 weeks/ 52 weeks * 10%)

Cost of delay on 100 shipments: $2,300,000

$2.3 million dollars in cost of gating parts! Now this is a $200 million manufacturer that has a net profit of $2.5 million (which by the way is a pretty good number for most manufacturers). The net impact of eliminating the gating with better inventory optimization would be to double the manufacturer's net profit. Before you say – this is not me because you don't do $2 million type products – change the numbers a bit. It could be 10,000 shipments of $20,000 type product going out or 100,000 shipments of $2,000 type product etc and you'd still have the same cost of capital of $2+ million dollars. Even if you can only shave off a couple weeks and not 6 weeks and if your volume is lower remember that you are still talking at least hundreds of thousands of dollars if not millions in savings by optimizing your inventory and supply chain with better planning. No small change by any standards.

The reality for manufacturers is that the management now has to be on the supply chain and inventory optimization and not just production planning and shop floor control. So how can you do this? Fortunately most of the newer generation ERPs provide functionality to do this out of the box. I'm going to take the example of Microsoft Dynamics AX – a next generation ERP from Microsoft – as a solution to this and show some quick and easy things to enable functionality that can help you get there.

One of the more important things to do in getting to a stable replenishment mode is to use automated replenishment to the extent possible: Dynamics AX has the ability to automatically spit out planned purchase orders by looking at a variety of things

  • Safety Stock levels
  • Forecast
  • Sales Orders
  • Purchase Order
  • Inventory that is Available to Promise
  • Vendor Lead times

For a human being, to take into account all of these parameters and provide a planned purchase forecast manually is just impossible – even if you just have under 200 Finished good SKUs. If anyone tells you otherwise they are kidding you or pulling wool over your eyes. No individual buyer or group of buyers is going to be able to do a multi-parametric calculation that involves six parameters and create a planned timeline for all your SKUs for each vendor without doing some rough (and dirty) ballparks. You need a fairly sophisticated automated process to do this right. And why shouldn't you – you will cut labor costs, you will reduce your inventory stocks outs as well as lower your cost of carrying inventory. And you should leverage the ERP to do that.

How do you do a forecast – for that you can use a demand forecasting system if you have a complex web of customers with changing patterns or you can get quite basic and track it in excel as a starting point and improve from there on. Dynamics AX provides you the ability to load forecasts by customers, customer group or at a total level.

Dynamics AX Sales Forecast by Item by Customer or Customer Group

The above figure for example shows the forecast in Dynamics AX by different customer groups. For example, the first line shows the forecast of 5000 units for all major customers and 6,000 units for a particular item for Retail customers. Dynamics AX splits them out based on an Item allocation key based on month (or any other time period relevant to you). By defining such item allocation keys you can take into account seasonality or business cycles.

Loading a forecast is however, optional. You can run planning just based on current open transactions including sales orders, purchase orders and inventory. The figure below shows planned purchase orders and planned production orders created using the MRP functionality for multiple release dates for multiple items with the quantity to be ordered and the desired delivery date. The delivery date ties to your need of the product and the order date factors in the vendor lead time.

Planned Purchase Orders with Dynamics AX Master Planning

The end result is a stable automated planned cycle that happens every day, week or month depending on the frequency of inventory churn and volume of orders in your business.

Now should you do this for every single SKU in your item master or just for some SKUs. My answer is your top % of SKUs by some measure. This measure could be sales quantity, Sales $, and most typically for manufacturers inventory carrying cost (which is determined by inventory value). Typically you would classify your items as ABCs and plan for the As and Bs and just ensure the Cs are always there and typically overstocked since they have a low inventory carrying cost. The ideal way to do it is again to have the ERP actually calculate the ABC classification for you. For example, in the example shown below I asked Dynamics AX to rank the top 25% of items by revenue as an A, Next 30% as a B and the rest as Cs. I may choose to do now do weekly planning on my As, monthly on my Bs and do no planning and use an auto-fill mechanism on my Cs.

ABC Classification of Items done automatically in Dynamics AX

This is simplifying it a bit but the point is that I don't need to go through a lot of grunt work to get this done. The system will do 90% of my work of loading forecasts, generating purchased orders and even deciding which items get planned for with the appropriate configuration. The end-result you've saved yourself a boat load of work and enough dollars to make this a high and fast ROI project.

Want more – email us at dynamics@ignify.com to get on our email list for valuable tips or to ask us any questions in general.

Sandeep Walia is the President & CEO of Ignify. Ignify is a technology provider of ERP, CRM, and eCommerce software solutions to businesses and public sector organizations. Ignify is a Microsoft Dynamics Inner Circle Partner and ranked in the top 18 Microsoft Dynamics partners. Ignify has been included as the fastest growing business in North America for 3 years in a row by Deloitte, Inc Magazine and Entrepreneur Magazine.

Creating Outlook Appointment and Tasks From Dynamics AX

February 13th, 2010 Sukrut Parab No comments

In one of my recent projects, I came across a requirement to create Microsoft Outlook meeting requests and tasks in the Dynamics AX CRM module. In Microsoft Dynamics AX we can create outlook meeting request, tasks, distribution list, journal entry etc. by using the COM interface class, and the MAPI (Messaging Application Programming Interface) and its properties.

The requirement was to create meeting /tasks in Microsoft Outlook and the appropriate Meeting/Appointment/Task should be created in Dynamics AX for the appropriate Activity type (Task, Appointment etc.).

Below is the activity screen in Microsoft Dynamics AX ERP. 1

The meeting request gets created with email id of user in the responsible fields of the activity form with some data in the same form as message body.

2

 

The business benefit to the user is that their Outlook and Dynamics AX activities are completely synchronized. In addition, a template can be created with data from fields from Dynamics AX. For example, here an appointment is automatically created for a sales person when a lead is assigned to him to in Dynamics AX. The appointment has relevant data about the lead / prospect name, customer number or any other details such as a sales quotation or order number. Here is an example of Outlook appointment created  automatically from Dynamics AX

3

Similarly we can create Outlook tasks, Journal entries, emails to distribution lists etc. from Dynamics AX.
 

This post is written by Sukrut Parab. Sukrut is a Technical Analyst in the Microsoft Dynamics AX Practice at Ignify . Ignify is a Global Microsoft Dynamics Inner Circle Partner specializing in Dynamics AX for Retail, Distribution, Manufacturing and Chemicals verticals. For help on Microsoft Dynamics ERP email us at dynamics@ignify.com

Port of Long Beach Selects Dynamics AX to improve customer service and increase efficiency

February 10th, 2010 Sandeep Walia No comments

America’s Second Largest Sea Port Refines Operating, Invoicing and Revenue Tracking Systems for Moving Over $100 Billion in Goods Annually

I am excited to announce that Ignify has been chosen by the Port of Long Beach California to implement Microsoft Dynamics AX. The new ERP system will greatly heighten productivity by automating the Port’s critical billing, accounts receivable, revenue recognition and analytical reporting systems responsible for moving more than $100 billion worth of products, natural resources, and provisions traversing through the harbor each year.

Microsoft Dynamics AX will serve as the central core for the Port of Long Beach’s new Port Operating and Revenue Tracking System (PORTS) that will be developed and implemented by Ignify. The key role of the PORTS platform will be to help the Port of Long Beach increase the efficiency of the billing process and improve customer service by managing invoices, accounts receivables and cash application. Dynamics AX -based PORTS will provide EDI and real-time reporting of billing data which is not available in the current system, thereby enhancing financial reporting and automating data validation. In addition, a new web-based portal will offer tenants, terminal operators, and employees the ability to securely create, view and manage orders anywhere an Internet connection is available.

Other benefits include:

  • Allows port staff and customers to enter billing data directly into a web browser, reducing data entry errors
  • Validates customer self-reported data and calculates charges and credits in accordance with lease agreements and Port tariffs
  • Interfaces with the Port's Electronic Document and Records management system, Vessel Tracking, Property Management and Green Flag systems
  • Provides dashboard style user interfaces for Port staff, executives and external customers

Microsoft Dynamics AX will provide increased automation and efficiency; flexibility and scalability for future enhancements; and better quality control and turnaround time for more effective decision-making.

The Port of Long Beach is one of the world’s premier sea ports responsible for the transport of goods ranging from textiles, automobiles, petroleum, steel, furniture, and consumer electronics among many other products. The Port is also an economic powerhouse responsible for over 316,000 job in Southern California and 1.4 million jobs throughout the United States.

I am pleased that the Port of Long Beach has chosen us for this important project. The amount of cargo traveling in and out of Long Beach at any given moment along with the amount of data generated for fulfilling these shipments is astronomical. By automating order entry and revenue tracking through Microsoft Dynamics AX and designing a web-portal where customers can log-in and manage orders themselves, the Port of Long Beach will dramatically improve day-to-day operations while lowering total annual costs.

In addition to the Port of Long Beach, Ignify in 2009 was selected to implement Microsoft Dynamics AX ERP system for the Harbor Center port in the Philippines. Ignify was recently ranked as the 26th fastest growing company by the Los Angeles Business Journal and 19th Fastest Growing IT Company nation-wide by Inc. Magazine’s Inc. 500.

Sandeep Walia is the President & CEO of Ignify

Ignify is a privately-held ISO 9001 certified company focused on the mid-market and enterprise business space for ERP, CRM and eCommerce implementations. The company provides design, consulting and implementation services for ERP, CRM initiatives for mid-market and enterprise businesses. Ignify is a Top-tier Microsoft Gold Certified partner ranked in both the Microsoft Dynamics Inner Circle and the Microsoft Dynamics Presidents Club in 2009. Ignify offers a comprehensive set of Business to Business (B2B) and Business to Consumer (B2C) eCommerce solutions for increasing online sales while lowering overall operation costs. Ignify has offices in Los Angeles, Silicon Valley, Nashville, Chicago, Toronto, Manila, Pune and Bangalore. For more information, visit http://www.ignify.com or call 888-446-4395.

Dynamics GP MACROS: LITTLE HELPER BIG ON RESULTS

February 6th, 2010 Tod Heath 1 comment

Written by Tod Heath, Senior Dynamics GP Business Analyst for Ignify

If you’re like me, there are times when you have more work than you can handle.  This is based on the fact that we are limited in what we can accomplish by our two hands and some of our tasks can be quite repetitive.  Well, what if you had the ability to recruit a ‘Little Helper’ to assist you with some of your chores and tasks?

Dynamics GP has a Little Helper ready to assist you.  All you need to do is recognize that’s he’s waiting around, hoping that you call upon him so he can feel productive.  Providing him with some simple instructions can make him happy and you more productive.  By the way, he is known as the GP Macro. 

Macros in GP are simply recordings of a series of keystrokes, mouse-clicks and mouse-movements made while performing a procedure. It’s like taking a video of a series of tasks that you want to accomplish and then being able to replay it at any time to accomplish various tasks.  Your Little Helper can be a big time saver while performing certain tasks such as Bank Transfer entries or other repetitive tasks.  Simply record the series of events up until the time you need to key in any data.  When ready, just replay the macro and you’ve saved yourself a series of keystrokes.

However, your Little Helper can really be productive by helping you import data.  Running Macros can be effective when working with these situations:

1)      Integration Manager does not support what you’re trying to import.

2)      You are using a customized or third party version of a window that might interfere with Integration Manager.

3)      You don’t want to use eConnect, Table Import, SQL or some other technical method.

4)      GP Master Records.

5)      Transactional data that would access only a single form (window).

6)      Any process where identical repetitive steps are required. As an example, members of my team have deleted selective inventory Items in GP using macros as it was not possible to be done via SQL as there were multiple related tables.

7)      Some developers even use them for testing purposes.

 

Summary Steps to create a Macro to import data are as follows:

1)      Record a dummy macro in Dynamics GP to be the template macro.

2)      Open the macro template in an MS Word document.

3)      Use the Mail Merge feature using the Step By Step Mail Merge Wizard to locate your data set and create your letter to define the records in the template.

4)      Run the macro in Dynamics GP to import the data.

 

Dynamics GP Macros really can aid you in many different ways.  It’s just up to you to give your Little Helper some instructions. 

 

This post is written by Tod Heath. Tod is a Dynamics GP Senior Analyst in the Microsoft Dynamics GP Practice at Ignify. Ignify is a Global Microsoft Dynamics Inner Circle Partner specializing in Microsoft Dynamics ERP for RetailDistribution, Manufacturing and Chemicals verticals. For help on Microsoft Dynamics ERP email us at dynamics@ignify.com