The keywords: Adaptation and Development Aid
The owners of the major Hungarian player in agriculture company, ISV Zrt. took the decision in time for initiating an ERP system. Without it, they would probably not be competitive today, because most of their competitors have already been using some sort of ERP system for years. Their IT manager already raised the necessity of initiation ten years ago – but the then owners were not willing to finance such investment. However, there is an advantage of the prolonged preparation: there was time to exhaustively scrutinize the domestic ERP market and consider the expectations from the system. The result: Microsoft Dynamics NAV, initiated by MultiSoft Ltd., has been going ’live’ since the beginning of January, 2010 – consequently, the costs of production were reduced with 20% already in the first year.
The Company
The fully Hungarian owned ISV is primarily specialized for feeding. With more than 40 years of experience, the company is a prominent player in the agricultural sector, some 100 people are employed at the four sites (Budapest, Debrecen, Mohács, Nyírtelek), and has a multi-billion revenue. In respect of corporate governance and industrial engineering, their peculiarity is that solely specific orders for specific feed mixture are delivered, and ISO certificate is issued in all cases.
Background and Project Preparation
Nearly two decades ago, ISV implemented an IT system through which the accounting, financial, billing and inventory registration tasks of the company were handled. In the Budapest centre, LibraCom management organization software was applied, however, without online connection, they could work with the functions only separately, independently from each other, so the system was inappropriate for integrated data management. The production control, inventory management and procurement were carried out with custom-developed pieces of software, however, automatic data exchange was inextricable, since the isolated applications could not be connected to the LibraCom system. A computerized production control system was also connected to the computer system, which controlled the production of high-quality feed with pharmaceutical quality assurance in the feed factory in Nyírtelek. This system is still significant in the operation of the company, because it contains not only the recipes of some feed mixture, but carries out the control of valves, scales, pressure and temperature regulators, which control the mixing proportions of the stock.
Formerly, the recorded data was sent to Budapest on floppies, but the aggregation of orderings were slow and concealed many risks of errors. The centre made analyses and reports with 1-2 months of delay, which was untenable in the ever-hardening competition. A system with online connection was needed, which fully covered all processes of the company. The modernisation efforts for an integrated system, which combines the sites, were completed only after the change of ownership in 2006, when 30 ISV employees purchased the company. The new leadership was receptive to change.
The recognition of the necessity of such milestone-like changes always require a competent strategist – a happy coincidence if he also has a decisive role in the completion of the solution. This happened in the case of ISV – finally, they took advantage of the fact that the former owners were against modernisation.
Jozsef Kovacs, chief information officer of ISV originally started as an agricultural engineer at the company three decades ago, so he was professionally familiar with all details of the operation of ISV, and he was aware of the IT expectations as well. Jozsef Kovacs summarizes the first steps of the decision preparation in the following way:
„We were looking for a solution, which, besides the standard ERP functions, provided the functions specialized for food companies, and also served all expectations of our four sites. I had a concrete conception about the modernisation, I attended several professional presentations, so I got to know the services of available ERP systems in details. I found that many offered ERP systems either in box or with operation, and I knew that the approach of the initiator, the viability of the unique developments and the later software and operation support would be very important. Quite a few bad examples were read in the trade press or on the Internet, we learned a lot from these mistakes, too. We were consciously preparing for not a single, but a medium-term investment, where, besides the initiation and the adaptation, the selection of the modules, the customization, the satisfaction of the individual needs, the trainings, the data migration, the software tracking and the general support were also key issues.
Besides Microsoft Dynamics AX and NAV, I got to know the solution of SAP Business One and the new system of Volan – the latter could have been carried out with little investment, but their functionality was not complete, for example, the production module was lacking. We got several bids from suppliers, and there was a great variation in the investment amount and the execution time – finally, I created a decision support table. Earlier we contacted Janos Sved, sales and marketing director of MultiSoft Ltd., he then presented the NAV 3.1 and 3.2 systems. We met again on the Micorosft Dynamics NAV Food Industry Business Breakfast in the spring of 2008, and after getting to know the new services it was quickly seen that we found the solution. The bid of MultiSoft Ltd. was the best in every respect.”
Based on their former experiences in the food industry, MultiSoft experts have already developed an industry solution: it merely had to be customized based on the needs of the customer, and the interface between the system and the software of the feed mixer machine had to be constructed, which resulted significant savings for the company. The consultations revealed that many unique features were added to the base system of NAV, which met the expectations of the food sector, and a number of functions were found in the industry solution of MultiSoft Ltd., which were developed based on former experiences and for which ISV also needed. Their IT manager says the following: „This is such an added value, that I know, only very few companies are able to carry out. Finally, we signed the agreement in 2009.”
Phases of Implementation
Events sped up from the summer of 2009. During the first consultations, the essential needs were assessed, a key user was selected from each speciality to the proposal of MultiSoft Ltd., and meanwhile the specific requirements of the sites were collected. In August, an intensive status assessment was began, the refinement of the special needs was finished by October, and meanwhile the system parameters were also completed by MultiSoft experts. Since the expected number of users could not be accurately determined in the first round, the Microsoft Dynamics NAV system was originally hired by ISV, later they purchased 30 concurrent user licenses. The implementation was completed by the end of November, then followed by the fine-tuning; training and testing began from December – Dynamics NAV has been going ’live’ from 1 January, 2010.
Unique Developments
ISV put precisely what functions they need during ’live’ start and what are those facilities that are enough to implement in the second or third phase. Following the advice of MultiSoft experts, data of many functions were recorded in the first round, which ensured a database for later developments and the availability of data for the new query functions. Of course, the first priority was the smooth production – additional activities got in the second line. An emphasized point was, for example, the development of the interface fitting the feed mixing software, which was more important than printing of labels or data sheets attached to the finished products. Dynamics NAV has originally no quality assurance module, however, ISO-based quality assurance must also be documented at ISV. MultiSoft engineers also succeeded this development, so now NAV is able to draw up credible certifications that the products comply with all aspects of feed law. Ultimately, the ERP system ensures a background for the production and sale, which guarantees the quality for the customers.
Experiences, Quantifiable Benefits
Jozsef Kovacs summarizes his experiences in the following way:
„There were initial difficulties in the first few months, but since March, all users have agreed that the application of Microsoft Dynamics NAV is a significant progress, no one would work with the old system. For example, the system was a great help in the management of receivables. A warning message is sent about the expiring accounts every day, and the regularly late-paying customers can also be collected. It happened with the old system that we did not realize in time that a customer had not paid yet, and goods were delivered again. Now the system immediately detects the problem customers during ordering: arrears are displayed in a new window.
Various statements, reports help us in quick decision making. We have just started to explore the benefits of the immediate, up-to-date data, we are using more actively the analyses to make appropriate decisions. We see the deeper connections more clearly, we are increasingly exploiting the benefits of integration, and increasingly discover that the responses to our daily questions are in the system – we have less questions to each other, yet we get more precise answers. The lead-time of an order is significantly shorter. Formerly, average 5-6 days passed from the order up to the fulfilment – now it is two days shorter: thanks to the NAV, the logistics can be organized optimally, delivery can take place sooner. In 2010, the costs of production decreased by at least 20% compared to the previous year, now it is sure that the investment will return in a few years.”
