A major ERP
implementation has sped reporting,
added flexibility and supported
rapid growth at this Tasmanian
brewer -- but its employees still
take their time, as David Braue
explains.
It’s well
accepted that good things take time,
but nobody has had to tell this to
Tasmanian beer maker J. Boag & Son,
which once ran a whimsical
advertising campaign suggesting
customers drink its products more
slowly because "great beer takes
time" to make.
This philosophy
has spilled over into its gradual
move to embrace enterprise resource
planning (ERP) over the past decade.
The company’s go-slowly approach
helped it build a broad
technological foundation that has
enabled growth, and is more recently
enabling efforts to meet retailers’
demands for smooth electronic
distribution.
Boag's,
which remains Australia’s largest
privately held brewery and has been
brewing premium beer from its
Tasmanian base since 1881, began a
major reworking of its backend
computer systems in 1997. At that
point, the company’s general ledger
and stock control were being run by
a McDonnell Douglas mainframe that
had been in place since 1982.
“It was very
ancient and we supported the
software ourselves,” recalls
managing director Patrick Riley (right).
“The hardware was at the stage where
it was completely unmaintainable,
and we needed to bring together our
databases to make business decisions
in ways that were better than what
we had previously. Sound decision
making data just wasn’t there.”
Facing the need to
consolidate its accounts and provide
room to grow in the future, the
company began exploring alternatives
and eventually settled on the ERP
system from developer
Pronto Software. However, as the
company soon found out, that
decision was only the beginning of a
major restructuring that has
continued driving change through its
operations to this day.
Harder
than changing beers
Boag's committed heavily to its
systems update, implementing all but
two of Pronto’s modules on an IBM
AIX Unix-based midrange system that
is still kicking nearly a decade
later.
While the
technology was clearly well suited
for the company’s business, however,
early on the project team faced
another challenge as it became clear
the people element of the project
was going to prove somewhat more
complicated than the technology.
With fully 85
percent of the company’s 150
employees almost computer illiterate
-- a fact correlated with an average
of 22 years’ experience with the
company -- staff issues were a major
consideration. The two-year project
faced the very real need to combine
a large technological leap forward
with extensive staff handholding.
This process began
even before Pronto was chosen, as
the effort to involve employees in
the project began with the
four-month process of authoring the
initial tender documentation. In the
end, around 70 percent of that
document came directly from the
employees’ own wish lists.
“This gave us a
platform that started to engage our
employees in fundamental change in
the way they could do business,”
said Riley. “We were trying to get
them involved in the decision making
process so they had some ownership
of the outcomes; we knew if we could
get them that ownership, [we were]
more likely to get acceptance of
what was going to be a very
difficult thing for them.”
Better
data, better auditing
This hands-on partnership approach
continued, ensuring that employee
resistance never became a hindrance
for the project.
Looking back,
Riley is confident that early
efforts to ensure employee buy-in
were a major part of the reason the
system ultimately went in live and
with “no disasters”. In the years
since, the Pronto system has
overseen Boag’s growth from a
boutique brewery that expanded
output from 16 million litres of
beer in 1995 to 42 million litres in
2006. This growth should continue
thanks to initiatives such as an
AU$18 million packaging line, which
opened in late 2004, part of a AU$55
million expansion plan.
Supporting this
growth has been a range of
management information that was
simply unavailable from the old
system, but which is readily
available in the new environment.
Regular reports provide updated
views of metrics such as sales
trends, production costs, and
availability of warehousing.
More detailed
reporting has given marketing staff,
for example, unprecedented clarity
into their marketing spend -- to the
point where they can more
effectively identify, target and
monitor performance in marketing to
key demographics.
Better information
has resolved what Riley calls a
“major problem tracking marketing
expenditure”, which accounts for
around 20 percent of the company’s
total annual expenditure. Most of
this funding is allocated early in
the year, but had previously been
difficult to follow up as campaigns
took their course.
“With the
[previous] purchase based system, it
was inherently unreliable,” Riley
explains. “We were able to use
Pronto’s job costing system to keep
track of those segments, with
minimal data entry. It’s to the
point where we would be very
disappointed if the marketing budget
was more than a few thousand dollars
off [projections].”
The job costing
system is also used to track fringe
benefit tax obligations -- a use for
the technology that the software
vendor didn’t intend, but for which
the module has proved to be
perfectly well-suited.
By improving
access to data and the production of
regular financial reports, Boag's
has been able to streamline its
reporting requirements
significantly. Monthly sales reports
used to take up to 17 days to
produce, but can now be produced in
just four days. Efficiencies have
been such that the brewer was able
to produce its most recent full-year
results report in just six days.
Data for
the future
Improvements to logistics and
warehousing processes are now on the
radar, since around two-thirds of
its produced volume is shipped from
the Apple Isle to the mainland. The
company is currently implementing
PRONTO iSupply, a logistics add-on
for the company’s ERP environment
that will support a recent and
increasingly inflexible mandate from
major retailers: that Boag's
introduce straight-through data
processing capabilities to
streamline their supply chains.
Such efforts have
been a major part of e-commerce
strategies of retail giants Coles
and Woolworths, and the brewer’s
investment in its ERP environment
has prepared the company for the new
requirements as they eventuate. No
amount of investment can change some
of the business processes -- leaving
the company to resolve issues such
as the increased costs that may come
from having to comply with
retailers’ different packaging and
delivery requirements.
Despite the
improvement in management data, the
strong focus on employee involvement
also beget an unexpected
consequence: while most of the
employees have embraced the new
system, even to this day some
continue to apply traditional
pen-and-paper accounting processes
to the computer’s data.
Rather than
discouraging this, Riley says the
knowledge that additional sets of
eyes are looking over the computer’s
results adds an invaluable
additional level of governance to
the whole process.
“Pronto has given
us confidence in the data so when
we’re making decisions, we actually
have a solid thought process behind
the processes,” he explains. “In a
rapidly expanding business, you
place a lot of confidence in the
data you’re looking at.”
“However, some
people still like to do
double-checking manually, and this
is a great audit process,” he adds.
“For people not to have blind
confidence in the computer system is
healthy; if someone is actually
doing a reconciliation so they can
go home at night knowing the data in
the computer is right, I’m very
happy.”
