Egg business streamlines end-to-end supply chain

With Microsoft Dynamics AX, Sunny Queen successfully transformed their integrated supply chain which resulted in significant efficiency gains, enhanced inventory management and increased business visibility.

Situation

Owned by two farming families, Sunny Queen sold its first dozen of eggs in 1903. Since then, the company has been helping Australians "wake up on the Sunny Side" with its fresh farm eggs.

As one of Australia's top egg suppliers and the Number One egg brand in supermarkets, Sunny Queen offers a full range of fresh farm eggs and egg products to both consumers and businesses. Sold at major supermarkets, its fresh farm eggs range from fresh farm cage, natural grain cage, natural grain cage free to barn laid, free range and organic free range.

Sunny Queen's value-added egg product range, including omelettes, poached eggs, scrambled eggs and liquid egg, is seeing fast-growing demand from a wide-range of food service customers.

With fresh eggs having only a five-week shelf life if stored correctly, Sunny Queen is constantly reviewing ways to move its products faster through the supply chain, to get them to the supermarket shelves at their freshest.

To be truly effective, Sunny Queen knew that they needed to solve their inventory control issues, eliminate manual processes and streamline their end-to-end supply chain. A review of their IT infrastructure revealed a legacy system that could not meet their future requirements.

Solution

When considering whether to upgrade their legacy systems or replace them with an off-the-shelf solution capable of meeting a minimum 80 percent of required functionality, Sunny Queen decided on the latter, more cost-effective option.

After an extensive evaluation, Sunny Queen decided on Microsoft Dynamics AX on the basis that it met the majority of the criteria detailed in its checklist of more than 100 pages. The solution was a complete end-to-end supply chain, process manufacturing, and distribution model including Electronic Data Interchange (EDI), Rebates, Demand Planning, Business Intelligence (BI), and Warehouse Automation.

In addition, Sunny Queen also made a decision to standardise on the Microsoft platform by virtualising its systems with Microsoft Hyper-V and implementing Microsoft Terminal and Remote Desktop Services to enable remote access to Microsoft Dynamics AX.

"Unlike our previous system, Microsoft Dynamics AX is purpose-built to address the unique needs of our industry," Bob Yarnold, National IT and Communications Manager, Sunny Queen Australia said.

"As a fully-integrated system, Microsoft Dynamics AX gives us 'one version of the truth' across all business functions. We are also assured by its proven robustness and scalability."

Scalable Data Systems, a Microsoft Gold Certified Partner for Enterprise Resource Planning, was chosen to handle its two-phased implementation.

To Yarnold, the key to its successful implementation is the seamless partnership between its internal project team and Scalable Data Systems. He said, "We are pleased with the service and dedication of Scalable Data Systems, who stationed staff at each of our offices for two-days after system 'live', to ensure that the system ran like clockwork."

The first-phase, which went "live" in July 2010, saw the implementation of Finance, Inventory, Sales and Trade, with Production shortly after. The second-phase, is nearing completion in June 2012, with the RF Smart Warehouse Management Solution across Sunny Queen's six distribution centres. 

Benefits 

Microsoft Dynamics AX has helped Sunny Queen to enhance inventory visibility, increase overall efficiency, improve demand planning, ease supplier credit and customer rebate management, and increase business agility.

Enhanced inventory visibility 

With millions of dozens of eggs, multiple brands and over 200 active SKUs, effective inventory management is key to Sunny Queen's success. Instead of manually reconciling inventory figures like before, all data is now consolidated at the General Ledger. This enhances Sunny Queen's inventory visibility − from stock received from farms, stock on hand to stock in transit.

Gained significant efficiency improvement with fully integrated supply chain model

With an integrated supply chain, Sunny Queen has successfully eliminated manual processes and streamlined efficiencies. For example, through the use of Electronic Data Interchange (EDI) for Microsoft Dynamics AX from Scalable Data Systems, Sunny Queen can now process customer orders faster by electronically sending, receiving and acknowledging customer orders and supplier purchase orders. Upon receipt of customer orders, warehouse processes are triggered to automatically generate pick and pack orders on shelves by load, which provides clear instructions to forklift drivers on exact lots for truck loading.

Customers are informed electronically regarding expected delivery date, and upon customer's acknowledgement of receipt, invoice is automatically generated and sent electronically to the customer. 

"Microsoft Dynamics AX helps us fully integrate and automate our entire supply chain from customer order, warehouse management to customer delivery – without any human intervention," Yarnold said.

"Only when there is an egg shortage, would a staff intervene for manual stock allocation.

"With Microsoft Dynamics AX, we have gained significant efficiency improvement. For large customers such as supermarket chains, we have seen the most significant efficiency gains with our streamlined end-to-end supply chain."

Gained more efficiency with virtualisation

By virtualising its systems with Microsoft Hyper-V and implementing Microsoft Terminal and Remote Desktop Services to enable remote access toMicrosoft Dynamics AX, Sunny Queen Australia gained more than efficiency savings. "We have seen significant efficiency gains with virtualisation. We now have a very stable system that delivers peace of mind with its live migration and failover clustering capabilities," Yarnold said.
 

Enhanced demand planning

With better visibility of customers' historical purchase behaviour, demand planning is now enhanced.

"Though we are dealing with hens who cannot be 'rushed' into producing eggs to meet our demand, Microsoft Dynamics AX gives us the enhanced visibility to work with our farms to smooth out the production," Yarnold said. 

Eased supplier credit and customer rebate management

Another improvement Sunny Queen has seen, is better credit management with its egg suppliers, who make several deliveries weekly.

Using Microsoft Dynamics AX, Sunny Queen now automatically tallies weekly receipts from its egg suppliers and generates a Recipient Created Tax Invoice (RCTI), which is sent to the supplier for verification against their records. Discrepancies would be adjusted in the following week's invoice.

"Previously, our accounts staff have to spend an additional day per week to manually process these supplier receipts," Yarnold said.

"Microsoft Dynamics AX has helped us automate this process, gain time savings and eliminate any discrepancies due to human errors." 

Managing rebates and joint-promotions with large retailers is now a breeze using Scalable's Rebate Management Solution.

"With Microsoft Dynamics, we are assured that the sales figures captured are accurate. Based on these figures, rebates can now be easily calculated. No time is lost in reconciling our figures against the retailers' records, which helps to improve customer service levels and satisfaction."

Sunny Queen also achieves better control when dealing with special pricing requests for in-store promotional blitzes.

Yarnold added: "Special rebates can now be easily input into the system for electronic approval. With role-based secured access, we now have full control over rebates and special product costing."

Increased business agility

With drill-down capabilities, Sunny Queen's management can now review business performance in greater granularity by product, region etc. Delivered gross margin reports also provide critical visibility into profitability.

"Instead of waiting a month to know if we are profitable on certain products, Microsoft Dynamics AX provides real-time visibility into margins and profitability," Yarnold said.

"This empowers faster pricing decisions, which increases our responsiveness to dynamic market conditions and empowers us to go-to-market quicker with new products."