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Treated wood producer cuts annual stock-take by more than half

Supplier: Microsoft Dynamics
29 October, 2012

Koppers Wood Products, an Australian subsidiary of Koppers Inc, wanted to improve inventory control and visibility of its utility poles, which has a varied and complex production cycle.

With Microsoft Dynamics NAV, Koppers has successfully improved its inventory management and stock-taking processes, reduced costs, streamlined financial reporting and increased business visibility.

Situation

Koppers Australia is a fully-owned subsidiary of Koppers Inc, a global integrated producer of carbon compounds and treated wood products. Listed on the New York Stock Exchange, the group achieved net sales of US$1.53 billion in 2011 and employs 1750 staff across 38 facilities worldwide.

As the Australia's largest producer of treated power poles, Koppers Wood Products (Koppers), managed by Koppers Australia, provides utility poles to the communications and power, agricultural, construction and landscaping industries.

Due to the long production cycle, the need to ensure adequate supply of timber resources and variety of wood species used, supply chain management is the key to Koppers.

Raw materials of hardwoods and softwoods sourced from private properties and state forests need to be sorted, dried, cut to length, cleaned and treated with a variety of preservatives according to customer's usage and requirements, before the utility poles are ready for delivery. The length of the production cycle varies, as the drying process ranges from a few weeks to a year, depending on the wood species used.

With utility poles categorised into six major categories and 1,800 minor categories based on length, strength, diameter, species, certification and source supply, Koppers needed a better way to manage its complex inventory.

An end-to end Enterprise Resource Planning (ERP) solution integrated with barcoding capabilities would assist to improve accurate stock-take, automate inventory management and enhance visibility with traceability from raw materials to finished goods.

Koppers also needed to satisfy Australian Standard AS 4707 - 2006, a Chain of Custody Standard which tracks a wood or forest product from its origin in a certified forest to its end use by the consumer. It is an inventory control system that provides a quality assurance standard.

Solution

A check with its corporate headquarters revealed that Microsoft Dynamics NAV has been used successfully by Koppers Europe for the past 10 years, which led to Koppers Inc's decision to designate Microsoft Dynamics NAV as the global standard for all business subsidiaries.

"Besides an easily customisable system, we wanted a scalable solution that is stable, proven and well accepted in the marketplace," Johanna de Roder, information systems manager, Koppers Australia, said.

"Having been successfully implemented at our European and US operations, we are confident that Microsoft Dynamics NAV can meet our needs."

Tectura, a Microsoft Gold Certified Partner for Enterprise Resource Planning, was appointed to handle Koppers Inc's Microsoft Dynamics implementations globally.

"With a technically complex solution, we wanted to work with a knowledgeable and dedicated partner," de Roder said.

"Impressed with the experience of the Tectura Australian team, we knew that we could count on them to see the project through successfully."

Koppers' IT team worked alongside Tectura to localise templates such as the global chart of accounts, for its Australian operations.

With Tectura's assistance, Koppers implemented the Financial Management, Purchase, Resource Planning, Sales and Marketing Management, Supply Chain Management and Warehouse Management functionality of Microsoft Dynamics NAV. Several Tectura solutions were also implemented, including Tectura Electronic Banking Reconciliation Import to automate bank reconciliation; Tectura Electronic Funds Transfer for efficient supplier payment; Tectura Asset Maintenance to establish an effective maintenance schedule, and The Enhancement Suite (TES), to send information captured via a Windows mobile application, wirelessly across a next-generation data network to Microsoft Dynamics. The system went live in May 2011.

Benefits

Microsoft Dynamics NAV helped Koppers streamline processes across inventory management, stock-taking, production and resource planning. This created greater visibility of all sites stock availability and greater transparency on sales quotes. With the group's month-end reporting to the US cut by 60 percent, financial visibility improved and auditing costs have been reducing 12 per cent year on year for the past two years.

Enhanced inventory management and visibility

With inventory made up of 8.0 to 30.0-metre utility poles stacked in yards of up to 30 hectares, efficiency in inventory handling is critical to enhance visibility and ensure the safety of Koppers' staff.

With Microsoft Dynamics, each newly-purchased hardwood or softwood pole is now barcoded with data including wood species, length, strength, diameter etc. Using a mobile scanning device, this information is captured directly in the yard and sent wirelessly to Microsoft Dynamics in real-time, making each pole serialised inventory data.

"Previously, inventory visibility was limited as goods receipt and delivery were recorded manually and processed weekly," de Roder said.

"An integrated system built on Microsoft Dynamics enhances inventory management and provides real-time visibility. With daily posting of production and purchase receipting, our salespersons now know their sales capacity at their fingertips, to better meet customers' requirements."

Enhanced stock-take accuracy

Having a unique barcode for each stock item makes stock-taking a more accurate process.

"Annual stock-take is now much more accurate and provides enhanced traceability," de Roder said.

Streamlined production and resource planning

With trees having varied lifecycles and requiring different processing times, streamlined production and resource planning is critical for Koppers in order to meet customers' required lead times.

By capturing the progress of the poles through the seasoning and fabricating processes, using the mobile scanner, Koppers now enjoy complete visibility of its production process for better planning and cost control.

Reduced costs with optimised transportation planning

For Koppers, transportation of its utility poles, from any of its four yards across Australia, can mean travelling thousands of kilometres over a few days. As such, accurate transportation planning is crucial to minimise transportation costs and ensure timely customer delivery.

"When handling stocks of such weight and magnitude, proper freight handling is key to avoid delays," de Roder said.

"With better visibility into individual item's weight and volume, we can now consider linking data from Navision with our weighbridge to make accurate calculations to ensure maximum truck loading. Precise planning is important to help us comply with maximum safe loading regulations to ensure safe and optimised transportation costs."

Standardised processes reduces auditing costs by 12 per cent

With standardised processes across subsidiaries, auditors can now review selective processes without having to audit each of Koppers' subsidiaries individually. This has reduced auditing costs by 12 percent. Standardised processes have also enhanced staff accountability, with specific tasks completed within stipulated time periods.

Cut month-end reporting by 60 per cent

"With one standard system across multiple businesses in Australia, which can be consolidated at the General Ledger, month-end reporting is cut by 60 percent from ten days to four days," de Roder. said.

"Microsoft Dynamics' easy-to-use, drill-down capabilities have given our management and sales teams real-time granular visibility by product, division and more, thus speeding up customer service and improving decision-making processes."

Looking ahead, Koppers plans to leverage the enhanced visibility it has gained by posting real-time stock levels on its upcoming customer portal to enhance service levels and customer responsiveness.