Published on the 28/04/2007 | Written by Newsdesk
Leading exporter New Zealand King Salmon is a medium-sized company but as a fish farmer, processer, distributor and marketer, its activities and needs are as complex as those of many much bigger firms…
To integrate its “islands of information”, NZKS has signed a 50-user contract with Lawson for a comprehensive suite of Movex e-collaboration software and e-business services.
NZKS has an annual turnover of more than $50 million and employs more than 330 staff. It accounts for 80 per cent of New Zealand’s total production of farmed King Salmon, also known as Chinook, and 40 per cent of world production. The company has four salmon farms, two hatcheries and processing facilities including a ready-to-eat factory.
With a focus on sustainable farming practices, the NZKS has built a reputation for one of the finest salmon stock breeding programmes in the world and uniquely avoids the use of chemicals or vaccines in supporting the pristine advantages of its grow-out environment in the Marlborough Sounds.
With a range of in-house disparate data models for the complex aquaculture (fish farming) part of the business, along with early generation basic production and sales management systems, NZKS was ready for a new integrated e-collaboration solution. As part of the integration of its disparate systems NZKS also wanted to implement “best business practice” processes in a consistent manner throughout the organisation.
Integrated Process
According to Bryce Gilchrist, NZKS’ General Manager Finance & Corporate Services, “Our business is a little unusual in that it’s a fully integrated process. We are farmers of fish and we need systems that will support our husbandry needs, we are processors, distribute and market and have all the corporate service needs of a large corporate organisation, yet we are a medium sized company.
“We have mixed planning requirements in that on the one hand we need to make quick planning decisions because we are dealing with a fresh product that arrives and needs to be processed and on a plane the same day. On the other hand we grow these fish for two years – it’s a slow process that involves a lot of planning and strategic management of the product. The day they are harvested an instant response and the ability to handle quick actions is paramount.
“The best way to describe our current situation is that we have lots of little pails of information or data spread throughout the entire company and we want to tip those tins of information into one large bucket and make it available to everyone who should have access to it. Also we want to put controls on the information going into the bucket so that we can present it in a meaningful way and make it readily available to all users,” Mr Gilchrist said.
Strategic Fishing
One of NZKS’ main drivers for implementing a new system was the access to best business practice that would assist the company’s current high level of professionalism. “We see that adding an ERP solution will bring in a lot of engineered-in best practice that saves us re-inventing the wheel again and then massage it to our environment. When we looked at functionality we looked at it not so much from a systems point of view but from a business process viewpoint and we ranked the solutions in terms of importance,” Mr Gilchrist said.
NZKS ranked the following issues as being of primary importance when choosing its e-collaboration solution:
1. Marketing and distribution capabilities
2. Degree of fit into NZKS’ unusual environment of aquaculture
3. Degree of fit into a process environment and disassembly needs as
opposed to the standard discrete manufacturing model.
Unique Requirements
NZKS’ requirements for a sophisticated e-collaboration solution were exacerbated by the fact that it farms the difficult to grow Chinook Salmon. This is in contrast to many of the large Salmon producers who farm the easier to manage, less flighty Atlantic Salmon.
“We don’t see ourselves as being in the commodity business. In terms of cost competitiveness it is difficult for us to compete with some of the other commodity salmon producing countries such as Norway and Chile. We are much more geared toward the higher end, valued-added sector hence we need a good infrastructure and support to be able to deliver high levels of product and support to our customers.
“I liken farming Chinook vs. Atlantic to farming deer vs. cattle. Deer is much more difficult and costly to manage as is the Chinook Salmon. However, we have a clear market advantage in that it is the preferred product in Japan. Indeed, close to 50 per cent of the company’s total product goes to Japan with 40 per cent being consumed within New Zealand.
The Right Fit
NZKS conducted an extensive review of Tier 1 systems and ultimately its process flow requirements were best suited to the Lawson solution – particularly the reverse bill of materials capability and the ability to manage processing without needing manufacturing orders in place. “Lawson’s optimisation modelling capability for supply chain management was an important factor in our decision to go with Movex,” Mr Gilchrist said. “We have a very difficult and complex supply chain and if we are looking at strategic production planning we have a 5-year time horizon that we need to plan for. So, having a model that uses the information available in the core transaction database and the provision of planning capability to optimise our different issues is very useful to us in dealing with the constraints and elements we face in our planning process,” he said.
Distribution Strengths a Must
The distribution aspect of the implementation of the Lawson solution will have a big impact on the efficiency of the entire organisation, today and tomorrow. NZKS needs to process and distribute very quickly to domestic and overseas markets, from a relatively remote location in Nelson.
The fish are harvested from the Marlborough Sounds, located a couple of hours from the plant. They arrive in Nelson for processing at 5 am each morning. They are then processed by 2 pm to meet flights out to domestic and international markets.
“This means there is difficulty matching supply and demand,” Mr Gilchrist said. “We have demand from customers the same morning as the fish are being processed. There is quite a lot of effort matching this to ensure we fulfil customer orders without having anything leftover that has to be frozen for lower value.
“We were particularly keen to ensure that the package we chose had the capability of providing forecasting from a market ‘pull’ perspective in the medium to long term forecasting capability and would also model the short term production ‘push’ requirements the company has,” Mr Gilchrist added.
Customer Service Improvements
Another major success factor for NZKS will be the ability to improve its levels of customer service through the deployment of Movex. This will assist both in marketing management where Movex will assist us to manage campaigns, special deals and discounts and also on the customer management side.
“By having the right information readily available to our telesales operations, for example, through improved efficiencies throughout the organisation we will be able to ensure minimum turnaround times while meeting our customers’ demands. This is particularly important as customers such as NZ supermarkets typically call in the morning and will expect delivery the same day,” Mr Gilchrist said.
E-business plans
Mr Gilchrist outlined that NZKS’s ebusiness strategy will take two stages. Initially the company wants to get the fundamental transaction machine in place. “This will backup anything that we want to do with e-business. This will mean we can deploy real e-business rather than have pseudo e-business with simple online ordering and someone in the backroom translating the information into slow manual processes.
“Once we have the front end we can then readily integrate it back to our supply chain, namely, our feed suppliers, (particularly in the planning processes) and our freighters. We will also provide online information capability to our customers, which will essentially put our product and services into the market 24 hours a day, 7 days per week. “We anticipate that this will greatly help our demand forecasting by allowing our customers to order outside our current operating hours,” Mr Gilchrist said.
