Austar tracks stack with Professional Advantage

With over 600,000 customers and a huge inventory of subscription TV boxes, cables, remote controls and more, AUSTAR was having trouble keeping track of its stock – until Professional Advantage came up with a solution...

Established in 1995, AUSTAR’s subscription television service is the company’s core business. Since its establishment, AUSTAR’s television subscriber base has grown to more than 601,126 (as at 31 December, 2006), ranking it as Australia’s second largest subscription television operator (behind FOXTEL), and the largest operator in its market of regional and rural Australia.

The company has also entered the mobile telephony and internet market and as at June 30 2005 AUSTAR Mobile and AUSTARnet had 30,000 & 43,000 customers respectively. In addition the company has a 50% stake in XYZnetworks in a 50/50 joint venture with FOXTEL. At the start of 2005, AUSTAR was using its existing customer care & billing system to manage its inventory of subscription TV boxes, cables, remote controls and other items. However, the system was unable to drill down to the level of detail required to keep track of these items – which led to issues of lost inventory, not knowing what was needed or when to buy replacement stock. With 30,000 item movements a day and an annual inventory budget in excess of $30m, this presented a serious problem. AUSTAR decided that a specialist inventory solution was required and began the process of evaluating alternative systems. A shortlist of five providers was asked to present.

The professional advantage
After evaluating each of the presentations, AUSTAR chose Professional Advantage (then Moore Stephens Technology Brisbane)’s Microsoft Dynamics AX solution, as it was able to manage both the regular supply chain and reverse logistics (when customers returned units or contractors returned damaged equipment). The Professional Advantage solution also required significantly less investment than the others. A big advantage that Microsoft Dynamics AX version 3.0 had over its competitors was that it had the ability to develop corporate reports detailing inventory holdings in each region, down to individual contractor level.

These reports were able to pinpoint how long stock had been there, provide visibility of freight consignment, automatically update inventory movements and allow the AUSTAR Supply Chain and Logistics team to proactively manage inventory orders and dispatches. This meant reconciliation of serialised and aged inventory was much easier.

The implementation
The Microsoft Dynamics AX pilot began in August 2005 and went live in November 2005 operating in parallel with the existing system until July 2006, when the final switch-over took place.

The implementation had some initial problems with performance due to the amount of inventory movements in a day. These were resolved once it was decided which items of inventory were to be included. “When you consider we move around 24,000 serialied inventory items every day and use third party contractors to manage it, you could say we faced a few logistical bugs during the implementation,” says Malcolm Schulstad, AUSTAR’s Supply Chain and Logistics Manager.

“Added to that complexity was a complete change in AUSTAR’s Supply and Logistics team during the implementation which meant that the people who wrote the specification were no longer there.” Nonetheless Schulstad says AUSTAR was impressed with how Professional Advantage worked through these issues to find a solution. “Without such close co-operation, we wouldn’t have had such a successful implementation,” he says.

Rapid ROI
“The biggest benefit from the new Dynamics AX system,” says Schulstad “is that it’s paid for itself inside 12 months.” Accuracy of monitoring has also been revolutionised. “AUSTAR’s previous system was never able to manage the finer details on stock as well as the new Microsoft’s Dynamics AX system does.” AUSTAR uses nine contractors (including freight companies) who bring information into Dynamics AX via 30 files a day that require different validation rules. With Dynamics AX, all these formats are accepted and validated using different logic pathways – allowing Schulstad and his team to see if equipment breaks on installation, understand why it broke and improve production quality.

Dynamics AX also allows full visibility of inventory. Though contractors have 400 people on the road with a multitude of inventory items in vans, Schulstad can see where they are and what they have as well as understand ordering patterns and stock levels. He can monitor stock that is physically lost or missing within the organisation. It also covers nonserialised items that contractors would over order, leading to wastage and over supply. “The ability to manage our equipment inventory effectively is the cornerstone of AUSTAR’s business model. It will allow us to introduce more expensive equipment that won’t become a liability by disappearing or gathering dust in a warehouse.”

Overall cost savings from Microsoft Dynamics AX implementation come close to $1.7 million per annum, including:

• Drilling down to identify the location of inventory to the individual person physically in possession means greater accountability;
• Tracking serialized inventory items in transit reduces the incidence of lost inventory;
• A significantly greater history on the movements of inventory by date of movement rather than system processing date (i.e. real time);
• Segregating different inventory models and knowing each item’s age improves customer service levels.

Some other key findings from the last 12 months:

• Current leakage rates are now less than 0.1%. Previous leakage rates were approximately 1.2% per annum or 7747 decoders. Leakage has effectively been eliminated or charged back to third party contractors representing a saving of $1.16 million per annum;
• Previously missing inventory is now being identified and recovered due to the level of detail on inventory movements that Axapta provides – at 0.006% per month, this equates to 460 decoders and smartcards per annum or $68,500 a year;
• The ability to identify equipment failures at the point of installation and recover costs from the warehouse is currently estimated at $10,000 in savings per annum;
• The ability to identify incorrect equipment installations due to faulty technician training and recover costs from contractor companies is currently estimated at $302,000 per annum;
• The ability to proactively manage non-serialised items and control non-serialised inventory leakage is currently estimated at $500,000;
• The ability to report and streamline the management of forecasting and procurement of inventory is estimated at $43,000 per annum.

Looking ahead
While the benefits to the business have been measured in the millions of dollars, AUSTAR did not anticipate the level of detail they would see in the Microsoft Dynamics AX reports. “This provides AUSTAR with the tools to aggressively pursue best practice in supply and logistics and target world class levels of performance,” says Schulstad.

The detail has also revealed other issues which are being prioritised currently. For example, AUSTAR plans to track its 6000 repairs a month through Dynamics AX in order to pick trends in equipment failures that can be addressed with more education or improved product design. Other future considerations for AUSTAR include implementing the demand planning, purchasing, and forecasting modules from Professional Advantage.

“It’s only when you implement a system like Microsoft Dynamics AX that you realise we weren’t really managing our inventory previously,” says Schulstad. “With our new system we can now manage the complete lifecycle of our equipment and hold contractors completely accountable for stock in their possession.”

For more information
Professional Advantage
Web: www.pa.com.au/microsoft
Ph: 1800 126 499
E: microsoftinfo@pa.com.au

8/1/26_ex_m_h_nl

View Solution Provider