Lincom Group: Mining a better future with Microsoft Dynamics AX

The family-owned mining equipment company needed a better ERP system to deal with its complex operations...

Lincom Group is an Australian-owned and operated family business serving the global quarry and mining industries.

Through subsidiaries such as Lincom Pacific Equipment Pty Ltd, Powerscreen Australasia Pty Ltd and Lincom Equipment Rentals Pty Ltd, the group provides a full range of hire, sales and services for industrial strength screening and crushing equipment for the extractive and recycling industries. Headquartered in Queensland, the group also has offices in China and Ireland, along with seven offices across Australia.

Not all equal
During the three years leading up to 2007, Lincom's management learned that not all enterprise resource planning (ERP) systems are equal.

After undergoing its own ERP deployment in 2004, the group soon realised the software was inadequate for Lincom’s multi-company, multi-scenario operations. Worse still, its end-of-financial-year reports weren't delivering the information management needed. It was the middle of a major resources boom.

Demand for Lincom’s products and services was growing exponentially and the organisation couldn't afford to be constrained by poorly performing software. It was time to acknowledge it would have to replace the ERP system with one that better suited its business model.

Keep it simple
Lincom's finance and IT departments worked together to evaluate the options. They investigated a range of financial and ERP systems, paying particular attention to the processes inherent in each of the systems they looked at.

Matthew Churchill, Lincom’s financial controller explains: “I've been through software implementations in the past where extensive modifications have been made for business processes and I've learned that too many such changes are not a good idea. It's best to keep things simple. So, we agreed from the beginning that we were going to keep changes to a minimum whatever system we selected.”

After careful consideration, the evaluation team selected Microsoft Dynamics AX as the best fit for the group's many and varied requirements – from hire activities to sales, engineering, warehousing and service, through to its multinational financial operations. Shortly after this, Professional Advantage was signed up as implementation partner.

“We looked for an organisation that could understand our business, plus, when it got down to the nitty gritty, Professional Advantage was able to offer software add-ons, such as the hire module, which were ideal for us,” says Churchill.

It took nine months to strip out the old ERP system and go live with Microsoft Dynamics AX.

The bulk of Lincom's companies switched to the new software on May 1, 2008, with one remaining company going live on June 1. All in all, the entire process ran smoothly.

The deployment involved all major modules within the ERP suite, including manufacturing, production, projects, hire, warehousing and financials.

Churchill believes that staff communications managers, from finance, IT, production and inventory, were heavily involved throughout the planning stages, and were responsible for explaining the changes and benefits to staff.

Benefits
One of the biggest benefits to come from the deployment is that, for the first time, Lincom’s management can identify, and fully understand, the costs across each division. “In the old system, these were all whacked together,” says Churchill.

For example, the software's project management functionality has made it possible to analyse the cost of sale and, therefore, profitability for each piece of Lincom's heavy machinery.

Under the previous ERP system any costs incurred in adapting these machines to meet Australian standards were charged to a catch-all category dubbed ‘Book to Machine’ – a situation that made it impossible to identify the money and time spent on any individual item of equipment.

Stock control and reconciliation have greatly improved. “Someone once told us that our inventory reporting would never match our general ledger; that we couldn't trust it. Now we have better inventory controls and we can track our stock, wherever it is,” adds Churchill.

Sales analysis has also benefited, with management now able to more easily pinpoint those staff who are most successful; what is selling or hiring, and other associated trends.

During implementation, a number of immediate process improvements were identified and introduced, but Churchill is quick to add that this was by no means the end of it.

“It's been a significant step for us, especially in the current economic climate. There were a lot of areas where we were bleeding costs that we didn't need to. The system has helped us to identify the key areas we needed to improve, and we are still going through various processes and making changes. Process improvement is something that we will be addressing on an ongoing basis.”

Carolyn Ingleson, business development manager for Professional Advantage commented: “This was a really exciting and challenging project for us, as mining services is our strategic area of interest. It was a boom time for the resources industry when Lincom chose to deploy its new system. Now that the market has changed, they are in a better position to deal with it.”

Overall, Churchill says, Microsoft Dynamics AX has improved our ability to respond to market conditions.

“We can get information immediately. Where we used to be reactive, we are now proactive.”

Future thinking
Within the next 12 months, Lincom plans to explore some of the more sophisticated features of the Master Planning and Customer Relationship Management modules.

Production planning will continue to be refined, while, further down the track, the company is considering advanced warehousing tools such as barcoding and scanners.

Churchill is also keen to introduce stronger financial reporting and analysis capabilities through the implementation of Microsoft FRx.

“Until now, my focus has been on getting everyone else up and running. But now that they are settled, it's time for me to turn to finance. We already have better reporting than we've ever had before, but not everyone who uses the reports is an accountant. That’s why I'm looking at Microsoft FRx, to create user-friendly financial reports that can be readily understood by all Lincom managers.”

The budgeting software will also make it easier for Churchill to realise his aim of rolling quarterly forecasts.

Nearly a year after going live, Churchill is confident the new ERP system was the right choice.

“The previous package lasted three years and it cost us more than it has taken to implement Microsoft Dynamics AX. This time around, we've chosen something that will last at least ten years and that will grow with the company.”

> Professional Advantage
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