McPherson's Limited – The beauty of McPherson's manufacturing software solution via IBS
Company background
Growth can bring its own problems, as McPherson's found out. The beauty and hair care products distributor turned to IBS software for driving down costs and handling high transaction volumes.
Durable and dynamic From its Australian base, McPherson's Ltd. (formerly Cork International) primary business is distributing strongly branded beauty and hair care products. Manicare, Lady Jayne and Cameo brands dominate their respective market segments with a total share in excess of 50 percent. Cork also handles kitchen utensils and bathroom accessories, which are sold to supermarkets and discount outlets.
May 2003 saw the takeover of Cork International by McPherson's. The synergy of the takeover was impressive. Cork's operational structure, financial dynamics and geographical spread were quite similar to those of McPherson's.
Potential cost savings were attractive:
McPherson's traditional high return on investment and rate of cash generation, combined with a relatively low capital employment, offered McPherson's both short and long term improvements for turnover and profit.
McPherson's employs 650 people and turnover in 2003 was AUD 100 million.
We are very happy with IBS solution. IBS continues to upgrade the solution on a regular basis, which makes it possible for us to stay ahead in a very competitive market, maintaining our position as market leaders.
Geoff Rickwood
IT Director
McPherson's Ltd.
Integrating operations
A 13,000-square meter warehouse in Sydney is the cornerstone of McPherson's operations, which caters for 4,000 items with an order input of 800 per day on a 12-hour shift. This warehouse receives 30,000 pallets per year of bulk product. An impressive six million individual items are picked each week, resulting in the weekly despatch of 7,000 boxes.
The company's IT problem was simple:
McPherson's had outgrown its old system. The company urgently needed something bigger with more functionality and greater flexibility, which could integrate all its operations.
Time is valuable for consumer durables distributors like McPherson's. The company has to fulfill complex orders with a wide variety of stock in the shortest possible time. Operations from reception, through warehouse and distribution, to billing and customer service, have to be streamlined.
McPherson's must keep inventory and delivery time to a minimum. Moreover, profits must be maintained by driving down distribution and handling costs.
With sales and warehouse operations in Australia, New Zealand and Singapore, and product sourcing managed from Hong Kong, McPherson's needed a truly international supply chain software solution to integrate its business and provide the path for growth.
International business
In the end, the company had to decide whether to upgrade its legacy software or go with a completely new system. After considering a cost-effective and concise proposal, the company chose IBS' ENTERPRISE – integrated enterprise software solution.
One reason for choosing IBS was its world of experience and expertise as an international software provider of business solutions. Global business solutions must have the capability to meet the standards of new international trade. IBS has successfully delivered complete information systems for worldwide operations, as well as local businesses, proving that IBS products are suited to companies like McPherson's.
More than 90 percent of McPherson's orders are received electronically. The low unit value of products and the short customer lead-times mean that IBS' cost effective processing methods, including electronic processing, are used wherever possible.
Another key benefit for McPherson's is IBS software for demand-driven manufacturing, which assists with planning, anticipates the company's needs and optimizes the use of its resources. The transparency of the Manufacturing solution allows McPherson's to determine what to produce or configure, when to do so and with which material, labor and work centers.
Value all around
With IBS software in place, McPherson's manages its business more efficiently. Growth is no longer a problem and the company is ready to take on fresh challenges in an ever-expanding Pacific Rim market.
IBS Manufacturing has helped McPherson's reduce costs and enhanced the company's ability to meet market demands. The software ensures complete integration, meaning that McPherson's now sees improvements that span its entire supply chain.
The new owners, McPherson's, are so impressed with the sophisticated warehouse operations that its housewares division will consolidate the activities of its two warehouses with those in Sydney, integrating them into the IBS solution. This will allow the whole group to track precise locations, balances and transactions, resulting in a more efficient and effective warehouse.
IBS software's full integration of information with automated processes has allowed the company to reduce costs, capital outlay and inventory. The solution lets McPherson's move products and information in the most efficient way possible.
All other facets of daily business operations, such as manufacturing, distribution, order taking, processing and shipping, as well as financial information, have improved. These benefits have helped McPherson's stay ahead of its competition and maintain its position as market leaders.
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