Distilling the secrets of a spirited success

Whisky producer Ian Macleod Distillers, deserves its place here, not only for its products, which include Glengoyne and Isle of Skye, but for an ERP implementation that turned two companies around, and has already saved £500,000 worth of finished goods and materials stocks - at least equal to the cost of the entire implementation and with another £1 million of savings still in sight. Finance director Mike Younger says that back in 2003 Ian Macleod and its half-owned (with J&G Grant) Broxburn Bottlers decided to replace their Grampian legacy system and that - with support for its HP 3000 due to run out in 2006 - it better do so soon. The companies wanted a system able to handle more products and customers, and one that could improve costing accuracy. "We also needed much better management information, and to eliminate duplicate processes," he says. "SSI's Tropos was already being used by three other industry players; it had approved C&E functionality; and it was a packaged system with an integrated database. Also, it had good financial integration with Coda, and SSI would support the links to other tools - for example, export admin and report writing through Cognos." But with the decision for SSI agreed, Younger alludes to the classic gap between business understanding of IT and what's now possible, not to mention the IT infrastructure. The site had no LAN to speak of (resolved by a £50,000 spend with SSI partner Matrix). Just as important, a business process review with SSI consultants revealed that substantial changes were required. "Reviewing all that took about two months, but it was absolutely necessary because it helped us understand what the new methodology might deliver, and that to make it work, management needed to address the working relationship between our two companies." Bottom up Then came the implementation, and apart from getting Coda in, Ian Macleod went for cased goods stock control, sales order processing and despatch first. "We wanted to start applying the system to get people used to the idea... It wasn't easy, but then when we went for Phase Two - MRP and manufacturing - in September last year, we were much better prepared." Next up is bulk whisky stock management and vatting, and in the meantime, SSI is now providing facilities management, dealing with application housekeeping and maintenance of the Oracle box. Younger says that's important for maximising uptime at minimum cost. However, it was further business review that made the huge additional contribution to this project. Tropos now looks at both businesses as one location for operational purposes while also preserving their independence as legal entities. And that means that whereas Ian Macleod had been purchasing dry goods, spirits etc against MRP, and free-issuing them to Broxburn - which also ran MRP for other customers - now Broxburn runs its own ship. It thus maintains Ian Macleod's and other customers' BoMs and production know-how, performing central purchasing, while leaving simplified cost controls and management back with Macleod. Younger says that made "a significant difference," and there were other benefits - notably improved margin and cost controls, reliable, real-time business information, standard costing for all manufacturing, and budgets and plans reflected in daily processes. It has also enabled better planning of production workload, improved management visibility of issues and, most important, the massively reduced stock holdings.