With Plants and Warehouses in 47 Locations in the United States and Canada, Ridley Manufactures

Situation

With plants and warehouses in 47 locations in the United States and Canada, Ridley manufactures and distributes animal feed and nutrition products, and tailors products for individual farmers based on the nutrition needs of their animals. The company’s processing plants mix the ingredients, vitamins, and other nutrients in individual batch processes—depending on formulas prepared for each customer—resulting in more than 47,000 variations.

Some of Ridley’s facilities operate with a limited number of products and are able to take advantage of manufacturing runs of up to 100 tons. The company’s other plants specialize in shorter runs, with batches from 10 tons before stopping to change formulas and create a new batch with different ingredients.

The company purchases ingredients from agricultural commodities markets all over the world through a central purchasing system, taking advantage of bulk purchasing and hedging options to secure the lowest-possible price. The commodities are delivered and stored at Ridley warehouses and processing plants in the field.

Ridley’s need to purchase and supply inventory for 47 locations and to track and manage manufacturing processes for 47,000 unique product formulas meant that its enterprise resource planning (ERP) system was critical to its ability to operate. “Our purchasing is centralized, but we customize our pricing system in every location. Because of that, general managers and plant managers at each location need to be able to price their products for their market areas,” says Jeff Kadlec, Director of ITat Ridley.

“We need to see the costs and profit margins on every item, every sale, and every discount we offer,” he continues. “But, we still do business from the back of a pickup truck, and customer service has to be our number one priority.”

The company’s ERP system used out-of-date software running on an obsolete IBM AS/400 minicomputer system. There was a growing risk that a breakdown in the system might have a catastrophic impact on Ridley’s business. “The software for the system was no longer being supported, and the only place we could buy replacement hardware was on eBay,” quips Kadlec.

Solution

The potential cost of a system failure made the decision to replace the previous, outdated ERP system easy to justify, but a new ERP system would be a major investment. Ridley conducted extensive analysis and research to document and analyze its needs, and gathered information from vendors about the possible solutions that might meet its needs. After this evaluation, Ridley invited representatives from Oracle, SAP, and Microsoft for daylong, live demonstrations of their product capabilities at company headquarters in Mankato, Minnesota.

At the time of the evaluation, Ridley was part of an Australian company, Ridley AgriProducts. The parent company had chosen an SAP solution for its operations and wanted the North American subsidiary to do the same.

Evaluating Total Cost

Kadlec gathered additional information about the long-term cost of an SAP implementation, which showed that Microsoft Dynamics®AX could drive considerable savings through a lower total cost of ownership. The data persuaded the parent company to let the North American operation implement Microsoft Dynamics AX. The Australian company later spun off its North American operations, but Kadlec notes that the former parent company has also migrated operations to Microsoft Dynamic AX.

To tailor Microsoft Dynamics AX to meet the unique needs of its process-manufacturing operation, Ridley turned to Microsoft® Gold Certified Partner Fullscope, a company with deep industry expertise and experience in enterprise resource solutions. Fullscope recommended Process Industries for Microsoft Dynamics AX, which offers extended functionality for managing and tracking the costs of batch-manufacturing processes.

“With Process Industries for Microsoft Dynamics AX, Ridley has better support for batch manufacturing with rapid change of formulas and the ability to link warehouse inventory levels at multiple locations.This inventory information is used in tools to manage the purchasing or hedging of agricultural products from multiple sources,” says Ted Root, Senior Account Executive at Fullscope.

The process industries solution was important to Ridley. “The additional functionality was critical to our decision to purchase Microsoft Dynamics AX,” says Kadlec. “Process Industries for Microsoft Dynamics AXgives us all the information about inventories, production, shipping, and receiving that we need to track and manage all our specific products, and run our entire business.”

Kadlec also appreciated that Ridley’s existing IT staff could implement Microsoft Dynamics AX, further contributing to the lower total cost of ownership of the solution. Ridley’s existing IT staff quickly acquired the skills needed to deploy and manage the system without expensive training or hiring new staff.“We did this implementation with our existing staff. I have not added a single IT individual to our staff with the implementation of Microsoft Dynamics AX,” says Kadlec.

Centralized Deployment

Ridley implemented Process Industries for Microsoft Dynamics AX as a centralized solution that will standardize business processes across the organization, reduce maintenance costs, and increase the visibility of operations across the organization. And, the company gains the ability for local offices to customize the solution, based on local needs. “We manage our purchasing from our central office, but our managers in the field have control over their pricing and their product lines, based on the needs of their local markets,” says Kadlec.

The expertise in process industries that Fullscope contributed was critical to the success of the project, giving Ridley the ability to make adjustments during implementation and still meet expectations. Kadlec notes that the initial implementation for the new solution was finished on time and under budget, despite the need to negotiate three scope changes.

The company expects to finish rolling out Process Industries for Microsoft Dynamics AX to field locations in late 2009.Says Kadlec,“We will start planning an upgrade to Microsoft Dynamics AX 2009 after all company locations have converted from the former ERP system.”

Benefits

Ridley now has a reliable ERP system that gives the company the functionality needed to run its operations and flow information throughout the company. With Microsoft Dynamics AX, information flows automatically—from purchasing agricultural commodities on global marketplaces to providing batches of customized products in multiple locations. In addition, the company has achieved a much lower cost of operation.

Low Total Cost of Ownership

Because Microsoft Dynamics AX is built on familiar Microsoft technology, Ridley’s IT staff was quickly able to adapt to the new system. The company saved the cost of adding people with specialized skills needed to maintain an SAP solution. People with experience in such technical skills as SAP Advanced Business Application Programming or SAP Basis middleware tools are available in Mankato or nearby Minneapolis, but only at much higher salaries. “I would have had to pay people with those skills hundreds of thousands of dollars,” explains Kadlec.

“Our analysis of the potential savings was reviewed by an audit firm,” continues Kadlec. “We estimated that the maintenance costs for Process Industries for Microsoft Dynamics AX would beover $1 million a year less than an SAP implementation.”

Industry-Specific Functionality

With Process Industries for Microsoft Dynamics AX, Ridley can manage its complex purchasing operations according to the company’s established business processes. “The commodities that are the ingredients for our products are one of our largest capital costs. Microsoft Dynamics AX supports the ways we manage or hedge those contracts with our vendors. That gives us visibility into our inventories and the ability to see exactly where we are at any given moment. That was critical to our decision to go with Microsoft,” says Kadlec.

Greater Adaptability

Ridley was able to easily adjust the solution to meet its unique needs. “Our ability to quickly make an adjustment in one of the applications or one of the modules to fit our business requirements has proven itself over and over and over again,” Kadlecsays.

“All of the functionality for the way we do our production processes was available, but it was scattered throughout the application,” says Kadlec. “Our production people analyzed the solution and developed some custom screens that brought all that together. Now, it’s truly a matter of four or five clicks of a mouse to send a product to our batching system or interface with our recipe system or our inventory system.”

“We needed the flexibility to include our unique way of linking our batching systems to our inventories. Process Industries for Microsoft Dynamics AX gave us all that. I'm very excited about what we're doing,” concludes Kadlec.

Microsoft Dynamics

Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systemsthat your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.

For more information about Microsoft Dynamics, go to: