Operations and Business Resource Management Modelling

Michael Hampson, Bega Cheese

How Did Bega Cheese Get Started with TM1

• Evaluated TM1/SPF and purchased to report general ledger actuals
  and customer/item sales;
• Initially identified that TM1/SPF could be useful for ABC costing
• Approached Excelerated Consulting for assistance with the ABC
  project
• More applications for TM1/SPF identified - Changed focus from ABC
  to developing an integrated business intelligence solution
• Close partnership formed with Excelerated Consulting to assist bring
  desire to reality

Things you may not know about Bega Cheese

• Established in 1899 as a Co-operative
• Owned by 110 farmers within the Bega Valley region of NSW
• Employees c. 500 people, all based in Bega NSW
• Operates two separate manufacturing operations – Bulk Cheese
  manufacture and Retail Consumer products
• Retail Plant commissioned in 1998
• High growth from 1998-99 from 4,965 tonnes of Retail Consumer
  products to 43,000 tonnes in 2003-04
• Exports to over 35 countries across the globe
• Commenced with GL cubes in TM1 late December 2003

Information Reporting Before TM1

Prior Information Architecture

• Inbuilt ERP reporting functions not meeting decision support
  information requirements
• Many linked spreadsheets being used for ad hoc and regular reporting
• Information holders linked to those understanding query and SQL
  languages
• Different versions of information kept in filed spreadsheets
• Monthly reporting resource occupation high, as all information was
  keyed manually into spreadsheets
• No central information network, other than the ERP

What did the Business Require

Business Performance Management Requirements

• Rapid and dynamic operational reporting – target 3 days bottom up
  forecast process completion period
• Integrated devolved budgeting– link all inputs into the one source to
  robustly calculated labour and cost of goods sold
• Dynamic sales reporting and forecasting - zero time report generation
• Cost allocation – understand the cost drivers and apply ABC
  principals across the FMCG business unit
• What-if analysis – understand changes in volume, within a robust
  template
• Easy to use – must facilitate information share across broad base
• Web interface, supporting information dissemination across all areas
  of the business – not just SQL guru’s

Overall Solution Architecture

Project Timeline

• Project commenced with Excelerated Consulting in
  December 2003
• General ledger reporting was implemented before Christmas 2003
• EIS reports were developed in early 2004
• Budgeting module was available for completion of the 2004/05 budget.
  Functionality from this module has also enabled :
  – modelling of human resource pay conditions and classification, through
  top down revisions
  – forecasting and what-if analysis, across volume, sales, headcount, etc
• Web based budgeting and reporting rolled out across the business in
  July 2004

Architecture for Resource Planning

Impact of dynamic link between Production Planning and Resource Planning

• Ability to instantly view the budgeted resource cost of a production
  plan including overtime
• Understand periods of supply chain stress
• Results in rescheduling production and factory down-time
• Model impact of change in employee pay conditions
• Let’s have a look

Solution Rollout

• Using SPF Plus Internet Services across the intranet
• Required minimal training – 35 new users trained in a day
• Let’s have a look

What are we doing next

• Benchmarking – other Dairy/FMCG businesses
• Purchase Price Variance (PPV) reporting and forecasting
• Integrated Finished Goods Inventory Forecasting through Sales
  Forecast and Production Plan (Input Inventory forecast through MRP
  and Planned Purchases)
• Process Logic Chip (PLC) integration
• Freight channel optimisation
• Activity Based Costing (ABC)
• and the list goes on…