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About Lincom Group

 

Lincom Group is an Australian owned and operated family business which serves 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 has offices in China and Ireland, along with seven offices across Australia.


Problems

During the three years leading up to 2007 Lincom’s management discovered that not all enterprise resource planning (ERP) systems are equal. After undergoing its own ERP deployment in 2004, the Group soon realised that the software was inadequate for the multi-company, multi-scenario operations required at Lincom. Worse, end of financial year reports weren’t delivering the information that management needed.

 

It was the middle of a major resources boom. Demand for Lincom products and services was growing exponentially and the organisation couldn’t afford to be constrained by poorly performing software. It was time to acknowledge that the Group would have to replace the ERP system with one that better suited its business model.

 

Solution

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 to each potential system. Matthew Churchill, Lincom 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 multinational financial operations. Shortly thereafter Professional Advantage was signed 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,” Matthew says.

 

Implementation

It took nine months to strip out the old ERP system and to go live with Microsoft Dynamics AX. The bulk of Lincom’s companies switched to the new software on 1 May 2008 with one remaining company going live on 1 June. 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.

 

Matthew believes that staff communications was key to the success of the project. A core group of managers from finance, IT, production and inventory were heavily involved throughout the planning, and were responsible for explaining the changes and benefits to their staff.

 

Benefits

One of the biggest benefits to come from the deployment is that for the first time, Lincom management is able to identify and fully understand its costs across each division. “In the old system these were all whacked together,” Matthew notes.

 

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 called “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,” Matthew adds. Sales analysis has also benefited with management more easily pinpointing which staff 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 Matthew 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 from 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 a new system and now, when the market changed, they are in a better position to deal with it.”

 

Overall, Matthew suggests, “Microsoft Dynamics AX has changed our ability to respond to market conditions. We can get information immediately. Where we used to be reactive, we are now proactive.”

 

Future

Within the next 12 months the Group will begin 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.

 

Matthew 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 using reports is an accountant. That is why I’m looking at Microsoft FRx to create user-friendly financial reports that are readily understood by all Lincom managers.” The budgeting software will also make it easier for the Financial Controller to realise his aim of rolling quarterly forecasts.

 

Nearly a year after going live, Matthew is confident that 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 which will grow with the company.” He pauses then adds, “The team at Professional Advantage demonstrated a true understanding of our business and really helped us clarify the right approach and solution to meet our needs. We now have an integrated solution that has connected our customers, partners, suppliers and employees into one seamless information flow. We have changed our internal business culture and dramatically
improved business processes from our administration and sales to manufacturing, supply, service and hire.”