mySAP Ensures Smooth Business Flow for 4,000-Strong Dairy Co-operative

New system equips Murray Goulburn for growth in the global dairy industry

Sydney, AustraliaWhat begun as a small group of 14 dairy farmers in the Murray River town of Cobram in 1950 is now Australia’s largest dairy co-operative with over 4,000 members.

Murray Goulburn Co-operative Company, which accounts for more than 30 per cent of Australia’s total milk production, has been registering double digit growth figures for the past several years.

In anticipation of further growth both in the domestic and international dairy market, Murray Goulburn had made the strategic decision to invest in a new enterprise resource planning system using mySAP.com suite of business solutions.

“We reviewed our existing IT infrastructure two years ago and it became obvious that we needed to update our then existing IT landscape to make sure that the expected business growth will be efficiently supported by IT in the future,” said Richard Zimak, business project manager at Murray Goulburn.

“Also, we’ve realised that to be able to cater for further growth we need to replace some of our legacy systems with one integrated enterprise solution package.”

Murray Goulburn went to the market in search of the best enterprise system that would address its needs for current operations and future growth. The tender process involved talking to more than 10 vendors including the major players such as SAP, JD Edwards, QAD, Intentia and PeopleSoft.

“We chose SAP because we wanted to work with a company that has a proven and good track record, good credentials, industry leadership and reliable customer support.” said Richard Zimak talking about the main criteria applied in the vendor selection process.

Murray Goulburn went live with the first phase of its multi-phase mySAP implementation in March 2002. The co-operative chose this phased approach as a long-term growth strategy and not merely as a cost cutting exercise or a temporary solution to its growing needs on IT support.

The completed first phase saw Murray Goulburn running on a new Financial and Procurement system that handles more than $300 million worth of purchases every year.

“This used to be one of our major headaches as we had a mix of manual and semi-manual systems in purchasing which were not integrated with our financial system,” said Russell Gardiner, the Group Purchasing Manager at Murray Goulburn.

“We now have a centralised control of our transactions with suppliers using the procurement system. This has made it possible to eliminate instances of over payment or payment for goods not received which was not guaranteed before.”

The mySAP system ensured a seamless integration of all the processes in financials and procurement of raw materials.

“With a substantial purchasing budget and a big network of suppliers, we have to make sure that every dollar we spend counts. The mySAP system has enabled us to do that,” said Gardiner.

The new system also created a level playing field and put Murray Goulburn in a better position when negotiating new contracts with their suppliers.

“Due to the new purchasing system, we’re now in a better position to negotiate prices, rebates or discounts with our suppliers. Consolidation of our contracts improved our negotiation structures and reduced our overhead processes. We were limited in this area before as the old systems were not integrated and could not deliver the necessary information to make appropriate decisions,” said Gardiner about other benefits.

With the success and acceptance of the new system, Murray Goulburn is now preparing for phase two of the project that will include manufacturing, sales & distribution, and inventory management of finished goods.

“We’re looking at SAP as the backbone of our entire IT strategy for the coming years. We’ve seen the immediate benefits and capabilities of this new system and more is to come as we’re confident that we will reap more gains once all the components are in place and all benefits of the integrated package are realised” said Zimak.