About CDC Pharmaceuticals
Established in 1927, CDC Pharmaceuticals (CDC) is a nation-wide service focused wholesaler of pharmaceutical and over the counter (OTC) products to over 300 Pharmacy and Hospital customers from 6 warehouses. Headquartered in Christchurch, the co-operative business has distribution centres in Wellington, Napier, New Plymouth and Wanganui.
“The formula for the company’s consistent growth and success is its excellent customer service focusing on top “in stock” availability across a full line inventory, dedicated experienced staff plus superior financial returns for its co-operative members, says Chief Executive Mike Rhodes.
Smart digital ordering systems and efficient, locally-based distribution centres allow CDC to respond with urgency to customer needs. They deliver over 2,200 orders per day, averaging 50 different items per order. That’s a staggering 110,000 items to receive, pick and deliver every day.
Replacing a legacy ERP
CDC had been running a legacy Visual FoxPro based ERP application for over 20 years. Company leaders recognised the need to move to a modern, well supported ERP application capable of meeting the complex needs of the business, as well as a large and growing volume of transactions now and into the future.
The requirement was for an ERP application that was complex enough to support the processes and volumes that make CDC unique and ultimately successful. Working with long time business software partner Endeavour, CDC decided to implement Microsoft Dynamics AX 2012(). Microsoft Dynamics AX 2012 provided a proven ERP application for enterprise level businesses, particularly around wholesale trade and logistics.
Many of the other ERP solutions available in the market were targeting Tier 2 or medium sized businesses with less complexity and volume than CDC needed. That Microsoft Dynamics was used by large companies across the world provided CDC with confidence that the application would support their needs now and into the future as the co-operative continues to grow in transaction volume.
CDC’s previous ERP had served them well over a long period of time, but the offshore vendor decided to discontinue the application, leaving CDC in a potentially compromised position. In addition, the underlying application platform was aging and causing instability issues in modern operating environments. Selecting Microsoft Dynamics removed the risk of this repeating in the future given the scale and breadth of the Microsoft Dynamics client base, and investment Microsoft was making into the future direction of the application. As Mike summarises, “We needed a proven, stable product with a future ahead of it, a future that would seek continuous improvement, just as we do.” Microsoft Dynamics fulfilled this need, and offered ability to be customised to CDC’s processes. “Several parts of CDC’s operation are unique to our business model and we need an ERP system to support an efficient process that isn’t out of the box. We don’t want external plug-in pieces that need ongoing maintenance - so core customisation was a big part of our requirement and deployment activity. Microsoft Dynamics provides this framework and our implementation partner Endeavour has great depth of capability in their team to deliver the solution we needed,” says Mike.
A longstanding relationship and deep knowledge of CDC’s business built up over many years was key to CDC’s choice of Microsoft Dynamics and Endeavour, enabling customer and provider to work as a team to achieve the desired outcomes from the application. Mike states, “We have worked with Endeavour for many, many years and have great trust in their abilities and in turn they had deep knowledge of our company and how we operate, and that relationship is crucial to a project of this scale.”
Patience the key to a quality outcome
CDC’s large transaction volume, the critical nature of the products they supply in the health sector, unique business processes and smart digital ordering systems meant the migration was extra challenging. This business simply could not have down time.
“It’s a continuous order taking and delivery environment that can’t be disrupted, the goods being supplied are critical to the health of the community,’’ explains Mike. ‘’Transitioning a major business software component of the company’s operation posed great risk and challenge for the company and our partner Endeavour. Literally, if we got this horribly wrong it could be a life and death situation.”
To manage this risk, CDC were flexible with the go live timeframe, and in the end deferred the actual go live beyond an optimistic original target in order to satisfy the need to minimise risk and disruption. “Even then the process was difficult and we were impacting our supply operations during the transition, but ultimately, we kept the lights on, shipped the products and met our customers’ needs. Hind sight is wonderful and I know we would approach parts of the project differently if we were starting again, but our team and our partner Endeavour worked tirelessly during the transition to mitigate the impact and keep the products flowing. There were plenty of long nights from the team and a lot of effort put in.”
18 months on
“No doubt looking back the transition was tough, but now we have a platform that is stable, performing day in and day out, tailored to the unique needs of our business and capable of supporting the growth we will see in the future. Our partnership with Endeavour provides stability, reliability and we see this growing as well as we implement new features of Microsoft Dynamics to improve more parts of our operation,’’ says Mike of the experience.
Since go live CDC have deployed Microsoft Power BI to deliver insights to key staff around activities at a customer and product level. This new capability is providing great value for CDC, allowing the team to focus on the right business drivers.
During 2018, CDC also implemented an Accounts Payable (AP) Automation tool that Endeavour created specifically for Microsoft Dynamics ERP - including AX 2012, D365 Finance and Operations, NAV and D365 Business Central. Automation of AP is incredibly valuable given the large volumes of transactions processed. Suppliers invoices are emailed to CDC’s application which receives them, extracts the data using a cloud based service, and then creates a pending AP invoice with three-way matching within Microsoft Dynamics AP. The application includes artificial intelligence to learn over time as it receives more and more documents from suppliers. It will provide significant time savings every month for CDC’s AP team and improve the quality of work.