Back in the early 1950s, Lyons (of Corner House fame) pioneered UK office automation with its investment in LEO – the Lyons Electronic Office. Its LEO 1 machine, the world’s first business computer, was used initially to value the weekly output of bread and cakes from its bakeries.

Half a century later, production of Lyons’s popular retail coffee brand is managed by another cutting edge system – SSI’s TROPOS. And, just as LEO sign-posted important changes, the TROPOS ERP system has facilitated a major business transformation for Gala Coffee & Tea, current owner of the Lyons coffee brand.

With TROPOS, Gala has consolidated multiple databases and gained real-time control over its stocks.

Paul Batchelor, financial director, says Gala would never have realised its transformation objectives without TROPOS. “We simply couldn’t have done it with our old systems,” he says. “Installing computers for data collection on the factory floor was a step-change for our business. It changed the way we work, and we are reaping the benefits.”

Gala is the UK’s leading private label coffee producer and as part of the Dutch-based Drie Mollen group forms one of the largest in Europe. About 80% of the company’s £21 million a year turnover comes from coffee, while 20% is tea and other ancillary products (eg instant coffee & hot chocolate). Its factory at Dartford, Kent, produces 4,000 tons a year of Lyons and other well-known brands, which are sold through the major supermarket chains or supplied to the food service industry.

Typically, Gala receives a low volume of high value orders from major customers – usually by electronic document interchange (EDI). The smaller customers produce a higher volume of relatively low value orders by phone and fax, which are processed through its sales desk. To facilitate this, SSI used the standard TROPOS Developer Toolkit to customise the sales order entry screens to suit the way orders are processed at Gala and meet the needs of both styles of customer.

Finished goods are distributed to customers in several ways:

• directly to the customer from the Dartford packing line;
• directly to the retailer’s own distribution centres and then subsequently on to the customer;
• to Gala’s new distribution hub, 15 miles away at Snodland. The 3,000-rack Snodland warehouse, which replaced four third-party warehouses, is run almost exclusively for Gala by a third party. Snodland also holds bulk stocks of packaging products.

Warehouse module produces quick win

The Snodland operation was the first part of Gala’s TROPOS implementation to go live, with the TROPOS Warehousing module providing an accurate overview of stock and an efficient tool for moving pallet-loads in and out.

The warehouse system went live on 23 December 2002 – coinciding with the opening of the new facility – less than two months after the TROPOS implementation project began. By the end of January 2003, Gala was already noting an improvement in stock accuracy – and, where discrepancies occur, TROPOS gave much greater visibility.

The rest of the TROPOS implementation was phased in over the next five months. It included modules for sales order processing, warehouse control, purchasing, costing and product structures (bills of materials), works order management, pallet control and quality assurance – as well as CODA Financials, with a unified ledger structure. The entire system was live by June 2003.

Accounting cycle cut by a third

Another early success for the TROPOS-Coda implementation was the ability to cut the month-end accounting cycle by a third. It also improved the productivity of accounting staff, because much of the data collection and verification needed for accurate month-end figures became an automatic, real-time process within the system – and an increased number of financial reports could be produced virtually at the touch of a button.

A single view of the business

For Gala, however, a key benefit of TROPOS implementation was that it produced “one version of the truth” – by eliminating multiple databases, conflicting data and diverse opinions.

Paul Batchelor says: “We wanted a fully integrated system for manufacturing and finance. We also needed an MRP system to improve planning and stock control. The key was one system, with real-time information.”

SSI’s Bill Ward says: “Previously Gala’s old, DOS-based system provided little online stock control: certain transactions were always recorded on the computer in arrears. This could at times lead to negative stock on hand balances before they got the stock balance right, which effectively meant it was difficult to place full reliance on stock balances in the computer system for day to day operational decision making.

“TROPOS brought a single view of the business and real-time control over the movement of stock. It meant that the arrival of each new order could generate an instruction either to manufacture a specific product or to draw a quantity from the finished goods warehouse (possibly also triggering a works order if stock fell below a preset minimum).”

Reduced stockholding frees working capital

TROPOS brings more science to the art of buying, enabling Gala’s purchasing team to support the production line with adequate supplies of packaging, but with less demand for operating capital – safety stock levels have now been reduced and increased reliance is now placed on ‘just in time’ deliveries based on known requirements. The same principles also cut Gala’s working capital requirement at the finished goods end of the business. Savings like these facilitate a redirection of financial resource to more beneficial areas, such as business development.

Paul Batchelor says administrative efficiency has improved throughout the business, leading to further benefits. “Because we are handling stock more efficiently, we have reduced our debtor days significantly. Problems with orders are minimal and there has been a substantial reduction in the number of credit notes we issue.”

TROPOS keeps a close watch on coffee “losses” – the weight (mostly water) that is lost during roasting, grinding & packing. This impacts both yield and pricing. By monitoring usage of packaging material more closely, TROPOS gives Gala a better view of wastage.

This enables the company to tighten processes and improve its overall cost controls – which in a competitive market where major customers are continually looking to drive efficiency improvements out of their supplier base helps to ensure that pricing remains attractive to customers. Improved financial reporting also gives Gala a clearer picture of profitability at all levels of the business.

Bill Ward says: “We have sorted out the short term data issues that you need to keep a business running - like the bill of materials, the stock and so on. We now need to do more to improve efficiencies and drive costs down even further. There is still more we can do with improved planning using TROPOS scheduling and MRP, and those will be the next areas we address.”

Paul Batchelor says: “Overall we are very pleased with the system. We can see direct benefits from TROPOS as well as indirect benefits through related changes in our business. We are not totally there yet, but can see many more benefits to come.