Microsoft DynamicsCustomer Solution Case Study

Increased transparency with principle based processes

OverviewCountry or Region: KoreaIndustry: RetailCustomer ProfileZero to Seven, a total shopping mall for infants-toddlers founded by Maeil Dairies., is a specialized retailer for infants-toddlers Maeil Dairies includes various products including apparel brands, Allo & Lugh, Alfonso, and Four Lads, and oriental medicine based cosmetics brand, Goong Secret.Business SituationThe company experienced a rapid double-digit growth that its need for innovation with enhanced transparency and improved rationalization of management increased accordingly.SolutionEnabled principle based business processes to take root within its organization through ERP. Deployed DW as follow-up process to utilize ERP data as basic analysis for various decision makings.Benefits Enhanced corporate transparency Regular monthly closing Initiated system business management Established ERP oriented reporting

culture Increased ERP value with DW

“Improving transparencies was the major goal for implementing ERP The

most significant transformation after the implementation was, we are no

longer busy matching sales and purchases at the end of every month and we

can see real time data”.Hee-yeol, Shim, manager of Zero to Seven

Zero to Seven, an infant-toddler products and apparels retailer, showed

remarkable annual average growth rate of 63.9% from 2007 to 2011. Zero to

Seven encountered several difficulties managing its fast growing business

with initial disengaged accounting and distributions system. Although, Much

of the company’s efforts and resources were locked in ensuring data

compatibility and complicated system had prevented the company from

utilizing its sales data despite the availability. Through Process Innovation (PI)

consulting, Zero to Seven established a proposal for process innovation and

deployed Microsoft Dynamics AX to enact a new business process within its

organization. 2 years after implementing ERP and accumulating basic

business management data, Zero to Seven deployed Data Warehouse (DW) in

2011 to aggressively utilize ERP data. Zero to Seven utilized SQL Server and

SharePoint Server to enable easy access to available data within the

organization, as well as facilitating data manipulation and information

sharing. As a result, the company was able to seamlessly incorporate ERP data

in business management activities including sales trend analysis.

SituationZero to Seven, an infant-toddler productsㆍ apparels, maternity clothes, toys, furniture, layette retailer showed a significant growth rate in the late 2000s. According to Hyundai Securities’ analysis, Zero to Seven recorded 63.9%CAGRfrom 2007 to 2011. Expanding beyond Korean market, the company was running a successful business in China as well, with its revenue exceeding 2billion KRW in 2011

, While enjoying its prosperity with high growth rate, Zero to Seven nonetheless made continuous efforts to strengthen its organizational capabilities. . In order to continue a stable growth, it endeavored to keep pace with business innovations, an effort that is simple but difficult to carry out. Zero to Seven started to actively commit in business management innovations from 2009At that time, Zero to Seven initiated PI project and received consulting. A critical reason behind Zero to Seven’s decision to innovate through PI was to effectively support the expansion and improve its existing disintegrated business processes with fiscal closing and inbound/outbound logistics management

A typical fashionㆍ distribution industry closes monthly Zero to Seven also has a monthly closing based on advanced IT including financial accounting system and inventory management system in its head office and legacy systems in 520 stores nationwide in connection with POS(Point of Sales) devices. Having performed monthly closing for a long time, Zero to Seven realized that although it may match the figures for sales and purchases, it is vulnerable in determining sales trend, a vital information needed in the fashionㆍdistribution industry.

Hee-yeol, Shim, manager of Zero to Seven, said, “The fashionㆍ distribution industry analyzes past sales for future production and distribution plans, so accumulating daily sales data is very important. However, under the monthly closing system, it is actually impossible to make real time trend analysis.”

Inventory management also required process innovation. Shim said, “Although head office partially manages Zero to Seven, we have local warehouses at different locations where systematic inventories allocation is important. We needed to enable parallel movement of inventory among stores but in the existing environment, it was not easy to maintain and operate appropriate inventory by stores.”

SolutionAfter completing reviews for PI proposals, Zero to Seven started ERP implementation, a major challenge since there was no best practice in a relevant industry, in the second half of 2009. . Although there are numbers of large fashion ㆍ distribution

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corporations that have ERP, they are quite different in handling items. Encountering difficulties in finding appropriate benchmarks, Zero to Seven had many up-and-downs in standardizing a suitable system.

Zero to Seven collaborated closely with the PI consulting provider and reached the conclusion that it is more beneficial to deploy market proven ERP solution than promote in-house development. Bo-moon Jung, assistant manager of informatization promotion team for Zero to Seven, said, “Unlike general manufacturing industry, we decided on customization to optimize business and tax accounting considering movement of commodities and inventory management. We selected Microsoft Dynamics AX to reflect Zero to Seven’s innovative processes extracted through PI on solutions with proven business processes.”

From the perspective of Zero to Seven, it was a wise decision to deploy Microsoft’s ERP to achieve its PI extracted mid-long term goals. Zero to Seven established innovative processes and established a roadmap to implement data warehousing (DW). In accordance with this plan, Microsoft’s Dynamics AX promised the most logical investment. Jung said, “We promoted DW as the 2nd stage of PI and we created a simple environment where anyone can easily analyze and share information through Microsoft’s SQL Server and SharePoint Server.”

Zero to Seven started ERP implementation from March 2010 and it conducted its DW project from July 2011 to January 2012. Zero to Seven’s DW environment enabled

user access to maximize the value of data accumulated on ERP- it deployed EIS (Executive Information System) dedicated solutions for its executives and linked it with ERP. And for the business users who are not familiar with DW tools, the company distributed Excel 2010 as the user tool to enable easy manipulation of required data to better manage business changes. In addition to structured data, Microsoft Dynamics AX allowed more efficient documents sharing and provided a space for better collaborative works among workers on SharePoint Server. .

Jung said, “Dynamics AX, provides seamless integration with Office so extracting data from ERP for reporting is convenient. However, the needs for DW increased significantly as the volume of transactions and data increased and types of reports diversified by departments and users. In our case, we utilized the BI service of SQL Server and users utilized PowerPivot function of Excel to relatively accommodate simple data analysis and manipulation demand. “

Zero to Seven uploads more than 1.5million transactions and ERP data increases by more than 10GB per month, so it expanded its system capacity in mid-2011. At the same time, it reinforced its infrastructure including HA (High Availability) configuration to ensure capacity.

Benefits

Enhanced corporate transparency

Zero to Seven was able to enhance its business transparency, one of the most critical factors in fashion - distribution

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industry. The company changed from monthly closing system to daily closing system that does not allow negative inventory, and initiated more accurate business tracking and accounting. Shim said, “The major goal of ERP implementation was achieving transparency. The most significant change is that we are no longer busy matching sales and purchases at the end of the month and we can view and trust data anytime as well as maintaining this transparency.”

Regular daily closing

The most significant change after implementing Microsoft Dynamics is changed closing period from monthly to daily. As a result, the finance accounting department benefits the most from it. Shim said, “The legacy finance accounting department was so busy inputting all kinds of slips and performing closings. With ERP, the business users would directly input the sales and purchases slips and the finance accounting department would ensure that there is nothing wrong with the data and approve the filled ledger. Now, we were able to run on more efficiency by reducing repetitive tasks and the financial accounting department is able to focus on more important areas including ensuring transparency of accounting and analyzing business management information.

Initiated system business management

Zero to Seven’s ERP implementation signaled the smooth navigation into the era of ‘system business management’. It’s just not adding a new system but seamlessly achieving business management activities

connection under the goal of systematic accumulation and utilization of information. Most people say that business innovation through PI and ERP requires a strong will of the executive business management. Zero to Seven also followed this formula. Jung said, “Our executive business management aggressively supported our ERP and DW implementation. Sung-chul, Jo, executive director attended the weekly meetings during the course of the project, checked the progress and mediated issues, showing aggressive interest and participation of the executive business management to successfully complete this project.”

Established ERP oriented reporting culture

Initiation of system business management can be seen in the actual business field. Zero to Seven has different reporting cultures: in the legacy system, each employee referred to the central data and created reports in Excel or PowerPoint documents. But now, all reporting activities are based on unified ERP data. Shim said, “After implementing ERP, we were able to use business related terms and view the same data enterprise-widely. Even the management gave instructions for making reports based on ERP data, putting a stop to reports based on individual data.”

Increased ERP value with DW

After ERP implementation, users had to input significantly more data including processing of expenses to closing, receiving and paying of returns and inventory management. Some employees complained about persisting in something that they were unfamiliar with. Besides the issues

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regarding unfamiliarity, Zero to Seven overcame the difficulties by. Fortunately, these did not last long. The staffs began to realize during the DW implementation that ERP did not increase their tasks but rather offered assistance.

Shim said, “As we were structuring the principle-based business processes with ERP system, business users had additional of work to do. They had to input data, which was done by the support department in the past. Although there were some complaints in the beginning, vast majority of the users expressed their satisfaction when DW implementation was completed. Users were able to conduct valuable information analysis with 2 years of centralized data, thus realizing the importance of a powerful ERP system.”

Increased trust of store owners

The positive impact of establishing principles in overall business management activities with Microsoft Dynamics AX and increasing corporate transparency expanded beyond Zero to Seven and influencing 520 stores nationwide. Shim said, “Store owners may argue that the changes in POS are insignificant; but if they were to observe it more profoundly, there are lots of changes, for example, it does not allow minus inventory and shows more details such as receivables ledger which was not provided in the past. We plan to provide store owners with even more transparent information and further strengthen office-store relationships.”

Microsoft Dynamics

Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.  For more information about Microsoft Dynamics, go to:www.microsoft.com/dynamics

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For More InformationFor more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers in the United States and Canada who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:www.microsoft.com

For more information about Zero to Seven’s products and services, call 82-1588-8744 or visit the website at: www.tecturakorea.co.kr

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Document published April 2012

Software and Services− Microsoft Dynamics AX 2009− Microsoft Excel 2010

− Microsoft SQL Server 2008 R2 Enterprise