Microsoft DynamicsCustomer Solution Case Study

Specialty Coffee Retailer Implements ERP Solution to Direct Growth, Reduce Overhead

OverviewCountry or Region: PhilippinesIndustry: Retail—Food and beverage retailing

Customer ProfileRustan Coffee is the exclusive authorized licensee for Starbucks Coffee in the Philippines, running a rapidly growing operation with 182 retail coffee shops.

Business SituationThe company wanted to ensure that it had the right infrastructure in place to manage sustained growth and place decision makers in firm control of business events and the organization’s future.

SolutionRustan Coffee implemented Microsoft Dynamics NAV together with LS Retail NAV from LS Retail in a phased project performed by Retail Software Associates.

Benefits Enable managerial control Double operations, reduce finance and

IT overhead by 70 percent Manage business growth strategically

“With Microsoft Dynamics NAV and LS Retail NAV, we created an efficient, scalable infrastructure that put company strategy in the driver’s seat and helped us make large reductions in overhead while expanding our operation.”

Rizalito Oades, VP of Finance and IT, Rustan Coffee

Facing continued, fast growth, Rustan Coffee, the sole authorized Starbucks licensee in the Philippines, required a scalable, dependable business infrastructure that would help managers take control and run the business with best efficiency. The company replaced several limited, separate software tools with a connected solution based on Microsoft Dynamics NAV and LS Retail NAV from Microsoft partner LS Retail, implemented by Retail Software Associates. During the implementation, Rustan Coffee almost doubled the number of coffee shops while reducing overhead in finance and IT by 70 percent. The technology reflects the company’s specific business needs with advanced and consistent finance, supply chain, and warehouse management. From the retail locations to the back office, a seamless flow of information gives managers the ability to make informed decisions and chart the company’s growth.

SituationPart of the Rustan Group of Companies, Rustan Coffee is headquartered in Makati, Philippines. The company is the authorized licensee of Starbucks in the Philippines, importing coffee beans from the roasting plant in the United States and distributing them to the 182 stores it currently operates.

Rizalito Oades, VP of Finance and IT at Rustan Coffee, joined the company in 2006. Says Oades, “The principal shareholders anticipated rapid growth of the Starbucks operation and wanted to ensure that Rustan Coffee would not fall behind other businesses that the same parent company owned in terms of having the necessary technology systems for supporting and managing this expansion.”

At that time, Rustan Coffee had several disconnected business systems, including an enterprise resource planning (ERP) system, highly customized warehouse management software from JDA, a point-of-sale (POS) system from a local company, and multiple reporting and business intelligence tools. With none of the existing systems infrastructure designed to integrate, employees needed to perform many business processes manually. For example, the ERP software lacked a bin locator system, which meant warehouse employees lacked bin detail on the printed pick lists generated by the ERP system, and had to refer to the JDA software for that information. Upgrades of the JDA software were difficult to administrate because of the extensive customizations. Without integration, financial detail from the POS system did not reflect in the ERP system

and finance administrators had to enter it manually.

This fragmented business infrastructure demanded significant resource overhead to run and maintain, and restricted Rustan Coffee employees from functioning at optimal productivity. A large team of 16 IT professionals administrated the company’s technologies. As Oades explains, “Our finance team had 33 employees. Except for one person, all of them were working on manual transaction and payment processing, reconciliations, and some financial reporting. Because systems were not integrated, information could not flow through the company. We usually completed month-end closing late—in the third week of the following month. In our midweek management meetings, we were often unable to draw on the previous week’s sales updates from the stores. In my executive role, I was extremely busy with operational minutiae, like resolving information conflicts or tracking down business performance data.”

With Rustan Coffee’s rapid retail growth, the company also needed an efficient solution to manage customer loyalty and rewards programs, which its technology tools were unable to facilitate. Oades decided to review technology providers and their offerings.

SolutionOades and his colleagues closely examined solutions from many of the technology companies with representation in Makati, including Microsoft, Oracle, and SAP. Microsoft Dynamics NAV, a richly featured ERP system, appeared to offer many of the capabilities Rustan Coffee was interested in.

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“Microsoft Dynamics NAV and LS Retail NAV helped me free up a lot of my time…. In addition, I can participate in more strategic, cross-functional exchanges with other executives or the store operations, working on ways to manage the company more effectively as we grow.”

Rizalito Oades, VP of Finance and IT, Rustan Coffee

“We had the opportunity to learn about Microsoft Dynamics NAV by actually experimenting with the solution,” says Oades. “Other providers offered presentations and white papers, but did not offer a hands-on experience. That made a big difference in our decision making, especially since we were able to verify that Microsoft Dynamics NAV provided the capabilities we sought from an ERP system.”

Rustan Coffee wanted to avoid deploying new software tools during its busiest periods, so the company scheduled software implementation projects in stages during several summers. Oades and his IT team performed thorough group testing before implementing new technology tools into the operation: To begin with, Rustan Coffee

implemented the financial and purchasing management capabilities of Microsoft Dynamics NAV in one brief project. Microsoft Dynamics NAV integrates with business intelligence tools that the company uses.

In the next step, Rustan Coffee replaced its existing warehouse system with Warehouse Management modules in Microsoft Dynamics NAV.

In a third step, Rustan Coffee implemented LS Retail NAV, a retail management and POS system specifically developed for integration with Microsoft Dynamics NAV by LS Retail, a Microsoft partner and independent software vendor.

LS Retail, with headquarters in Iceland, is a leading provider of end-to-end solutions and services for the retail and hospitality industries based on Microsoft technology.

LS Retail maintains its own partner channel with more than 120 certified partners in more than 60 countries. More than 1,900 companies with, collectively, 36,000 stores use LS Retail solutions today. For Rustan Coffee, Retail Software Associates, another Microsoft partner and a certified LS Retail partner with a strong presence in the Philippines, performed the implementation and integration of the two solutions.

Close to 20 Rustan Coffee employees in finance, supply chain management, and the warehouse use Microsoft Dynamics NAV directly. Thousands of employees in the company’s Starbucks retail locations work with the POS capability of LS Retail NAV as their primary technology resource. Sales data from the POS stations immediately reflects in the ERP system, where it is available for financial calculations and reporting. “Once employees were able to work with the new solutions, they became comfortable with it very quickly,” says Oades. “The screens look much like what you find in Microsoft Excel and other Microsoft Office tools, so people can be effective without extensive training.”

Rustan Coffee is preparing additional enhancements to the technology environment. The company is evaluating a variety of customer loyalty solutions, which employees will manage with LS Retail NAV and Microsoft Dynamics NAV. An automated inventory management function will keep needed items available in all of the retail locations, allowing retail managers to simply set proper parameters within the system and accept its replenishment proposals. Rustan Coffee will also implement portals for better collaboration among employees.

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BenefitsRustan Coffee thrives and grows with ERP and retail systems that let executives direct for growth and help employees work with optimal productivity. Says Oades, “With Microsoft Dynamics NAV and LS Retail NAV, we created an efficient, scalable infrastructure that put company strategy in the driver’s seat and helped us make large reductions in overhead while expanding our operation.”

Enable Managerial ControlToday, Rustan Coffee’s integrated business infrastructure follows the way the company works, including very specific operational requirements such as effectively accounting for goods shipped to and used by the retail locations and the items sold, which are not the same. “Our sales items are not the same as the bills-of-material that constitute these items, and in the past, we had issues accounting for both types of items. Now, we can easily review all the information we need,” says Oades. “We avoid spending valuable employee time on extracting information from the business systems and then determining what it means, because it’s directly available and perfectly clear.”

One-time data entry has eliminated discrepancies between various business systems and largely removed human error. As Oades explains, “A seamless flow of current data from the POS systems in the retail locations to the ERP system at company headquarters lets our executives and employees be in control of business events. Month-end closing now happens within five days or sooner, and on every Monday, we promptly have all the information about the previous week’s

store sales. We now enjoy stable, reliable supply chain and financial management with extremely efficient, closely connected processes.”

Double Operations, Reduce Finance and IT Overhead by 70 PercentSince Rustan Coffee began building its new business infrastructure, the number of Starbucks coffee shops in the Philippines has almost doubled, from 98 to 182. At the same time, through transferring and reassigning employees to other business units, the company was able to reduce the headcount and associated costs in finance and IT combined by 70 percent. Instead of 33 employees, today nine of them take care of the company’s finances; IT needs only five people to manage systems and support, whereas Rustan Coffee formerly required 16 technologists to administrate the multiple, disconnected business systems. Oades comments, “In our finance department, not only do we work with a much smaller team, but the quality of the work is also very different. With Microsoft Dynamics NAV and LS Retail NAV, we can work much more productively and need only two employees of the small finance team to do transaction processing. The other team members can perform more valuable tasks that can play a greater role in moving the business forward. We can offer financial professionals a more rewarding, challenging work environment where their skills can make a bigger difference.”

Manage Business Growth StrategicallyMuch like his finance team members, Oades finds that his working life has changed for the better. “Microsoft Dynamics NAV and LS Retail NAV helped

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me free up a lot of my time,” he says. “I can now engage in meaningful conversations with my teams and help them grow professionally. In addition, I can participate in more strategic, cross-functional exchanges with other executives or the store operations, working on ways to manage the company more effectively as we grow. For example, I can use information from the ERP system to improve our vendor management. This is quite different from the highly granular tasks and inquiries I was busy with in the past. With time to think, I’m definitely bringing more value to the company.”

For Oades and Rustan Coffee, Microsoft Dynamics NAV and LS Retail NAV still offer new opportunities. Says Oades, “I know there are many capabilities of our ERP and retail systems that we have not fully used yet. Our infrastructure is now very stable and scalable, so we will continue to extend the value we experience from our technology investment.”Additional Resources

Review the listings for LS Retail NAV by LS Retail and Retail Software Associates in the Microsoft Dynamics Marketplace.

Learn more about Microsoft Dynamics solutions for retail.

Review deployment options for Microsoft Dynamics solutions.

Find out how to purchase Microsoft Dynamics NAV.

Microsoft DynamicsMicrosoft 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 Rustan Coffee products and services, visit the website at: philippines.starbucks.com/en-US

For more information about LS Retail products and services, please send an email message to info@LSRetail.com or visit the website at: www.LSRetail.com

For more information about Retail Software Associates products and services, call 011 (63) 2 5840545-46 or visit the website at: www.retail-associates.com

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

Document published February 2012

Software and Services Microsoft Dynamics− Microsoft Dynamics NAV

Microsoft Server Product Portfolio− Microsoft SQL Server

Partners LS Retail Retail Software Associates

“A seamless flow of current data from the POS systems in the retail locations to the ERP system at company headquarters lets our executives and employees be in control of business events…. We now enjoy stable, reliable supply chain and financial management with extremely efficient, closely connected processes.”

Rizalito Oades, VP of Finance and IT, Rustan Coffee