Solution Overview
Organization Profile
With over 40 years of history in the distribution and manufacturing of Traditional Chinese Medicine (TCM) and health products, Tong Jum Chew is a key player in the fast expanding TCM market in Singapore. The company manufactures more than 400 types of TCM products, employs about 50 staff and achieved 2007 revenue of more than S$5 million. In 2006, the company was awarded the Good Manufacturing Practice (GMP)
certification for medicinal products by the Singapore Health Sciences Authority.
Business Situation
With the change in its business model from trading to manufacturing in 2004, Tong Jum Chew knew that it needed an integrated Enterprise Resource Planning (ERP) system to cope with the business growth. An integrated system is also required to better track its inventory, manage raw materials and handle
production planning.
Solution
Tong Jum Chew implemented Microsoft Dynamics™ NAV to integrate its accounting, distribution, inventory, manufacturing and sales operations.
Benefits
- Streamlined order administration and warehouse operations
- Enhanced inventory management
- Improved production planning
- Increased management visibility
Hardware
- IBM Server
Partner(s)
DP Technology Pte
Software and Services
Microsoft Dynamics NAV
Vertical Industries
Pharmaceutical Industry
Country/Region
Singapore
Tong Jum Chew Pte Ltd
Traditional Chinese Medicine Manufacturer Scales Capabilities to Capture Business Growth
Posted: 9/1/2008
”If we did not make the decision to implement Microsoft Dynamics, our business will be crippled by now. Microsoft Dynamics gives us the readiness to scale as our business grows. We now have the capabilities to capture the growth potential of the TCM market.”— Mr Tong Yen Tien, Managing Director, Tong Jum Chew Pte Ltd
/ We find it very easy to work with the DP Tech team, who is conversant in Mandarin. They are also very patient with training our staff... Whenever we encounter problems during or even after the implementation, they have been very responsive in giving us help, even from remote locations. /
Mr Tong Yen Tien Managing Director Tong Jum Chew Pte Ltd
Tong Jum Chew was established in 1965 as a TCM clinic and medicine hall. Since then, it has transformed itself into a trading business in the 1980s and in 2004, as one of Singapore’s leading manufacturers of TCM medicine and health products.
As a manufacturer, the company saw a business increase of more than 40 percent, which revealed the inadequacies and limited scalability of its existing system. Tong Jum Chew also required an integrated Enterprise Resource Planning (ERP) system to better track its inventory, manage raw materials and handle production planning.
Microsoft Dynamics™ NAV enabled Tong Jum Chew to streamline its order administration and warehouse operations, while enhancing inventory management and production planning. Management visibility has also been improved, which provides more insights as it strategizes its impending expansion into Europe and the United States.
Situation
Named after its founder, Tong Jum Chew Pte Ltd (Tong Jum Chew) was established in 1965 as a Traditional Chinese Medicine (TCM) clinic and medicine hall. Now managed by second-generation family members, Tong Jum Chew has since transformed itself from its early days to a trading business in the mid-1980s and more recently, as one of Singapore's leading manufacturers of TCM medicine and health products.Focused on delivering Tong Jum Chew's mission of "Highest Quality, Leading Effectiveness", its myriad range of more than 400 types of "Nature's Green" brand of TCM medicine and health products are manufactured at its 20,000-square feet facilities at its Singapore headquarters. Sold in more than 90 percent and 70 percent of Singapore's TCM retail shops and clinics respectively, its products are widely available in other retail outlets in Singapore including Guardian Pharmacy, Watsons, Mustafa Center, Unity NTUC Healthcare and OG. They are also distributed across Asia, including Malaysia, indonesia, Brunei, Cambodia etc. The company received its Good Manufacturing Practice (GMP) certification from the Singapore Health Sciences Authority (HSA) in 2006. It also exceeds the requirements by operating a class 100,000 clean room.
To Mr Tong Yen Tien, Managing Director, Tong Jum Chew Pte Ltd, switching from a trading business to a manufacturing model in 2004 was a strategic move to capture the growth potential of a global market that is fast accepting TCM as complementary to Western medicine. "Back in the 1980s, we realized that our business model of being the middle-man, focused on reselling China's TCM imports and exporting it to countries in the region, was limiting our growth. Even though we eventually became the exclusive distributor for many leading China TCM products, we knew that a radical change was required — if we want to carve out a competitive niche to successfully capture the huge market potential of a world that is fast taking to TCM," explained Mr Tong.
Indeed, the decision to change its business model was quickly proven right, as Tong Jum Chew swiftly experienced more than 40 percent increase in its business. However, the rapid growth also revealed the
inadequacies of the DOS-based system it had used for more than 20 years. "Besides the inability to support the increased business volume, we were handicapped by the command-driven DOS-based system, which limited the types of reports we could generate for management reporting. Without an integrated system, our sales administrator also needed to spend at least half a day preparing all relevant sales documents, before our warehouse operations could take over the process to pick and pack the orders," said Mr Tong.
Tong Jum Chew knew that it needed an integrated Enterprise Resource Planning (ERP) system to cope with the business growth, better track inventory, manage raw materials and handle production planning.
Solution
/ Tracking the stock levels of close to 1000 different items manually would be close to impossible. With Microsoft Dynamics, we can now track the sales movements of our stocks by individual product lines, down to individual products. These valuable insights serve as vital guidance as we make decisions to optimize our stock levels, while balancing our production needs. /
Mr Tong Yen Tien Managing Director Tong Jum Chew Pte Ltd
"As one of the pioneer users of technology amongst the TCM companies in Singapore, we have experienced the benefits of information technology (IT) and want to continue to leverage IT to streamline our business processes. We know that an integrated ERP system such as Microsoft Dynamics, will better equip us to cope with the growth," explained Mr Tong.
For the Tong Jum Chew management, a key selection criterion is Chinese language support, as the company used to struggle to update its Chinese language software whenever there is an upgrade in its IT systems. Scalability and the ability to support its unique business model are also important factors for consideration.
After a detailed evaluation, Tong Jum Chew selected Microsoft Dynamics™ NAV for its familiar Windows-based graphical user interface (GUI) and Chinese language support. "As we are already using Microsoft Office, we are pleased to know that Microsoft Dynamics uses the same easy-to-use, familiar and user-friendly graphical user interface. This definitely helps to improve user acceptance as we transition to an ERP system," said Mr Tong.
He added, "We are also assured by the Microsoft Dynamics native support for the Chinese language, which saves us a lot of hassle and gets us off-the-ground much faster with the new system. Backed by Microsoft's industry-leading brand, we also feel assured that regardless of how the Windows operating system will develop in the future, Microsoft will continue to provide native support for Chinese."
Tong Jum Chew implemented the Distribution, Financial Management, Inventory, Manufacturing and Sales modules of Microsoft Dynamics NAV. The system went live in July 2007 after a 3-month implementation.
The implementation was handled by DP Technology Pte Ltd (DP Tech), a Microsoft Certified Partner, which impressed the Tong Jum Chew management with their sincerity in understanding its business needs. Mr Tong said, "We find it very easy to work with the DP Tech team, who is conversant in Mandarin. They are also very patient with training our staff, some of whom are not so familiar with IT systems. Whenever we encounter problems during or even after the implementation, they have been very responsive in giving us help, even from remote locations." Tong Jum Chew's confidence in DP Tech can be seen in its engagement of DP Tech for its network maintenance.
Benefits
Microsoft Dynamics enabled Tong Jum Chew to streamline its order administration and warehouse operations, while enhancing inventory management. As a result, production planning is also improved. With comprehensive reporting capabilities, management visibility has increased significantly.Streamlined Order Administration and Warehouse Operations
Everyday, Tong Jum Chew's five sales staff visit its distribution channel across Singapore to gather sales orders from the stores to replenish their stock of "Nature's Green" products.During its trading days, Tong Jum Chew's average sales orders numbered about 60 daily. Once back in the office, the sales order information were passed to the sales administrator, who would then take about four to five hours daily to manually prepare the necessary sales documents, generate the picking list, delivery orders and invoices. After picking and packing, the stocks were loaded onto its trucks for delivery the next day. The preparation of the sales documents proved to be a bottleneck, as picking and packing could only take place after the sales documents were ready. On days when the order volume tipped over the average, two more staff had to help in preparing the sales documents, as any delay would impede its delivery commitments.
Since becoming a TCM manufacturer, its daily sales volume had increased by more than 40 percent to above 100 orders. To streamline its order taking process, Tong Jum Chew selected a third-party mobile sales solution, which is tightly integrated with Microsoft Dynamics through a connector developed by DP Tech. This enables Microsoft Dynamics to push the inventory master and latest price lists to the individual Personal Digital Assistant (PDA) held by its sales staff. Once the order is taken, the sales order is then transmitted within a few seconds to its Microsoft Dynamics system via General Packet Radio Service (GPRS). This almost-instant updating of sales orders in Microsoft Dynamics eliminates the need for the manual preparation of sales documents by the sales administrator, resulting in significant time and cost savings.
Commenting on how an ERP system like Microsoft Dynamics helps Tong Jum Chew handle the business growth, Mr Tong said, "If we did not make the decision to implement Microsoft Dynamics, our business will be crippled by now. Microsoft Dynamics gives us the readiness to scale as our business grows. We now have the capabilities to capture the growth potential of the TCM market," said Mr Tong.
With Microsoft Dynamics, Tong Jum Chew has successfully consolidated its sales administration and warehouse operations into one integrated system. The picking list, which can be easily retrieved and printed from the system, makes the picking and packing processes much smoother, faster and more accurate, as it includes the exact warehouse location of its goods.
/ The valuable and comprehensive data collected within Microsoft Dynamics enables us to monitor, in real time, our stock movement and sales figures. These insights help us make quick and accurate decisions on whether to increase the production volume for a certain range of popular stocks.... also help us identify our "star products" and guide our decisions on whether to invest more marketing dollars... /
Mr Tong Yen Tien Managing Director Tong Jum Chew Pte Ltd
"The integrated Microsoft Dynamics system enables us to easily cross-check the delivery orders against our picking and packing processes. With higher data integrity, it helps us to easily identify human errors," added Mr Tong.
Enhanced Inventory Management
To support its production of more than 400 products, Tong Jum Chew manages a massive inventory made up of close to 1000 different types of items. These range from myriad raw materials such as herbs and herbal extracts, to packaging materials such as foam and labels, and finished products. On the average, when the stock level of any of these items falls below three months, purchase requisitions will be generated to replenish these stocks, to prevent any delays on the production process."Tracking the stock levels of close to 1000 different items manually would be close to impossible. With Microsoft Dynamics, we can now track the sales movements of our stocks by individual product lines, down to individual products. These valuable insights serve as vital guidance as we make decisions to optimize our stock levels, while balancing our production needs," said Mr Tong.
To enhance stock take, DP Tech also customized a PDA scanner application to facilitate the integration of the stock take process with Microsoft Dynamics. To capture the stock quantity, Intermec handheld scanners are used to scan the product barcodes. These data are synchronized with Microsoft Dynamics to update the stock levels in the system. This has helped Tong Jum Chew to reduce the manpower required for physical stock take, while easing the time taken for the process.
With Microsoft Dynamics, stock returns management has also been enhanced. Returned inventory can be easily processed to account for additional costs such as restocking charges. Additional documents required including credit memos, replacement goods, returns to vendors, and partial or combined return of shipments or receipts, can be easily generated from the system. Exact cost reversal of returned items also increases inventory costing accuracy.
Improved Production Planning
Another complexity that Tong Jum Chew needs to manage is the limited shelf life of its raw materials, which are mainly natural products such as herbs and herbal extracts. As many of these herbs are imported from countries such as China, there is the added difficulty of managing the stock levels of these perishable raw materials and their delivery lead time.On the average, most of Tong Jum Chew's products have a shelf life of about three years. To ensure maximum "shelf-time" while in circulation in the market, Tong Jum Chew always manages its production cycles and stock levels such that, within the first year of production, the products must be sold to the distribution channel. That will leave at least two years for the products to be sold through the retail outlets.
"Our accountability to the end-users who use our products is to provide them with the highest quality products at its freshest state. As such, we place great emphasis on more than stringent quality control processes, but also on how we manage our supply chain — starting from the procurement of our raw materials, to our production planning and actual production processes, through to our warehousing and delivery processes.
With Microsoft Dynamics, we now have better control over our entire supply chain," explained Mr Tong.
Increased Management Visibility
According to Mr Tong, one key benefit of Microsoft Dynamics is the increased management visibility. "For the rest of the business functions, once the system is put in place, it basically runs like clockwork. However, for the management, we truly experience the benefits of Microsoft Dynamics on a daily basis, as we use the system to monitor the business operations. Its web-based interface also lessens the "pressure" for the management, as we can check on the business progress wherever we are. In fact, personally, even while I am on the road or out for meetings, I feel like I have not left the office," said Mr Tong.Indeed, the easy-to-use and flexible drill-down functionalities means that the management can "help themselves" with ad-hoc requests, such as looking at individual salesperson's performance and whether a specific product is showing improved sales performance after a marketing campaign.
"The valuable and comprehensive data collected within Microsoft Dynamics enables us to monitor, in real-time, our stock movement and sales figures. These insights help us make quick and accurate decisions on whether to increase the production volume for a certain range of popular stocks. These figures also help us identify our "star products" and guide our decisions on whether to invest more marketing dollars to further "cultivate" these products," said Mr Tong.
Besides easing ad-hoc management requests for information, the valuable business data collected also helps Tong Jum Chew ease the preparation of the detailed reports required for the GMP audit that is conducted by the HSA every two years.