" title="Ansell will spend at least $30 million to “accelerate” its digitisation strategy over the next three years, with a broader adoption of cloud.
The ASX-listed manufacturer of personal protective equipment (PPE), such as gloves, outlined the digitisation expansion in a trading update.
The company said the acceleration aimed to build on “successes from recent investments in modern cloud-based supply chain planning and manufacturing ERP [enterprise resource planning] systems.”
It intends to broaden its ERP replacement “to include our commercial units”, and said its ultimate goal is to “move to consistent global ERP and decision support systems.”
The announcement did not outline the technology choice, although at least one recent case study suggests it has landed on Microsoft’s Dynamics 365.
An Ansell media representative contacted by iTnews said they “can’t provide specifics” on the platform of choice.
The company has previously run some large-scale ERP efforts, and financial analysts sought assurances from managing director and CEO Neil Salmon that Ansell could safely navigate another ERP project.
“To give you some confidence, we’ve completed more than 11 go-lives in the last, I think, 18 months to two years, at different sites across our network and we’ve had barely a day of disruption post go-live,” Salmon said.
“These are both smaller sales units and very large manufacturing units – thousands of people at a time, cutting over from one system to another.
“I expected some trepidation indeed when you embark on a major ERP journey.
“I would not have made this commitment if I hadn’t gained a very high degree of confidence in our ability to execute, and not based on promise but based on track record.”
Salmon continued: “Now admittedly we are increasing our ambition here, but with an already well-established track record, and it’s the same system that we’ve successfully implemented many times over that we’re continuing to implement.
“So this is not embarking down a brand new technology path. This is taking something tried and tested, already working across many sites at Ansell, and now extending it across the entire Ansell, and when we get there we think that will be a very significant effort to our efficiency as an organisation.”
Salmon said that while the company intends to use “some third-party consultants to help with the specifics of the technical capability of the system”, most of the ERP implementation work would be handled by an internal team.
He also noted that in parallel to the cloud-based ERP rollout, Ansell has also “overhauled” its “decision-support systems” over the past year as well.
“We’re putting in a best-of-breed system, and that’s had major benefits and improved management of demand, supply and inventory planning,” he said.
“It also gives us the confidence, with improved service levels for customers that we’ve seen as a result of this, [that] we can now start to reduce inventory without affecting those service levels.”
Ansell announced this morning that it would “temporarily slow… production of finished goods to normalise inventory holdings”.
It also intends to “reduce manufacturing employee numbers in order to provide a partial offset to the unfavourable impact of slowing production”, while investing in more automated systems in the longer-term.
Salmon declined to put a number on the cuts yet.
On the digitisation expansion, the company indicated it would increase its IT spending by between $30 million and $35 million over the next three years.
A “small amount” of the extra investment falls in FY24, with the majority planned for FY25 and FY26.
“We are confident based on our recent track record of successful systems upgrades that these investments will deliver further gains in productivity and in our ability to service our customers efficiently and we will update our overall benefit expectations after the initial blueprinting and business case development phase is complete,” the company said.
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