Critical role for software in Gallagher profits

By Chris Barton

Electric fence manufacturer Gallagher has begun installation of a 100-seat, $2 million SAP project that includes one of the first New Zealand implementations of SAP's supply chain optimisation software.

The Hamilton-based company which had revenues last year of about $100 million - 70 per cent of which was in exports - sees the new software as a critical component in moving towards build-to-order manufacturing and to support aggressive export growth forecasts set to double the company's size to $200 million within five years.

Gallagher Group chief executive Bill Gallagher said he expected the software to provide more efficient shop floor scheduling and capacity planning, which would see a return on investment within two years.

The company's growth comes from Gallagher's existing electric fence and perimeter security systems, and also from further expansion in the security market from its June acquisition of Marton-based PEC and its Cardax access control business.

Mr Gallagher said the company had established itself as the number one in both the agricultural and security electric fence business. Its challenge was to move Cardax - its rapidly expanding "gateway" business - up from the number six in market share rankings.

He said the key to achieving that goal lies with Cardax's new access control technology - a combination intercom and Windows NT-based intelligent camera system which was the result of heavy R&D investment.

The SAP implementation was the fourth computer system the company had been involved with. The latest upgrade came about because the existing MRP11 (manufacturing resource planning) system was no longer adequate for the group's increasingly diversified business, requiring sales coordination across overseas subsidiaries, affiliates and agency companies in more than 100 countries.

"On our second system we changed it to fit with our requirements. It was a complete disaster. This time we asked 'what's so sacred about the way we do things?' and are prepared to change to the way the computer does things and adopt [SAP's] best practice."

The co-joint rollout of SAP's R/3 and supply chain software to be implemented by Supply Chain Group will go live in stages over the next 12 months.