BMC Software, The shape of knowledge

Manufacturing in Action, Source : The Manufacturer
Zone : IT in manufacturing
Published : August 2007

Even the knowledge economy must have some tangible outputs. Mark Lally, manufacturing and distribution manager at BMC Software talked to Jayne Flannery about the production challenges thrown up by the software industry

Classic manufacturing operations have a direct physical output. So what happens in the knowledge economy where the benefits on offer have no tangible presence? Mark Lally, manufacturing and distribution manager at the Dublin site of BMC Software explained.

Lally’s team undertakes all manufacturing and distribution activities associated with the European, Middle East, African and Asian business of BMC, one of the world’s leading providers of enterprise management solutions with a worldwide presence and annual revenues of $1.5 billion. The company has attained this position in little more than 25 years of trading by offering a unique focus on managing IT from a business perspective. BMC software solutions span enterprise systems, applications, databases and service management. All are focused on attuning IT systems to share the same goals by growing revenue, reducing cost, and lowering risk.

The Dublin site, which has been ISO 9001 certified since 1997 undertakes a number of functions. It has sales and customer service responsibilities for Europe, Africa and the Middle East and is also the European recruitment centre for the organisation. In addition, the site produces around 30,000 boxed software kits each year and deals with around 120,000 orders each year for loose pieces of documentation and media.

In the US and the EMEA region, software is increasingly downloaded electronically, but Lally believes there will always be a need for some physical media. “For example, some customers have built such stringent firewalls that they will not accept electronic downloads and you also have to bear in mind that these are huge files that occupy a lot of space. In any event, customers still want physical copies of documentation or back-up discs readily available,” he said.

The Dublin site produces eight broad categories of software products, or routes to value, as they are known in the business. The total product portfolio is enormous, containing 20,000 distinct orderable parts. Of these, just 1,000 are held in stock with the remainder built to demand. “We use an ABC type inventory system which ranks products according to demand,” he explained. “We hold up to two weeks’ inventory for high demand products and also stock those products that require long lead times to build. What we are trying to do though is move to a build to demand model for just about everything we produce.”

Lally is very interested in lean methodologies and recently graduated as a six sigma black belt. The training, supplied by Excellence Ireland, formerly the Irish Quality Association, met and exceeded his expectations. “The facilitator knew nothing about BMC which gave the course a lot of valuable objectivity and it was very useful to learn from managers in other industries about how they were tackling their challenges and implementing lean thinking,” he said.

Over the past six months he has worked hard to transform this newly acquired knowledge into practical improvements at the site. “Our processes were already robust before. We were coming in under budget and already offered service levels that saw 95 per cent of our orders shipped out within 24 hours. However, we have still managed to take 15 per cent out of our costs based on a whole series of changes undertaken within the six sigma framework. We have also achieved it without impacting on our service levels,” he said.

Two tools have been particularly effective. “Value stream mapping has been a big help in enabling us to identify and then strip out those processes that were not adding any value to our activities. The other main facet has been reducing our inventory holdings through a progressive shift to real time production based on real time orders. There is always a trade off between the losses that arise from obsolescence when a product is too long on the shelf and customer disappointment if they cannot get what they want immediately. It is a delicate balance, but one which I think we are now getting right as the cost of inventory obsolescence has dropped to one per cent while 97 per cent of orders are now turned around in 24 hours,” he commented.

Forecasting demand is one of his biggest challenges in implementing the shift. “Trying to forecast accurately against demand is very difficult, especially as it is hard to predict how new products will move. The build to demand model also involves a big rise in the number of one-offs and a corresponding rise in the number of individual jobs that must be performed,” he said.

Automation of the CD manufacturing process is ongoing. The next processes in his sights involve the submission of jobs to digital printers and to the replicating equipment, which must produce 250,000 CDs and DVDs each year. When it is complete, he believes the shift to true on demand production will be complete. He would like to see machines running out of hours with staff devoting their time to the handful of key tasks which still require human intellect to figure out.

From another perspective, he is also involved with a project that will make it easier than ever for those customers who choose the electronic download route. “We are currently redesigning our entire electronic web download system. There are several different sources by which customers can obtain their software electronically. We want to introduce a single site with quicker access that offers a better customer experience.” It is another step towards process simplification which has a high priority within BMC as a whole.

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