Going IT alone

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Magazine Article, Source : The Manufacturer
Zone : IT in manufacturing
Published : April 2004

Although many OEMs expect suppliers to use a fully integrated IT system, some are adopting ERP for reasons of their own. John Dwyer reports

For most of the history of enterprise resource planning (ERP), small to medium-sized manufacturers have regarded ERP as too expensive to buy, too complicated, too difficult to install and too expensively maintained to be of interest to them. This is changing.

Susie Davison of ERP integrator Absoft is forthright. Though Absoft is an integration consultancy for SAP, which, fairly or not, once had a reputation for difficult installation, Davison insists that the difficulty and expense of ERP has been a myth ever since ERP suppliers ditched mainframes in favour of client-server architectures a decade or more ago. Though speaking before news of SAP’s tie-up with Fourth Shift (Page 19), she said: “ERP implementation has become affordable, and it can go to people who charge substantially less and do it as quickly as possible.

“People want a quick and clean approach,” she summarises. “They want systems support but they don’t want to have to own IT departments.

Some unexpected businesses are using ERP in anger. Absoft’s customer base includes Boston, Lincolnshire, based construction industry supplier Calders and Grandidge (C&G), the UK’s biggest supplier of telegraph poles. C&G’s SAP system has 25 users on two sites. Nottingham-based arms maker NSAF sells pistols and sub-machine guns to UK and commonwealth armies, police forces and, latterly, film companies. NSAF’s full-blown SAP R3 system now has just 10 users.

The food industry offers abundant examples of this. Langmead Farm, a West Sussex-based grower of lettuces, celery and other salad crops with a maximum labour force of 400, is a Ross Systems customer.

The suspicion lingers, of course, that much of ERP’s move down the market can be explained by customer pressure. Davison says Walmart issued a ukase last year that its suppliers must also be SAP users, though The Manufacturer has been unable to confirm this assertion. Her point though is that, “Wal-Mart wouldn’t have been able to say this two or three years ago.” And it is not in Wal-Mart’s interest to threaten the livelihood of any of its suppliers, she adds.

Maybe, but ERP installation is still not plain sailing for companies without much IT resource. Nottingham’s Pontiac Coil Europe (PCE) was Critchley Components until its takeover in 1999. It designs and manufactures electrical coils, solenoids and electro-mechanical devices for cars, modems, fax machines and digital set top boxes.

PCE installed an IFS ERP system just over three years ago to replace an old Unix-based system that had limited functionality and, as managing director Kevin Springthorpe puts it, ‘kept falling over’.

PCE installed the system in two parts: first materials management, then manufacturing and routing systems. “Both,” says Springthorpe, “were fraught with problems. They took much longer than we would have anticipated.”

The main reason was the difficulty of carrying over old data into the new system: “The new system has so many boxes to check and click. It’s easy to put them into the wrong box and that sends things haywire.” He adds, however, that the reporting and extra accuracy the system has made possible are “well worth the pain.” Springthorpe says he would use IFS again.

The pressure to upgrade came not from big customers but from within. Before the installation, “every function was being run by spreadsheets. [But] you need some common databases that you can run the business from. It’s difficult to say we were driven by customers to do this. We had the knowledge internally that things were out of our control and we didn’t know it.” PCE operates a ‘faxban’ that enables customers tell PCE when to replenish their stocks. Faxed orders contain part numbers, order quantity and delivery date which PCE enters manually in its systems.

The company is now moving to what Springthorpe calls an ‘emailban’ which will allow it to run consignment stock at customers’ premises. PCE can now generate a report which is downloadable into a spreadsheet which it can email to the customer saying, ‘This is how your order book looks to us, do you agree?’.”

Springthorpe says PCE used a consultant to narrow down the software choices: “Some of the systems were far too involved for what we needed.” In the end the company had to take an off-the-shelf package and try to make the business fit round it.

This has not proved easy, he notes. “One of the most difficult things is changing people’s working practices to meet the package,” he comments. But there was little choice. Changes to the software were far too expensive to be chosen lightly.

PCE had prepared its people well. In an exception to the usual rule, the company took six months before the installation “to persuade staff that this is what we are going to do,” followed by three months system training. The six months was spent investigating with individuals exactly how they did their work, what information they needed and how much they needed to provide. During the training period PCE put parts on the system and trained everyone in the company, from senior managers to users, in the new procedures.

No matter how good software of this kind is, it carries a risk, Springthorpe believes. Because of the way PCE prepared for the installation, everyone had to ask themselves why they did what they did, and they learned a lot about the company and the way it worked.

Now, with the inevitable churn of staff, users are highly proficient in the system but are probably less aware of why they do what they do. Consequently, says Springthorpe, if anything goes wrong, they’re at sea. “We couldn’t exactly start again from scratch, right through the managers and everyone, but I believe that, once you’ve put something like that in, the original training needs carrying on in some form.”

Hereford plastics company AK Industries which, in 1999, won a chunk of business from what is now US-owned shower fittings maker Kohler Mira, has found that the contract boosted turnover at the 100-employee company by half. Says joint managing director Allen Green: “Almost overnight we were faced with £1.5 million worth of business... Our existing business processes and software simply began to give way at the seams.”

AKI decided to replace its planning system, Plasware from Plastics Software of Haslemere, Surrey, in favour of Infor’s Infor:Plastics, for a go-live date of November 2001.

Green stresses that little of the pressure came from Mira: “We always knew it was of more benefit to us than it was to them.” A main reason for changing was that Infor:Plastics offered EDI. Mira was beginning to pull in suppliers from the far east. EDI was a way of “locking the customer into us. Once we got our EDI sending them invoices and delivery notes they are not going to want to go backwards.” Though partnership is a much abused word, Green says, he believes this is what Mira and his company have now established, even though, as of mid-February, while the ERP part of the installation has worked fine, AKI still hasn’t got its EDI. That’s another story.

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