SAP continually interviews A&D industry thought leaders to identify the biggest challenges and trends fac- ing your company today. This knowl- edge, combined with our experience with customers worldwide, has led to the most comprehensive portfolio of solutions for the A&D industry. For example, the robust SAP NetWeaver platform easily integrates SAP and non-SAP solutions for a lower total cost of ownership. mySAP™ Business Suite ' built on SAP NetWeaver ' offers powerful, adaptive business solutions with best-of-breed functionality, industry-specific capabilities, and sup- port for Web-based collaboration. And the SAP xApps™ portfolio of packaged composite applications delivers next- generation business practices that transform existing functions into new cross-functional processes. SAP also offers affordable, scalable solutions developed expressly for small and midsize A&D companies. And we back all our solutions with ongoing support and services to help you achieve your business objectives and maximize return on investment.
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Monday, December 14, 2009
CHANGE IS NEVER EASY BUT TO STAND STILL IN TODAY'S MARKET IS TO FALL BEHIND
Trends show that many companies are moving away from traditional practices and adopting forward thinking "leading practices" to support profitable growth in key areas.
THE ROAD TO PROGRESS
The business processes and information systems throughout your company were developed over decades, and many of them are undoubtedly considered very entrenched. Reengineering them to industry-leading practices won't happen overnight, and requires a strong commitment at the highest levels. This is especially true when it comes to integrating processes across departments and divisions. The good news is that companies that persevere can expect the following rewards:
* Better insight into the overall business
* Streamlining of processes that have grown overly complex and inefficient
* Significant reductions in risk and exposure
* Increased flexibility to respond to market changes
THE FUTURE LOOKS BRIGHT . . .
EMERGING TECHNOLOGY AND TRENDS
In the years ahead, companies in the A&D manufacturing industry will become increasingly integrated. This will enable the coordination of supply requirements with customers' MRO needs as manufacturers move toward life-cycle support models. It will also facilitate predictive maintenance models, as envisioned by DoD's network-centric warfare initiative. As the outsourcing trend continues, companies will turn to portals to face internal processes outward to trusted suppliers, subcontractors, and cus- tomers. This will facilitate distributed product teams and help spread pro- gram risk.
All of this requires a technical infra- structure that supports master data management and content consolida- tion. This will be enabled as legacy sys- tems are replaced or integrated with open-standards technology platforms such as SAP NetWeaver. Eventually, services-oriented architectures will emerge that are capable of decoupling business processes from underlying systems, allowing these processes to run across multiple systems in a flexi- ble manner. Such an architecture will speed integration, enable business change, and enhance a company's ability to innovate.
EMERGING A&D MANUFACTURING MANAGEMENT TRENDS INCLUDE:
PERFORMANCE-BASED LOGISTICS
Defense contractors entering the MRO aftermarket are moving away from task-and-fee arrangements toward performance-based agreements that base payment on the availability of air- craft. This is fueling the drive toward optimized parts sourcing, collaborative inventory replenishment, and life- cycle support perspectives.
COLLABORATIVE CONTRACT MANAGEMENT
As programs and product develop- ment continues to require coopera- tion between organizations, companies are looking for ways to manage con- tracts collaboratively. This requires enhanced capabilities for exchanging information, including financial and project management information.
THE ROAD TO PROGRESS
The business processes and information systems throughout your company were developed over decades, and many of them are undoubtedly considered very entrenched. Reengineering them to industry-leading practices won't happen overnight, and requires a strong commitment at the highest levels. This is especially true when it comes to integrating processes across departments and divisions. The good news is that companies that persevere can expect the following rewards:
* Better insight into the overall business
* Streamlining of processes that have grown overly complex and inefficient
* Significant reductions in risk and exposure
* Increased flexibility to respond to market changes
THE FUTURE LOOKS BRIGHT . . .
EMERGING TECHNOLOGY AND TRENDS
In the years ahead, companies in the A&D manufacturing industry will become increasingly integrated. This will enable the coordination of supply requirements with customers' MRO needs as manufacturers move toward life-cycle support models. It will also facilitate predictive maintenance models, as envisioned by DoD's network-centric warfare initiative. As the outsourcing trend continues, companies will turn to portals to face internal processes outward to trusted suppliers, subcontractors, and cus- tomers. This will facilitate distributed product teams and help spread pro- gram risk.
All of this requires a technical infra- structure that supports master data management and content consolida- tion. This will be enabled as legacy sys- tems are replaced or integrated with open-standards technology platforms such as SAP NetWeaver. Eventually, services-oriented architectures will emerge that are capable of decoupling business processes from underlying systems, allowing these processes to run across multiple systems in a flexi- ble manner. Such an architecture will speed integration, enable business change, and enhance a company's ability to innovate.
EMERGING A&D MANUFACTURING MANAGEMENT TRENDS INCLUDE:
PERFORMANCE-BASED LOGISTICS
Defense contractors entering the MRO aftermarket are moving away from task-and-fee arrangements toward performance-based agreements that base payment on the availability of air- craft. This is fueling the drive toward optimized parts sourcing, collaborative inventory replenishment, and life- cycle support perspectives.
COLLABORATIVE CONTRACT MANAGEMENT
As programs and product develop- ment continues to require coopera- tion between organizations, companies are looking for ways to manage con- tracts collaboratively. This requires enhanced capabilities for exchanging information, including financial and project management information.
AFTERMARKET MANAGEMENT STRATEGIES
With tremendous intellectual capital invested in the assets they produce, A&D manufacturers are moving into main- tenance, repair, and overhaul (MRO) and aftermarket services such as spare parts supply. For defense contractors, this move is in response to the DoD's performance-based logistics mandates. On the commercial side, this is an attempt to develop new sources of revenue in a tight marketplace.
WHAT ANALYSTS RECOMMEND
To succeed in the aftermarket, A&D manufacturers need to extend design and production information for MRO purposes. This requires improved infor- mation flow from legacy applications as well as tighter integration across functional areas such as materials management, teardown and overhaul, work execution, and asset manage- ment. Administrative and reporting capabilities to support multinational operations and integration to financial software are also required.
WHAT SAP OFFERS
SAP provides a host of capabilities to support aftermarket services. These include aircraft maintenance planning and execution, line maintenance with an electronic logbook, overhaul plan- ning and execution, and resource- related billing. Configuration control functionality also helps minimize parts obsolescence while a component maintenance cockpit helps monitor all parts removed from an airplane.
ANALYSTS RECOMMEND THESE STRATEGIES FOR SEIZING THE MRO AFTERMARKET
IMPROVE SERVICE LEVELS WITH CUSTOMER RELATIONSHIP MANAGEMENT CAPABILITIES
The A&D aftermarket is a services market. And with services typically generating two to five times the rev- enue of the original sale, forward- thinking companies are seeking ways to improve service levels. This requires a focus on maintaining customer relationships.
WHAT ANALYSTS RECOMMEND
To assume a strong customer service orientation, companies need to over- haul their installation, repair, and main- tenance activities to shift revenues from product sales to services. This entails far more than Web access to technical catalogs and parts data. Companies need sophisticated master data management as well as forecast- ing and logistics capabilities to manage service parts planning and minimize the problem of parts obsolescence across multiple inventory locations and suppliers.
WHAT SAP OFFERS
SAP provides robust customer rela- tionship management capabilities that integrate with back-office ERP and inventory management functions. Powerful business intelligence, sup- ported by market-leading master data management capabilities, helps improve forecasting while comprehen- sive parts-management capabilities help ensure a positive customer experience.
MOVE TOWARD A LIFE-CYCLE SUPPORT MODEL
A&D manufacturers are increasingly required to consider support and maintenance concerns in original design plans ' especially under DoD initiatives such as network-centric warfare and performance-based logis- tics. This requires long-term planning that takes into account the costs asso- ciated with an asset over its entire life cycle.
WHAT ANALYSTS RECOMMEND
To succeed in the aftermarket, A&D manufacturers need to extend design and production information for MRO purposes. This requires improved infor- mation flow from legacy applications as well as tighter integration across functional areas such as materials management, teardown and overhaul, work execution, and asset manage- ment. Administrative and reporting capabilities to support multinational operations and integration to financial software are also required.
WHAT SAP OFFERS
SAP provides a host of capabilities to support aftermarket services. These include aircraft maintenance planning and execution, line maintenance with an electronic logbook, overhaul plan- ning and execution, and resource- related billing. Configuration control functionality also helps minimize parts obsolescence while a component maintenance cockpit helps monitor all parts removed from an airplane.
ANALYSTS RECOMMEND THESE STRATEGIES FOR SEIZING THE MRO AFTERMARKET
IMPROVE SERVICE LEVELS WITH CUSTOMER RELATIONSHIP MANAGEMENT CAPABILITIES
The A&D aftermarket is a services market. And with services typically generating two to five times the rev- enue of the original sale, forward- thinking companies are seeking ways to improve service levels. This requires a focus on maintaining customer relationships.
WHAT ANALYSTS RECOMMEND
To assume a strong customer service orientation, companies need to over- haul their installation, repair, and main- tenance activities to shift revenues from product sales to services. This entails far more than Web access to technical catalogs and parts data. Companies need sophisticated master data management as well as forecast- ing and logistics capabilities to manage service parts planning and minimize the problem of parts obsolescence across multiple inventory locations and suppliers.
WHAT SAP OFFERS
SAP provides robust customer rela- tionship management capabilities that integrate with back-office ERP and inventory management functions. Powerful business intelligence, sup- ported by market-leading master data management capabilities, helps improve forecasting while comprehen- sive parts-management capabilities help ensure a positive customer experience.
MOVE TOWARD A LIFE-CYCLE SUPPORT MODEL
A&D manufacturers are increasingly required to consider support and maintenance concerns in original design plans ' especially under DoD initiatives such as network-centric warfare and performance-based logis- tics. This requires long-term planning that takes into account the costs asso- ciated with an asset over its entire life cycle.
THESE STRATEGIES CAN HELP MINIMIZE RISK AND MAXIMIZE EFFICIENCY FOR THE PROJECT-ORIENTED A&D MANUFACTURING INDUSTRY
In the United States, the DoD's capa- bilities-based acquisition initiative requires greater coordination among design, production, and testing groups and supply chain planning and exe- cution. A&D organizations across the industry spectrum seek enhanced integration to speed time to market, increase productivity, and add value to the new product development process. A key feature to enable this is the visibility of real-time program management information.
WHAT ANALYSTS RECOMMEND
A&D manufacturers should prioritize IT investments to improve informa- tion flow, increase revenue, and pro- vide better support to customers. This requires significant upgrades to decades-old legacy systems. Require- ments include sophisticated inventory management, project life-cycle man- agement, supplier collaboration, as well as the master data management and information exchange capabilities needed for support.
WHAT SAP OFFERS
SAP delivers powerful collaboration capabilities to help companies coordi- nate projects and share information more efficiently. Inventory data can be shared and external suppliers can be incorporated into the product devel- opment process at the earliest stages.
SPREAD RISK THROUGH DISTRIBUTED PRODUCT TEAMS
Leading A&D manufacturers are reducing their financial risk on pro- grams by establishing a partner network and outsourcing project elements that were previously regarded as core competencies. On the defense side, this is driven by the adoption of the lead system integrator model, which man- dates that contractors allow more sub- contracting. On the commercial side, distributed product teams are also helping to reduce costs, boost produc- tivity, and enhance process efficiency.
WHAT ANALYSTS RECOMMEND
To manage distributed product teams, companies need sophisticated supply chain management technology to coordinate the multilevel bid and delivery process. Companies also need ways to connect with outsourcing partners to coordinate activities, track progress, and ensure quality. Most companies will need to revamp their IT infrastructures to streamline the flow of design and program informa- tion across teams of external partners.
WHAT SAP OFFERS
SAP helps A&D manufacturers face internal processes outward to incor- porate suppliers and improve inter- action among distributed teams. An intuitive portal with a customizable interface ensures usability while leading-edge collaboration technology and workflow processes help teams work together efficiently.
WHAT ANALYSTS RECOMMEND
A&D manufacturers should prioritize IT investments to improve informa- tion flow, increase revenue, and pro- vide better support to customers. This requires significant upgrades to decades-old legacy systems. Require- ments include sophisticated inventory management, project life-cycle man- agement, supplier collaboration, as well as the master data management and information exchange capabilities needed for support.
WHAT SAP OFFERS
SAP delivers powerful collaboration capabilities to help companies coordi- nate projects and share information more efficiently. Inventory data can be shared and external suppliers can be incorporated into the product devel- opment process at the earliest stages.
SPREAD RISK THROUGH DISTRIBUTED PRODUCT TEAMS
Leading A&D manufacturers are reducing their financial risk on pro- grams by establishing a partner network and outsourcing project elements that were previously regarded as core competencies. On the defense side, this is driven by the adoption of the lead system integrator model, which man- dates that contractors allow more sub- contracting. On the commercial side, distributed product teams are also helping to reduce costs, boost produc- tivity, and enhance process efficiency.
WHAT ANALYSTS RECOMMEND
To manage distributed product teams, companies need sophisticated supply chain management technology to coordinate the multilevel bid and delivery process. Companies also need ways to connect with outsourcing partners to coordinate activities, track progress, and ensure quality. Most companies will need to revamp their IT infrastructures to streamline the flow of design and program informa- tion across teams of external partners.
WHAT SAP OFFERS
SAP helps A&D manufacturers face internal processes outward to incor- porate suppliers and improve inter- action among distributed teams. An intuitive portal with a customizable interface ensures usability while leading-edge collaboration technology and workflow processes help teams work together efficiently.
PROGRAM MANAGEMENT STRATEGIES
Used mainly by defense contractors to identify cost and schedule variances, earned value reporting is often ap- proached as a governmental reporting requirement to be fulfilled at the end of each accounting period. In this context, variances have time to per- petuate themselves throughout the program before they are identified. Companies need to be more proactive.
WHAT ANALYSTS RECOMMEND
Earned value management helps com- panies identify variances in real time before they disrupt the program. Stand-alone reporting solutions should be replaced with a unified system to coordinate budgets, schedules, prod- uct development, inventory manage- ment, and supplier collaboration. In addition, a wide range of program par- ticipants need access to data and func- tionality. This makes usability a critical success factor.
WHAT SAP OFFERS
SAP offers a powerful project system backbone that integrates with plan- ning and execution activities. Where necessary, SAP NetWeaver can be used to integrate with legacy project tools. SAP NetWeaver also provides a flexible portal environment that provides user-friendly, role-based access to all functions connected to the program. In addition, SAP capabilities for RFID and auto-ID improve inventory tracking to meet the U.S. Department of Defense (DoD) requirements.
WHAT ANALYSTS RECOMMEND
Earned value management helps com- panies identify variances in real time before they disrupt the program. Stand-alone reporting solutions should be replaced with a unified system to coordinate budgets, schedules, prod- uct development, inventory manage- ment, and supplier collaboration. In addition, a wide range of program par- ticipants need access to data and func- tionality. This makes usability a critical success factor.
WHAT SAP OFFERS
SAP offers a powerful project system backbone that integrates with plan- ning and execution activities. Where necessary, SAP NetWeaver can be used to integrate with legacy project tools. SAP NetWeaver also provides a flexible portal environment that provides user-friendly, role-based access to all functions connected to the program. In addition, SAP capabilities for RFID and auto-ID improve inventory tracking to meet the U.S. Department of Defense (DoD) requirements.
EFFECTIVE SUPPLY CHAIN MANAGEMENT IS CRITICAL FOR A&D MANUFACTURERS. TRY THESE STRATEGIES TO HELP YOU SUCCEED
While enterprise resource planning (ERP) implementations are common for managing financials at the corpo- rate level, little coordination extends down to the shop floor to manage schedules and individual subprojects. This undermines initiatives to boost productivity and project efficiency.
WHAT ANALYSTS RECOMMEND
Legacy systems, originally implement- ed to fulfill company-specific processes in accordance with an individual inter- pretation of industry regulations and requirements, need to be replaced to implement industry-wide best-practice processes and to meet customer man- dates. The immediate issues are a lack of system connectivity and data access. Once these issues are addressed, com- panies can implement more sophisti- cated project life-cycle management (PLM) solutions to help them manage areas such as collaborative design. This will help improve innovation and speed time to market.
WHAT SAP OFFERS
SAP offers market-leading ERP and PLM capabilities that leverage the SAP NetWeaver platform to extend func- tionality across the entire enterprise. Companies benefit from a powerful exchange infrastructure to facilitate integration; master data management to share consistent data across the enterprise; and a sophisticated portal that enables uniform, role-based access to data, applications, and services.
IMPROVE ASSET AND INVENTORY MANAGEMENT CAPABILITIES
Inaccurate demand forecasting and supply planning lead to excess inven- tory and suboptimal use of capital assets such as plant equipment. Companies need better inventory management, especially for spare parts, to succeed in the aftermarket.
WHAT ANALYSTS RECOMMEND
Companies should move away from point solutions and integrate systems for more robust supply management activities. This requires supply chain management and capabilities for parts tracking and valuation. Customers in both commercial and defense sectors are now requiring radio frequency identification (RFID) devices to sup- port real-time asset and inventory tracking processes. This requirement means that manufacturers must approach asset management from a life-cycle cost perspective.
WHAT SAP OFFERS
SAP provides supply chain manage- ment and business intelligence that integrate into back-office ERP and PLM capabilities. This helps companies improve supply forecasts, reduce inventory-carrying costs, and even execute sophisticated processes such as collaborative inventory replenishment.
WHAT ANALYSTS RECOMMEND
Legacy systems, originally implement- ed to fulfill company-specific processes in accordance with an individual inter- pretation of industry regulations and requirements, need to be replaced to implement industry-wide best-practice processes and to meet customer man- dates. The immediate issues are a lack of system connectivity and data access. Once these issues are addressed, com- panies can implement more sophisti- cated project life-cycle management (PLM) solutions to help them manage areas such as collaborative design. This will help improve innovation and speed time to market.
WHAT SAP OFFERS
SAP offers market-leading ERP and PLM capabilities that leverage the SAP NetWeaver platform to extend func- tionality across the entire enterprise. Companies benefit from a powerful exchange infrastructure to facilitate integration; master data management to share consistent data across the enterprise; and a sophisticated portal that enables uniform, role-based access to data, applications, and services.
IMPROVE ASSET AND INVENTORY MANAGEMENT CAPABILITIES
Inaccurate demand forecasting and supply planning lead to excess inven- tory and suboptimal use of capital assets such as plant equipment. Companies need better inventory management, especially for spare parts, to succeed in the aftermarket.
WHAT ANALYSTS RECOMMEND
Companies should move away from point solutions and integrate systems for more robust supply management activities. This requires supply chain management and capabilities for parts tracking and valuation. Customers in both commercial and defense sectors are now requiring radio frequency identification (RFID) devices to sup- port real-time asset and inventory tracking processes. This requirement means that manufacturers must approach asset management from a life-cycle cost perspective.
WHAT SAP OFFERS
SAP provides supply chain manage- ment and business intelligence that integrate into back-office ERP and PLM capabilities. This helps companies improve supply forecasts, reduce inventory-carrying costs, and even execute sophisticated processes such as collaborative inventory replenishment.
Strategies for Profitable Growth Aerospace & Defense Manufacturing
The Aerospace and Defense (A&D) manufacturing industry is always changing. What worked yesterday might not work today. That's why A&D manufacturers are constantly seeking better ways to manage complexity, cut costs, and boost productivity.
In pursuit of these objectives, A&D manufacturers are looking beyond standard practices to new business strategies that promise solid business results. But what strategies and practices are right for your company? And what are the best solutions for facilitating them? To answer these questions, companies rely on insights and advice from industry thought leaders.
STRATEGIES FOR PROFITABLE GROWTH
To relay what industry experts are thinking, Strategies for Profitable Growth explores the most recent strategies, solutions, and best practices for each of the more than 25 major industries served by SAP.
Each brochure in this series reflects the views of independent analysts, industry experts, and corporate executives on a specific industry. Take a closer look at the strategies, practices, and tools in the pages ahead, and consider how they can help your business achieve profitable growth.
HIGHLY TARGETED SOLUTIONS . . .
SAP® SOLUTIONS FOR THE A&D MANUFACTURING INDUSTRY
SAP supports the most important busi- ness processes in any A&D manufac- turing organization and provides tools to help you understand how these processes work. One of these tools is the solution map shown on the next page. Based on input from customers and industry analysts, plus the techni- cal expertise SAP has acquired through extensive business experience and research, solution maps are multilevel blueprints of processes defined for a particular industry. They help you visualize, plan, and implement a coherent, integrated, and comprehen- sive information technology solution. They also show how various processes are covered, including the processes that SAP and its partners support. With solution maps, you quickly understand business solutions and the business value they can bring. A complete library of solution maps, business maps, and business-scenario maps for the A&D manufacturing industry is available at www.sap.com/businessmaps and then select Industry-Specific Business Maps.
SAP® SOLUTIONS FOR THE A&D MANUFACTURING INDUSTRY
SUPPLY CHAIN MANAGEMENT STRATEGIES
REDUCE SPEND BY RATIONALIZING THE SUPPLIER BASE
To reduce global spend, A&D manu- facturers first need to see it. But with multiple procurement systems and a persistent lack of enterprise-wide purchasing visibility, many initiatives to control spend and rationalize the supplier base never get off the ground.
WHAT ANALYSTS RECOMMEND
A&D manufacturers need to consoli- date systems to get a handle on spend, aggregate demand, and negotiate favorable terms with trusted suppliers. Then they need a way to enforce con- tract agreements down to the procure- ment level to realize the benefits of negotiated agreements. This requires business analytics, master data man- agement, supply chain management, and supplier relationship management capabilities.
WHAT SAP OFFERS
Powerful business intelligence and master data management capabilities, provided by the SAP NetWeaver™ platform, help A&D manufacturers analyze spend and consolidate demand. Sophisticated supplier relationship management capabilities help close the loop between sourcing and pro- curement so that companies can reap the benefits of negotiated supply agreements.
In pursuit of these objectives, A&D manufacturers are looking beyond standard practices to new business strategies that promise solid business results. But what strategies and practices are right for your company? And what are the best solutions for facilitating them? To answer these questions, companies rely on insights and advice from industry thought leaders.
STRATEGIES FOR PROFITABLE GROWTH
To relay what industry experts are thinking, Strategies for Profitable Growth explores the most recent strategies, solutions, and best practices for each of the more than 25 major industries served by SAP.
Each brochure in this series reflects the views of independent analysts, industry experts, and corporate executives on a specific industry. Take a closer look at the strategies, practices, and tools in the pages ahead, and consider how they can help your business achieve profitable growth.
HIGHLY TARGETED SOLUTIONS . . .
SAP® SOLUTIONS FOR THE A&D MANUFACTURING INDUSTRY
SAP supports the most important busi- ness processes in any A&D manufac- turing organization and provides tools to help you understand how these processes work. One of these tools is the solution map shown on the next page. Based on input from customers and industry analysts, plus the techni- cal expertise SAP has acquired through extensive business experience and research, solution maps are multilevel blueprints of processes defined for a particular industry. They help you visualize, plan, and implement a coherent, integrated, and comprehen- sive information technology solution. They also show how various processes are covered, including the processes that SAP and its partners support. With solution maps, you quickly understand business solutions and the business value they can bring. A complete library of solution maps, business maps, and business-scenario maps for the A&D manufacturing industry is available at www.sap.com/businessmaps and then select Industry-Specific Business Maps.
SAP® SOLUTIONS FOR THE A&D MANUFACTURING INDUSTRY
SUPPLY CHAIN MANAGEMENT STRATEGIES
REDUCE SPEND BY RATIONALIZING THE SUPPLIER BASE
To reduce global spend, A&D manu- facturers first need to see it. But with multiple procurement systems and a persistent lack of enterprise-wide purchasing visibility, many initiatives to control spend and rationalize the supplier base never get off the ground.
WHAT ANALYSTS RECOMMEND
A&D manufacturers need to consoli- date systems to get a handle on spend, aggregate demand, and negotiate favorable terms with trusted suppliers. Then they need a way to enforce con- tract agreements down to the procure- ment level to realize the benefits of negotiated agreements. This requires business analytics, master data man- agement, supply chain management, and supplier relationship management capabilities.
WHAT SAP OFFERS
Powerful business intelligence and master data management capabilities, provided by the SAP NetWeaver™ platform, help A&D manufacturers analyze spend and consolidate demand. Sophisticated supplier relationship management capabilities help close the loop between sourcing and pro- curement so that companies can reap the benefits of negotiated supply agreements.
Manufacturing Systems with an IQ: Beating the Odds, Mightily – Part 1
Some time in mid-2005 TEC published a six part article on IQMS, a relatively small and obscure enterprise resource planning (ERP) vendor based in Paso Robles, California (US), with offices across North America (i.e., in Chicago, Canada, and Mexico), Europe (i.e., Sweden and with recently announced indirect presence in the UK) and Asia (i.e., China and Taiwan). Some readers were likely wondering why I “made so much mileage” out of a seemingly unimportant vendor of fewer than 70 employees and with only a few hundred customers at the time.
Well, I might have been somewhat vindicated in early 2009, when IQMS announced that it closed 2008 with double-digit profitability and a 10 percent increase in new customer accounts. Even as manufacturing markets have tightened and doom-and-gloom sentiments have pervaded the globe, IQMS has accumulated revenue gains for several years. Namely, in 2005 and 2006, the company grew by about 25 percent each year (which was a multiple of the industry’s average growth), demonstrating its value proposition to selected manufacturing industries worldwide, including medical devices, automotive, aerospace, plastics, and consumer packaged goods (e.g., appliances, electronics, computers/business machines).
IQMS (whose name alludes to “manufacturing systems with an intelligence quotient [IQ]”) was incorporated in 1989 and has been privately held ever since without any venture capital (VC) money involved. Having been based in California and founded (and still majority-owned) by a married couple, IQMS somewhat resembles its bigger fellow ERP peer, QAD. But the differences between the two vendors are also apparent starting with QAD being publicly held for over a decade. QAD is also a much larger vendor, with typically larger customers (although overlapping and possibly competing with IQMS in many similar industries and regions), and has an incomparably better global presence.
For its part, IQMS boasts a 98 percent customer retention rate and continuous profitability and growth, which traits have not always characterized QAD. Currently, IQMS has a total of over 500 corporate customers at over 1,000 locations in 4 continents and 11 countries. These user companies range from a single site with only 5 users to companies with 10 sites and an unlimited number of users.
IQMS focuses on small-to-medium enterprises (SMEs) in make-to-order (MTO) and make-to-stock (MTS) operations in the discrete manufacturing, repetitive manufacturing, and process manufacturing environments. These companies tend to embrace lean manufacturing (and overall “lean business”) principles and thus require low-maintenance and cost-effective (but fully functional) ERP systems. To that end, perpetual licensing provides the rights to all future upgrades and includes database licensing too.
Master of Its Own Destiny (and Its Own Domain)
Being privately held and not burdened with the stifling demands of private equity firms, venture funds, or public shareholders has proven to be a blessing for IQMS. Namely, not only has IQMS stayed away from the disturbance of the ongoing vendor consolidation bonanza, but it has also been able to control its own destiny and make independent decisions about product development. IQMS customers are also intimately involved in product development via annual user meetings, an online user group, and participation in focused development teams.
In keeping with growth and its commitment to delivering leading-edge solutions, IQMS added employees to every department in 2008 (with a total head count now well over 100), and created new work units including the Automation and Oracle Data Services groups. These groups are focused exclusively on system advancements, customer satisfaction, and bridging shop floor equipment directly into functional ERP applications.
For instance, IQMS’ Automation Group’s charter is to expand the interface capabilities of IQMS’ flagship EnterpriseIQ ERP [evaluate this product] system with manufacturing equipment on the shop floor. The newly formed group, comprised of engineers and programmers, has as its goal working with existing IQMS customers to create greater efficiency and automation between shop floor hardware and ERP software. This integration is expected to result in leaner manufacturing operations.
The IQMS Automation Group was launched with several custom programmable logic controller (PLC) interfacing projects developed with customers’ input at a number of customer beta sites. Implementations included capabilities such as:
* two-way communication with PLCs to control and initiate conveyor systems, vertical lifts, scanners, palletizers, photo-eye sensors, and other pieces of equipment;
* two-way communication with stretch wrap machines via relay/digital input boards to automate final packaging of customer product;
* automated first-in-first-out (FIFO) pick/store warehouse applications for forklifts; and
* directly interfacing with work centers to automatically report scrap and production.
“Not Invented Here” Attitude
One of the key tenets of IQMS’ success has been a laser-sharp vertical industry focus, of which I have always been a big proponent, in general. Namely, when the company started in 1989, it initially catered solely to injection molding manufacturers. This focus has allowed IQMS developers to focus deeply on the requirements of this esoteric market segment and really gain subject-matter expertise on the idiosyncratic problems and issues of those customers.
Namely, if a system doesn’t understand and support tricky requirements such as family molds or multiple cavitations running at the same time, it will cost the customer dearly in terms of system customizations, lowered efficiency, and heavy-lifting maintenance. Since 1989, IQMS has judiciously expanded its focus to SME companies in related industries such as automotive suppliers, packaging manufacturers, and medical device makers.
But other tenets of IQMS’ success have seemingly been at odds with conventional wisdom and the practices of vendors of IQMS’ size and means. Namely, IQMS’ niche focus has driven the company to try to address as many of the needs of its target customers as possible. As a result, the EnterpriseIQ suite has (surprisingly to a first-time observer) a pretty wide footprint of functionality (coming from such a small vendor with limited means).
To be concrete, the suite natively provides extended-ERP applications such as enterprise asset management (EAM), customer relationship management (CRM), electronic data interchange (EDI), and warehouse management system (WMS). As if these capabilities were not impressive enough, then how about adding the abovementioned intrinsic shop-floor equipment automation and monitoring, time-clock, and quality management system (QMS) functionalities?
These features mean that all these modules run on a single database and feature out-of-the-box integration with a consistent user interface (UI) or look-and-feel. Furthermore, we are talking about real-time transactions here, rather than delayed (and thus after the fact) batch processing (e.g. data transfers) and necessary interfaces when “alien” third-party applications are involved.
Many IQMS customers have indeed benefited from an EnterpriseIQ production management application called RealTime Machine Monitoring. This application connects each work center to the EnterpriseIQ database, allowing users to follow jobs as they move through production. Because production data feeds directly into the ERP database, job status is automatically updated down to the minute. The system also supports graphical scheduling screens and reports that can be used by stationary and remote users to assess job status, track downtime, and view quality data. Pager and public announcement (PA) system alerts are also available for the plant.
Thursday, December 10, 2009
E = Excellent Value in the ETO Landscape: How Global Shop Solutions Excels for ETO Industry Challenges
The needs of the changing business, economic, and technology landscapes have given organizations that manufacture precision and complex products an added incentive to see how they can manage to contain rising costs, and stay competitive against global competition and market volatility. The findings were quite unlike those experienced by tradiditional discrete manufacturers, since discrete manufacturers do not deal with the same intricacies of mass customization as ETO manufacturers. It was with this as a backdrop that I and fellow TEC analyst Leslie Satenstein engaged in conversation with Global Shop Solutions ERP engineer Marc Atnipp in order to review their product One-System as part of a recent TEC Certification exercise.
A Word About the Vendor
Over three decades ago, from deep in the heart of Texas, Global Shop Solutions founder Dick Alexander was a proponent of such core manufacturing principles as continuous improvement and just-in-time manufacturing. In these approaches the goal is always to reduce and eliminate non-value-added activities which contribute to delays in production and ultimately drive costs upwards through excessive machine set-up costs and improperly managed inventory among other things. Through the core principles which underlay the development of this software, the product struck an eager and responsive chord among its initial customers in the small to medium sized manufacturing space within the “custom job-shop” and engineer-to-order segments of the market. The initial market acceptance of these principles and a vendor that could deliver on the promise propelled the organization though its growth and development. Now, three decades later, Global Shop Solutions is truly a global enterprise solution, with customers not only in the US and Canada but also in South America and down-under in Australia.
What We Liked About the Software
Global Shop Solutions has developed a fully integrated manufacturing and accounting ERP package for custom ETO shops spanning a range of industries, including aerospace and electronic and precision machine and fastener manufacturing. Among the neat features was the GUI icon display menu configuration, the product’s embedded BI application to capture KPI scorecard information at a glance. It also had a rich and comprehensive tool featuring web-enabled scheduling and graphic scheduling tools which can at a glance look at current capacity or constraints across the shop floor, or drill down to specific work center or machinery. The ETO offering supports a “Product Configurator” tool which is mission-critical for any company whose business model is dependent upon the ability to integrate design and engineering changes, estimates, and quotes in short order on a daily basis. The ETO ERP application offers standard CRM functionality, which means it can be a one-stop single solution for those firms looking for a value proposition between functionality, budget, and feature. The system had its own built-in report generator, permitting the user to easily create reports on the fly. This can be useful for organizations that have inventory at multiple locations and need to either reconcile physical inventory counts or transfer semi-finished materials between plants and company warehouse locations.
A Word About the Vendor
Over three decades ago, from deep in the heart of Texas, Global Shop Solutions founder Dick Alexander was a proponent of such core manufacturing principles as continuous improvement and just-in-time manufacturing. In these approaches the goal is always to reduce and eliminate non-value-added activities which contribute to delays in production and ultimately drive costs upwards through excessive machine set-up costs and improperly managed inventory among other things. Through the core principles which underlay the development of this software, the product struck an eager and responsive chord among its initial customers in the small to medium sized manufacturing space within the “custom job-shop” and engineer-to-order segments of the market. The initial market acceptance of these principles and a vendor that could deliver on the promise propelled the organization though its growth and development. Now, three decades later, Global Shop Solutions is truly a global enterprise solution, with customers not only in the US and Canada but also in South America and down-under in Australia.
What We Liked About the Software
Global Shop Solutions has developed a fully integrated manufacturing and accounting ERP package for custom ETO shops spanning a range of industries, including aerospace and electronic and precision machine and fastener manufacturing. Among the neat features was the GUI icon display menu configuration, the product’s embedded BI application to capture KPI scorecard information at a glance. It also had a rich and comprehensive tool featuring web-enabled scheduling and graphic scheduling tools which can at a glance look at current capacity or constraints across the shop floor, or drill down to specific work center or machinery. The ETO offering supports a “Product Configurator” tool which is mission-critical for any company whose business model is dependent upon the ability to integrate design and engineering changes, estimates, and quotes in short order on a daily basis. The ETO ERP application offers standard CRM functionality, which means it can be a one-stop single solution for those firms looking for a value proposition between functionality, budget, and feature. The system had its own built-in report generator, permitting the user to easily create reports on the fly. This can be useful for organizations that have inventory at multiple locations and need to either reconcile physical inventory counts or transfer semi-finished materials between plants and company warehouse locations.
The Steel Manufacturing Industry: What Use Is an ERP System, Anyway
TEC regularly works with companies to identify the right software vendors for their industry and particular needs. I’m going to provide you with information about ERP systems and how they relate to steel industry requirements (note: you can always consult our Vendor Showcase to find out more about specific software vendors).
An ERP system is typically considered to be a company’s IT data backbone application, and helps integrate business activities across multiple departments and sites (or across the entire enterprise). ERP modules range from product planning, parts purchasing, inventory control, and product distribution, to order tracking, and provides business application modules for finance, accounting, and human resources as well. Tier-one vendors such as SAP and Oracle provide full suites of ERP business applications.
ERP applications have evolved with new technological innovations such as client/server architecture and service oriented architecture (SOA), which provide more flexibility to configure a system for your particular requirements. With the help of SOA, for example, it’s easier to “break” an ERP application into small modular components which use industry-specific processes to communicate, interact, and operate. SOA has helped ERP vendors move away from the “one size fits all” methodology—as we all know, no two organizations have the same requirements.
In the steel manufacturing industry, the ERP application typically sits on the top levels of the business IT/manufacturing framework. See the diagram below for the different application layers within a steel manufacturing company; this diagram is very similar to a diagram contained in a document produced by IBM Global Business Services (see page 9), which I have modified slightly for the purposes of this blog post.
An ERP system is typically considered to be a company’s IT data backbone application, and helps integrate business activities across multiple departments and sites (or across the entire enterprise). ERP modules range from product planning, parts purchasing, inventory control, and product distribution, to order tracking, and provides business application modules for finance, accounting, and human resources as well. Tier-one vendors such as SAP and Oracle provide full suites of ERP business applications.
ERP applications have evolved with new technological innovations such as client/server architecture and service oriented architecture (SOA), which provide more flexibility to configure a system for your particular requirements. With the help of SOA, for example, it’s easier to “break” an ERP application into small modular components which use industry-specific processes to communicate, interact, and operate. SOA has helped ERP vendors move away from the “one size fits all” methodology—as we all know, no two organizations have the same requirements.
In the steel manufacturing industry, the ERP application typically sits on the top levels of the business IT/manufacturing framework. See the diagram below for the different application layers within a steel manufacturing company; this diagram is very similar to a diagram contained in a document produced by IBM Global Business Services (see page 9), which I have modified slightly for the purposes of this blog post.
Enterprise Asset Management Systems: Your Manufacturing Organization’s Underrated Superstar
For all you baseball fans living in the US and Canada, you can probably appreciate that we are quickly approaching what is referred to as “the dog days of August.” This is when the pennant races are close, and almost every game has added significance for a team’s chances of making it to the playoffs.
As I was enjoying one of those rare idyllic days lying in the backyard hammock and reading the sports page, it occurred to me how the good teams are not just about one or two great players. Rather, they are comprised largely of players whose natural athletic ability may not necessarily match that of the few superstars on the team, and who may not be found basking in the limelight, but who consistently work hard and practice on a daily basis. These are the players that, when given the opportunity, can deliver the key play or get the big hit when the game is on the line.
This made me think about how in a manufacturing environment, the most unlikely areas can contribute in a critical situation. In many organizations, it is the maintenance department that, much like the unsung heroes of the baseball team, manages to keep aging equipment running flawlessly. When a machine unexpectedly breaks down, it is this department that knows what is required to repair it. And just like the baseball season, summertime is a busy time for maintenance departments, as companies choose to use the summer holiday period to shut down in order to install, repair, or replace equipment in their production facility.
In this blog post, I thought it would be a good idea to take an inside look at the challenging world of enterprise asset management (EAM), and find out how this unheralded software can give your company the winning edge.
Factors Leading to Critical Failure of Assets
- poor maintenance practices
- undocumented maintenance logs
- poor budget planning
- inability to track known rates of failure for equipment
Emerging Opportunities for Revenue
SCM can be thought of as the management of "warehousing processes," in which the movement of goods occurs through multiple warehouses or manufacturing facilities. Tracking the costs of moving products and components through the maze of warehousing and manufacturing facilities is a tricky process, and many organizations lose money at each warehousing step.
Within the flow of goods in the manufacturing sector, the warehouse is a crucial part of the supply chain. Traditionally, the warehouse has been a source of frustration because the manufacturer or supplier pays for the use of the warehouse (whether owned or rented by the company). This leads to two possible scenarios: 1) the costs of the warehouse are incurred by a 3PL or manufacturing company, or 2) the costs are passed from one warehouse to another warehouse, and the original warehouse charges for these costs.
The typical warehouse process includes the following steps: receiving, put away, picking, kitting, packing, repacking, cross-docking, and shipping. ERP - distribution software is able to track costs across the entire organization and to aid companies in reducing costs that were previously tough to track.
As seen in figure 2, an ERP - distribution system encompasses the entire production of the final good. The ERP - distribution system is able to include inventory visibility from points "A to Z" (start to finish) and to track each warehouse cost from supplier to manufacturer to user, whether consumer, business, or retailer.
Within the flow of goods in the manufacturing sector, the warehouse is a crucial part of the supply chain. Traditionally, the warehouse has been a source of frustration because the manufacturer or supplier pays for the use of the warehouse (whether owned or rented by the company). This leads to two possible scenarios: 1) the costs of the warehouse are incurred by a 3PL or manufacturing company, or 2) the costs are passed from one warehouse to another warehouse, and the original warehouse charges for these costs.
The typical warehouse process includes the following steps: receiving, put away, picking, kitting, packing, repacking, cross-docking, and shipping. ERP - distribution software is able to track costs across the entire organization and to aid companies in reducing costs that were previously tough to track.
As seen in figure 2, an ERP - distribution system encompasses the entire production of the final good. The ERP - distribution system is able to include inventory visibility from points "A to Z" (start to finish) and to track each warehouse cost from supplier to manufacturer to user, whether consumer, business, or retailer.
ERP - Distribution: The Answer to the Manufacturing Shift
Within the software industry, many SCM and enterprise resource planning (ERP) vendors are following the economic shift. They are developing new functionality—ERP - distribution software—to meet the recent demands and needs of the changing manufacturing and distribution industries.
SCM and ERP software are converging to better address these new demands in the manufacturing industry. In the enterprise software market, ERP software vendors have reached a point of saturation; their installs are slowing down and they are seeing a reduction in sales. Therefore, ERP providers are developing new functionality in order to remain competitive with other ERP vendors, in addition to looking for new opportunities. ERP vendors are trying to adapt to the changing market in order to increase their revenues. They are integrating SCM functionality into their ERP offerings, creating ERP - distribution software that can span the entire production process across many continents (if necessary), and that is able to track final goods, components, and materials.
Traditional ERP solutions included some SCM functionality, which was needed to distribute the companies' produced goods. These systems also allowed components and parts to be imported in order to assemble these goods. But offshore manufacturing and expansion into new markets has required SCM functionality in ERP software to be extended. Some larger vendors have acquired other companies in order to meet these changing demands. For example, Oracle acquired G-Log, a transportation management systems (TMS) vendor and Agile, a product lifecycle management (PLM) vendor; and Activant acquired Intuit Eclipse. SCM software vendors, in contrast, have felt encroached upon by ERP vendors. The situation has posed a real threat to SCM providers in the market, forcing them to extend their ERP functionality to compete with ERP vendors and to try to gain new clients in the distribution and logistics industry.
ERP - distribution software has integrated SCM functionality into its existing functionality to navigate through the complex global manufacturing environment. SCM software maps five processes into one solution: planning, sourcing (obtaining materials), producing, delivering, and returning final products if defective. These processes help to track and manage the goods throughout their entire life cycles. In addition, ERP solutions are used to manage the entire operations of an organization, not only a product's life cycle. This gives users the broad capability to manage operations and use the SCM functionality to manage the movement of goods, whether components or finished product.
With the ability to gain accurate inventory visibility and SCM production, ERP - distribution software is able to see the whole chain of manufacturing and distribution events, from supplier to manufacturer, all the way to the final consumer. Figure 2 illustrates this process.
Figure 2: The merging of a distribution and manufacturing business model
Figure 2 depicts three business models. The first is the SCM model, which includes the manufacturing process. The second is the retail model, which is the distribution of final products to the consumer, business, or retailer. The third model is a combination of the first two business models, joined by the ERP - distribution software solution into one seamless process.
Results of the Shifting Manufacturing Industry
Manufacturing is a global industry, and although a manufacturing company may be based in an industrialized country, it may have the bulk of its manufacturing facilities in a developing country. Producing goods in such a country reduces wage and capital costs for the manufacturer; however, some manufacturing control is lost in offshore production. Shipping, distribution, and rental costs, for example, are often difficult to track and manage, and quality control can be compromised in a production environment that is not local.
Two main outcomes can be seen within the manufacturing industry because of this manufacturing shift: manufacturers have a sense of having relinquished control of their production to low-cost labor nations, and supply chain management (SCM) has now become the answer to manufacturing within industrialized nations.
Suppliers that provide components to manufacturers often have issues with quality. Being part of a large network of suppliers, each supplier tries to offer the lowest prices for its products when bidding to manufacturers. Although a supplier may win the bid, its products may not be up to standard, and this can lead to the production of faulty goods. Therefore, when using offshore suppliers, quality issues, product auditing, and supplier auditing become extremely important.
Because the manufacturing model is changing, manufacturing has become more of a service-based industry than a pure manufacturing industry. Even though the physical process of manufacturing hasn't changed, the actual locations of where the goods are being produced have. This fact is now compelling industrialized countries to engage in more assembly driven activities—a service-based model. The manufacturing process has transformed into obtaining parts and reassembling them into the final product. The final product is then redistributed throughout the appropriate channel or to the consumer. SCM methods are now reacting to this change as well; they are taking into account final assembly needs, and they are distributing particular products to consumers or manufacturers.
SCM is becoming the norm for manufacturers in the industrialized world. Offshoring is now standard practice, and methods such as SCM have been set up to deal with these economic and logistical business realities.
The economic shift happening in both industrialized and developing countries is dramatic. As the level of management knowledge increases, better methods of constructing offshore products are available in SCM solutions. In both types of economies, the changes in the labor force skill sets and manufacturing environments have consequently led to new software solutions being developed in order to manage this dramatic change.
Two main outcomes can be seen within the manufacturing industry because of this manufacturing shift: manufacturers have a sense of having relinquished control of their production to low-cost labor nations, and supply chain management (SCM) has now become the answer to manufacturing within industrialized nations.
Suppliers that provide components to manufacturers often have issues with quality. Being part of a large network of suppliers, each supplier tries to offer the lowest prices for its products when bidding to manufacturers. Although a supplier may win the bid, its products may not be up to standard, and this can lead to the production of faulty goods. Therefore, when using offshore suppliers, quality issues, product auditing, and supplier auditing become extremely important.
Because the manufacturing model is changing, manufacturing has become more of a service-based industry than a pure manufacturing industry. Even though the physical process of manufacturing hasn't changed, the actual locations of where the goods are being produced have. This fact is now compelling industrialized countries to engage in more assembly driven activities—a service-based model. The manufacturing process has transformed into obtaining parts and reassembling them into the final product. The final product is then redistributed throughout the appropriate channel or to the consumer. SCM methods are now reacting to this change as well; they are taking into account final assembly needs, and they are distributing particular products to consumers or manufacturers.
SCM is becoming the norm for manufacturers in the industrialized world. Offshoring is now standard practice, and methods such as SCM have been set up to deal with these economic and logistical business realities.
The economic shift happening in both industrialized and developing countries is dramatic. As the level of management knowledge increases, better methods of constructing offshore products are available in SCM solutions. In both types of economies, the changes in the labor force skill sets and manufacturing environments have consequently led to new software solutions being developed in order to manage this dramatic change.
From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy
Over the past fifty years, manufacturing has changed from individual companies producing and distributing their own products, to a global network of suppliers, manufacturers, and distributors. Efficiency, price, and quality are being scrutinized in the production of each product. Because of this global network, manufacturers are competing on a worldwide scale, and they have moved their production to countries where the costs of labor and capital are low in order to gain the advantages they need to compete. Today, the complex manufacturing environment faces many challenges. Many products are manufactured in environments where supplies come from different parts of the world. The components to be used in supply chain manufacturing are transported across the globe to different manufacturers, distributors, and third party logistics (3PL) providers. The challenges for many manufacturers have become how to track supply chain costs and how to deal with manufacturing costs throughout the production of goods. Software vendors, however, are now addressing these manufacturing challenges by developing new applications.
Global competition has played a key role in industrialized countries shifting from being production-oriented economies to service-based economies. Manufacturers in North America, Western Europe, and other industrialized nations have adapted to the shift by redesigning their manufacturing production into a distribution and logistics industry, and the skills of the labor force have changed to reflect this transition. Developing countries have similarly changed their manufacturing production environments to reflect current demands; they are accommodating the production of goods in industries where manufacturers have chosen to move their production offshore—the textile industry being a prime example of this move.
A report from the US Census Bureau titled Statistics for Industry Groups and Industries: 2005 and another from Statistics Canada titled Wholesale Trade: The Year 2006 in Review indicate that wholesalers are changing their business models to become distributors as opposed to manufacturers. Between 2002 and 2005, overall labor and capital in the manufacturing sectors decreased substantially. US industry data (from about 10 years ago) indicates that the North American manufacturing industry was engaged in 80 percent manufacturing processes and only 20 percent distribution activities. Today, however, these percentages have changed dramatically; the current trend is in the opposite direction. Manufacturing processes account for around 30 percent of the industry processes, and wholesale and distribution activities, approximately 70 percent.
In addition, a report from the National Association of Manufacturers indicates that the US economy imports $1.3 trillion (USD) worth of manufactured goods, but exports only $806 billion (USD) worth of goods manufactured in the US. This negative trade balance is a clear indication of the changing economic trend toward the manufacturing of goods in low-cost labor nations.
Figure 1: Evidence of a declining manufacturing industry in the G7 countries (from Forfas's The Changing Nature of Manufacturing and Services: Irish Trends and International Context, July 2006)
In figure 1, the horizontal axis represents the year time line, and the vertical axis represents the percentage change in the number of people working in each indicated industry.
Tuesday, December 8, 2009
On-Time Delivery Demands Leave No Margin for Error
Being a vendor/supplier for the automotive industry requires a keen sense of time and timing. Because of the number of parts inherent in vehicles, and the strict production scheduling necessary for assembly, automotive customers require very narrow windows of delivery dates.
"When the customer truck arrives on your dock on the expected due date, your parts products had better be waiting there for loading. Otherwise, it will be up to you, and at your expense, to ensure the parts arrive in Detroit or any number of various subassembly plants before their expected need date. Otherwise, it is certain you will lose the customer very quickly," Hasty explains. For Best Foam, additional expedited shipping expenses due to missed delivery dates was something that was considered the cost of doing business, but still a substantial cost nonetheless.
"Getting our company on track in terms of on-time deliveries has been the greatest benefit of acquiring Global Shop," Hasty insists. "Our on-time delivery has improved from the mid-80's to 99%, and this is the rate that our customers really demand. This year we spent about $500 in expedited freight, while before Global Shop, we might have been spending $40,000 or $50,000 per year on expedited freight. For us, this is a substantial cost reduction through the use of Global Shop. Clearly, the big change has been in our ability to see problems in advance through Global Shop and not waiting until the last minute to see that we're going to miss a due date and then have to foot the shipping ourselves."
Advanced planning and scheduling, as well as the auto purchasing features of Global Shop, are the primary reasons for the on-time delivery performance turnaround at Best Foam. This is particularly true when it comes to receiving unique parts from their own vendors. According to Diane Hasty, vice president of finance and comptroller of Best Foam, " Some of our components are specialty foam items and our suppliers sometimes only run them every six weeks or so-they're not part of their normal run. So if we miss placing our purchase order for one of these specialty parts, it could be a very big problem. The Global Shop Auto Purchasing system is a great help in not allowing us to make this sort of oversight in materials inventory."
Reduced Labor Costs
Another cost reduction benefit Best Foam has found in using Global Shop has been in the area of labor costs. Through the lean efficiencies offered by the real-time integration of system-wide data, Global Shop is able to reduce labor overhead through both cost accounting of each job performance, as well as the front office administration of functions such as payroll and purchasing. According to Keith Hasty, "We had three times as many employees in our Chicago facility as we do now before we installed the Global Shop system. With Global Shop, we've been able to re-engineer our labor tasking and, therefore, our labor costs. In other words, we've been able to streamline our operations-Global Shop, in the engineering area, has made us focus on processes. We're looking at the processes, making sure we understand where the excess labor was in a job, and in this, Global Shop has eliminated a lot of that excess labor."
Once Best Foam is able to eliminate excess labor, they can then go back through the tracking in Global Shop to see the profitability of a job. In these reviews, crucial decisions are made with regards to the bottom line. Often, it will be apparent that labor costs cannot be reduced enough to make certain jobs profitable, and so these jobs are considered for elimination. "Before Global Shop, we didn't have a good handle on knowing, first, what the labor should be, and second, what our labor costs actually were," adds Keith Hasty.
Diane Hasty agrees, observing that, "With Global Shop we've been able to get our various processes organized and run in different matters with our engineering BOM's. We've been able to reduce our labor from about 150 people before Global Shop to about 110 people today in the plant after the installation of Global Shop."
Labor tasking has been streamlined through Best Foam Fabricators' implementation of Global Shop Solutions robust ERP software. Here, lean shop floor production utilizes computerized precision foam cutting and finished goods packing all in a single-flow system guided by Global Shop Solutions.
"When the customer truck arrives on your dock on the expected due date, your parts products had better be waiting there for loading. Otherwise, it will be up to you, and at your expense, to ensure the parts arrive in Detroit or any number of various subassembly plants before their expected need date. Otherwise, it is certain you will lose the customer very quickly," Hasty explains. For Best Foam, additional expedited shipping expenses due to missed delivery dates was something that was considered the cost of doing business, but still a substantial cost nonetheless.
"Getting our company on track in terms of on-time deliveries has been the greatest benefit of acquiring Global Shop," Hasty insists. "Our on-time delivery has improved from the mid-80's to 99%, and this is the rate that our customers really demand. This year we spent about $500 in expedited freight, while before Global Shop, we might have been spending $40,000 or $50,000 per year on expedited freight. For us, this is a substantial cost reduction through the use of Global Shop. Clearly, the big change has been in our ability to see problems in advance through Global Shop and not waiting until the last minute to see that we're going to miss a due date and then have to foot the shipping ourselves."
Advanced planning and scheduling, as well as the auto purchasing features of Global Shop, are the primary reasons for the on-time delivery performance turnaround at Best Foam. This is particularly true when it comes to receiving unique parts from their own vendors. According to Diane Hasty, vice president of finance and comptroller of Best Foam, " Some of our components are specialty foam items and our suppliers sometimes only run them every six weeks or so-they're not part of their normal run. So if we miss placing our purchase order for one of these specialty parts, it could be a very big problem. The Global Shop Auto Purchasing system is a great help in not allowing us to make this sort of oversight in materials inventory."
Reduced Labor Costs
Another cost reduction benefit Best Foam has found in using Global Shop has been in the area of labor costs. Through the lean efficiencies offered by the real-time integration of system-wide data, Global Shop is able to reduce labor overhead through both cost accounting of each job performance, as well as the front office administration of functions such as payroll and purchasing. According to Keith Hasty, "We had three times as many employees in our Chicago facility as we do now before we installed the Global Shop system. With Global Shop, we've been able to re-engineer our labor tasking and, therefore, our labor costs. In other words, we've been able to streamline our operations-Global Shop, in the engineering area, has made us focus on processes. We're looking at the processes, making sure we understand where the excess labor was in a job, and in this, Global Shop has eliminated a lot of that excess labor."
Once Best Foam is able to eliminate excess labor, they can then go back through the tracking in Global Shop to see the profitability of a job. In these reviews, crucial decisions are made with regards to the bottom line. Often, it will be apparent that labor costs cannot be reduced enough to make certain jobs profitable, and so these jobs are considered for elimination. "Before Global Shop, we didn't have a good handle on knowing, first, what the labor should be, and second, what our labor costs actually were," adds Keith Hasty.
Diane Hasty agrees, observing that, "With Global Shop we've been able to get our various processes organized and run in different matters with our engineering BOM's. We've been able to reduce our labor from about 150 people before Global Shop to about 110 people today in the plant after the installation of Global Shop."
Labor tasking has been streamlined through Best Foam Fabricators' implementation of Global Shop Solutions robust ERP software. Here, lean shop floor production utilizes computerized precision foam cutting and finished goods packing all in a single-flow system guided by Global Shop Solutions.
Simplicity in Action with Global Shop ERP
When Keith Hasty and his wife, Diane, graduated from college 27 years ago, they joined with other family members in starting Best Foam Fabricators. As a family affair, their simple hope was to have a small slice of the American pie, something that would support and sustain them over the years. Little did they know back then that nearly three decades later, Best Foam would grow into being a major parts supplier for the Detroit auto industry. Today, in their plant on the South Side of Chicago, just across from Chicago State University, the Hasty's oversee a foam fabrication operation that now includes two additional out-of-state satellite facilities. Another thing that has changed over the years is the way Best Foam takes care of their business operations. What once was, by their own accounts, a small business that was running at less than peak efficiency is now an ultra-lean manufacturing operation that is increasingly reducing costs. The key to this success? Global Shop Solutions enterprise resource planning(ERP) software.
"We have three locations now and we will be adding a forth location, and we see that with this number of remote locations the need for control becomes more and more important. A system that will allow us to control both the inventories and labor usage is critical for us, and will especially be so in the future. We see our relationship with Global Shop as an integral part of that plan," states Keith Hasty. Since their acquisition and implementation of Global Shop software in 2002, Best Foam has experienced the fortunes of having their business grow while their costs-both direct and indirect-have gone down. "Global Shop has made us a better company overall," Hasty adds, "It is a primary reason that we are who we are today."
Best Foam Fabricators President Keith Hasty shows finished foam insulation products destined for use in automobiles. For Hasty, on-time delivery to their customers in the automotive industries is paramount- both in terms of customer relations and in terms of profit. Global Shop's One-System ERP Solutions helps Best Foam Fabricators consistently meet these all-important delivery due-dates, as well as customer expectations of quality.
"We have three locations now and we will be adding a forth location, and we see that with this number of remote locations the need for control becomes more and more important. A system that will allow us to control both the inventories and labor usage is critical for us, and will especially be so in the future. We see our relationship with Global Shop as an integral part of that plan," states Keith Hasty. Since their acquisition and implementation of Global Shop software in 2002, Best Foam has experienced the fortunes of having their business grow while their costs-both direct and indirect-have gone down. "Global Shop has made us a better company overall," Hasty adds, "It is a primary reason that we are who we are today."
Best Foam Fabricators President Keith Hasty shows finished foam insulation products destined for use in automobiles. For Hasty, on-time delivery to their customers in the automotive industries is paramount- both in terms of customer relations and in terms of profit. Global Shop's One-System ERP Solutions helps Best Foam Fabricators consistently meet these all-important delivery due-dates, as well as customer expectations of quality.
The Payoff of Empowered Employees
Manufacturing intelligence dashboards enable your production personnel to make rapid, accurate decisions on the factory floor, and let your company:
* Execute production plans on time and within budget using real-time snapshots of factory and production-line operations, sophisticated decision-support tools, and current production-cost data
* Find and solve problems quickly and proactively with realtime exception detection and alerts that highlight critical situations and automated workflows that let employees trigger the right responses to issues as they arise
* Increase productivity and efficiency by giving employees easy access to aggregated, targeted data from multiple, heterogeneous systems in a user-friendly format, configured to their specific needs
* Keep improving manufacturing processes over time with the ability to track KPIs; perform root-cause analyses; and monitor, measure, and control production performance
To Get Started . . .
With the manufacturing intelligence dashboards offered in SAP Manufacturing, your production employees can have the visibility into plant operations needed to increase responsiveness and performance. Dashboards can empower shop-floor decision makers to act quickly and accurately, keeping your manufacturing operations in step with customers and ahead of the competition.
To find out how manufacturing intelligence dashboards and SAP Manufacturing can help your company succeed in a fastmoving industry, visit www.sap.com/manufacturing
* Execute production plans on time and within budget using real-time snapshots of factory and production-line operations, sophisticated decision-support tools, and current production-cost data
* Find and solve problems quickly and proactively with realtime exception detection and alerts that highlight critical situations and automated workflows that let employees trigger the right responses to issues as they arise
* Increase productivity and efficiency by giving employees easy access to aggregated, targeted data from multiple, heterogeneous systems in a user-friendly format, configured to their specific needs
* Keep improving manufacturing processes over time with the ability to track KPIs; perform root-cause analyses; and monitor, measure, and control production performance
To Get Started . . .
With the manufacturing intelligence dashboards offered in SAP Manufacturing, your production employees can have the visibility into plant operations needed to increase responsiveness and performance. Dashboards can empower shop-floor decision makers to act quickly and accurately, keeping your manufacturing operations in step with customers and ahead of the competition.
To find out how manufacturing intelligence dashboards and SAP Manufacturing can help your company succeed in a fastmoving industry, visit www.sap.com/manufacturing
Keeping Production People up to Speed
To help manufacturers tackle those challenges and empower production personnel on the shop floor SAP offers the SAP Manufacturing solution with comprehensive, integrated capabilities that include powerful manufacturing intelligence dashboards that deliver integrated, targeted information about the status of the plant and production lines at a glance.
Manufacturing intelligence dashboards aggregate relevant content from the full range of manufacturing systems (ERP, manufacturing execution, and shop-floor automation) into a single, up-to-the-minute view of operations. By providing visibility into plant activities, these role-specific dashboards enable employees to monitor and manage manufacturing performance and respond quickly and effectively to changes. Automatic alerts inform decision makers when problems and exceptions arise in production. They in turn can trigger automated workflows to resolve these before they become customer issues.
With the manufacturing intelligence dashboards offered in SAP Manufacturing, you can provide your production personnel with:
* Content that is based on the individuals role in the manufacturing process, which ensures that employees have the relevant information needed to manage and make decisions in a format they are comfortable with while eliminating the overload of extraneous data
* Integrated decision support for planning and execution, by giving production personnel a clear understanding of the current status of plant operations and the actions they can take to keep performance levels high
* Ready-to-use manufacturing and business content, such as key performance indicators (KPIs) for production processes, which can be configured and displayed to meet the users needs, as well as the ability to draw real-time data from various applications
* Sophisticated analytics and reporting tools that allow decision makers to quickly recognize trends, detect potential problems, analyze their root causes, and identify opportunities to improve production performance
* Real-time exception detection and management, enabling employees to monitor processes closely and address problems quickly before they have a negative impact on the customer
With manufacturing intelligence dashboards, production personnel can easily monitor critical metrics, using the companys custom reports or KPIs from a predefined library provided by SAP. They can drill down on each KPI to analyze the cause and get to the bottom of problems. Responding to real-time alerts in their dashboards, production personnel can trigger workflows in SAP ERP to resolve problems quickly.
The dashboards are designed to meet specific company needs and fit in with established systems and processes. These dashboards can be configured easily to track and display the metrics that are important to your company, and users can personalize dashboards to enhance access to the information needed for their jobs.
Manufacturing intelligence dashboards are integrated with SAP solutions, such as SAP Business Intelligence, which ensures that frontline employees have access to a full range of business information. Based on the open SAP NetWeaver platform, dashboards can be integrated easily with the SAP xApps portfolio of packaged composite applications and non-SAP systems as well, providing the scalability to grow with changing business conditions. Overall, this integrated, flexible approach ensures that the dashboards can meet your needs today and tomorrow with a low total cost of ownership.
Manufacturing intelligence dashboards aggregate relevant content from the full range of manufacturing systems (ERP, manufacturing execution, and shop-floor automation) into a single, up-to-the-minute view of operations. By providing visibility into plant activities, these role-specific dashboards enable employees to monitor and manage manufacturing performance and respond quickly and effectively to changes. Automatic alerts inform decision makers when problems and exceptions arise in production. They in turn can trigger automated workflows to resolve these before they become customer issues.
With the manufacturing intelligence dashboards offered in SAP Manufacturing, you can provide your production personnel with:
* Content that is based on the individuals role in the manufacturing process, which ensures that employees have the relevant information needed to manage and make decisions in a format they are comfortable with while eliminating the overload of extraneous data
* Integrated decision support for planning and execution, by giving production personnel a clear understanding of the current status of plant operations and the actions they can take to keep performance levels high
* Ready-to-use manufacturing and business content, such as key performance indicators (KPIs) for production processes, which can be configured and displayed to meet the users needs, as well as the ability to draw real-time data from various applications
* Sophisticated analytics and reporting tools that allow decision makers to quickly recognize trends, detect potential problems, analyze their root causes, and identify opportunities to improve production performance
* Real-time exception detection and management, enabling employees to monitor processes closely and address problems quickly before they have a negative impact on the customer
With manufacturing intelligence dashboards, production personnel can easily monitor critical metrics, using the companys custom reports or KPIs from a predefined library provided by SAP. They can drill down on each KPI to analyze the cause and get to the bottom of problems. Responding to real-time alerts in their dashboards, production personnel can trigger workflows in SAP ERP to resolve problems quickly.
The dashboards are designed to meet specific company needs and fit in with established systems and processes. These dashboards can be configured easily to track and display the metrics that are important to your company, and users can personalize dashboards to enhance access to the information needed for their jobs.
Manufacturing intelligence dashboards are integrated with SAP solutions, such as SAP Business Intelligence, which ensures that frontline employees have access to a full range of business information. Based on the open SAP NetWeaver platform, dashboards can be integrated easily with the SAP xApps portfolio of packaged composite applications and non-SAP systems as well, providing the scalability to grow with changing business conditions. Overall, this integrated, flexible approach ensures that the dashboards can meet your needs today and tomorrow with a low total cost of ownership.
SAP Manufacturing Manufacturing Intelligence Dashboards
Production personnel are hindered in their ability to make rapid, right-time decisions on the factory floor by their inability to gather relevant information from disparate, stand-alone systems. Additional challenges include the lack of real-time alerts on shop floor exceptions, workflows to resolve them, and relevant key performance indicators for production processes.
Manufacturing intelligence dashboards offered in the SAP Manufacturing solution provide configurable role-based entry pages that deliver the visibility production personnel need to be responsive to exceptions and changes in demand or supply, deliver superior performance, and run manufacturing at the speed of business.
Working Smarter on the Shop Floor
To thrive in a world of global competition and demanding customers, manufacturers must be able to sense and respond to change, and adapt quickly and accurately to evolving conditions. To a large extent, adaptability depends on a companys frontline production employees and making sure those employees are armed with the right information. To remove delays and errors from processes and enable manufacturing to work at the speed of the business you need to give plant managers, quality inspectors, and production and maintenance supervisors the ability to identify and resolve problems rapidly, as they arise, and to monitor, measure, and improve manufacturing performance over time.
In short, adaptiveness depends on being able to push decision making to the shop floor. But thats often easier said than done. At many companies, the various systems used for enterprise resource planning (ERP) , manufacturing execution, and shopfloor automation are not well integrated. Data is fragmented across systems. There is little or no real-time information about production events available on the shop floor. And users cannot easily access up-to-date reports and perform the rapid analyses needed to evaluate and improve performance.
Its an environment where plant managers and production personnel are overloaded with data but without ready access to essential information about orders, labor, machines, material, and capacity. Pulling information together from disparate systems is slow and difficult, and decision makers have to work without a clear, up-to-date view of what is actually happening in the plant. In short, production personnel are faced with a fundamental lack of visibility into their manufacturing operations, which makes it difficult to understand and respond to change, impairs their performance, and ultimately hampers the companys ability to meet customers needs.
Manufacturing intelligence dashboards offered in the SAP Manufacturing solution provide configurable role-based entry pages that deliver the visibility production personnel need to be responsive to exceptions and changes in demand or supply, deliver superior performance, and run manufacturing at the speed of business.
Working Smarter on the Shop Floor
To thrive in a world of global competition and demanding customers, manufacturers must be able to sense and respond to change, and adapt quickly and accurately to evolving conditions. To a large extent, adaptability depends on a companys frontline production employees and making sure those employees are armed with the right information. To remove delays and errors from processes and enable manufacturing to work at the speed of the business you need to give plant managers, quality inspectors, and production and maintenance supervisors the ability to identify and resolve problems rapidly, as they arise, and to monitor, measure, and improve manufacturing performance over time.
In short, adaptiveness depends on being able to push decision making to the shop floor. But thats often easier said than done. At many companies, the various systems used for enterprise resource planning (ERP) , manufacturing execution, and shopfloor automation are not well integrated. Data is fragmented across systems. There is little or no real-time information about production events available on the shop floor. And users cannot easily access up-to-date reports and perform the rapid analyses needed to evaluate and improve performance.
Its an environment where plant managers and production personnel are overloaded with data but without ready access to essential information about orders, labor, machines, material, and capacity. Pulling information together from disparate systems is slow and difficult, and decision makers have to work without a clear, up-to-date view of what is actually happening in the plant. In short, production personnel are faced with a fundamental lack of visibility into their manufacturing operations, which makes it difficult to understand and respond to change, impairs their performance, and ultimately hampers the companys ability to meet customers needs.
The Economics of a Shifting Manufacturing Industry
To fully understand how an ERP system can create this tunnel vision for a manufacturer, shifts in the manufacturing sector in developed nations needs to be explained.
The trend of offshoring manufacturing processes has brought different economies together from countries that would not otherwise conduct business with one another. This has caused the manufacturing world in developed nations to shift its focus to distribution, which has led to supply chain management (SCM)—please refer to the article From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy.
However, there is a new trend to consider: manufacturing has started to revert back to developed nations due to the rise in the price of fuel and issues of quality control. Thus, even though the shift in developed nations is heading toward more distribution-type activities within the manufacturing sector, and even though discrete manufacturing is still a heavy economic sector, changes in the amount of products being produced can be difficult for manufacturers to deal with, as they need to accommodate both logistics and manufacturing activities.
The truth of the matter is that most industrialized nations have a large manufacturing base. And even though many manufacturers have outsourced their manufacturing to developing nations, these firms need to stay flexible if changes in either the local or international economies occur.
How can manufacturers deal with this ever-changing climate? How can ERP vendors help take the blinders off for manufacturers and allow them to become flexible enough to deal with these global challenges?
How to Free Yourself from Tunnel Vision!
Manufacturers must examine their business operations in the context of the global manufacturing environment and properly evaluate their software tools. Manufacturers faced with the complexities of manufacturing activities that are teetering back and forth from location to location must be able to track and manage the global business operations. This means that the enterprise software in place must be flexible enough to efficiently handle shifts in operations between heavier manufacturing to distribution, or vice versa.
To achieve this flexibility, something more than the traditional discrete ERP system is needed: a combination of SCM and business intelligence (BI) software, together with an ERP system.
SCM Software
SCM software is not only of benefit to global enterprises. It is also important for manufacturers that need to forecast demand for products; manage warehouse inventory, supplier relationships, and transportation vehicles; and track goods.
Integrating SCM software with an ERP system enables the manufacturer to have an "ERP for distribution" system. The main advantage of SCM software is that it gives discrete manufacturers the flexibility and visibility they need to know what is happening in terms of logistics. SCM software also helps manufacturing operations set up in multiple locations, through integrated warehouses and high-level demand planning. In addition, SCM software can pinpoint the nearest location to procure components for a lower cost, which can also help in terms of quality issues due to the proximity of the manufacturing plant.
BI software
Two other major issues need to be addressed for a manufacturer to become truly flexible: compliance and real-time information.
Compliance issues introduced by such regulations as the US Sarbanes-Oxley Act (SOX), import and export duties, international trading tariffs, etc., become even more complex when it comes to the business of offshoring. To handle these issues and standards properly and effectively, BI software can help a company get a grip on the amount of information passing through it, allowing improved visibility and transparency.
The trend of offshoring manufacturing processes has brought different economies together from countries that would not otherwise conduct business with one another. This has caused the manufacturing world in developed nations to shift its focus to distribution, which has led to supply chain management (SCM)—please refer to the article From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy.
However, there is a new trend to consider: manufacturing has started to revert back to developed nations due to the rise in the price of fuel and issues of quality control. Thus, even though the shift in developed nations is heading toward more distribution-type activities within the manufacturing sector, and even though discrete manufacturing is still a heavy economic sector, changes in the amount of products being produced can be difficult for manufacturers to deal with, as they need to accommodate both logistics and manufacturing activities.
The truth of the matter is that most industrialized nations have a large manufacturing base. And even though many manufacturers have outsourced their manufacturing to developing nations, these firms need to stay flexible if changes in either the local or international economies occur.
How can manufacturers deal with this ever-changing climate? How can ERP vendors help take the blinders off for manufacturers and allow them to become flexible enough to deal with these global challenges?
How to Free Yourself from Tunnel Vision!
Manufacturers must examine their business operations in the context of the global manufacturing environment and properly evaluate their software tools. Manufacturers faced with the complexities of manufacturing activities that are teetering back and forth from location to location must be able to track and manage the global business operations. This means that the enterprise software in place must be flexible enough to efficiently handle shifts in operations between heavier manufacturing to distribution, or vice versa.
To achieve this flexibility, something more than the traditional discrete ERP system is needed: a combination of SCM and business intelligence (BI) software, together with an ERP system.
SCM Software
SCM software is not only of benefit to global enterprises. It is also important for manufacturers that need to forecast demand for products; manage warehouse inventory, supplier relationships, and transportation vehicles; and track goods.
Integrating SCM software with an ERP system enables the manufacturer to have an "ERP for distribution" system. The main advantage of SCM software is that it gives discrete manufacturers the flexibility and visibility they need to know what is happening in terms of logistics. SCM software also helps manufacturing operations set up in multiple locations, through integrated warehouses and high-level demand planning. In addition, SCM software can pinpoint the nearest location to procure components for a lower cost, which can also help in terms of quality issues due to the proximity of the manufacturing plant.
BI software
Two other major issues need to be addressed for a manufacturer to become truly flexible: compliance and real-time information.
Compliance issues introduced by such regulations as the US Sarbanes-Oxley Act (SOX), import and export duties, international trading tariffs, etc., become even more complex when it comes to the business of offshoring. To handle these issues and standards properly and effectively, BI software can help a company get a grip on the amount of information passing through it, allowing improved visibility and transparency.
ERP: When Transparency Becomes Tunnel Vision
The idea behind an enterprise resource planning (ERP) system is to give organizations the transparency and visibility they need to have into their business activities. But what if the ERP system in fact creates a "blind spot" for the business? How could this happen, you might ask? Well, before we answer this question, a little history is needed.
In developed nations, many manufacturing activities have moved offshore. Manufacturers have done this because the cost of labor is cheaper in developing nations. But offshore manufacturing has led to some key concerns:
* How do you measure quality assurance?
* Is it really cheaper to outsource production, given rising energy prices?
From an economic and an IT perspective, several negative factors about moving manufacturing offshore have become apparent:
Negative economic factors:
* The manufacturer is subject to the stability of the local economy where their facilities are located, meaning that labor may be tougher to acquire.
* The speed at which components and parts are acquired is subject to global—and potentially faulty—supply chains.
* Offshore currency instability may make components more expensive to acquire or sell.
* Tracking the cost of resources and reverse logistics can prove to be difficult.
Negative IT factors:
* Access to critical, real-time data may be impeded by disparate enterprise applications in different regions.
* Tracking components may be more difficult due to a low-quality IT infrastructure or minimal IT resources. Or perhaps the ERP software is too inflexible to service the entire organization.
* Financial tracking can be difficult to maintain, due to the factors listed above.
Traditionally, ERP systems come with financials and human resources modules to track all costs throughout the organization. The system controls these processes through a manufacturing management module. The manufacturing management module of a typical ERP solution includes multi-level bills of materials (BOMs), advanced plant scheduling, shop floor control, field service and repair, production planning, project management, product data management, inventory management, purchasing management, quality management, and sales management.
This range of traditional functionality can be sufficient for most manufacturers, giving them the ability to manage their operations very well within the four walls of the manufacturing plant. However, if a manufacturer's business is carried out in multiple locations across continents, and if its supply chain involves complex activities, then a more robust ERP system is needed. This is because such a manufacturer is faced with changing economic, quality, and logistical problems, and its traditional ERP system can actually impede its growth and flexibility by not delivering what this manufacturer needs most: transparency and visibility into all manufacturing and supply chain activities. The manufacturer can develop a sort of "tunnel vision" with respect to their operations if nothing is done.
In developed nations, many manufacturing activities have moved offshore. Manufacturers have done this because the cost of labor is cheaper in developing nations. But offshore manufacturing has led to some key concerns:
* How do you measure quality assurance?
* Is it really cheaper to outsource production, given rising energy prices?
From an economic and an IT perspective, several negative factors about moving manufacturing offshore have become apparent:
Negative economic factors:
* The manufacturer is subject to the stability of the local economy where their facilities are located, meaning that labor may be tougher to acquire.
* The speed at which components and parts are acquired is subject to global—and potentially faulty—supply chains.
* Offshore currency instability may make components more expensive to acquire or sell.
* Tracking the cost of resources and reverse logistics can prove to be difficult.
Negative IT factors:
* Access to critical, real-time data may be impeded by disparate enterprise applications in different regions.
* Tracking components may be more difficult due to a low-quality IT infrastructure or minimal IT resources. Or perhaps the ERP software is too inflexible to service the entire organization.
* Financial tracking can be difficult to maintain, due to the factors listed above.
Traditionally, ERP systems come with financials and human resources modules to track all costs throughout the organization. The system controls these processes through a manufacturing management module. The manufacturing management module of a typical ERP solution includes multi-level bills of materials (BOMs), advanced plant scheduling, shop floor control, field service and repair, production planning, project management, product data management, inventory management, purchasing management, quality management, and sales management.
This range of traditional functionality can be sufficient for most manufacturers, giving them the ability to manage their operations very well within the four walls of the manufacturing plant. However, if a manufacturer's business is carried out in multiple locations across continents, and if its supply chain involves complex activities, then a more robust ERP system is needed. This is because such a manufacturer is faced with changing economic, quality, and logistical problems, and its traditional ERP system can actually impede its growth and flexibility by not delivering what this manufacturer needs most: transparency and visibility into all manufacturing and supply chain activities. The manufacturer can develop a sort of "tunnel vision" with respect to their operations if nothing is done.
Challenges and the Future
One of the challenges IQMS has faced and overcome involves its customers' international requirements. As its customers increasingly compete on a global scale, IQMS has developed multicurrency and multilingual support. The software is now translated into at least seven different languages and supports localization characteristics in its financial functionality.
IQMS's PLM solution is a fresh introduction from the company's roadmap. Providing an ERP-centric perspective on PLM, the company's core system will drive its PLM solution. Its medical and automotive manufacturing customers must think in terms of project oriented contracts, so IQMS continues its integration theme and its PLM module will unify customers' existing ERP information. Users can view an entire history from quoting to contract management, to design phases, to first article phases, tooling phases, build-out phases, to the actual production, repairs, maintenance of production, part changes, and finally all the way down to retiring the project.
The contribution analysis graph below demonstrates the degree to which each area of IQMS's solution contributes functionality to its overall solution. This graph is based on TEC's model of Discrete ERP solutions.
Supporting the Customer
IQMS customers typically have annual revenues in the range of $5 million to $200 million (USD) and participate in such industries as automotive, medical devices, rubber and plastics, packaging, and housewares, among others.
IQMS specializes in high-volume manufacturing especially in made-to-order areas while handling continuous and batch mode, as well as mixed mode manufacturing. The company's solution is a core manufacturing system, which customers may purchase with extended modules as defined by their requirements. Namely, it offers a fully embedded customer resource management (CRM) product; human resource (HR) functionality such as payroll and a time and attendance system; product lifecycle management (PLM); real time production monitoring; electronic data interchange (EDI) and extensible markup language (XML) e-commerce; preventative maintenance project manager, fixed assets; customer and supplier portals; forecasting; and quality management.. Its wireless warehouse management system (WMS) capabilities help customers move products and keep track of shipments and receivables. While IQMS is not a hardware or firmware company, it has created its database structure to support radio frequency identification (RFID) by outputting the data to feed into RFID tags. Quality management functionality may be viewed as a third party package by some ERP vendors, IQMS supports a fully embedded quality management module with document control, corrective actions, engineering change request, deviation requests, and more.
One of IQMS's customers (located in Michigan, US) had both a quality system and EDI package that were outside of its main ERP system. That meant the company had three different databases that they had to maintain. It also meant they had to build an interface or manually use part of one product, take the output from that product and then re-input it back to their ERP system. According to IQMS senior vice president, Terry Cline,
"Nothing could be more inefficient than doing that. Looking at the global manufacturing nature of today's business environment, you really can't afford to be hiring people to sit around and retype data that's already inside your environment. We eliminate all of that; the interfaces, the development time, all the hassles of maintaining that interface, by putting these things directly into a single database."
IQMS has paid special attention to customers that participate in multiple industries. Companies competing in the plastics manufacturing industry must supply not only a plastic component but also an assembly that goes to their customers. Thus, they also make the metals that go into the plastic or their encasing of the plastic. IQMS has found this especially true with its customers in the United States and China—who are involved in die-casting, metal stamping, metal forming, and assembly work.
IQMS specializes in high-volume manufacturing especially in made-to-order areas while handling continuous and batch mode, as well as mixed mode manufacturing. The company's solution is a core manufacturing system, which customers may purchase with extended modules as defined by their requirements. Namely, it offers a fully embedded customer resource management (CRM) product; human resource (HR) functionality such as payroll and a time and attendance system; product lifecycle management (PLM); real time production monitoring; electronic data interchange (EDI) and extensible markup language (XML) e-commerce; preventative maintenance project manager, fixed assets; customer and supplier portals; forecasting; and quality management.. Its wireless warehouse management system (WMS) capabilities help customers move products and keep track of shipments and receivables. While IQMS is not a hardware or firmware company, it has created its database structure to support radio frequency identification (RFID) by outputting the data to feed into RFID tags. Quality management functionality may be viewed as a third party package by some ERP vendors, IQMS supports a fully embedded quality management module with document control, corrective actions, engineering change request, deviation requests, and more.
One of IQMS's customers (located in Michigan, US) had both a quality system and EDI package that were outside of its main ERP system. That meant the company had three different databases that they had to maintain. It also meant they had to build an interface or manually use part of one product, take the output from that product and then re-input it back to their ERP system. According to IQMS senior vice president, Terry Cline,
"Nothing could be more inefficient than doing that. Looking at the global manufacturing nature of today's business environment, you really can't afford to be hiring people to sit around and retype data that's already inside your environment. We eliminate all of that; the interfaces, the development time, all the hassles of maintaining that interface, by putting these things directly into a single database."
IQMS has paid special attention to customers that participate in multiple industries. Companies competing in the plastics manufacturing industry must supply not only a plastic component but also an assembly that goes to their customers. Thus, they also make the metals that go into the plastic or their encasing of the plastic. IQMS has found this especially true with its customers in the United States and China—who are involved in die-casting, metal stamping, metal forming, and assembly work.
The TEC Quick Case for IQMS
IQMS is a private corporation operating from Paso Robles, California (US). The company was founded in 1989 by Randy and Nancy Flamm with a goal to create software for the plastics and repetitive manufacturing market. Over the years, IQMS has held true to its manufacturing roots for discrete and process environments but its market reach now includes an expanded range of companies doing repetitive, high volume manufacturing.
Business Background
IQMS began by providing a scheduling module with bills and materials, sales order processing, and some inventory management. The company added its financial package shortly thereafter and then introduced real time manufacturing functionality in 1992. Today, the IQMS solution addresses an increasingly broad area of integrated functionality. The company has expanded its operations, profitably, to Canada, Mexico, Europe, Asia, and Australia. IQMS offers professional services, which include training, implementation, and business consulting; and prides itself on helping customers eliminate interfaces, third party applications, and third party databases.
Business Background
IQMS began by providing a scheduling module with bills and materials, sales order processing, and some inventory management. The company added its financial package shortly thereafter and then introduced real time manufacturing functionality in 1992. Today, the IQMS solution addresses an increasingly broad area of integrated functionality. The company has expanded its operations, profitably, to Canada, Mexico, Europe, Asia, and Australia. IQMS offers professional services, which include training, implementation, and business consulting; and prides itself on helping customers eliminate interfaces, third party applications, and third party databases.
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