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Collaborative technology moves manufacturing from paper to Web

published on November 6, 2002

In the not too distant past, yellow legal pads provided the platform for manufacturing decisions and raw material acquisition planning at GHSP, based in Grand Haven, MI. The designer/manufacturer/supplier of electromechanical systems for car transmissions realized that, to stay competitive, it needed to transform paper-based systems to improve processes with vendors of raw materials and reduce parts inventories. The company also wanted to update outmoded financial systems.

The organization began examining collaborative commerce solutions that would allow the company to conduct business via the Web using a wide range of technologies from e-mail and shared databases to conferencing. In the manufacturing sector, these systems can help reduce raw materials inventories, improve supply-side ordering and vendor relations, cut costs associated with cargo shipments, and boost cash flow. The ROI on processing costs alone can be substantial. For example, a $150 cost-per-purchase-order can be reduced to $4— based on gains from automation and subsequent workforce reductions or reassignments, according to Pierre Mitchell, VP of research at AMR Research.

With serious process improvements in mind, GHSP undertook a vendor evaluation process. The competitors for supply visualization include Brain International's SupplyWEB, Future Three's Eclipz, and SupplySolution's i-Supply. The competitors for MSG/PRO are SAP, Oracle, PeopleSoft, and J.D. Edwards.

GHSP selected QAD Inc.'s MSG/PRO for its manufacturing needs and QAD's SupplyVisualization for the ability to gain visibility with supply replenishment and capabilities.

Features of the chosen solution

The system includes an integrated set of manufacturing, distribution, financial, and customer service applications tailored for the automotive, consumer product, and medical supply manufacturing industries.

The system supports multiple currencies and global tax management, and it is tailored to financial practices and requirements in major geographic markets, making the product adept at streamlining paperwork associated with acquiring and shipping raw materials and final products across the globe. It supports 26 languages, including French, German, Spanish, Japanese, Chinese, and Korean— making it easier to use regardless of where a manufacturer or supplier is based. Its bar-code-based implementation reduces data entry and associated data entry errors.

Pricing for SupplyVisualization is a monthly $1,900 subscription fee, providing manufacturers with a Web-based hosted service. MSG/PRO has proprietary pricing based on a licensing model.

Tips for streamlining integration

GHSP's initial integration of QAD's tool took six months from start to finish, which included integrating it with the company's legacy finance tool, Centron Data Systems.

Key to the project's success was 100 percent project buy-in from the entire executive staff, said Jeffrey McCauley, IS manager at GHSP. The finance department and the members of the materials staff, who had relied on the legal pads for determining raw materials needs, championed the transition to MFG/PRO eB2.

Research into the success rates of integration consultants further streamlined the project deliverable, said McCauley. Instead of being pigeonholed into using one firm for all aspects of the MFG/PRO eB2 installation— whether plugging in bar coding tools or conducting training— GHSP sought out firms that specialized in each area. McCauley said that in doing so, the company cut its risk of project failure by contracting with known quantities.

A prelaunch communication plan— part of the project management strategy— played a role in the successful product launch. McCauley said the communication boosted the speed of adoption and built a spirit of staff cooperation during the shift to automated processes, which is often a stressful time.

Training a key element of success

Lastly, added McCauley, the company pushed for and continues to take technical and end-user training quite seriously. Initially, GHSP hired a consultant to conduct classroom training. But following various upgrades, the company switched its focus to a "train the trainer" approach. The method not only has cut overhead but also has given departments within GHSP more ownership over their part of the MFG/PRO eB2 system, according to McCauley.

Today, MFG/PRO eB2 is used from the shop floor to the executive staff with 52 concurrent users in the United States and five in Germany.

While GHSP does not have specific ROI figures, the company said the tool, coupled with implementation with a Toyota Production System, gave the company a tighter hold on finances and improved overall inventory control.

Financial information and management reports are now readily available in real time— a stark shift from the past. And the staff that manages raw materials is better able to forecast consumption of raw materials from suppliers— eliminating the need to stockpile materials at the factory for possible production spikes. This alone, said McCauley, has had a positive effect on GHSP's cash flow.

All these improvements and others are clearly something the legal pads of the past couldn't accomplish. And as McCauley notes, the company's automation efforts are also helping the environment.

"Our yellow legal pad orders have declined substantially, so I guess we are helping to save a few trees too," he said with a chuckle.

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david southgate
writing for living.