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e-Manufacturing or production automation in ERP.
Abstract: In a fast-paced market, a two-week turnaround time for specifying, quoting, and processing orders are not acceptable for some companies. ERP Software - users can double its sales volume quoted and improve its quote-to-close ratio while significantly reducing costs for selling various products.
The Situation: ERP users come from a variety of industries, including food processing and packaging, industrial products, hi-tech engineering items, precession components manufacturing, corrugated box production units, intra-ocular lens, trading and others. Although many companies stock standard products, they also design and distribute custom-configured and engineered-to-order items. Many companies sell directly to end Customers, OEMs (original equipment manufacturers) and through reseller distribution channel – Supply Chain. The sales are domestic or export. DNS team has designed and developed an ERP package called Digital Nervous System or DNS. When DNS users recognized the importance of adopting a new approach to selling its products, they were cautious in their search for a software partner. Selecting the right software vendor is critical to achieving success. Yet, understanding which vendors can meet business objectives and deliver results can be one of the most difficult challenges.
DNS team interviewed users from engineering and technology management teams to understand key decision-drivers for the DNS design. He learnt that the key strength was the ability to implement ERP modules in a phased manner, in a short time. Finally, from a cost savings and time-to-value perspective, companies believed that it was wise to take advantage of DNS team's twenty-eight year experience.
Key Business Challenges: Many companies have a distributed ‘business-process’ system that use a legacy- system that is inconsistent across multiple company locations. Order specification information is generally stored only in the plant in which an interaction takes place and is not available to staff in other locations. This makes it difficult for the company to effectively manage its internal operations and support engineering and manufacturing processes. To complicate matters, companies have deployed assorted in-house and point solutions to address distinct problems or specific domains of the business. These islands of automation create information gaps and do not directly support the fundamentals of automation. Additionally, not having a common repository of information makes it difficult for the company to recognize and target additional revenue opportunities. Another challenge for users is the lack of visibility into activities across different divisions and business functions. For example, the marketing department controls how products are priced and what they sell, while engineering department decides the rules surrounding what can and cannot be built. Therefore, the solution needs to be able to separate the pricing configuration from the engineering configuration, but still create a model that allows the two teams to work in parallel. The first software packages were deployed in the early eighties. DNS team along with enthusiastic growth-oriented companies had the vision to automate business functions. ERP users discovered that there could be hundreds of permutations of valid part numbers for a given product. DNS was applied to make the generation of the bill of material (BOM) modular for each configurable unit. This feature has been enhanced in the most recent release of DNS. It is now possible to make a BOM by using unique drag-and-drop techniques.
Before the DNS deployment, employees and customers had to rely on a FoxBASE system that was difficult to maintain and required users to know and understand a part-numbering scheme. Moreover, the system did not allow an immediate response from sales to convert a quotation into an order. Other internal and operational problems that needed to be addressed by the ERP project included: Lost revenue due to errors in pricing. Discounting and order configurations. A missed business opportunity due to an incomplete view of customer information and the customer’s purchasing habits. An ability to mine and leverage business and customer data An inability to discern the needs of customers and strengthen relationships. One of the companies where DNS is used is one of the largest food processing (FMCG) companies in India. Over 100 SKU are sold through ten depots / CSA located all over the country as well as export. Many engineering companies have focused their efforts on delivering flexible products. This task was becoming increasingly difficult for them because their legacy systems were not optimal. Opportunities for improved production were realized and largely attributed to the deployment of advance modules that gave production planning and control, work order automation and production entry that is linked with BOM.
Legacy processes may have contributed negatively to manufacturing activities. ERP users felt the obvious advantages of DNS could not be overlooked. DNS users and DNS team deployed the ERP solutions. Key challenges addressed include: The inability to accurately manage a detailed production plan for a given product. This requires an online link with raw-material availability. Inconsistent management of geographically different plants (factories) selling the similar product lines or third party (sub-contractor) production. A lack of integration among multiple, disconnected database systems across the entire business group – e.g. Dos / Netware based programs, Excel sheet based MIS and / or Tally based accounting. The inability to utilize existing resources and the expertise of employees Inefficient processes and lack of tools to gather customer history, product data, and pricing information.
Solution Approach: In early 1999, ERP users began to explore how they could improve their ability to sell products and take advantage of the ERP package. The company engaged DNS team to help it form a project team that consisted of engineers and managers and a group of experts from DNS team's team. The team’s objective was to create an integrated environment that could be easily modified and maintained without time-consuming and expensive programming. This integrated framework shows the assimilation of DNS team's DNS applications and DNS users Order Management System (OMS) and back-office solutions. This ability to integrate has enabled DNS users to avoid issues associated with having to enter product orders into multiple systems (one for sales, one for manufacturing) and ensures the accuracy of a configuration as it moves through the interactive DNS modules. DNS pre-sales modules: This quoting management system leverages MS SQL 2000 Server and existing data model support to allow for the storage, personalization, and retrieval of quotes from a central repository. In August 2003, DNS team rolled out a new version of its ERP software package. Key benefits of this new release include improved ease-of-use, more support for executives, and new enhanced production module and online cost sheet module capabilities. The enhanced speed and flexibility of the system and increased usability and maintenance of the product. This latest version gives DNS users technique that enables both the novice and experienced user to create Item Master database in an easy, step-by-step style – an important objective for any ERP user. This upgrade is expected to further accelerate speed and efficiencies for all DNS users online quoting and ordering activities.
Results: DNS team's ERP solution has enabled DNS users to address opportunities and demands of online quoting, pricing, order processing, manufacturing, and preparing Challan-cum-Invoice (CCI). It has also enhanced the company’s ability to manage brand consistency, ensure accurate pricing, and recognize additional opportunities for new revenue. Recent observation suggests that ERP software can satisfy customers and transform many legacy solutions from passive to active selling experiences. Finally, DNS deployment has enabled its users to achieve many of its goals to improve operational efficiencies, cost savings, overall profits, and user satisfaction.
Lessons Learned and Future Deployments At present, some companies are using some of the modules only, and now they have decided to migrate to other DNS modules. It is expected that eventually 100% of the business processes will be incorporated into the DNS package. ERP users will continue to expand the use of DNS team’s DNS software solution to additional company product lines with similar selling models requirements.
During our onsite interviews, we discovered some important lessons learned by members of the ERP project team. The most critical noted were to (1) secure executive confidence early; (2) analyze and determine which business processes make sense and can be mapped to the ERP processes; and (3) establish clear, well-defined business objectives and budgetary requirements up-front. Users also indicated that keeping the implementation process in defined phases – with the understanding that enhancements can add functionality in the future – helped to keep the project on schedule and meet management’s expectations. It is also necessary to carefully define a ‘cut-off line’ - that is entering opening balances. From which point all entries has to be done in ERP. Usually this is 31 March because the audited balances are available. This also implies that some backlog data has to be entered twice – in legacy software as well as new ERP software.
Our Conclusions: DNS modules clearly improve the accuracy and completeness of PO (purchase orders) for complex products, and ease the burden on the Procurement section. The sales person need not understand every product details to give the customer a quote or submit a purchase order – he or she can depend on the DNS sales module for correct technical specification. Yet, as valuable as order accuracy is, the deployment of selling and configuration technology within LAN-based deployments has a broader value proposition. For instance, preparing a Dispatch Order and automatically defaulting the same to prepare the transfer invoice. ERP-based delivery enables e-Commerce (future) platforms – previously focused on processing relatively simple transactions – to expand into selling environments that accommodate transactions that are more complex; increase the likelihood of successful transactions; and enhance the value of a transaction through guided cross- and up-sell capabilities.
DNS team has helped DNS users achieve important operational efficiencies and improve customer service with its ERP package. The companies are now generating more revenue, while order error rates for products and pricing have been reduced significantly. Additionally, DNS users’ experiences that it could reduce the time required to educate employees describe details of product features. That has enabled DNS users to focus more on resolving problems, serving customers, and completing sales processes with greater speed and increased accuracy.
Related link: Production Module details.
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