Four years ago, Holland-based Fogg Filler Co. needed a new Enterprise Resource Planning (ERP) system because the system it had custom-built in the 1980s was no longer efficient.
The company wanted a new system to improve engineering efficiency and to offer a unified platform for enhanced visibility across the company, said Todd Kemme, engineering manager at Fogg Filler, which designs and manufactures rotary filling systems for the liquids industry.
Fogg Filler considered the available off-the-shelf ERP systems, like those offered by industry giants Oracle and SAP. Those products are designed for manufacturers that make millions of the same parts, Kemme said, and Fogg Filler was afraid it would still have to spend hundreds of thousands of dollars to customize off-the-shelf ERP solutions to meet its needs.
Instead, the company created an internal team to develop its own version of ERP software from scratch.
Today, that team has morphed into Smooth Logics, a spin-out of Fogg Filler. Earlier this year, Smooth Logics began beta testing countERPart, its ERP and material requirements planning (MRP) solutions, at two West Michigan companies, Automation Specialists Inc. in Holland and Allied Engineering Inc. in Zeeland.
The purpose of an ERP system is to integrate multiple disparate software applications into a single system to improve information sharing across all departments, from accounting to HR to sales, said Derek Singleton, an ERP analyst at Software Advice, a website that reviews enterprise software and related technologies. He said it is important for manufacturers to have this kind of information sharing because it can increase efficiencies and insights across the entire company.
An example of how ERP works would be that immediately after a sales representative logs an order, the system passes that information along to the manufacturer to initiate production and fulfill the order, he said.
Companies that don’t use ERP software typically do a great deal of manual data entry where different departments are running the business from pen and paper or spreadsheets, Singleton said. This is an issue because it opens up important data tracking to human error and poses a lot of redundancies that could be avoided if a single, automated system were in place, he said.
Even when companies are using ERP software, many use multiple different applications that weren’t made to share information, and they wind up with some of the same issues, he said.
Most of the ways that ERP helps save money result from efficiency gains, Singleton said. ERP can improve how a company uses its material, time and labor to help cut costs and drive efficiencies across the organization. For instance, an ERP system can calculate, based on projected demand, the optimal level of inventory that a company should keep on hand to meet demand, which can then reduce excess inventory holding costs.
ERP software, which has been around since the early 1970s, can be purchased as a packaged product from many different vendors. But increasingly smaller West Michigan companies like Fogg Filler say they have been assembling custom platforms that meet their exact needs.
Like Fogg Filler, Holland-based Koops Inc., which specializes in factory automation systems, chose to go its own way with ERP.
Koops started small by developing a system that worked in Intuit’s QuickBooks, said David Jessup, the company’s director of sales and marketing. As Koops grew, it began shifting to Microsoft Excel tools. But two years ago, Koops began converting the Excel tools to a Microsoft Access database. In the long term, after Access has been thoroughly proven out, they intend to move to a SQL database, he said.
“We’re 50 percent of the way through that process,” Jessup said. “By year’s end, we should be done. We love what we’ve come up with. We really use these tools and feel our approach is the right choice for us.”
Koops decided to tackle ERP on its own after the company investigated a couple of commercially available software packages and wasn’t 100-percent satisfied, Jessup said. Each of the solutions required tweaks with other, external tools, he said.
“That pushed us toward, ‘Let’s come up with our own stuff,’” he said. “It’s not necessarily the correct way for everyone to go, but (it) fit really well with what we needed to do.”
Changeover Integration LLC of Ludington also eschewed off-the-shelf ERP systems, but instead of developing a system on its own, it partnered with an outside company to develop a customized solution. Changeover Integration makes products for the package handling industry, such as filling machines, labelers and machines that put caps on bottles. Its clients include Kraft Foods and Proctor & Gamble.
“ERP systems are very expensive to implement,” said Paul Powers, national sales manager with Changeover Integration. “A lot of companies have developed ERP targeted at smaller businesses like ours. We have 30 employees, so we’re obviously watching costs. Our industry also is very cyclical, so cash flow is uneven.”
Changeover Integration hired a Chicago-based company to custom-build a content management system for web applications that integrates both front-office and back-office systems. It means the company’s sales force can upload sales information from mobile devices to the corporate website.
Powers said Changeover Integration is spending about $20,000 on the project, which includes both a lead generation and a follow-up customer relationship management system. The company hopes to take the new website live by May 1. He said the customized system is about 25 percent more expensive than packaged solutions, but better fits his $10 million company’s needs.
“I think that’s where the industry is going,” Powers said. “We’ll be able to forecast future business capacity based on the amount of leads coming from our website.”
The ability to access its data over the Internet anytime and in real time is what appealed to Grand Rapids Spring & Stamping Inc. (GRS&S). But rather than custom-build a solution, GRS&S a decade ago selected an existing product, Plex Online, developed by Auburn Hills-based Plex Systems Inc., one of the few ERP solutions providers that was using the Software as a Service cloud-computing business model at the time.
Dan Armock, vice president of advanced engineering and development at GRS&S, said his company had power outages in Grand Rapids, but could still access its ERP system from another site, print production labels and do quality checks remotely.
“Around 2001, we had our Bond Street facility but had plans to grow out of state,” he said. “Our (then) current ERP system, an IBM As400, was outdated. We needed an upgrade. What intrigued us about Plex is it was one of the few SaaS service providers on the market, and its software was rich from a manufacturing perspective. As we grew and added other sites, Plex grew with us.”
Plex gained traction throughout Michigan, particularly among manufacturers. Plex, mirroring its Michigan roots, developed an automotive supply chain product around the specific requirements for companies in the industry.
“You can easily argue that is about as demanding a manufacturing environment as there is on the planet,” said Jim Shepherd, who serves as vice president of strategy at Plex. “No one asks more of suppliers and changes the rules more often than auto OEMs.”
Shepherd said people buy ERP technology and expect it to last 20 years. What Plex typically finds is that customers have cobbled together different equipment from different vendors from different ages, forcing Plex to make it all work with its Plex Online product.
Plex started diversifying from the automotive market by working with precision metal formers and light assembly fabricators that served other markets besides automakers. Local customers include FloraCraft, Meijer, N-K Manufacturing Technologies and Shape Corp., according to the company’s website.
“Since it is cloud-based, it fits the way manufacturing companies operate these days,” Shepherd said. “Our customers tend to serve global markets. They tend to have suppliers scattered all over the world. Their employees are not just in the plant, but in airports, traveling to customer sites, and working from home.”
Editor’s note: This story has been changed from its original version. A previous version incorrectly stated that Steelcase was a customer of Plex Systems. The two companies do not work together. We regret the error.