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Sunday, 01 March 2015 22:00

Automotive suppliers face decisions over ERP investments

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Melissa Anderson, IRN Inc. Melissa Anderson, IRN Inc. COURTESY PHOTO

Information technology professionals might disagree, but for many supplier personnel, dealing with the software involved in running a manufacturing firm is a necessary evil to be avoided as much as possible.

The MRP (material requirements planning) and/or ERP (enterprise resource planning) systems can be hard to learn, cumbersome to access, inflexible to use, difficult to get the right information out of, incomplete, and possibly even incorrect.

But without them, there is no hope of functioning in the high-volume automotive industry, so it is best to invest the effort and resources to make them serve you well.

Computer systems can feel like a black hole for dollars. Many companies take a conservative approach to hardware and software upgrades, delaying the purchase of new equipment and software updates until they are long overdue.

We recently participated in a client’s journey from the reluctant decision that it was time to replace its 10-year-old I.T. platform to the selection of a new, comprehensive ERP system. The client is involved in plastics processing, mainly for the automotive industry but also with positions in other industries. It has manufacturing facilities in the U.S. and Mexico.

In addition, it is part of a large and growing global entity, so there is a need for financial consolidation to the corporate level. The company’s high-level criteria included real-time machine monitoring, no need for bolt-on software packages and ease of periodic upgrades.

The first step was to determine the current state of the company’s operations. Through meetings with every business function, the I.T. evaluation project manager developed process maps showing input and output flows and the systems used to create them. The flow chart diagram for production control, for example, illustrated some complicated and wasteful aspects of receiving and processing forecast and shipping schedule inputs from customers, the accounting department and sales.

From a similar analysis of each department, the evaluation team concluded that they were running a robust MRP system, but with too many manual systems — an outdated Access database, Excel spreadsheets, paper files, and outdated software applications that did not tie into their aging ERP system.

The discipline was in place to run the company — that is, people got the job done — but the tools left much to be desired. Pieces of data were collected in abundance but it “didn’t go anywhere” and was not linked for ease of access.

After facing the ugly truth resulting from years of underinvestment, the company had a good idea of the areas where it had a solid existing process and where a new system would be helpful. It was comforting to realize, as one team member noted, that anything they chose would be a vast improvement over the existing system.

An evaluation scorecard from a sister company was adapted to compare a set of potential new ERP platforms, selected on the basis of automotive industry reputation or their use by a sister company. The scorecard was filled in after interviews with vendor personnel, webinars, “discovery meetings” for the vendor to fully understand the company’s requirements and initial demos. This enabled our client to narrow the set of choices from five vendors to the top three for a deeper review.

The top vendors conducted detailed demonstrations for department employees so that a larger number of people could see specific functions in action. This also provided an opportunity to involve employees, encourage buy-in and create excitement around the advantages of going through the considerable work of implementation once a new system was chosen.

Participants completed internal surveys on their impressions and ratings of each vendor. The last phase of user review involved site visits arranged by the vendors and through industry contacts to see the top two ERP systems in action at comparable manufacturing firms.

After six months of work — and in addition to their regular jobs — the evaluation team made a presentation to top management of its recommended vendor and the rationale for the choice. The recommended vendor was not the least expensive, but it was the unanimous choice of the cross-functional team on the basis of its better training and documentation, innovative and intuitive feel, limited need for I.T. involvement and other considerations. This platform solution is expected to align with current requirements and also accommodate future scenarios for company growth.

Overall, the I.T. evaluation team did a thorough job and remained rigorously objective in its process. For an expenditure of several million dollars, that was the right thing to do.  

 

Read 3672 times Last modified on Sunday, 01 March 2015 16:29

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