How to Integrate Your Software For a Better Manufacturing Experience
One company CEO relates his
experience on how successful software integration helped him become
more competitive and faster to market with his products
Lean manufacturing processes are about
eliminating waste. In an effort to do just that, eliminate waste,
almost half of North American manufacturers with 100+ employees
implemented an ERP (Enterprise Resource Planning) software system. Many
of these companies are on their third or fourth generation of an ERP
system, putting into question how much was wasted by selecting the
wrong system initially.
In fairness, ERP systems have gone through iterations and ERP vendors
have designed a degree of planned obsolescence to ensure updates,
upgrades, and maintenance fees continue to flow into their coffers.
Where the great waste can be found in the manufacturing software
process is in the magical word "integration." While most ERP vendors
will make extravagant claims about how various modules from third party
software vendors are "simple bolt-on" features, the fact is such
constrained integration creates fiscal, management, and operational
nightmares.
According to Tom Verzi, Director of Marketing for PRONTO North America,
a leading integrated ERP vendor, "It's like taking a muffler from a
Chrysler, an engine from a Ford, and an electric system from a
Chevrolet, and contending that it will all work because these are
American automobile manufacturers. It just doesn't work like that."
With average annual ERP maintenance charges ranging from $25,000 to
$75,000, manufacturers often weigh the benefits of the new features,
advantages of these upgrades, and either choose to have the most
current version (supported by the ERP vendor) or hold off.
Where the lean manufacturing process quickly falls apart with ERP
systems is when the bolt-on third party vendors are also making
upgrades and changes. A manufacturer who has a service module for
maintenance and repair may be made to fit the 2004 version of an ERP
system. When the ERP vendor upgrades their 2005 version, the service
module will require modification to continue functionality. The price
is wasted time and financial resources. Next the third party service
module vendor makes modifications and now the ERP system must be
corrected to continue working. This ongoing situation quickly spirals
to a consistent and constant waste of time and money.
According to Verzi, Packaging Incorporated, based in Minnetonka, MN,
was faced with this challenge when selecting a new ERP system. "Due to
the complexity of their business the company required applications not
readily available in "standard" ERP systems." Packaging Incorporated is
a distributor of fastening and packaging equipment as well as fasteners
such as nails and staples for the construction industry.
Doug Lowe, VP of Operations for Packaging Incorporated and a proponent
of lean manufacturing principles, explained, "The integrated ERP
solution provided by PRONTO North America addresses our complex needs
because unlike other ERP systems, it is a complete and continually
evolving solution that provided modules not available in standard ERP
systems for the manufacturing and distribution environment." Lowe
continued, "We evaluated many solutions during our selection process."
The combination of standard ERP functionality with the following
integrated single sourced modules from PRONTO allowed us to maintain a
lean operation:
- CRM (Customer Relationship Management)
- Service
- Project-Costing
- Warehouse Management
- Advanced Forecasting
- Point of Sale
This manufacturing integration scenario is common. Most ERP vendors take a "spare parts" approach to closing the sale. The lean manufacturing process is not considered for the potential customer, only getting the sale. As a result the direct benefits of ERP, including real time data gathering and reporting, and precise financial visibility, are greatly diminished as glitches in integration consume these discernable advantages. Michael Ligudzinski, CEO of PRONTO North America concluded, "In today's highly competitive economic environment, operational efficiency is the key to continuous improvement and the further growth of manufacturing and distribution in North America. A fully integrated ERP System is the cornerstone to success in achieving this objective."
Lean manufacturing continues to grow as North American companies seek methods to remain competitive. From design and engineering, through to the back office operation, to the plant floor there is waste to be eliminated. The continued process of seeking out waste for better processes is critical to create a best-of-practice manufacturing organization. Ultimately the claims of ERP vendors are subject to scrutiny. If carefully considered, and integration with the enterprise as a whole, there are some winning technologies that truly deliver. Others do not. Caveat Emptor! Buyer beware!
