NT ERP drives up flexibility and profits

Netherlands-based electromechanical drive inverters manufacturer Emotron has achieved reduced inventory through flexible MRP- and Kanban-driven materials replenishment, and improved customer service with instant capable to promise (CTP) delivery dates on standard and custom products and late priority order handling. The firm has also integrated the management of larger scale special projects and has now taken stock rotations up from two to four – it expects this to reach six by the end of this year, saving around eur750,000 (£470,000). Wim Duis, Emotron’s financial controller, puts the success down in large part to the company’s implementation of a new ERP system, in this case Geac’s (formerly JBA) relatively new NT-based StreamLine. And he says other advantages include: better handling of what is a fairly complex manufacturing environment, including discrete and batch production; full traceability over thousands of component parts; and, interestingly, total integration with its Microsoft Office environment for reporting and the rest. Emotron, formed in 1973 to serve the ventilation sector, is now Swedish-owned and has 500 customers in a range of markets across Europe and world-wide. Its drive technology is used to regulate speed and torque in industrial electric motors for conveyors, climate controls, braking systems, bridge lifting equipment and so on. These are highly configured devices each involving hundreds of components, and requiring a substantial sourcing, sub-contracting, manufacturing and logistics handling system in the background. Until 18 months ago, the company was using a Novell Unix-based IT system, running on an IBM RS/6000 (pSeries), to link its financial, distribution and manufacturing operations. Although entirely MRP II-driven, it struggled with the realities of late changing customer requirements, Internet working and alternative materials procurement methods – and, with the coming of the euro, had to be changed. Initially, Emotron bought a license for PWC’s enterprise software selection suite, which helps organisations narrow down the ERP choices. It’s a useful aid, but at the time it didn’t include StreamLine, which the firm found instead through its existing IT supplier. Although there were others that could have provided a functional fit, Duis says Emotron was lured by its promise of relatively simple implementation, its similarity with the old system and the fact that data migration from old to new thus looked feasible in house. Beyond this, he says, “It was web-enabled and object-orientated and Microsoft Windows NT-based so it would be easier to integrate with our Microsoft business packages.” The deal was clinched in mid 2000, when Emotron visited UUNET, an Internet ISP already using the same software. Duis says he was happy with StreamLine’s manufacturing side, but, “it gave me an opportunity to look at the financial package which wasn’t ready at the time.” After custom developments the system was installed late in 2000 and, following two pilot runs, the first of which did not pass the data clean-up test, Emotron went live on 1 January 2001. Cut out the dead wood In fact, Duis says data clean-up and migration took about four weeks, covering BoMs (bills of materials), obsolete stock, factory routings and so forth. “We had 12,500 BoMs before, and by the time we had finished that was down to 2,500. Our products have a short lifecycle, and in the old system we had kept five generations. So we cut off the three oldest.” On the Microsoft side (Exchange Server, SQL Server, Windows 2000 clients and a Windows 2000 network for 40 users) Duis says not only were his integration expectations realised – with import and export of data into Access and Exel, as well as email – but that user training was fast and simple. As for materials management, the new system has helped with the modern shop floor balancing act for components and subassemblies of facilitating late configuration – enabling good production flexibility between standards, specials, late orders and major projects. It has also underpinned materials classification according to value, lead time and turnover. Emotron now holds three months worth of ‘C’ classified low cost components on a two-bin Kanban, while higher value A and B items are purchased on demand through StreamLine MRP. Some A materials get individual item attention, while B item orders are aggregated and weekly and monthly call-offs sent to suppliers by email, assisted by StreamLine’s ‘Focused Forecasting’ long range planner. As for ‘indent manufacturing’, where late orders have to be slotted into production within capacity limits, the new ERP allows Emotron to raise manufacturing orders immediately and move to partial ‘demand pull’ operation on top of weekly planning, also raising purchase orders if necessary without waiting for weekly MRP. Duis says the facility enables shortcuts to be made, thereby significantly reducing lead-times for key customers in many cases to 24 hours. Customers can now phone Emotron and be given an accurate delivery date both for standard and bespoke products – like its inverters for climate control on the new double deck trains in Holland. The ERP’s ‘capable to promise’ takes stock, lead times, existing manufacturing orders and work in progress into account, and provides the answer in real time, followed by the factory action plan on commitment. All this without APS Duis says there was no need for anything as sophisticated as advanced planning and scheduling (APS) or finite capacity scheduling here. Cycle times are from one day to three weeks, although mostly within one week, and Duis says: “We have no capacity planning at all because we can just switch between production lines, and if the turnover is what we expect we know the factory is loaded.” Beyond this, Duis says the ERP has been instrumental in providing detailed product traceability down to sub-assemblies and individual components. “All our products have serial numbers, and we can now trace these back to purchase receipts and see what components, which suppliers and which shipments are actionable for recall.” Prior to installing StreamLine, Emotron was operating with high stock levels. Now it says that by dynamically balancing the factory, materials replenishment and its customers’ short and long term requirements, it guarantees firm fast delivery dates and has still reduced inventory. “Initially we had stock rotation of two; by the end of 2002 we expect to improve that to five or six. That’s a lot of cost saving in terms of working capital: probably about three quarters of a million euros.”