Braking hard on motorsport costs

“Over the last 12 months our cash balance has shown a 800% improvement and we’ve also achieved a 50% drop in sub-contract work and saved ourselves more than £100,000 by reducing overtime, small tools and consumables inventory.” So says Alistair Fergusson, managing director of high specification brakes and clutches manufacturer Alcon Components. And he adds: “These are real advantages and, although new machinery has helped, our ERP system has made a very significant difference.” They’re impressive figures and there’s no doubt that ‘lean manufacturing’ for Alcon has meant using its Made2Manage ERP system intelligently as part of the route to cutting costs and time, improving cash flow and customer service, and acting as the enabler for waste reduction through better working practices. “With the help of the system we are transforming the way we do business,” says Fergusson. “We’ve now got the competence and the confidence to make everything we do more efficient and more effective and it’s certainly improving our bottom line results.” Alcon Components makes race brakes and clutches for motorsport and high performance road vehicles. It supplies to the World Rally Championship (WRC), is Official Technical Partner to the Subaru World Rally Team, and a player with front running IRL racing outfits Penske and Team Andretti Green, as well as PPC, leader in the NASCAR Busch Series. Alcon also supplies Toyota’s F1 team in Cologne and the motorsport divisions of Audi, BMW, Citroën, Peugeot, Renault and Volkswagen. Aston Martin, Bentley, Brabus, Prodrive, BMW, Ford and Jaguar are also customers, and most recently it’s been working with Range Rover and Prodrive to help produce one of the most advanced civilian armoured vehicles in the world, capable of withstanding grenade attacks. Established in 1984 by engineer and sportscar racer John Moore, it now employs 60 at its site in Tamworth, with further sales personnel in the USA, France and Germany, and turns over around £7 million. In terms of manufacturing, we’re looking at a factory with around 15 CNC machining centres for turning, milling and so forth, as well as conventional machines and substantial test facilities for high performance brakes and a fairly large R&D centre. In its competitive markets, Alcon offers a high quality bespoke make-to-order manufacturing capability and prides itself on very high speed response to customers. And that’s where the ERP system and the ‘lean’ initiative come in – making that all work fast enough and profitably enough to stay in the game. Dave Fuller, Alcon’s project manager, says its ERP system has helped to change everything for the better. “It’s given us all access to the same information. Before, for example, we had a separate accounts system, so there were always delays there, and sales orders weren’t connected with works orders – all the usual problems. By getting us more efficient, with better communications between engineering, accounts and so on, so we can all see what we’re supposed to be doing, we’ve been able to cut inventory, reduce scrap, reduce lead times and release cash to buy more machines.” It’s a virtuous circle. For example, the firm has to deal with a range of materials, including titanium, as well as castings and forgings, many with lead times considerably beyond what’s acceptable in an industry that wants things yesterday. “So the system lets you see re-ordering patterns and profiles, and we can proactively ring customers and check if and when they’re going to want brakes and clutches in time to procure what we need for their deadlines.” Similarly, whereas before the system, re-ordering materials across 27,500 part numbers and 3,500 live stock items was all done by gut feel, now it’s done according to the usage cycles, with knowledge of costs, supplier performance and so on. And the same is true with stock control, planning, scheduling and order processing; as Fuller says, it’s all about communication, automation and information. And it all means that the company can not only be fast and flexible, but do so without the cost of holding undue material inventory. It all sounds great, but a word of caution: it wasn’t at first easy to get. When Alcon set out to implement Made2Manage in 2000, the biggest problem was lack of IT skills and a dedicated team to deal with the kind of change and change management that was required. As Fergusson says: “ One of the reasons it has taken us a while to reap the rewards is that we just didn’t have the skills needed to take advantage of the functionality of the software.” Alcon got round that by taking on an interim operations manager for nine months with experience of what could be done and how to get there. “It was quite expensive,” says Fergusson, “but hiring him was the best thing we did. It gave us the objective viewpoint that allowed us to make some quite dramatic changes.” Over the last 12 months, since Made2Manage has been successfully implemented and processes changed to take advantage, Fergusson confirms that Alcon has seen significant improvements in stock control and materials utilisation, as well as smaller re-order quantities without cost penalties, thanks essentially to better visibility. By being able to show the evidence of volumes over time reports, for example, the firm has been able to convince suppliers to deliver materials in lower consignment sizes at annual volume rates. The result is stock value down 40%-plus. In addition, Alcon piloted cycle counting and now saves three days of expensive down time every year by eliminating the manual stock take. And shop floor data is now being collected using PCs at workstations – due for upgrade to barcoding later this year – so WIP (work in progress) has also improved: down more than 30%. Adding in the fact that sales and works orders are now joined at the hip, there are other benefits resulting from less clutter, less scrap and less frustration in what is inevitably a fast moving, busy factory environment. Scrap specifically is down 20%. Fergusson believes the effect of all this has been a 17.4% improvement in productivity. Fuller puts it down to more accessible information and the ability to utilise the new staff and machinery more effectively. But he also adds: “We’ve been able to use better data from Made2Manage to go back to our customers and have successful debates about late and changed orders as well as late deliveries, something we were not confident to do before. The result is a better working relationship with our customers and honest debates about roles and responsibilities – we’re stronger for this.” It’s worth noting, incidentally, that the system has also helped ease the process of gaining the QS9000 quality standard, and is now the foundation for implementing the emergent ISO/TS 16949 standard. Fuller says it’s essential for the firm’s contracts with partners in the USA. But he adds: “We were encouraged by the improved access to information and greater efficiencies that the system and culture of change have provided us.” Next Alcon intends to move to the latest version of Made2Manage (v5.5), probably going live in October with advanced planning and scheduling (APS) in the form of the M2M Synchronizer. Fuller says the firm is going through the cost/benefit analysis now, but notes that it should enable planners to manage the shopfloor more efficiently and further improve delivery date performance by providing impact analysis, ‘what ifs’ and capacity bottleneck avoidance. The new version also brings variable customer price lists, with time and quantity break definitions. This is very important for Alcon, which agrees contract prices for most of its customers. Once live, it will mean that creating a customer sales order for a part and quantity will automatically generate the appropriate selling price without the need to review price lists. “For Alcon the last 12 months have been very demanding,” says Fergusson. “We’ve had to learn new skills and new ways of working, but it really has been worthwhile. You only have to look at the bottom line. We’re more profitable and on time deliveries have improved by 47%. But we’ve only really just started, and our challenge will be to exploit the information source further for business advantage.”