Broadcasting the business message?

“IT is seen here as an essential business driver for where we’re going – staying profitable and ahead of the game.” So says Chris Stanghan, business systems manager at Bury St Edmunds-based, £30 million specialist television studio engineering firm Vinten Broadcast and who also now looks after IT development for parent company Vitec Group. And this fact alone colours it’s whole approach. Add to that a range of challenges and objectives spanning engineering management and manufacturing production, through to integration of sales, after-sales and the supply chain, and its choices and Stanghan’s observations make an excellent sounding board for business and IT strategy planning. “Our big issue, like most right now, is how do we move everything forward into the 21st Century,” he says. Vinten and others in the £190 million Vitec Group are, without doubt, SME manufacturers, but nonetheless increasingly global. They’re also OEMs that design and build their own products and sell both direct and through distribution. And they’re lean and streamlined; Vinten employs some 200, between them handling not only product development and manufacture, but sales, customer service, channel management, after sales... the lot. So there’s a very big bunch of management and operational considerations. “We’re not large,” observes Stanghan, “but we have all the complexity, and need the same sort of sophistication, as much larger manufacturers, like Cannon and Xerox.” In fact, this is a company in IT motion. On the ERP side, Vinten recently implemented IFS enterprise management software. “It’s fully live for all functions in the factory in Bury and in the French sales office. We’ve got manufacturing, distribution, product configurator, sales and marketing, HR, finance … most of the modules.” That alone was a farily bold plan. “We started implementation in September 2001 for all the factories in the UK, and went live in May last year. Now we’re rolling it out to Singapore, Germany and so on, so we’re getting towards global integration.” But he’s not stopping. Next, he says, the system will almost certainly be rolled out into the sister companies. Why? Because it’s achieving the business objectives. “Our old system was certainly capable on the MRP and financials sides, but to get slicker we needed to spread the information visibility and the functionality. We needed to integrate the other parts of the business. With the new system we cover sales and customer support, for example. So whereas sales didn’t have contact management online, now they have…” The list goes on, and the same goes for getting real time views into production, inventory and the rest. This is key, he says, to improvement. Start the information visibility bit and, once you’ve got critical mass, the lights come on and it spreads. “Now we’re looking at going for e-business, especially for spares,” says Stanghan. Whereas to date this has been a small revenue earner, handled through the global dealer network which wasn’t that interested, getting integrated and web-connected provides an entirely new opportunity for profitable direct business development and, simultaneously, better customer service. “We’re using the IFS web shop integrated seamlessly into the back office system so that web orders appear as real time transactions. If you don’t do that that it’s more trouble than it’s worth,” he cautions. In fact, there’s still a way to go on the sales side, and Stanghan agrees it’s crucial to get this and the integration right since ultimately it will provide the foundation for new business, customer service, competitiveness and profitability. We’ll return to customer service and supply chain issues later. But first, Stanghan says his next priority is, “developing much stronger links between our engineering CAD, PDM (product data management) and the ERP.” He explains: “Like many others, we’re consolidating our manufacturing operations. As a group, we have 13 factories globally, with six just for Vinten, but we intend to cut that down to three or four, and then just one or two. So we will end up with a very small number of factories manufacturing multiple product families and brands with different design intents for multiple sales forces in different countries. “To make that work we’re going to assign design authority to sales, marketing and brand management. For example, Vinten will own the sales, marketing and brand management for its products and the product development for them – but everything will be manufactured at group shared manufacturing sites.” It’s an ambitious plan, and hence the need for links and controls. “We’ll need better PDM and better data integration between PDM and ERP to make production management work efficiently. There won’t be a design office just through the door of the factory any more where you can take a drawing and say ‘what did you mean here?’ or ‘how did you intend this to be assembled?’. The factory will be in Costa Rica and design in the UK, US and Germany.” He accepts that for some companies of Vinten’s ilk there would also be a call for manufacturing engineering and simulation systems, at least for the automated electronic publishing facilities for operators and fitters. However, “We’re not talking about big volumes here,” he says. “We’re high value, high margin, specialist niche engineering, so systems specifically for manufacturing engineering are less critical to us.” Although when prices come down that could change. For now however, the issue is how best to construct the links, with EDS Unigraphics and what was IMAN in the design office and the ERP system. Most likely is an implementation involving EDS’ Teamcenter PDM communicating with the production bill of materials (BoM) management and PDM module in IFS. “Vinten design is leading the PDM pilot – we’re starting there and moving towards manufacturing. It doesn’t really matter who leads, as long as someone does and someone else is listening,” says Stanghan. However it’s done, clearly, spending some money on linking processes and data between manufacturing and engineering makes a huge amount of sense – and will become a feature of more companies’ IT strategies. But there’s more to this. Moving on to the supply chain, one serious emerging possibility, and indeed requirement, for Vinten will be global sourcing. “When we’re manufacturing in the UK and Costa Rica, consolidating products on those factories from Germany, the US and so on, we’ll need to take advantage of this,” he says. “We have a lot of good purchasing people around the group, but at the moment they work largely in isolation. In the future, they’ll wear two hats – the local responsibility and the global one, perhaps negotiating all the steel or aluminium tube or castings or carbon fibre, whatever, for the group.” From a systems point of view, “That’s the beauty of a single global database,” he says, handling all production sites, all design, all sales and all purchasing. You get good up-to-date information and visibility for all departments that need it. We’re already starting to do it now.” And when there’s no longer a factory in Germany, Vinten will use its procurement staff there to buy machining services, materials and so on for the whole company. “They are in a much better position to work with Eastern Europe, for example, that our guys back in Suffolk.” And beyond that, he adds: “[Procurement people] will be able to start working more closely with the design groups around the world and pull through standardisation of components and commodities as well.” Yet again, system integration is the key. “Historically, Vinten’s German office had a PSI Penta ERP system, so all the data, parts, prices, suppliers and so on, were different and it was very difficult to get sensible information to and fro. To make this work you need common access, common processes, common formats, policies and structures, otherwise the information they see is meaningless.” Do it right and, “a buyer in Munich can get reports on bearings, for example, in the UK and do something.” And they also get the time to do it, precisely because of that same integration, and the scale of business process automation it allows. “The other issue is demand pull and the lean approach. We don’t want to be wasting time issuing lots of purchase orders; we want schedules and call-offs with faxbans, Kanbans and e-bans. So we’ve set up a suite of purchasing processes – for example, on the factory floor, when a reserve bin is empty it’s two keystrokes from the operator on the local terminal and the system automatically alerts the supplier.” That’s the way for everything – components and assemblies – as long as they’re not configured specially to order. The system manages all the links and dependencies between internal departments and external suppliers. The benefits: upstream it’s about lean, low cost replenishment modes and automation that reduce transactional costs and, by the way, also materials inventory; downstream it’s about reducing stockholding of finished goods.