Cummins propels itself into the 'e' world

We now have a unified view of the whole supply chain, from factory to distributor, to user and back again. And we’ve cut our new engine inventory down to just £1.5 million this year,” says Eric Boyson, UK md at Cummins Diesel. “That’s £4 million less than it was four years ago.” But that’s not all. After implementing Intentia’s Movex ERP software, the company has now got greater visibility over the whole procurement process. “We can now optimise the levels of stock and roll-up demand for parts across all our European sites. As a result, our ‘first pass fill’ ratio [percentage of orders fulfilled from stock] has climbed from 80% to 90% this year. It’s improved availability to our customers and cut delivery times.” Cummins Diesel, part of £6.6bn Cummins Engines, sells engines direct to OEMs, repairs and services engines and supplies spare parts to its distributors, and direct to clients. In 1995, the company chose to implement Movex ERP from Intentia. Boyson: “Our bespoke control system [materials management, logistics and engine parts] was installed in the mid-80s and wasn’t up to the task. It meant we were producing 3,000 engines a year with software designed for 200.” Intentia went live in 1998 - across materials management, logistics, engine parts and spares - and the benefits are surfacing. Boyson reckons we’ve “invested about £3.5m in total on the Movex implementation over the last five years – on new IT infrastructure, telecommunications links, pure software [£2m], training and support. We were looking for a five year project payback, and it looks like we’re on course.” Boyson says the firm now has much better information to drive the business. “Before Movex, we used to know broadly what parts we had sold, but we had little detail beyond that.” The company now uses Cognos reporting and analysis software, integrated with Movex, for breakdowns of parts sales by customer and market sector. Boyson explains: “We’re now in a position to get information we really need to manage the business. It’s starting to tell us things about our customer base that we hadn’t realised. We’re finding we’re not as strong in some markets as we’d believed, and conversely, that some customer groups give us more business than we actually thought – and could give us a lot more.” And the firm’s cash customers are a good example here. Originally grouped under one account, these companies were in the top 10 rankings for revenue, but it didn’t know who the individual customers were. Boyson: “What Movex [and Cognos] has enabled us to do is effectively treat these customers as individuals now. We’ve found 3,000 new customers in the last six months who we can market to more effectively.” And Movex is also helping to reduce the time it takes to deal with warranty claims. “We might have as much as 50 days elapsed time between completing the repair and getting the claim in. Now, the details for the claim have to be entered before the work on the engine can start. As the job is closed, the details are automatically transmitted to process it,” he explains. “This means we’ve reduced the average time for the whole process from 30 days down to four days, with corresponding benefits to cash flow,” he adds. So, after a successful ERP implementation, what about e-business? Boyson: “We’ve been working on a pilot project with Intentia for about 12 months now, to develop B2B [business to business] parts trading. We’ve spent about £50k so far on consultancy and development work. The difficult part has been evaluating and changing our internal business processes, not the front-office web shop part. It’s knowing exactly what happens to the electronic order once it is made, and where it goes. This is where we’ve had delays” The pilot is limited to six of Cummins’ regular dealers, and Boyson wants a ‘web shop’ that allows customers to order directly through the site, with the order passing right through to Movex for fulfilment.