Flexible ERP at a third of the cost

We’ve now got a more flexible ERP [enterprise resource planning] system,” says Chelton Radomes’ quality and operational systems manager Neil Broughton. “We can now make changes to the software quickly ourselves and create our own new templates in house very easily. It’s saving us a lot of time, money and hassle.” Chelton Radomes manufactures aircraft nose radomes and microwave components for military and commercial applications. There are 85 employees in all, 22 of them on the shop floor. Based in Stevenage, the company has an annual turnover approaching £10 million and was acquired by the Cobham group in April 2000 from BAE Systems (BAES). The firm is currently preparing for full scale production of the new Eurofighter aircraft which is due to enter service in 2002. But high profile aerospace projects like these are typically fixed price contracts, reflecting the mounting pressure on aircraft manufacturers (and their suppliers) to strip out cost from the design, test and build processes. For Chelton this meant a stricter control of budgets would be necessary throughout the whole business. But that wasn’t all. The move from BAES to Cobham brought other changes. Under BAES, the company had been using an ERP system from Baan (outsourced to CSC), one of its approved ERP vendors. Broughton explains: “We were a small business using an ERP system that fitted very well for medium to large enterprises, but wasn’t right for us. There was simply too much functionality, our support was 300 miles away, and any changes had to be made by CSC. Every change was costed separately and the whole process was time consuming and costly.” Size is important Flexibility of the software was a major factor too. “We did consider staying with Baan,” adds Chelton’s md Trevor Cook. “But it forced us in certain directions. We wanted an ERP system with the flexibility to enable us to be masters of our own destiny… As a standalone company the price [£350,000 for software, hardware and support services] was not acceptable for a business of this size.” In April 2000, the company decided to bring its IT function in house rather than continue to outsource to CSC, and at the same time decided to replace the existing ERP system with one from Made2Manage (M2M). “The price for the new system was around £100k,” says Broughton, “a third of the price Baan quoted us for its equivalent offering. And we were buying a flexible product this time.” But there was another potential problem at this stage. The company had just six months to implement the new software before its outsourced contract with CSC expired. M2M’s UK reseller, NCR, carried out the actual implementation of the new software. Broughton recalls: “Because of our time pressures, NCR used Made2Manage’s Time2Value rapid implementation tools. “It was fundamental to implement the new ERP solution without compromising business performance. Thus, as far as possible, we opted to replicate existing processes but [on advice from NCR] took the opportunity to simplify some of the more complex processes.” Although Broughton claims the installation went “very smoothly” he does concede that there were some difficulties: “Migrating corporate data from Baan to M2M did present us with a few problems. We were ok with static data, such as bills of materials, routings and item masters, but when it came to dynamic data like sales and purchase orders we were less successful. “It [the M2M software] was sold to us as a big-bang approach, but in the end we had to do it in stages. Over a crucial two-week period towards the end of the implementation we had to store some of our dynamic data in dual systems [therefore some manual re-keying of data was necessary]. When we were happy that everything was replicated in the new database we turned off the Baan one.” And in the year since M2M was launched (back in October 2000) the new software is already beginning to pay off some of its price tag. In fact you could say things have really taken off (excuse the pun) for Chelton. Better repair cashflows According to Broughton, the firm’s repair centre isn’t constrained like it was with the ‘old’ Baan software, “which was configured to cope with the core business but not periphery areas.” He says: “We used to assess each repair job differently; there were no standard prices, we just looked at it, quoted a price for work done, and then let it pass through the repair centre. “We’re now achieving a slightly faster turnaround with the new software, but it’s not the turnaround where we’re really seeing benefits. It’s our cashflow that’s really improved here. With M2M we can now attach invoice and payment details, track the job through our workshop and make sure we get paid quickly for doing the repair work. Before, we simply had no method of doing this and payment often arrived with us months later.” And further benefits have come in the design, development and production processes. M2M now lets users link engineering instructions to shop floor paperwork. In the past, delays in updating the planning, route cards and bills of material, which ideally should be in synch at all times, led to data inconsistencies throughout the business. “A Eurofighter radome is a complex project with planning alone running to over 30 pages… Any change to the quantity in the bill of materials forced a change in both planning and route card. As a result, changes were stored and updated in batches, often weeks after they were initially made,” adds Broughton. With M2M, Chelton has now introduced a fast-track change process that doesn’t require all three documents to be updated. And while Broughton doesn’t quote actual savings made, he says that, “the new process is providing up to date paperwork on the shop floor resulting in more accurate purchasing, accurate costs and consistent project reports.” But there’s more. The firm is also making further savings by using M2M to automate the production of certificates of conformance for its customers, replacing traditional re-keying methods. And, it’s currently introducing shop floor data collection using bar coding. In the first phase, Chelton will use bar codes to improve the process of picking stock from the 20 to 30 page pick lists. The next phase will expand the use of bar codes to labour entry to provide up-to-the-minute job costing information, and Broughton expects it all to be operational by the middle of 2002. “For the first time, Chelton Radomes has a consistent reporting platform that is trusted throughout the organisation,” concludes Broughton. “M2M is giving us the information we need to drive business change. Our challenge is to exploit that information source for business advantage.” Quite.