Soapbox for growth

“Many IT projects are justified on reducing costs in manufacturing or the business. While that’s still an admirable objective, I believe they should be focused on getting value up – improving our order-winning business processes, verifying the opportunities, clearly understanding customers’ unfulfilled needs.” So says Ewan Tozer, technical director of £16 million office furniture manufacturer Orangebox, formerly Giroflex. Orangebox is the epitome of make-to-order mass customisation. Based in South Wales, it offers instantly validated choices from several million permutations of backrests, arms, upholstery and so on across all its ranges. Yet it avoids the crippling consequences of massive bills of materials (BoMs) and stocking requirements by company-wide integration linked right back into its SoftBrands (Fourth Shift) ERP system, with product variants created and managed on the fly by integrated Eden Origin rules-based order entry product configurator software. So good is its customer service that it’s beating off much bigger rivals in Sweden, Germany, Italy and the USA. Tozer is that relatively rare breed – a businessman who knows his IT and his manufacturing, and can see beyond how things are done now, to how they could and should be done. And he’s prepared to keep on pushing for improvements with the aid of pragmatically deployed technology – and get them. He’s just taken Orangebox through a major ERP upgrade, partly to bring it onto the Microsoft SQL database platform and improve system and thus business service performance, and partly to get more internal application functionality. He also took the opportunity to upgrade his four-year old server hardware to get the price-performance gains there. And as part of that he’s making the firm’s integrated Eden Origin product sales configuration tool available to more internal users – to improve customer service and business potential as well as making for slicker operations. For him, investment in IT is a serious issue, a key component for his company’s success. He is unequivocal: this year alone his system, and the plans he has for its improvement, will be supporting revenue growth budgeted at around 5%, as well as modest cost cutting, set at around 2%. “I don’t ever want IT to be a bottleneck to our business,” he insists. But he adds: “In my experience many factories probably have enough IT, but companies’ marketing and sales activities either have very little, or make little use of what’s available.” His point: if that’s what your firm looks like, there are diminishing returns in manufacturing management. “We’ve got to look elsewhere for improvement. Start turning the IT power to help us win more business.” His priorities: “I’ve got all our configured product information in a database, so I can see the product trends, the colours, product families doing better than others. I can also establish profitability from different customers. And all of that means we can do more targeted marketing.” Crystal Reports is the magic tool there, but there’s more. “I also want to roll out a new website – a customer extranet – and make our configuration and quoting tool available for key customers as well as our internal sales. In the future, customers could punch out of their web procurement hub onto the tool and order that way.” And you get his drift – it’s all about focusing on more business and then investing incrementally in IT, still integrated with the existing systems, to support growth first, cost-cutting second. For him that’s not going to be classically hyped CRM though. “CRM is overkill,” he says. “But we do want to invest in helping managers to know what’s a good deal. And we want to ensure we don’t miss opportunities.” Part of that will be improving on the customer ‘order promising’ due date. He wants to get the product configurator, which currently drives everything through MRP, to first go through a “mini-MRP” to check the configured BoM against materials inventory, part lead times, supplier production demand, work centre resources and planned deliveries and confirm earliest availability. “If it detects a problem I want that to generate an exception report so that our sales people can go back to the customer with alternatives.” Common sense, and the pragmatic view continues. For now at least, he’s no intention of extending that to web-based order tracking. “There’s been a lot of hype about that too,” he says. “Our customers don’t call us to see where their orders are – we call them to check that they’re still happy to receive their delivery on the date they said they wanted it.” Right now though, he is extending the company intranet, implemented more than a year ago and now at critical mass in terms of staff usage for access to all company information and processes. “We’ve now built a supplier extranet which will soon allow our suppliers to come on and see some of our data. Eventually they’ll be able to browse our MRP.” And the benefit of that, he says, will be towards cost cutting and efficiency. He sees it as the way to move on from the imperfections of the existing system for advising suppliers of material requisitions, involving forecast, history, actual orders and some smoothing – by allowing them to see real order entry, and look at stocks and replenishment cycles. In an ideal world, Tozer sees his company morphing towards consignment stock held at line side, thus eliminating purchase order and receipt transactions. Receipt of configured customer order would drive manufacturing, and the finished goods transaction, generated automatically by barcode swiping would handle shipping and the rest. Backflushing would be for financial reconciliation only. It’s certainly worth moving some of the business in this direction. “The high volume lines we can move to true kanban,” he says, although there are some customer service dependencies, like late changes altering build requirements. And other transaction streamlining thoughts include ensuring that only fully complete orders are ‘shipped’ to reduce admin around open works orders. “It’s down to scheduling efficiency really,” he says. And that’s another interesting one. “We do rough cut capacity planning on a rolling six week horizon. We don’t run MPS (master production scheduling). We just use Crystal Reports. Then we create a daily schedule in Fourth Shift by back scheduling from due date and allowing rules-based lead times for operations, with flexibility to manage real world issues. “We leave detailed scheduling to the people on the shop floor. They know if there’s likely to be a problem with a particular fabric, or that this customer always wants deliveries first thing. I always say it’s better to be approximately right than precisely wrong!” And with only £50,000 worth of work in progress (WIP) and an annual spend of £8 million, the customer service and smooth running of the business isn’t costing him much. Incidentally, it’s also worth noting his feeling about how far you go with supply chain involvement. For Orangebox, he sees the business as too dynamic for developing the scale of rules needed to automate say supply chain event management. But he also feels there are limits to which IT generally should be applied. The human touch in supplier and customer relations, he points out, is very important – just as important as the automation. Good point: there’s a balance for any IT strategy and it’s good to avoid IT dogma. But there are some no brainers. Tozer is looking this year at doing the bar coding. “I’m not that bothered whether we do it or not,” he says, “but it’s only going to cost around £20,000 and it will avoid errors and result in real time visibility of material and product availability. At the moment, all the processes around material movements are manual. We’ve already got a slick business, but we can’t get it any slicker if we stay manual.”