Time to hose down your business?

Inventory reduced by 10–15%, stock and work in progress (WIP) accuracy transformed, and major improvements in production planning, production and business agility: those are among top line benefits at industrial composite hose manufacturer Dantec since installing its ERP system. But this success wasn’t the result simply of bolting-on integrated business management software. The firm, based in Merseyside, turns over £4 million with 60 people, and manufactures and distributes specialist hoses, gaskets and accessories for a range of industries, including petrochemicals. When, three years ago, growth and change meant that its DOS-based Sage accounting and manual production systems could no longer cope, it took the opportunity to set itself up via grass roots business process change. This is key, says Dantec IT manager Derek Connolly. Although problems included inability to access sales and finance data fast enough, and poor assembly controls, the “almost non-existent IT support” wasn’t seen as the only cause. The firm had come from small make-to-stock roots, and had outgrown its management controls. Process mapping So consultancy Capacity Solutions was brought in for business mapping. The review looked at key activities from sales and management to manufacturing. “Mapping confirmed our fears about existing systems, that decisions were not being made, or the wrong actions taken, because people either didn’t have the information they needed, or the data they were using was inaccurate,” says Connolly. “It also highlighted key areas where we needed new control practices and proved that, if we were to maintain growth, major change was needed.” There was a clear requirement for an integrated ERP system to improve information visibility. But the study also showed that controls and stock recording around goods for fabrication and assembly versus those factored in for distribution, would need to be substantially improved. Similarly for WIP, forecasting, sales and procurement. It was a long wish list, amounting to a pressing need for a structured framework to impose management discipline and departmental controls. And Connolly says the consultant was pivotal in helping Dantec to prioritise action and investment. “Looking at yourself honestly is very hard,” he observes. In the event, Dantec implemented McGuffie Brunton’s Impact Encore ERP (now Syspro) two years ago, with integrated finance, distribution, sales and manufacturing, along with the recommended change management and a big user education job. Connolly emphasises the importance of the latter. “People weren’t used to using the computer … so they needed to understand that for the system to be accurate for all departments, it needed the right information at the right time.” Otherwise, queries would result in an unrealistic picture and the system would fall into disrepute. Says Connolly: “We now have a comprehensive and integrated system for managing and controlling purchasing, inventory, WIP, warehousing – none of which we had before. And we have rapid access to the sales data and almost instant visibility of orders for assembly.” Also, whereas it had been almost impossible to extract management information on anything from cash flow and sales to stock, now the firm has instant visibility via Microsoft Access, with managers configuring their own reports and being able to concentrate on managing products, orders and customers that make money. Stock control has also been radically improved. Previously, materials were recorded and managed as single values, whether for fabrication and assembly or bought-in and factored. Now, all items have stock code, order and location data. The result: all relevant departments have precise stock visibility. For manufacturing, that’s meant ‘closed loop’ controls such that inventory and WIP no longer ‘disappear’ from the system as they’re allocated and de-allocated. And that in turn has meant less WIP and clutter, and manufacturing planned more effectively to order. Similarly, purchasing gets the efficiency benefits that come from real-time information. And for sales, it’s meant a clear picture of demand and ability to fulfil – including seeing the consequences of accepting late orders from key customers, not only on production, but on other jobs and other customers.