Works orders or individual profit and loss accounts?

We now have software that enables us to treat each job through the shopfloor as an individual profit and loss account,” says Laserform’s MD, Sean MacEntee. “We’ve really got our house in order now. We know which orders are making money and which ones we should be declining… And after 21 years in business, this is the first time that software people have not over-promised and under-delivered.” He’s talking about the firm’s implementation of a new production management and shop floor data collection (SFDC) system from Warwickshire-based software vendor Manusoft. And one year after going ‘live’ on the software, the results are impressive: the firm now has better control of its resources and has improved visibility (through customised reports) of what’s actually happening down on the shopfloor, where it really matters. Cost estimating is more accurate now too. “Having the ability to know which jobs you ought to be turning down and which ones will add to your bottom line is crucial for us in what is currently a very tough economic climate,” adds MacEntee. The Laserform group has three sites: sheet metal fabrication and laser profiling sites are both based in Drogheda, Ireland, and there’s a site in Stockport that manufactures dies for the packaging industry. The company turns over roughly £2m a year and employs 72 people, 42 at the Drogheda sites, the remainder at Stockport. Manufacturing at Drogheda is basically a jobshop with small to medium-sized batches. As MacEntee explains: “Each job is different. The process here tends to be: we get an enquiry from a client; we quote for the job; we then hopefully get the order; and then we manufacture.” The story actually starts back in mid-2000 when the company decided it needed to replace its existing SFDC and cost estimating software, e2i from Radan. MacEntee explains the situation: “At that time, we’d been using e2i for three or four years, primarily for preparing quotes for customers, but it was taking too much cost and time to customise the software… And the shop floor data collection just wasn’t working to plan. More and more clients were asking us for rapid responses to queries on past and present jobs which placed real pressure on us and were time consuming to deal with… That’s why we decided to look elsewhere.” So why Manusoft? MacEntee says that after considering an upgrade from Radan, then a new production control module from Pegasus (to complement the firm’s existing Pegasus financials system), “we decided back in October 2000 on Manusoft via a chance phone call. It happened partly through word of mouth but also because we were informed that Manusoft had real experience in sheet metal fabrication software.” A few weeks later Manusoft demonstrated its software to Laserform. MacEntee: “We were really impressed with it. It looked easy to use; the visuals were good; we liked the idea of shopfloor workers entering key production information via touch screen terminals; and its web module appealed to us as this meant customers would be able to view their orders through our website.” Positive user feedback MacEntee also spoke to other Manusoft users in Australia and New Zealand: “I wanted to talk to similar size manufacturing firms to gauge the success of their software implementations,” he says. “What the benefits were; how responsive the system was; what the support was like; and whether the software really had made a difference or not to the bottom line.” According to MacEntee the feedback from these users was very positive and so, after further software demos, the company decided to start implementing the new software in December 2000. What followed was a very fast but intensive training and installation period of between two and three weeks. “Every morning Manusoft staged tutorials for our staff. Every day was spent learning about a particular software module. Those who needed to know about that module attended the tutorial.” Next came a one-month safety period. Laserform decided to run its existing e2i software in parallel with the new stuff. “We did this to minimise risk and to act as a safety net for those who were nervous about the new software. Any glitches and we could revert back to the old system,” explains MacEntee. Laserform is using Manusoft’s quoting and estimating modules, plus production control and a less-frequently-used B2B web-based software module that lets clients track their orders on-line. The system is relatively uncomplicated: data is input on the shopfloor by production operatives via touch screen terminals (which MacEntee says was a culture shock at first but didn’t hold up the implementation at all). People clock in each time they start a job, then clock out having stopped or completed it. There’s also a facility to record scrap and reject work. The new system went live in February 2001. “The only slight irritation for us,” says MacEntee, ”was that we had to upgrade our hardware to cope with the new software. Real time software means you put extra pressure on your hardware and networks. Putting this right cost us around 30,000 euros [£18,000]. He continues: “The software itself cost around 60,000 euros [£37,000] for a 15-user license, including a year’s maintenance. But with training and implementation, plus our own internal effort, I reckon we’ve invested double that figure in total.” But one year later, Laserform has seen a real difference. “We expect a payback within 18 months,” says MacEntee. “Once we started getting real time reports from the shopfloor we realised that some jobs we’d been taking on had become institutionalised and weren’t actually contributing to profit. “Although it’s against the culture here, we’ve actually had to decline certain jobs from customers in favour of other work. You could say we’ve become more selective and more profitable as a result. “With softening demand and a tough Irish economy to cope with over the last few years, the new software has really helped us get through this difficult period… Our house is now in order though and we’ve got the foundation in place for future business growth.”