While metalformers may have been avoiding installing a new enterprise-resource-planning software system, due to the somewhat daunting investment required, the alternative typically can be much more time consuming, labor intensive, costly and even harmful to your businesses future. The right type of ERP system can actually reduce costs, save thousands of dollars and markedly improve overall profitability. Two areas, of several, where a new ERP system can significantly reduce costs: inventory management and production scheduling.
Trimming Inventory-Related Costs
Typically, when metalformers begin implementing a new ERP system, they’ll realize a reduction in net inventory costs, carrying costs on this inventory, and labor and shipping costs. For example, consider London Automotive & Manufacturing, which operates a metal stamping and assembly facility in London, Ontario, Canada. Says company president Greg Ducharme: “We needed better inventory management of our raw materials, and had more than $500,000 tied up in the wrong steel inventory. Improved shop-floor scheduling with our new ERP system has resulted in improved production levels since each piece of equipment is now in a level-load state. As a result, we have the right stuff at the right time, which has resulted in dramatically less equipment changeover.”
Stampers must be able to answer these questions—just a few of the questions that new ERP software can answer with a keystroke.
• How much raw-material inventory do you have right now, and where is it exactly?
• How old is it?
• Is it the right material for the right job?
• Where did it come from and how much did it cost?
Similarly, metalformers must account for work-in-process (WIP) inventory, and understand how this inventory affects production planning. Says Jason Franklin, Tennessee Stampings, Portland, TN: “We had zero visibility of WIP components and finished goods, and our new ERP system now handles bar-coding capabilities from steel receiving to WIP inventory through to shipping.”
This type of tracking capability allows a metalformer to have answers to customer questions quickly and accurately, improving customer service. Integrating eliable data-collection systems such as barcode readers on wireless networks, in concert with an ERP system, allows a company to make decisions quickly, based on real-time and accurate data.
Production scheduling can become a real headache for companies trying to manage a dynamic process with a static tool. ERP software can compute all of the many variables affecting production scheduling, helping a metalformer answer these and other critical questions:
• When do I need to start producing a component to meet my deadline?
• What should the sequence be to meet production requirements today, this week or over the next several months?
ERP software not only helps optimize production and eliminate delays and nonproductive activity, it also allows a metalformer to run reports that help explain slow production periods. However, the real cost savings from employing an ERP system for scheduling compared to a manual process reliant on spreadsheets typically come thanks the decreased time required to not only schedule production but to adapt the production schedule on the fly to changing customer demands.
For example, at Ada Stampings, LLC, in Ada, OH, plant manager Gary Wicker explains how the company sought a competitive advantage through cost-effective production. “That’s what we got,” he says, “with a new ERP system that helped decrease our changeover times to accommodate smaller volumes. Our older system was purchased by accountants, and lacked a focus on manufacturing and shop-floor activities. Also, our new system includes a scheduling and planning module to level equipment utilization by incorporating historical order patterns.”
Newer nongeneric ERP systems such as those referenced by Wicker and Franklin offer features specifically designed for metalformers, including bar-coding functionality, wireless networking, EDI data transfer, integration with the toolroom, and scheduling engines. These advanced software algorithms accept the myriad of variables that impact production scheduling, right down to the strokes-per-minute capacity of a company’s equipment and the loss codes at each work cell. A metalformer can even integrate all of its tooling requirements in these newer, vertically designed and industry-specific ERP systems.
See also: ShopEdge Software Inc.
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