Leaner times

During the early nineties enterprise resource planning (ERP) software was the thing to have, and technicians were setting up pilots to implement SAP or Baan systems.

Then the world changed. Far Eastern manufacturing edged out UK firms, and to stay in business we had to figure out what we were good at. During that process many firms discovered that the traditional big company approach to SAP and Baan-style ERP was no longer valid.

The kind of manufacturing that sets the UK apart from the rest of the world is its ability to customise and make exactly what the customer wants — in the quantities required. This environment, and the necessity to make small batches economically, places new constraints on manufacturing software.

According to Simon Bragg, European research director at ARC Advisory Group: ‘Today, challenged by increased product variability, greater demand fluctuations, and shorter lead times, lean manufacturers are adopting agile manufacturing which synthesises lean thinking, make-to-order manufacturing and event management to increase profits.’

This view is supported by Graham Hackwell, technical director of Preactor, the leading finite capacity scheduling vendor. ‘Agile is just a push to get to an economic batch quantity (EBQ) of one,’ he said. ‘This means you need to be able to change from one product to another very rapidly. But when you do get to the happy situation of an EBQ of one you have a scheduling problem.

‘To my mind make-to-order is the ultimate lean,’ he continued. ‘When you reach a point where you make exactly what the customer wants, you have no excess inventory and no waste — it’s exactly the position you need to be in.’

Legendary motorsport engine maker Cosworth Racing uses Preactor, and production scheduling manager Darren Dowding said: ‘Before Preactor, core team meetings in our Ancillaries, Refurb and Prototype (ARP) section, which handles the most immediate changes, would be full of “what if” questions that were answered by gut feel and/or intuition. Since its introduction, the scheduler simply takes the “what if” scenario to the system and returns a few minutes later with a hard copy of all the actual consequences.’

According to Dowding, just buying software is not going to solve the problem. ‘Anyone can buy a grand piano but it doesn't make them a concert pianist — you actually need to understand all of the issues before you can apply any kind of software solution.’

Bendalls Engineering makes specialist steel fabrications and assembles electro-mechanical equipment for industries from petrochemicals to the nuclear sector. Once the company is given a job it is logged into its McGuffie Brunton Syspro ERP system and the engineers use that to generate the material requirements.

‘Syspro takes over once the job is defined and keeps everything in order,’ said finance director Neil Murray. ‘When we place any order on a job, that order is attached to the job so at any given time we can see the cost commitment and what we’ve spent so far and compare it with the estimated costs.’

He said that Syspro allows the company ‘no surprises’ management, and users have far greater awareness of where Bendalls is in detail with the work-in-progress (WIP). Another advantage, he said, is that things don’t get overlooked because everything is included in Syspro. The good thing about the system is that nothing relative to the job can exist outside it — that way the company won't suddenly get an invoice that it has forgotten about.

‘Syspro is designed to cater for engineer-to-order (ETO) whereas traditional ERP/MRP is less useful because we carry so few stock items,’ said Murray. ‘We tend to buy everything in against the particular jobs.’

In terms of advice and best practice Murray suggests that you do your homework and get the system that works for you. ‘That is the beauty of dealing with McGuffie Brunton,’ he said. ‘Not only is the product good, but the company also makes an effort to understand our business. It is much more affordable than alternative ERP systems, and being modular we can generate all sorts of regular reports and it can be run using the existing staff. We’ve also found that the staff are enthusiastic about working with it because they can see the real benefits.’

According to Mark Howitt, AWS Electronics business development manager: ‘The MTO/ETO situation is further complicated if you consider the complexities involved in re-manufacturing — that is repair and/or renovation or refurbishment. In this kind of industry you don't know what your final BoM is until the product goes out the door.

‘Many major ERP providers think re-manufacturing is relatively simple and sufficiently similar to “scratch” manufacturing so it doesn’t require any specific or specialised modules,’ said Howitt. ‘This could not be further from the truth. Many providers fail to meet minimum functional specifications for re-manufacturing. And it’s not just about complexity. In re-manufacturing, as well as the BoM problem, there are a number of simultaneous requirements that ERP vendors cannot handle simultaneously. They could satisfy them with different modules, but they can’t get the modules to talk to each other in real-time to cope with the simultaneous requirements.

‘Also, you don't know the usage rates until the finished product has been shipped,’ he said. ‘Often you don’t know the route for your route card until it has been through it, because you don’t know the condition of the internal components, and every job is different in terms of the refurbishment work needed.’

AWS has an Infor ERP system. Howitt explained that with any scratch manufacturing the structure is much simpler because when an order is received, every detail of all components and materials could be worked out and programmed in — making things much more straightforward.

He said: ‘We knew we needed a lightweight system, because AWS is a small company with very, very narrow margins (around two per cent) because of the industry we are in. We’ve got a wide variety of customers with a wide variety of products. Often, customers place orders with us and expect delivery in less than the lead time of the major components. Maintaining the margin is the biggest challenge, so we have to eliminate all non-contributing processes.’

MTO, ETO and Agile manufacturing have special characteristics that are not always catered for in the traditional ERP or manufacturing systems. Manufacturers need to understand these characteristics and make sure the selected system can deal with them effectively.