Switching ERP systems proved to be an opportunity to transform the way work is tracked and measured at CDF Corp....
The company moved off a narrowly focused, siloed system to an IFS Applications platform that is touched by every employee, from factory workers to the president. The change has boosted manufacturing visibility throughout the plant floor, reducing error rates along with labor and inventory costs while speeding up delivery times.
|A CDF shop worker interacts with a terminal running IFS ERP software.|
"We're really empowering people on the shop floor," said Laura Beechwood, the company's chief operating officer. "There's this whole sense of this engine now that's pushing us forward."
Based in Plymouth, Mass., and specializing in flexible packaging for liquids, CDF makes plastic liners for pails, drums and other containers used in industrial storage, shipping and consumer goods.
Before installing IFS two-and-a-half years ago, the company's customer service and accounting departments ran a Glovia ERP system, and salespeople used ACT for rudimentary customer relationship management (CRM). CDF was having difficulty finding cost savings and wanted a better handle on machine use and overtime, according to Beechwood.
Now the company has visibility into manufacturing and financials, and a new confidence in the accuracy of the data. "Our customer-service people now can actually see -- live -- what's happening," she said.
CDF integrates ERP with shop floor operations
In tours of the company's two plants, IT manager Alex Ivkovic and Tom McCarthy, manufacturing manager of CDF's intermediate bulk container (IBC) division, showed how the ERP system provides a window into manufacturing processes.
Shop floor workers access the software from touch-screens, many of which are associated with specific machines. They can punch in to the IFS time-and-attendance software by scanning their ID tag under the attached barcode reader or typing a personal number. The units are powered by $200 Hewlett-Packard thin clients running Windows CE and linked over Windows Terminal Services to IBM 3550 and 3650 servers that run middleware and the IFS Oracle 10 database. IFS does not connect directly with the machines, which are controlled by programmable logic controllers (PLCs) in the IBC plant and by DOS computers in the older drum and pail building.
Supervisors use the screens to assign workers to jobs, track their time on a machine, and record inventory. "It's a big change for employees," Ivkovic said, because previously they were not expected to clock in and record units right at a machine. "Now we know what each machine is doing, what employees are working on what products," he said.
IFS outputs barcoded shop orders that contain bills of materials and work instructions. Previously, the information was scattered across several documents. "The supervisors were handed a paper work order, and everything from that point on was paper until they came back to report the number of liners produced," Ivkovic said. "There was no view into what jobs were being worked on, how far they had gotten, etc."
"Now, we've built it all into one shop order," McCarthy said.
The IFS document-management module has allowed the company to reduce physical filing by more than 80% and save money on paper. "All documentation related to customer orders, shop orders, purchase orders, shipping, and invoicing are scanned or saved and attached to the appropriate screen in IFS," Ivkovic said. "It takes about the same amount of time to scan and attach as it did to file, but the real payback comes on retrieval. No more missing documents."
ERP implementation improves inventory management, capacity planning
Management strives to keep materials inventory to a minimum while ensuring sufficient supply to turn around orders in a day, if necessary. To that end, McCarthy uses IFS for cycle counts and other lean manufacturing metrics, along with the manufacturing resource planning (MRP) module. The company also tries to source raw materials locally.
IFS also helps McCarthy plan for capacity based in part on demand forecasts that chief financial officer Mark Kasberg prepares from sales projections. Under the old system, it was hard to plan for each work center in the production process, which handles approximately 30 high-volume orders a month. Kasberg said people would write down units and someone would enter them into Microsoft Excel. When the company started adding product lines and became more of a 24/7 operation, the lack of information about work processes was putting a damper on CDF's growth, according to McCarthy.
Now the company uses IFS's timelier and more accurate labor data to improve productivity by, for example, reassigning workers who are waiting to get on a machine, Kasberg said. McCarthy can more easily quantify the hours needed for each step and avoid bottlenecks from insufficient labor. This has boosted the company's available-to-promise capability, he said, allowing it to take on unexpected orders it might have turned down before while reducing errors.
CDF enjoys benefits of manufacturing visibility
Labor costs as a percentage of sales have dropped 1.5% in one plant, and inventory is down 40%, according to Kasberg. For the first time, the company can accurately account for the value of scrap plastic -- called regrind -- that goes out to a recycler and returns to resource inventory. The data also gives CDF a better idea of how efficiently it uses the plastic sheets that are its main component. "We can go back and better adjust our standard to get a better idea of our real manufacturing costs," Ivkovic said.
The team is debating upgrading to IFS Applications 7.5 or 7.6. "There's a lot of push-back to spend any money on updating," Beechwood said. "Upgrading computers is not high on our list." But the consensus of management is that the upgrade will bring needed fixes and features and is probably cheaper than getting by with outdated software, a lesson learned with Glovia. Few doubt that the ERP upgrade will happen, but they know they need a solid business case nonetheless.
Meanwhile, McCarthy is eager to use the IFS quality module. Quality control is critical for CDF because it competes on quality and service against low-price vendors. Its customers store high-value liquids, such as food syrups, in thick plastic bags that can hold hundreds of gallons, and leaks can be expensive. So CDF workers spend a lot of time inspecting seals for defects. With the software, they will be able to enter quality data for Six Sigma analysis, and it will alert them to potential problems. McCarthy believes his first efforts to use the module failed because he set it to be too sensitive.
Ivkovic is eyeing radio frequency identification (RFID) for tracking inventory through the plants and dock doors, and he is considering adding the IFS human-resources module this summer.
His advice for other IT managers? "Integrating ERP is a long, slow, hard process. You're trying to fit the software that wasn't designed for your business to your business model." A natural resistance to change and stubborn repetition of old methods are major hurdles only overcome with persistence. "You have to really be willing to push people and say, 'Why can't we do it this way?'"