Using global ERP to manage the complex supply chains and financial transactions of multinational commerce is nothing new to Satellite Industries. But the Minneapolis-based manufacturer of portable toilets and rest rooms will take a big step toward managing global operations more efficiently when it upgrades this fall to the latest, more consolidated version of its Sage ERP X3 system.
Satellite’s perch is truly global. Besides its headquarters, the company operates a plant in Texas and a mix of manufacturing and sales facilities at wholly owned subsidiaries in the United Kingdom, Germany, the Netherlands and Belgium, along with several other offices, including its Asia-Pacific base in Hong Kong.
X3 helps keep the flow of money, materials and finished goods moving smoothly among the various entities and rolls it all up into a consolidated accounting picture, according to Satellite senior management.
With approximately a dozen ship-from locations, including four third-party warehouses, the company must also share some of its ERP data with outside suppliers and logistics providers.
“Our suppliers know where an order goes and they have visibility into our demand,” said John Markeson, Satellite’s director of supply.
Satellite’s use of X3 essentially boils down to monitoring purchase orders placed by second- and third-tier suppliers via electronic data interchange (EDI), Markeson said.
“We’ve essentially outsourced that whole part of our process -- manufacturing, planning and distribution," he said. "We’re operating a large network of business with just a handful of people.”
Seeking efficiencies in ERP data consolidation
Markeson said having an ERP system has made the company more efficient and streamlined. But he admits that the current setup is more fragmented than he would prefer.
“We don’t have the ability right now to have a fully integrated inventory management system,” he said, and there isn’t enough real-time visibility into inventory for the company to use X3’s available-to-promise features.
John Babcock, the company’s vice president of finance, faces similar issues. By design, Satellite’s financial entities are separated with a “hard brick wall,” Babcock said, and he often wires money between them, though their financial accounting is consolidated.
The problems have more to do with ERP data management across the subsidiaries.
“Each one right now is using a separate installation of the software,” and there might be four different numbers to identify the same supply source, Babcock said. “If you modify one of them, you’ve got to modify the other three.”
The data management shortcomings are the main reason the company wants to install version 6.2 of Sage X3, which will allow managing locations from a single “folder” (X3 parlance for database) instead of needing separate ones as they do now.
“We should be able to integrate all of our suppliers and all of our warehouses into one specific folder,” Markeson said.
The single-folder architecture might also allow Satellite to implement consignment inventory at some locations, according to Babcock. Right now, the email-driven process it uses to stay in touch with business partners is too asynchronous and “offline” for a consignment program, he said.
Babcock also expects intercompany transactions to become “a lot simpler and more automated,” though he will still need to maintain distinctions between countries in X3 for regulatory and tax purposes.
Prior versions of X3 had limited capabilities for handling multiple countries’ legislative requirements in the same folder, according to Larry Walker, a Sage senior consultant and project manager on the Satellite account.
“V6 allows [customers] to use a single folder with distinct legislative codes to still produce the reporting separations desired,” Walker said, though they have the option of retaining their existing, multi-folder configurations. “Locations and management related data will retain [their] uniqueness in one or multiple folders.”
Consolidating folders should also reduce data entry and redundant data transfers at Satellite, according to Walker, and financial transactions will improve as the process of associating inter-company receivables and payables is automated.
Walker said testing will have to be conducted on the Satellite deployment before deciding on the final configuration. “Separate folders would still be recommended if the business units maintain their own servers and related systems,” he said.
Virtualization eases ERP integration
X3 went live in 2005, when Satellite replaced its custom, green-screen manufacturing resource planning (MRP) software. “We custom designed and tweaked and added onto it for probably 15 years, and it fit like a glove -- just perfect,” Babcock said. But the software became unwieldy because anyone could request changes, he said.
Today, the company runs X3 on virtualized servers that it controls at a third-party hosting facility, according to IT director Duane Jasco. Satellite replaced its original virtualization platform, VMware, with Citrix XenServer but will likely move back to VMware for its high-availability (HA) feature, which Jasco considers superior to Citrix’s.
“I do know of a company that lost data with the Citrix HA system, and that’s not something we’re willing to risk,” Jasco said. “I don’t know when anyone has lost data on VMware.” Jasco said he anticipates no problems switching back because the Citrix software runs well as a VMware virtual machine.
Today, nearly 60 Satellite employees use X3, and around a dozen people at direct-ship partners access it over the Citrix NetScaler appliance. “We have a vendor network established, basically keeping them separate from our network,” Jasco said.
Babcock can access all of X3 on his Apple iPad, thanks to NetScaler and the Citrix Receiver and Citrix Desktop software, which Jasco said can turn almost any client device into a virtual desktop. Other iPad users include pretty much anyone whose job is partly mobile or who needs access to X3 from home, including material planners, sales, research and development, and security personnel.
Looking for relief in ERP-enabled standardization
Babcock deems the X3 deployment a success, noting that Satellite’s expenses as a percent of revenue have declined in that time.
“It’s allowed us to grow our business substantially without growing our overhead,” he said.
Having business units drive the deployment proved to be key. “IT was the least involved,” Babcock said, but he would still have done a few things differently.
He would have done more training. “You’ve got a core of a couple of superusers who do the core of the heavy lifting,” he said, but he wishes he had “converted” more employees to that status so they could train others.
“I would have standardized more processes between entities,” Babcock said. “I would have spent more time trying to tie the system into one global entity.”
It looks like he’ll get a second chance with the pending move to a single folder in X3 6.2. “We’re hoping that it will just tie us together and make us one company," he said.