Finding The Right Fit

Software responds to different industries, sizes of manufacturers.

When 3M went looking for a software package to help standardize and automate its far-flung and disparate methods of barcoding and packaging products, it found there was nothing on the market that fit the bill. Faced with that problem, many manufacturers, assuming they have the information systems expertise, will create their own application. And that's exactly what 3M did. The only difference is, the new software worked so well, the company decided to offer it to other manufacturers of industrial products that had similar packaging needs. "We looked at a number of automation and software suppliers, but the 3M solution proved to be a bull's eye for us," says Ron Juncal, process improvement manager at W.W. Henry Co./Ardex Inc., a manufacturer of flooring adhesives and floor-care products based in Pittsburgh. "We were looking for a standardized software approach with a centralized database for our labels, so that we would have a standard-looking label across our four manufacturing locations." Whether they produce consumer goods, pharmaceuticals, automobiles, semiconductors or medical devices, manufacturers generally have the option of finding enterprise software that meets their specific industry's functional needs. This includes enterprise resource planning packages, manufacturing execution systems, customer relationship management software, and supply-chain-planning packages. Similarly, a number of niche software providers offer all manner of applications geared to improving the information flow and worker productivity related to various business processes. Oracle Corp.'s latest version of its ERP system contains about 900 new industry-specific functions, as well as an equal number of new functions for all industries, says Ellen Minter, vice president of global industry strategy and marketing. "In the high-tech vertical, we added RosettaNet transaction capability, advanced catalog support and outsourcing support," she says. "Similarly, in automotive, we added direct ship, flow sequencing and enhanced order releases." Oracle likewise added functions in a host of other industry-specific packages, including life sciences, aerospace and defense, and consumer packaged goods, among others. In most cases, these industry-specific capabilities boil down to discrete functions, often helping to automate or provide the information component associated with processes that are indelible to each business. "It's clear that the more you can solve the types of specific issues that keep these manufacturing people in a particular industry up at night, the more successful you're going to be," Minter says. "I see us as a company that is doing everything we can to support industry-specific needs. Our ERP system is one product with different features that you can unlock to support your particular industry." ERP For Pharmaceuticals Of course, the vertical industry software package sometimes becomes a necessity. That's the case with pharmaceutical firms, which typically face a plethora of special Federal Drug Administration functional and reporting requirements throughout all their processes, from new product research, development, and testing to manufacturing, packaging and shipping. Pharmaceutical firms of all sizes are attracted to ERP systems because they not only help automate the usual stuff businesses need, such as inventory control and supply-chain planning, but they also enable companies to electronically track everything that goes on. For instance, in case a pharmaceutical company needs to do a product recall down the road, the ERP system offers excellent documentation for maintaining lot numbers and for traceability of products, says Joe Cardarelli, a consultant with Taratec Development Corp., a Bridgewater, N.J., firm that assists major pharmaceutical firms in solving regulatory issues. Drug manufacturers also benefit from industry-specific ERP packages at the front end of the product equation. For instance, the ERP package from Oracle allows tracking of inventories of all reagents used in the lab during the product R&D process. Other industry-specific capabilities contained in ERP software designed for pharmaceuticals include key sales and invoicing functions. For example, SAP AG's R/3 system provides for what the industry calls chargebacks, tracking special prices negotiated for certain large customers, and calculating the amount of money wholesalers are eligible for rebate. The idea is to enable drug manufacturers to manage these contracts more effectively. Pharmaceuticals is one of 23 different vertical industry solutions SAP maintains. Another important function for drug manufacturers is keeping track of product shelf life. Each manufacturer must verify that the correct date appears on the product and has to keep tabs on where the product is in the supply chain. The downside of industry-specific solutions is that they don't come cheap. Consultant Cardarelli figures the average industry-specific ERP system for the pharmaceutical business costs about 30% more to implement than similar systems that don't require special validation to meet FDA requirements. The SAP package comes equipped with a built-in routine for testing the system's compliance. Packaging And Barcoding Sometimes even industry-specific ERP systems don't delve deeply enough into the specifics of a particular trade. That was the case at W.W. Henry/Ardex, where the business had labored along for years with multiple methods of barcoding and different kinds of labels that went on the packages for its various products prior to shipping to customers. This multiplicity led to confusion not only among its own warehouse order pickers, but also among its customer base. It also led to errors in orders. Says Juncal, "It not only caused problems for our stock pickers, but also for our customers if products were labeled wrongly." The 3M Integrated Packaging Tool maintains W.W. Henry/Ardex's labels in a single database containing each item number, the UPC number, the barcode number, a product description, and any associated artwork or logos that appear on the packaging. Having the artwork in a digital format available online to product designers can be a time-saver when companies introduce new products. "For a major consumer packaged goods company, the ability to turn [around] a piece of artwork quickly offers an opportunity for additional revenue," says 3M's Mike Haldane, business manager for integrated packaging management. MES For Medical Devices Agilent, a manufacturer of medical devices, and other high-tech products that was spun off from Hewlett-Packard Co. a few years ago, is using a manufacturing execution system from Camstar tailored to the special needs of biotech device manufacturers, a fledgling but fast growing industry. The BioResearch Solutions manufacturing unit, which makes DNA chipsets for medical testing, takes advantage of Camstar's Insite system to track the history of each product and to provide a customized workflow system that prompts operators who must follow a complex procedure in building the chips. "We are the fastest manufacturer in the industry because of the software we use, such as Camstar," says Len Esparza, infrastructure manager at the company's plant in Santa Clara, Calif. "We are similar to many other medical device manufacturers in that we make complex custom products in a very quick fashion," Esparza adds. "We are always looking for ways to use machinery and software to enable us to make these chips faster, and that's where Camstar helps us." Because the workflow system portion of the software package prompts operators at each step of the manufacturing process, Agilent is able to hire and train people without Ph.D.s or other advanced degrees. "The operator doesn't have to be a microbiologist or a computer scientist," Esparza says. "We can bring in lower-skilled workers to produce these products at much lower costs." Demand Planning For CPG Sara Lee Corp's Household & Body Care Division in the U.S. had specialized demand planning needs related to its particular industry. The company needed more special and detailed functions than could be found in most ERP systems. "We had an archaic and limited demand planning process before," says Gary Kahler, director of sales and operations planning at the Exton, Pa., firm. The Sara Lee unit now uses a demand planning system from Prescient Software to support its sales and operations planning. "Since we've begun using this software, our sales forecast accuracy has risen dramatically," Kahler says. He adds that the new system has also had a positive impact on the company's inventory planning and order-fill capability, the latter in turn boosting customer satisfaction. The household and body products group has been able to boost the accuracy of its sales forecast from about 61% in 1999 to 74.5%, which Kahler says is at or near the apex for his industry, based on benchmarking studies the company has done. In other words, the error between the demand forecast and actual sales has been reduced from 40% five years ago to about 26% today. "In terms of forecast accuracy, 75% to 78% is as high as CPG companies get," Kahler adds. "The logic sold the concept," Kahler says. "Better inventory management influences our order fill ability, and if you can fill your orders accurately and on time every time, that increases sales. Also, it boosts our inventory turns, which also helps our profits." Still, even with the software as an aid to forecasting sales, the process is still a laborious one. "The process is labor intensive, because it depends on the intelligence you bring to it," he says. "We work with the assumptions we have for initial demand." Then, sales planners have to figure in numerous variables, including various promotions, advertising, product history, and other factors. "It's not a magic bullet," Kahler points out. "You can't just put in the software and expect it to give you perfect sales forecasts. You absolutely have to have the sales and market intelligence to marry up with the software to make it work right." In other words, the technology is only a tool. It's how people use it that makes the difference in the business.

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