Improving Financial Performance

Dec. 11, 2006
How manufacturers put ERP to work.

In New Age lingo, enterprise resource planning (ERP) is holistic.

It's about big-picture stuff. ERP represents a big investment. This isn't about picking a package or two of software off the shelf at Staples or Office Depot. And manufacturers expect a big return on their investment.

True, manufacturers have mixed and matched software modules -- for example, production and CRM systems from SAP, a financial management package from Oracle and a human resources management package from PeopleSoft -- and often they've considered the combinations to be both efficient and effective.

But as good as individual business software packages are, the results the ERP system as a whole can deliver are the ultimate test. At the end of the day, it's about the whole enterprise, about improving operations and overall financials.

See Also

ERP Breaks Barriers

Points To Consider When Investing In ERP

ERP Benefits

Putting ERP To Work

Setting Your IT Priorities
Consider Barnes Aerospace, a privately held Windsor, Conn.-based producer of machined and fabricated components and assemblies for aerospace manufacturers.

In early 2005, Barnes Aerospace implemented Infor Global Systems' ERP SyteLine at its Windsor Airmotive repair base in West Chester, Ohio, to complement the Infor SyteLine systems it was already running. The issue was "scalability," says Pete Gottschalk, group director for management information systems at Barnes Aerospace. The business was planning to double its sales, and the division manager believed the existing ERP system could not support that level of business, Gottschalk explains.

During the first 12 months with the new system, Windsor Airmotive in West Chester posted double-digit increases in sales and profits, recorded a 65% decrease in accounts receivable and a 174% improvement in days payable outstanding. Oh yes, it also closed its books in half the time it formerly took.

SUMCO USA Corp., a unit of Sumitomo Mitsubishi Silicon Corp., self-described as the world's second-largest silicon wafer producer, says it has reduced IT costs to 2.5% of sales from 6% of sales by selecting SAP to obtain a one-source ERP solution for its three U.S. manufacturing sites. Mergers and consolidations had left SUMCO facilities without a common database, a situation, notes Dan Moore, SUMCO's Phoenix-based IT director for ERP systems, that the company decided needed to be changed.

Implementation of the new system began with some finance functions in 2002, progressed through such manufacturing functions as production planning and finally brought in human resources. The system is now fully operational, and Moore and his colleagues this fall were planning for a two-step upgrade that's expected to begin in 2007.

Replacing its legacy system with QAD's GXE enterprise system has allowed Vita-Tech International Inc., a California-based contract manufacturer that develops and produces nutritional supplements, to automate and centralize business processes, bringing it closer to customers and dramatically reducing lead times. The company has been able to process 20% to 30% more price-quote requests and to reduce quote processing time to days from weeks.

Vita-Tech receives as many as 100 requests for quotes per week, and its legacy system involved manual distribution of information, making it difficult to set priorities and respond quickly. The new system, among other things, provides automated alerts so that purchasing and R&D can work on a quote at the same time.

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