Associated Rubber: ERP Improves Inventory Management, Financial Closings

June 14, 2006
Software improves company's competitiveness.

New software can serve as a catalyst in helping bring about process changes. That was the case at Associated Rubber Co., which sought to improve its inventory control methods as well as to enable a faster monthly financial closing.

"In the past it took several days to do the monthly closing, and as a result, we were totally in the dark for a week or so each month," says Ramey Thompson, president of the Tallapoosa, Ga.-based company. Associated Rubber processes raw materials for rubber parts manufacturers. The manufacturer recently installed an ERP system from IFS North America Inc., Milwaukee, to manage its three locations.

"We also had an inventory control system that was not good," Thompson says. Because the system was paper-based and depended on workers filling out paper forms for data entry, "We were running 12 to 24 hours behind at best on our inventory disposition."

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The shift to IFS enabled the company to change the inventory management process. Now changes in inventory are reflected within minutes by the company's ERP system, so that a worker taking an order can immediately see if the necessary raw materials are in stock. "We are now operating less than an hour from real time," Thompson adds.

This capability is critical to Associated Rubber's competitiveness, Thompson explains, because the company operates on a make-to-order basis, and managers need to know if production can process a customer's order on time. "The more accurate your inventory is, the more certain you are when you make a decision on whether we can process that order," he says. "If your inventory is not close to real time, you don't know if you can make that order."

As is the case with many manufacturers, product complexity also comes into play, requiring careful inventory management if the company is to succeed. For instance, Associated Rubber maintains more than 5,000 different product codes. Says Thompson, "We buy rubber and chemicals and blend them together, and we have a unique compound for many customers."

Yet another important capability for many manufacturers today, including those in automotive and pharmaceuticals, is product traceability -- the ability to pinpoint exactly where and when a certain batch was produced, as well as how.

"Before we put in this ERP system, we had an older datacollection system that was in-house developed, and we weren't able to do a lot of tracking," he says. "As a result, while we participate in the auto industry and other sophisticated markets, our lot traceability capabilities were limited. Today, with the IFS system, we are world class."

Automating time-consuming and error-prone manual processes also can be a no-brainer for a process change enabled at least in part by new technology. Associated Rubber was able to scrap its laborious process for documenting its ISO 9001:2000 standards. The company traditionally had maintained these records on paper in a series of three-ring binders.

"We used IFS Document Management to turn our ISO documentation system paperless," says Anderson Benefield, controller. "Just in paper alone that was a substantial savings. We had been maintaining sand piles of three-ring binders everywhere. We estimated we had seven or eight sets of manuals in multiple binders that everyone had to have access to, and each time we made a change we had to reprint every bit of that."

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