Three of a Kind

By Doug Bartholomew  |  Posted 2006-10-02 Print this article Print

International Game Technology, a maker of slot machines, uses an enterprise resource planning system to tilt the odds in its favor by cutting production turnarounds and streamlining staff access to company information.

Three of a Kind

By using SAP R/3 version 4.6, IGT was able to integrate its three major business functions—finance, manufacturing and product development—through this common information platform. The company typifies many large manufacturing companies that depend on an ERP system such as SAP or Oracle for front-office applications that connect with existing plant-based control systems.

As has been the case at most of the thousands of manufacturers that have installed ERP systems over the last 15 years, IGT found it necessary to change some of its business processes to accommodate the new technology. "SAP is a very structured product with very structured processes," Cudworth says. "We had to step back and look at our processes. The software forces you to put a structure in place where you didn't have it before."

Yet another plus for SAP vs. the competition was its product configuration engine, which Cudworth says was more flexible than those included in the other ERP systems. That was extremely important for a manufacturer whose products are made on a build-to-order basis.

Even with the flexibility of the system, IGT had to revamp its order process to accommodate the way the software works. "The greatest change in the order process was not releasing a sales order to the production schedule until two weeks before the build," Cudworth points out. Also, more emphasis was placed on the quoting process to get a better-quality sales order up front, she says.

There were benefits on the plant floor as well. Operations employees now can get manufacturing process sheets online at their workstations. At each step, the ERP system helps foster process gains through the discipline it requires. Employees who might before have been able to cut a corner on a particular process now get stopped by the system. The discipline enforced by the software in effect forces workers to do things the right way. The end result is fewer errors and higher yields due to more efficient processes. As an example, the company was able to establish a quick-turnaround process enabling rush orders to be handled in four weeks instead of seven to eight.

IGT manufactures 140,000 machines annually at its Reno site alone. The company also operates factories in Las Vegas and Manchester, England. The SAP system is used to connect the company's operations worldwide, integrating customer orders, document management and new product development.

On the factory floor, IGT continued to use its homegrown factory control system, integrating it into SAP. The company already had experience with integrating the factory control system with its old MRP system, Cudworth says, "and we knew the data it required. This interface wasn't any more challenging than any other."

The factory control system coordinates the delivery of materials to the production line at the proper location and time. Meshing it with ERP allows IGT customer order staff to find out exactly which machines were built and at which plant locations. IGT also uses SAP's project management system to monitor costs and design changes in developing and launching new products, such as its EZ Pay "cashless" feature—with winners paid off in redeemable or reusable tickets—introduced on many gaming machines starting in 2003.

IGT's experience with ERP has been largely beneficial, with the company reaping improvements in operations, including:

  • Inventory accuracy up, from the low-90% range in 2002 to the high 90s in 2005.
  • Inventory turns up from 6.3 to 8.4 per year over the same time period.
  • Customer order-to-delivery lead times cut from nine to 10 weeks to seven to eight weeks, with a quick-turnaround capability of four weeks.

    According to Cudworth, the biggest challenge arose when IGT tried to adapt the ERP package's product configurator to meet its own product configuration needs. IGT has a highly variable product line, because the company's business is build-to-order for casinos as well as government lottery agencies. As is the case with many manufacturers that face high variability in their product lines, IGT's implementation team members had to work through the features of each product so the system could accommodate them. "You have to list all the features of each product," she explains. "It's a lot of data entry work."

    NEXT PAGE: The Challenge of Implementing SAP

Doug Bartholomew is a career journalist who has covered information technology for more than 15 years. A former senior editor at IndustryWeek and InformationWeek, his freelance features have appeared in New York magazine and the Los Angeles Times Magazine. He has a B.S. in Journalism from Northwestern University.

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