Schumacher Elevator: On the RiseBy Mel Duvall | Posted 2004-10-01 Email Print
The manufacturer gets a big lift from a small-business SAP enterprise software package that's improving production efficiencies and customer service. Schumacher is now growing faster than Otis.
Schumacher Elevator 1 Schumacher Way, Denver, IA 50622
Business Designs and manufactures passenger and freight elevators.
Key Business Executive President Marvin Schumacher
Key Technology Executive Vice President and CFO Jeff Schumacher
Project Build new production plant and install planning system to control operations.
Objectives Grow services business, reduce costs, improve forecasting and reduce material requirements.
Technology Used mySAP planning software.
How it gave edge over bigger companies Allows Schumacher to maintain its focus on designing custom elevators, by putting its customer service at the same level as the industry giants'.
For 68 years, the Schumacher family has harvested a comfortable living building and servicing elevators for offices, hospitals and factories.
The family competes in a business dominated by a handful of global manufacturers. Otis Elevator, the industry leader, commands $7 billion in yearly revenues. Schumacher achieved record sales last yearof $25 million.
The company has hidden behind the rows of tall corn that surround its plant in a town 1,700 people call home.
"We've been successful by staying under the radar, by not trying to go head-to-head against the big guys," says Jeff Schumacher, vice president and elder son of president Marvin Schumacher. "We don't go after the contracts for the tallest building in Chicago."
That doesn't mean Schumacher is content. The 150-employee firm completed a new fabrication and headquarters building in 2000, eliminating the need to ship components between five different facilities in Denver, Iowa. Over the past year, it forged a partnership with a Chinese firm and now sells into the booming construction market there.
Most significantly, it has invested heavily in technology to track and guide the company's operations.
Some initiatives have been basic. The company installed a Xerox Document Center to serve up elevator designs and specifications over the Internet to customers and its service force. In August, it converted its phones to a Nortel Internet Protocol telephony system, paving the way to match incoming customer calls against service records.
But in 2000, Schumacher borrowed a page from much larger manufacturers. It completed the installation of an SAP enterprise resource planning system to manage its manufacturing, human-resources and financial operations.
The cost$200,000 for the SAP software, $300,000 for implementation and about $30,000 in annual licensing fees, support and maintenance costswas onerous for a company of Schumacher's size. In fact, Jeff Schumacher was told by former colleagues at Andersen Consulting and by competing vendors such as Baan that installing SAP was dangerous and perhaps overkill. But he was serious about elevating the company, particularly with the push into China.
"We may only be at $25 million in revenue, but that doesn't change the fact that the companies we do business with expect us to respond in the same way that the big guys do," Schumacher says.
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