ZIFFPAGE TITLEShaking the FloorBy Mel Duvall | Posted 2004-10-01 Email Print
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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.
Shaking the Floor
To stay out of Otis' sights, Schumacher focused either on customers in Iowa or building highly customized elevators.
Step into the Cybrolater amusement ride at the Walt Disney World Quest building in Orlando, Fla., and you step into a Schumacher elevator. When the doors close, the lights begin to flicker, the floor shakes and the genie from Aladdin appears in 3D. Meanwhile, passengers get lifted to the building's fifth floor.
"We have a high ratio of engineers to workers on staff, which allows us to take on jobs that others may not want to touch," says Jeff Schumacher.
His influence on the family business is evident in the new 70,000-square-foot plant and office. Take the plant's U-shaped layout. Raw materials, such as steel bars, cables and stainless steel sheets for doors and button plates, are received at the top of the U. After each stage of completion, elevators make their way around the layout until they reach the shipping door. A 25-foot tower, a new addition to the manufacturing process, allows elevators to be tested before being shipped. Each stage is controlled, tracked and monitored by the SAP software.
Prior to installing SAP, the company relied on an IBM AS/400 computer running a factory planning system called Job Scope. The system was good at handling manufacturing, but it could not support a services organization. Maintaining 4,000 elevators generates about $12 million a year in revenue and has become the fastest-growing segment of Schumacher's business.
SAP, in contrast, could accept customer orders, pass designs from engineering to production, coordinate required raw materials, predict delivery dates, handle finances and human resourcesand address all aspects of Schumacher's services, including scheduling maintenance procedures and collecting data from the field.
"The companies we do business with expect us to respond in the same way that the big guys do"
Schumacher has only one full-time technology person. So, it contracted the installation to Itelligence, a Cincinnati firm. Account manager Mark Mueller says a key to the project's success was Schumacher's willingness to change operations to meet the software's requirements.
In industry lingo, that's referred to as accepting best practices. In Schumacher language, it's called a major cultural upheaval.
"I honestly thought the project was going to bring us to our knees," chuckles Marvin Schumacher about the six-month implementation. "If I didn't have confidence in Jeff, I might have pulled the plug on the thing."
Engineers, for example, were used to designing elevators and passing two sets of plans to production and purchasing. Those departments were then responsible for calculating what materials were required, such as stainless steel for floor button plates, raw steel for the cabs, and motors, cables and hydraulic pumps for the lifting mechanism. However, with the adoption of SAP, that job was shifted to the engineers, and the software's Materials Requirement Planning module automatically generated the appropriate purchase requisitions.
"It was not an easy process," adds the senior Schumacher, "but we had to do it. Without this system in place, I don't know how we could take the business to the next stage."
The system, now in place for four years, is producing benefits. The company used to carry as much as $950,000 in raw material. Inventories were often padded to ensure supplies never ran out. By more accurately forecasting demand, that figure has been shaved by $300,000, even though the business has grown 70%.
But saving $35,000 a year carrying that inventory, Jeff Schumacher notes, wasn't the point. Being able to grow was.
"I would like to think that in five years we'll be a $40 million or $50 million company, continuing to grow profitably,'' he says. "We're ready to start a new chapter in this business."