Lightnin: Flash of Brilliance

By Sean Gallagher  |  Posted 2003-05-01 Print this article Print

A maker of old-fashioned mixers blends in new technology to stay ahead of the churn.

Lightnin, a manufacturer of custom-designed industrial mixers, couldn't move fast enough in the 1990s.

Botched orders and delayed shipments added up to unhappy customers. So Lightnin executives looked to make its processes more efficient.

PDF Download While other companies are still recovering from bingeing on new technology, this 80-year-old industrial stalwart and division of SPX Corp. can point to specific ways a Web-based ordering system helped to cut costs, reduce errors and improve delivery times in designing and making mixers, blenders and agitators.

The project has had a major impact on the way the company responds to its customers, says Richard Gray, Lightnin's vice president of information technology and e-commerce. "The phrase that comes to mind is 'clean to lean,'" he says. "It cleaned up our orders coming in on the front end, and that helped make our manufacturing processes more lean."

Lightnin's problems had started with an inefficient ordering system that required manufacturing or sales representatives to jot down a customer's request and sift through paper catalogs to prepare hand-sketched designs before faxing or mailing proposals and price estimates to the customer. Once the manufacturing rep and customer agreed on the product specifications and price, the documents were delivered to Lightnin—either by fax or mail—for review and entry into Lightnin's computer system.

The journey from customer to manufacturing rep to plant floor opened the door for errors to be introduced into the mix. An estimated 20% of all orders contained an error, according to Lightnin. Though many problems were caught on paper—before the order was submitted for production—some faulty orders actually made it to the manufacturing floor.

Another ongoing challenge: Lightnin's highly customized products require constant changes in the manufacturing floor configuration. During one week, the plant might crank out a bleaching tower for a pulp and paper mill, and during another week, it might build a mixer used to create vaccines.

Lightnin invested in Baan IV enterprise resource planning (ERP) software to automate the flow of work on the manufacturing floor, and the system was activated on Lightnin's Compaq Alpha servers in February 1998.

While the Baan software could efficiently create the parts lists for orders and put together the route each job would take through the Lightnin factory, shortcomings still existed in the ordering setup. Only 5% of Lightnin's custom products were being handled automatically by the software because of the way orders from the field were entered into the system.

In 1999, Lightnin's then-President Jay Caraviello hired Gray to head up information technology. Gray had previously managed information systems at Mobil Chemical and ITT's Goulds Pumps. Lightnin executives subsequently retained eLogic Group, a consulting company, to evaluate options for adding an online ordering system.

As it turned out, there weren't many. Some early contenders for the project were headed out of business in early 2000. Among those still standing were Baan, Selectica and Calico Commerce.

Baan's e-commerce offering wasn't yet released in late 1999 when Lightnin narrowed the field a final time, according to Ernie Eichenbaum, Baan vice president of industry marketing.

Soon after Lightnin chose Selectica's software, eLogic consultants learned about BigMachines, a startup targeted at industrial manufacturing businesses. Lightnin executives were impressed by the vendor's plan to put catalogs online and allow for secure entry of orders.

BigMachines also proposed to host the software, which would allow Lightnin to offload that operation and focus on other development tasks—including integrating the company's product designs, created in Autodesk's AutoCAD, into its Baan work-flow systems and the BigMachines software.

Another plus: Lightnin would be able to work closely with BigMachine's developers and influence the way the product functioned. Some manufacturing reps, who would eventually use the online-ordering system, were brought in to help shape the product on the BigMachines beta team.

By being an early user of BigMachines, Lightnin also got a price break. Neither company would disclose the amount.

The Downside for Lightnin

The downside for Lightnin? BigMachines' software was still in development so it would take longer to complete the project than if Lightnin worked with another vendor. In projects like these, some savings are typically offset by a longer implementation process.

Still, Lightnin exercised an exit clause in its agreement with Selectica, and by mid-2000, it had signed on BigMachines.

By August 2000, the first incarnation of the Lightnin "e-sales" site was online. But it was "immature," says Gray. "It was just a few parts; we had six of our key manufacturer's reps online with it, and a few of our business units." This was expected; the initial implementation was more of an opportunity to show manufacturing reps what the technology could do and to get their support for the project.

Because BigMachines' development team had its own view about how some elements of the software should work, "in certain cases, we had some disconnects between what was expected and what was delivered," says Gray.

One of those disconnects was how the software gave access to inventory information. Manufacturing reps on the beta team found that they couldn't get the kind of information they needed for parts. A search for a part in the system would show how many were on hand, but not where they were or whether they were already assigned to another customer. So, the software was adjusted to show real-time inventory, according to Bob McDermott, an independent Lightnin manufacturing rep from Mills-Winfield Engineering and a member of the beta team.

BigMachines CEO Godard Abel points to another improvement requested by Lightnin—more flexibility in the way the software handled workflow. Nearly every type of transaction had a workflow that varied based on what was being ordered, so BigMachines added "adaptive process modeling"—a feature that let Lightnin build in different procedures based on a transaction's characteristics.

These changes took time, so Lightnin had to wait for BigMachines' software to catch up before moving forward. "Certainly, the implementation took longer because Lightnin was working us during the beta period," says Abel.

In all likelihood, the delay didn't help Lightnin's top line. SPX's revenue from the flow technology division, which included Lightnin, fell by 3% from 2000 to 2001. Executives attributed most of the decline to the sale of Lightnin's sister company, Marley Pump, in April 2001. Meanwhile, the company's primary U.S. competitor, Robins & Meyers Inc., saw a 2% gain in its industrial-flow-technology sales.

In April 2001, Lightnin's online ordering site went from an ongoing development project to a production application for Lightnin's North American operations. Sales reps received a day and a half of training on the BigMachines interface.

Once the ordering system was working, the payoffs quickly followed. In the first full year of operation, "all of our metrics have been achieved or exceeded," says Gray.

The time Lightnin took to fill an order after giving a customer a quote was reduced by 40% to 50%, and the company saw a 25% improvement in on-time delivery of orders. And having contracted support for its sales systems to BigMachines, Lightnin reduced its I.T. staff from 26 at the start of the project down to 11. Gray says not all of the staff reduction was tied directly to the BigMachines project, "but the efficiencies we gained as a result certainly made it easier." That included a 20% cut in the customer support staff.

Louis Columbus, an analyst at AMR Research, estimates Lightnin saved "tens of millions of dollars" by improving order accuracy and speed.

However, Gray says those numbers "are aggressive and difficult to quantify, as they always are. Our experience [in savings] is about 2.6% of sales" as a result of reducing staff, reducing expenses for warranty claims and increasing revenue from improving the way changes are handled.

Because the online ordering site has been integrated into the company's Baan ERP system, Lightnin has more effectively used the ERP software. For example, Lightnin generated 45% of custom items, bills of material, and job scheduling and routing automatically instead of re-creating them by hand at the plant, according to Gray.

The new system helped Lightnin more quickly incorporate new product lines into its business. "The time to market is much faster," says Gray. "We went from six to nine months for new products to get into the channel, to two months."

That improvement has made it much easier for Lightnin to absorb companies acquired by its corporate parent, SPX. Acquisitions and the incorporation of new product lines were the main source of the 6% revenue growth for Lightnin and SPX's flow technology business in 2002.

The depressed overall market for flow technologies means the bottom-line benefits of Lightnin's new information systems are difficult to measure.

McDermott, the manufacturing rep, would agree. "I wish I could say that the e-sales system has brought in more business, but I can't. Business is crummy," he says. Nonetheless, he recognizes that the online ordering system has helped him get out quotes more quickly and turn around an order faster. And that alone may have kept him from losing some customers.

Though Lightnin may not be moving at the speed of sound, it at least it knows what direction in which it needs to go.

Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.

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