On the Make, onBy Baselinemag | Posted 2002-05-15 Email Print
Brady Corporation CEO Katherine Hudson knew that before she overhauled the "high performance" label-making company she had to look at the people who ran the operation first.the Move">
On the Make, on the Move
Brady's "make" process is what most companies refer to as manufacturing. It includes production-scheduling, evaluation of raw material availability, product manufacture and product reporting. Before Eclipse, Chris McElfresh, the order-to-cash process leader, says the process was not standardized across factories, nor was it integrated with other parts of the business.
That changed as Brady focused on the make-process through adoption of SAP's Materials Requirement Planning module. The platform automatically blends manufacturing data with other SAP modules, including Sales and Distribution, Production Planning, Material Management and Finance.
McElfresh says the SAP manufacturing resource planning module lets vendors track materials going through Brady plants and replenish as needed, without Brady being involved, and allows orders received over the Web to proceed directly to the module that schedules manufacturing of new products. When complete, it will allow a plant to start making an order as soon as the customer enters it into Brady's Web site.
Brady's "move" process entails choosing the right plant to manufacture a product, distributing it to a warehouse and finally delivering it to a customer. Before Eclipse, each plant had its own move system and excess inventory was kept on hand. The same pipe markers might have different numbers, so the company wouldn't even know how many they actually had.
"The old system didn't allow the integration of data collection tools and there was no forecasting," McElfresh says.
With SAP, the entire move process is linked from raw material purchase to customer delivery. Orders are now put into the SAP Sales and Distribution module. If the product is in stock, the finished goods shipping-administrator boxes it up and sends it. If the product is not in stock, a manufacturing order is created automatically and scheduled, with a finish date reported to the sales agent. Before, every plant had its own production schedule and sales reps had to essentially guess when a product would ship.
With the revamped processes and SAP modules, Brady is hoping to achieve supply-cost savings of 10%, or about $8.8 million, over seven years. That figure currently stands at 2% annually, and Brady should make the goal well ahead of schedule.
The situation is similar with purchase-order costs, which Brady measures as a percentage of total purchases. The goal for 2002 is to have that figure at 3%. The company is currently ahead of goal, at 1.5% of purchases.
Brady is already well on its way to achieving a goal of lengthening the average time it takes to pay suppliers, by seven days. But the target won't be achieved through accounting fiat, says McElfresh, "That wouldn't be ethical."
To be ethical, Brady now rates its suppliers by payment history and product qualitybecause it has the data. If there are problems with either, Brady pays them later. Similarly, McElfresh says the company is converting invoices to cash sooner by committing fewer shipping errors. "If you have satisfied customers, they pay on time."
With bar codes and the SAP software, Brady workers now can see production problems as they occur and act to solve them. But as with any large-scale process changeover, some processes take a long time to wrestle down. For Brady, one of those was the process of converting data from the Pansophic platform onto the SAP system.
Early on, the company moved its static master data (parts, inventory and customers) to a Microsoft Access database where it manually added missing field information such as units of measure and sales tax. SAP required much more data than the original system, sometimes boosting the size of a record fourfold. Brady then had to transfer the data to an SAP database. In all, 800,000 records were converted.
The experience ranged from tedium to near terror. "It was a lot of hard work," says Kaczanowski.