ERP Takes Center Stage
By Christian Perry
Today’s manufacturers bear little resemblance to their nuts-and-bolts predecessors from the previous century. Managers overseeing assembly lines in search of inefficiencies and security lapses have been replaced by IT-driven innovations designed to streamline processes in lightning-quick fashion.
The way manufacturers apply these innovations rests heavily on the unique challenges they face with their products and in their industries. Baseline spoke with several manufacturers to get a closer look at some successful mergers of manufacturing and IT.
Weathering the Changes
When Hurricane Irene collided with the Northeast U.S. coast in August 2011, consumer product companies that supplied retailers in the region scrambled to understand the storm’s impact on their supply forecasts for the coming week. Forecasts that had consumers buying their typical weekly supply of diapers and tissues, for instance, proved useless when storm-struck residents loaded up on batteries and bottled water.
However, Kimberly-Clark—a producer of personal and health-care consumer products—had an ace up its sleeve in the form of demand-sensing technology that it had recently adopted to improve supply forecast accuracy.
“By accessing consumer data daily, we could tell when retailers shifted back from emergency supplies to restock a more normal product mix,” says Jared Hanson, demand senior specialist for Kimberly-Clark. “As a result, our response to the storm was quicker and less expensive because our forecast was based on actual consumer and retailer behavior, rather than on historical sales that became irrelevant the moment Hurricane Irene threatened to sweep the Northeast.”
With shifting retailer dynamics already presenting challenges to maintaining service levels and containing costs, the Irving, Texas-based company made the move to a demand-driven supply chain strategy in 2007. To achieve a more responsive supply chain, Kimberly-Clark defined a set of initiatives that included improved forecast visibility, lean manufacturing and segmentation. Improved forecast accuracy, in particular, served as a key starting point for the manufacturer.
Large retailers such as Walmart were making POS (point of sale) and customer data available, and Kimberly-Clark saw a similar opportunity to operationalize data in a structured way to respond to changes in consumer demand and gain a competitive advantage, Hanson says. Not only did the size and scope of the company’s data increasingly require a solution that could effectively handle real-time response, but the market downturn in 2008 further ramped up both the need for such a transformation and an improved cash flow.
“As one of the pillars of our strategy, we implemented Multi-Enterprise Demand Sensing from Terra Technology to gain visibility into the demand our retailers are facing and to better protect their orders,” Hanson explains. “The solution uses transactional data from within our operations, along with downstream data, such as POS, to produce daily forecasts that are published directly to our planning systems.”
By improving accuracy in near-term forecasts, Kimberly-Clark can make better decisions about which materials to order, which products to build and where to ship them. Data is now operationalized through demand sensing to create a responsible supply chain that forges a direct connection from the consumer to the supply base—all the way back to raw materials, such as pulp, Hanson says. No longer limited by only weekly or monthly forecasts, the company can now use accurate daily forecasts to better serve customers and capture new revenue opportunities.
According to Hanson, Kimberly-Clark views supply chain evolution not as an endpoint, but as a continuous journey to meet consumer needs more effectively. Forecasting can be tough sledding, especially in volatile times, due to the dynamic nature and scale of the consumer-products sector. Performance is undoubtedly improved through the addition of downstream data, but there are challenges around the analysis and application of mountains of data to manufacturing systems.
“IT’s role has never been more important,” Hanson says. “It sits at the heart of this transformation with structured solutions that enable the change to a responsive, demand-driven supply chain that will ensure we stay competitive.”
Defeating Security Threats
For Austin Powder, a Cleveland-based explosives manufacturer, security is a top priority. Employees at other firms might expect a fair amount of freedom with their company-supplied computers, but Austin Powder’s line of business requires a more limited computing environment that allows users to execute only tasks related to their jobs.
While that requirement might seem simple in the age of Microsoft’s security-minded Windows 7 operating system, Austin Powder still uses the aging Windows XP OS to accommodate legacy equipment and applications.
“Microsoft provides different classes of users—guest, user, power users, and administrator—with each class having additional privileges, moving from guest accounts, with minimal task privileges, up to the administrator, who can perform any task,” explains Mark Howard, PC operations manager for Austin Powder. “Microsoft has a best practice called 'least privilege’ that defines this idea. In a least-privilege environment, the computer user only has enough privilege to perform the operations required to run the applications required.”
That concept works effectively for environments with some flexibility in their security requirements, but Howard discovered that bumping a user to a higher class to accommodate a certain application also granted access to unauthorized tasks. To remedy this problem, Austin Powder sought a more granular method for providing privileges when an application required it without granting access to a user at all other times. The manufacturer found it in the form of BeyondTrust’s PowerBroker Desktops, which intercepts the launch of an application and injects the security token of a different account to only the process being launched.
Howard notes that this technology allows the company to run any application for a user-class account, even if that application otherwise requires administrator-level access. The implications around security breaches are potentially devastating to Austin Powder, but its combination of least-privilege and PowerBroker helps it defeat malware and viruses that can circumvent account privileges.
“We used to spend many hours fighting and removing malware and viruses when our computers were being operated with an administrator-class account,” Howard recalls. “Now, with our computers operated by the user-class accounts, the malware and viruses have very limited capabilities. This is a very big deal.”
Hungry for Clear Vision
For manufacturers, having visibility into the manufacturing process, the products and inventory is invaluable. Henny Penny, a manufacturer of restaurant equipment that serves quick-serve restaurants such as McDonald’s and KFC, is anticipating expanded growth in Asian markets. To handle the oncoming tide, the company is investing in IT as part of the expansion of an existing facility in Suzhou, China.
According to Sam Stewart, Henny Penny’s director of IT, the facility plans to expand the use of ERP tools from JD Edwards. Through this effort, Henny Penny will gain further visibility into manufacturing process, inventory and financial details to provide analysis against viability, profitability and other factors. He adds that it will also deliver a single view into the overall company at the enterprise level, rather than looking at separate entities.
According to Stewart, Henny Penny plans to expand the ERP technology throughout its Suzhou location in two phases. The operational system expansion is targeted for Q1 2013, while the financial systems expansion is targeted for Q1 2014.
“We’ll have visibility into the manufacturing process and the inventory itself,” Stewart says. “We’ll also have the ability to back up crucial data and the operational data that is within the JDE package, as well as data security, financial data consolidation, a network that is supportable and maintainable from the United States, and a support mechanism that allows us to consolidate the technical support of the financial systems across both sites.”
ERP Takes Center Stage
Manufacturing companies might face similar challenges, but the way they apply technology to meet those challenges can vary wildly due to unique requirements and environments. However, many manufacturers have certain applications that are considered “mission critical,” with data that is handled in real time or near-real time, says Cindy Jutras, a principal analyst at Mint Jutras, a research-based consulting firm.
“Think about an automated production line producing hundreds of gallons of product per minute,” Jutras says. “If the properties of the product start to stray out of spec, thousands, or even millions, of gallons of unusable product—waste—can be produced in a matter of minutes. So automated data collection and the appropriate technology to 'read’ the results and automatically shut down a line is critical to these types of manufacturers.”
Enter ERP, which is a consideration for manufacturing companies across all verticals. Jutras says it has now become harder to tell where ERP ends and other applications begin, since the footprint of ERP has expanded over the past few decades.
In a recent study, Jutras found that manufacturers are deriving serious benefits from ERP implementations, including reductions in operating cost, inventory cost and obsolete inventory. She also has discovered that, while ERP applications can help to cut costs and improve business transparency, many manufacturers aren’t using ERP technology to its fullest extent.
“Until now, top-level decision-makers have been somewhat sheltered from IT,” Jutras says. “While they use data contained in enterprise applications for decision making, they are seldom directly connected. They generally rely on surrogates or subordinates to query the data base and collect and massage data.
“But with the accelerating pace of both business and change today, this will no longer be fast or efficient enough. The biggest challenge most of my survey participants face today is in managing change.”