by July 1, 2011 0 comments

The manufacturing vertical has typically been very conservative as far as IT deployments are concerned. Heavy capital expenditure is incurred in procuring real estate and machinery and therefore budgets for IT deployments are low on priority. The awareness levels and seriousness for integrating technology in daily operations is also low amongst the top management and so any drive to introduce new solutions gets stymied very soon. This is quite unlike, for instance, the BFSI vertical where IT usage is heavy and a plethora of solutions are required and can be seen in action across organizations. Being the driver of economic growth, it’s absolutely critical that manufacturing companies use the best of technology to improve efficiency and drive business growth. PCQuest recently analyzed the manufacturing vertical as part of its annual Best IT Implementation Awards 2011 for the latest challenges faced and trends in IT deployments to alleviate those.

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Shop floor integration: the challenges

In order to drive increasing competitiveness, manufacturers need to focus on reducing their losses in operations and increasing their efficiencies so that profits go up. For the right people to carry out fact-based analysis and take corrective actions at the right time, accurate information has to continuously flow from the shop-floor to the top management. One of the ways is to alleviate this is to automate the process of data collection from various stages on the shop floor. This is could be difficult as data needs to be collected from different types of machines: CNCs, PLCs, welding machines, etc. You also have to convince everybody involved for acceptance of a new technology for collecting real time data in a traditional manufacturing setup, where the data collection generally happens with log books.

How ‘Ace Designers’ integrated their shop floor

One company that has done this type of shop-floor integration is AceMicromatic. They implemented a solution called TPM-trak and developed a software to collect data from microcontroller sensors spread across their production machines and integrated it with their existing decision support system. This enabled them to present a comprehensive view of activities on the shop floor to the top management. As a result, the company derives substantial benefits. They now have an accurate online data collection methodology. They can accurately calculate downtimes and the amount of losses as a result of these downtimes. Fewer hours are spent on documentation as the software eliminates manual entry of any production data and parameters, thereby increasing speed, and of shop-floor data. There is now increased employee involvement and accountability. All this combined has led to an increase in productivity by 20%.

Managing information flow

A tremendous amount of information and reports are exchanged across various branches in an organization. So, there can be a great deal of inefficiency in matters pertaining to accounts payable to vendors, customer credit management and inventory control and management. For a small company with diverse business activities and sights firmly set on growth, there is bound to be complexity in operations. This is where deploying an ERP solutions imperative, because it allows for workflow automation across all internal departments of the organization. While ERP has already become ‘old hat’ for large manufacturers, the small and mid-sized ones are still riding the wave. Thankfully, the cost of deploying ERP has come down significantly, and there are plenty of options to choose from. You can choose from a software-as-a service based model, where the ERP solution is running in the cloud to an inhouse deployed solution. Most vendors provide both options so SME manufacturers can choose the one that’s more cost effective for them.

How Essae Digitronics scaled up

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Being a firm believer in IT as a business enabler, Essae Digitronics realized the need to automate operations and provide management and staff with the most up to date tools to operate. Their individual business units were managing stand-alone software for invoicing and sending reports to the corporate headquarters where the P&L and balance sheets were maintained. Inventory was being maintained using Excel sheets. As a growing company, they found it difficult to maintain visibility into customer receivables and gain visibility into the entire manufacturing processes at their four business locations. Their inventory control was also not in perfect shape as they relied on a manual system using excel worksheets that was only as good as the person. Further, they had over 500 suppliers and it was becoming exceedingly complex to keep track of accounts payables and receivables, invoice processing, invoice payments and documentation.

The company deployed SAP Business One ERP, implementing the standard modules of Sales, Inventory, HR, Purchase, Finance, Service and Production. They also integrated SAP Business One with cloud-based Expense on Demand and Salesforce management applications. The implementation integrated data sources from their five business divisions following different business models into a single database. Now they have gained absolute transparency in payments and dues and have implemented a great deal of checks and measures including credit locks and approvals to maintain a check over defaulting customers and to ensure timely collection of essential documents. The accuracy of MIS reports and P&L ensure that key decision makers have real time view of business. As a company they have scaled up from Rs 43 crores to the current Rs 85 crores without having to scale up their administrative staff. And what did the deployment cost? Well, just Rs 40 lakhs upfront with some recurring maintenance costs.

Home grown vs. traditional ERP?

This is one of the most common questions we hear from small Indian manufacturers. We’ll answer this with an example of a soya manufacturing company, Sonic Biochem. The company was using a legacy ERP system developed in house using “VB+Oracle” combination for the past 10 years with all modules interlinked properly. But with continuous growth of business it was becoming impossible to manage all requirements along with a good & friendly UI. The company needs ERP support to take correct and timely decisions and the existing ERP was not able to cope up with it. They need more effective monitoring of product profitability, inventories, deliverables, and accounts. This required a tightly integrated ERP solution. It was finally decided to go for a standard ERP product, which could deliver all these requirements. SAP ECC 6.0 was chosen for implementation after carefully evaluating the various features it offered. They ran it parallel for four months along with the legacy ERP system, keeping SAP in front and old ERP at a level below to make sure the end users became comfortable with SAP. It was implemented across all manufacturing locations and the head office in one go. Almost 80-100 business processes were taken care off during implementation. The project is a symbol of a well orchestrated team work where a team of 13 IT pros worked assiduously with 120 end users and successfully completed it in just 90 days.

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