By using shop-floor PCs to scan bar codes printed on each work order, factory workers register the times they start and finish their portions of the job. That makes it possible to clock the progress of an order through every step of the manufacturing process, which helps customer service respond to requests for early delivery or order status. "Before, we had to send a runner out to the plant to find out how much work had been done on an order," explains Brian Setchell, Iowa's general manager. "Now we can see what's happening on the shop floor at any time."
That pinpoint accounting, fed through a module for calculating product cost, lets Iowa Spring price its jobs more accurately than it could in its pre-ERP days. The spring maker dumped some jobs altogether after learning how unprofitable they were, which contributed to the 10% increase in profit that Bianco attributes to the ERP system.
Anthro Corp. didn't need to drive growth so much as find a way to cope with demand. A privately held company of 65 employees in Tualatin, Oreg., Anthro makes office furniture for electronic gear, including desks and racks for PCs, medical instruments, and video equipment. The company sells direct, taking orders over the phone and assembling prefabricated parts to customer specifications within 24 hours. As business grew, administration became hellish: Anthro found itself maintaining 30,000 separate accounts with 30,000 separate production orders and 30,000 separate bills. Supporting operations without the information links built into ERP was impossible.
To handle its high-volume business, Anthro went to the top of the ERP hierarchy, purchasing the R/3 system from SAP. Anthro employs four ERP modules: financial management (including a "configurator," which calculates costs as clerks enter orders), production planning, materials management, and sales and distribution. The system runs on 30 PCs and ties together everyone from senior managers to production workers.
Naturally, Anthro uses the features in SAP's latest version that are designed to attract small companies. For example, R/3's Business Engineer feature speeds installation by allowing users to turn off unnecessary functions, such as foreign- currency conversion, by clicking a switch. Anthro also expects to take advantage of a feature that allows users to customize their systems over the Internet.
But even the new features didn't ensure smooth sailing. "The pain is behind us," sighs Anthro's president, Shoaib Tareen, as he recalls the six-month implementation, which was completed last year. Although Anthro's direct investment in R/3 was about $500,000 (for software, hardware, training, and start-up consulting), the indirect investment in time and effort was huge. "You pull your brightest and best people, put them in a room and say, 'We're going to figure this thing out," Tareen says. "That goes on for several months."
It wasn't until November 1997--about four months after the launch--that Anthro solved one of its stickiest problems: handling customer records while taking calls. The reseller who helped with the installation wasn't well versed in configuring R/3 for telephone order banks. It delivered an awkward procedure in which operators selected from menus in as many as seven electronic locations to get customer information. "We had to fix it ourselves," says Tareen. Now an operator can blast straight to customer records from a single location.
Tareen says the system's paybacks accrue gradually. "I wouldn't try this if I had short-term financial pressures," he cautions. "You have to have a long-term focus, because the advantage is that, once you get it going, you can grow with it." Primary among those paybacks has been the ability to speed up production. For starters, the system keeps tabs on inventory--weighing what's being used against materials required for incoming orders--so Anthro doesn't run out of critical items like casters. It also ties inventory to production. Say that an operator takes an order for shelves in a color not currently stocked. The ERP system releases an immediate production order telling workers in the color department to apply custom-colored laminate to the boards they'll be using. The speedy notification gives the adhesives time to dry so that the next shift can cut the shelves.
It's those kinds of capabilities that enable Anthro to get even special orders out within 24 hours. As Ken Dixon, vice-president of finance and procurement, says, "We want to be the McDonald's of the furniture industry."
Jeffrey Zygmont writes about business and technology from Salem, N.H.
Does size really matter?
Whether to go big or small when choosing an ERP vendor is a tough decision. By going big, with a software house like SAP or Oracle, a business risks a grueling implementation but gains flexibility. By going small, it may sacrifice breadth of integration for ease of setup.
"In general, small companies look to big packages for a breakout strategy," says Peter Heller, senior director of product marketing for the Oracle Applications Division. "They think something drastic is going to happen, like they're going to go international or double their sales force. It's a wonderful opportunity for the little guy to try whatever business strategies are in front of him and, as things get more complex, to plan on the software being able to help him."
On the other hand, if the company expects to maintain the status quo, smaller may be better. "Some products have too many control characteristics"--capabilities for things like assimilating acquisitions, Heller says. "A small company could never use them. They're just too complex."
Other big-company specialists would disagree, noting that they've slimmed down their packages specifically for the small user--or provided ways for small companies to pick and choose among the features their large-company products provide. Consider SAP's R/3. Though originally designed for global manufacturers, R/3 now comes with a feature called Business Engineer, a checklist that enables a company to tailor R/3 to its needs. Users simply activate or deactivate settings by turning virtual switches on or off. For example, in configuring sales orders, a small company would begin with the standard order form that SAP has built into the package. Then, if the company sells only domestically, it would deactivate the export checks that the system is preprogrammed to perform.
