QAD MFG/PRO supercharges automotive suppliers` business, delivering fast return on investment

Today`s cost-conscious automotive environment requires that IT projects be implemented rapidly, be delivered on time and on budget, and meet or exceed expected ROI projections. Yet companies rarely go back to determine whether their original expectations and goals were actually met. In fact, many industry analysts believe the enterprise software market would be experiencing more robust growth if companies could reliably document the benefits that accrue from investments in technology.

Cascade Engineering, a $250 million manufacturer of plastic components for the automotive, furniture and waste management industries, documented the hard benefit it received as a result of implementing QAD applications across its enterprise. Cascade implemented QAD`s enterprise resource planning suite and a number of its supporting modules and reported the following hard benefits:

* Cascade realised $500 000 in cost savings per year, directly related to new business processes that were made possible by the installation of its new enterprise software system.

* The company`s improved inventory control processes resulted in inventory turns increasing by 47%.

* Cascade was able to purge $3 million worth of on-hand inventory from its factories and warehouses.

* Overall inventory accuracy improved by 25%.

* Cascade significantly reduced month-end reporting time from 15 days to two to three days.

* The manufacturer reduced the time it takes to ship products by 20%.

* Delivery performance improved by 30%.

* Cascade was able to forgo the hiring of new employees in its purchasing, inventory control and finance departments during a four-year period in which revenue grew by nearly 40%.

* Cascade`s implementation of QAD solutions came in on time and $100 000 under budget.

Cascade has seen increased efficiency and eliminated waste in virtually every aspect of its business - from the way it manages customer orders, to its processes for planning and scheduling the flow of material through its factories and its procedures for shipping products by implementing QAD solutions enterprise-wide.

Now more than ever, manufacturers want a quick - and substantial - return on the dollars they invest in information technology. In fact, many industry analysts believe the business software market would be experiencing more robust growth if companies could reliably document the hard benefits that accrue from purchasing new systems.

It is likely that more manufacturers would be investing in new technology if they believed that investment would have the same impact it had at Cascade Engineering, Grand Rapids, Michigan. Cascade, which makes plastic components for the automotive and furniture industries, in addition to supplying plastic containers for waste management firms, has linked nearly $500 000 in cost savings per year directly to new business processes that were made possible by the installation of a new enterprise software system.

This system - the QAD MFG/PRO enterprise suite - allowed Cascade to forgo the hiring of new employees during a four-year period in which its revenues grew by nearly 40%. In 1999, Cascade`s annual revenues were roughly $180 million. It reported $250 million in revenues in its most recent fiscal year.

"We haven`t had to add new people in our purchasing, inventory control, or finance departments," says Lowell Johannsen, a Cascade IT project manager, "because QAD increased our efficiency."

Currently, Cascade is using multiple components of the QAD MFG/PRO enterprise suite-from its base financial and manufacturing functionality to newer additions like the EDI ECommerce module and Supply Visualisation. The increased efficiency is evident in virtually every aspect of Cascade`s business - from the way it manages customer orders to its processes for planning and scheduling the flow of material through its factories and its procedures for shipping products.

"Our investment in MFG/PRO has more than paid off," Johannsen declares. "We have received multiple benefits from the suite. Because we can post and review financial transactions each day, our month-end reporting time has been reduced from 15 days to two-to three days. Our inventory control process improved dramatically, with inventory turns increasing 47%, from 33.6% to 49.5%, and inventory accuracy improving by 25%. With EDI ECommerce and Supply Visualisation, we will achieve 100% connectivity with our trading partners."

These results explain why the IT research and consulting firm, Meta Group, recently named QAD as the overall value leader among ERP suppliers. That distinction came after Meta Group researchers examined the return on investment that 200 manufacturing companies realised from various ERP systems, including those from such well-known vendors as SAP, Oracle, PeopleSoft and JD Edwards.

"Meta Group has been focused on measuring the total cost of ownership and value derived from ERP applications for more than five years," says Barry Wilderman, senior vice-president and director, META Group. "Companies we interviewed gave QAD very high marks in those areas."

Cascade rates QAD so highly that it has designated MFG/PRO as the IT backbone for its entire corporation, which encompasses more than a dozen manufacturing and distribution facilities.

Cascade`s relationship with QAD began in 1998. At that time, Cascade realised its ERP system was not Y2K compliant, but it wanted more than a system that could handle 21st century dates - it wanted one that also could manage a 21st century business.

The system had to keep Cascade functioning at the same level that has earned it numerous industry awards. In recent years, Cascade has won the Ron Brown Award for Corporate Leadership from the US Department of Commerce, and been named the General Motors Supplier of the Year, among other honours. "Cascade was looking to build strategic relationships with application vendors," says Mike Meretta, a Deloitte & Touche consultant who helped Cascade with its MFG/PRO implementation. "The goal was to build an infrastructure that would allow the company`s technology to expand and change as quickly as the company itself was expanding and changing."

Johannsen says QAD has proven to be the ideal technology partner. But this relationship might never have blossomed if MFG/PRO had been difficult to install. That`s because Cascade needed a new ERP system in place before its fiscal year ended on 30 August 1999, and it started looking for a system just 14 months before that deadline.

"We turned the system on in our last plant in July 1999," Johannsen recalls, "and came in about $100 000 under budget." Cascade`s implementation of MFG/PRO actually occurred as a series of mini projects that took place in clockwork fashion starting in the summer of 1998.

The first project took place at a joint venture facility called StarCade that makes interior and exterior trim components for automobiles, and it was completed in five months. A second plant that designs and manufactures custom resins for use in various products went live with MFG/PRO three months later. A plant that makes components for automotive heating and air-conditioning systems was up and running in a mere nine weeks. Finally, Cascade`s remaining facilities, which include five additional plants and several offices located at its corporate campus, all went live in July 1999.

While he refers to MFG/PRO as "essentially a plug-and-play system," Johannsen says the system is not the sole reason why Cascade`s project was such a success. Equally important, he says, was the spirit of co-operation among all parties involved - QAD and Cascade staffers, the Deloitte consultants, and the team from Eagle Consulting and Development, who provides automated data collection and bar coding technology for MFG/PRO users.

"The Deloitte consultants had a thorough knowledge of the auto industry, and how the QAD system should be applied within the industry," Johannsen says. "That allowed us to start working with software immediately after it was installed, rather than having to learn how to use it, which helped us get a quick return on our investment."

Johannsen says Eagle Consulting performed so well that he never panicked in the face of what could have been seen as a disaster as the deadline for bringing the last group of facilities online approached. "Two weeks before our go-live date, Ford ordered a change in the design of a bar code label," he says. "But Eagle had completed all of its work on time. With that track record, I wasn`t concerned that it would delay our implementation." And it didn`t.

Eagle`s expertise in automated data collection and bar coding specifically for MFG/PRO was critical to the streamlined business processes that have generated the bulk of Cascade`s savings from the use of MFG/PRO. "We bought two solutions at the same time-MFG/PRO from QAD and RF Express for MFG/PRO from Eagle," says John Smith, another Cascade project manager. "We realised that we could cut the time it takes to ship products by at least 20% simply by having bar codes on the products."

The bar codes make it easier for Cascade to collect and display information that its customers want to see on advanced shipping notices transmitted by EDI, as well as on the shipping labels attached to the products that arrive at their doors. RF Express for MFG/PRO enables the reading of bar code label information-online and in real time-into the MFG/PRO database, utilising the same edit, validation, and posting routines as MFG/PRO.

"With these systems in place, we can see inventory transactions as they occur rather than at the end of the shift," Smith says. "The previous system allowed no visibility into inventory, and most of our inventory tracking involved a lot of manual processes. Now that we are using the product shipping functionality from MFG/PRO in conjunction with bar code scanning, our trucks are loaded much more efficiently and we are spotting-and correcting-errors much sooner. It seems that every day we see further improvements in that area." RF Express for MFG/PRO effectively repositions companies for error prevention, rather than error detection and correction in the shipping process.

Tracking the movement of parts via RF barcode technology is now standard procedure in Cascade`s production areas, which also have recorded substantial operational improvements following the adoption of MFG/PRO.

"The overall management of our business is much better," says Sandi Ragan, a materials manager in Cascade`s corporate supply chain department. "And much of that improvement can be attributed to the simple fact that we now have real-time reporting."

Because its factories adhere to the tenets of lean manufacturing, Cascade uses an inventory reporting method known as back flushing, which means that it doesn`t record material as being consumed until it actually has been placed in a completed product. In most lean-oriented plants, production workers are expected to keep track of the material they consume and then report the totals before leaving for the day, a process that is known to be fraught with error. With MFG/PRO, Cascade has that problem solved.

"We get real-time back flushing, which means we can track our inventory consumption throughout the day," Ragan says. "The ease with which we can run these reports has had a tremendous impact on our inventory accuracy."

Overall, the improvements in inventory tracking that resulted from the tightly integrated solution of ERP, inventory visualisation and bar coding have allowed Cascade to purge $3 million worth of on-hand inventory from its factories and warehouses without sacrificing customer service. In fact, Ragan says the company now is much less likely to find itself short of the components it needs to fill customer orders, and that has helped boost its on-time delivery rates by at least 30%.

The QAD suite - particularly its EDI ECommerce module and Supply Visualisation - has helped Cascade strengthen relationships with both its customers and suppliers. The EDI ECommerce package is a powerful transaction mapping and data-conditioning application that provides a streamlined method of managing EDI communications between MFG/PRO and virtually any system that a manufacturer`s trading partners may be using. Johannsen says EDI ECommerce has made it much easier for Cascade to map EDI data coming from its customers` systems into MFG/PRO, which means Cascade can begin conducting business - and booking revenues - from new customers much more quickly.

Supply Visualisation can improve the efficiency of an entire supply chain by giving suppliers direct, real-time visibility into their manufacturing customers` inventories. It takes advantage of the power already built into MFG/PRO to communicate inventory information to specified trading partners via a standard Internet browser.

Smith notes that EDI ECommerce and Supply Visualisation do more than merely connect Cascade with its trading partners; they actually allow business to be conducted in the exact fashion that each trading partner desires. That is especially important for Cascade`s relationships with the auto manufacturers, which make up the largest portion of its customer base, and their suppliers.

"The auto industry is very demanding," Smith says. "All of the auto manufacturers want to conduct business via EDI, but they each have slightly different requirements. They have their own specifications for how bar codes should be printed. They also have different rules for various processes - for example, how soon an advanced shipping notice must be transmitted after a product has been shipped. If you don`t comply with all of these rules, you can get hit with charge backs or even lose business altogether."

Since the automotive industry is one of six manufacturing vertical markets on which QAD is focused, QAD constantly works to make sure that its product suite can accommodate the current needs of companies in the automotive supply chain. Part of that effort includes working with Eagle Consulting on R&D projects to ensure that both companies` products are fine-tuned for the automotive industry and that their products stay compatible as they are upgraded.

"When we selected MFG/PRO, we knew that QAD was the leading ERP vendor for tier-one and tier-two automotive suppliers," Smith says. "And their dedication to this vertical market has been evident throughout our relationship."

The first sign of that dedication emerged during the planning for Cascade`s implementation of MFG/PRO. "The consultants who worked with QAD on our implementation almost knew the business model we would have to follow, and the functionality we would need, when they walked in the door," Smith says. "For us, the implementation was a matter of doing a gap analysis based on the model they presented and then doing a pilot to determine if any of our actual processes deviated from that model."

In the end, there was little deviation from the QAD-supplied model and Cascade`s business processes, which is a major reason why the implementation was easily completed ahead of schedule and under budget. Johannsen, who was responsible for managing Cascade`s budget for the ERP implementation, was especially pleased that MFG/PRO required virtually no customisation.

"We decided early that we were going to use the standard version of QAD as much as possible," Johannsen says. "We felt that was important in order to standardise processes across all of our plants. And we have accomplished that goal by standardizing almost all of our processes - from receiving materials to reporting production and recording financials. That has helped in numerous ways - in training employees to use the system, in identifying problems, and implementing system upgrades.

"There really wasn`t a great need to modify the system because QAD knows the automotive industry," Johannsen adds, "and the system works for automotive companies."

Smith confirms that QAD continually works to ensure that MFG/PRO stays in tune with the automotive industry`s changing dynamics. "QAD`s release management functionality, scheduling component is geared for the way OEM`s work on a global basis," Smith says. "But when automakers introduce different scheduling techniques, QAD quickly adapts. They also keep up-to-date with the functionality to ensure our ERP, EDI, and bar coding capabilities are Honda approved."

While it offers full support for automotive manufacturers, MFG/PRO is also flexible enough to manage the part of Cascade`s business that makes waste-management containers. "Our business is primarily in the automotive industry, which is why we needed a system that can handle release management through EDI," Smith says. "But we have one facility that makes refuse containers. They use sales orders and their customers don`t use EDI, and MFG/PRO easily handles both environments."

EDI ECommerce and Supply Visualisation are making it easier - and less expensive - for Cascade to transmit orders to all of its suppliers. "When we get orders, either through EDI or over the Internet, they go directly into the order management component of MFG/PRO," says Ragan, Cascade`s materials manager. "That allows us to run a material requirements plan at any time during the day."

Each new material requirements plan is then converted into a set of delivery schedules that are posted on the Supply Visualisation portal for suppliers to review, a process that takes roughly 15 minutes. "When we installed Supply Visualisation, we wanted to get our largest suppliers connected first," Ragan says. "We currently have about 56% of our suppliers using Supply Visualisation and we want to increase that figure to 100%. The suppliers actually like using it because they can see exactly what we have in inventory and they can decide whether they need to react to changes in customer demand or stick with a regular delivery schedule."

Supply Visualisation is also eliminating the need to fax or e-mail orders to suppliers, which is freeing Cascade employees to do more productive work. "We recently realigned our order management departments," Ragan says. "We were able to reassign two people from each plant to different jobs because the computer can now generate a lot of the information that these employees previously had to compile manually. Our goal is to learn to do as much as possible with MFG/PRO to show that we can continue to streamline processes."

Johannsen says MFG/PRO has transformed Cascade into a more proactive organisation. "Over the past year, we have focused on measuring our performance and setting higher standards for that performance," he says. "We are looking at factors like scrap rates and variances from production standards. Employee bonuses are tied to those variables, which gives employees an incentive to look for ways of constantly improving processes. But they wouldn`t be as effective without the systems we now have in place. The combination of MFG/PRO and Eagle`s RF Express for MFG/PRO allows us to operate in a much more timely fashion."