Dual ERP delivers pan European configure to order

Finished goods inventory and work in progress (WIP) down 15—20%, stock turns up 20%, customer delivery performance up 10%, and lead times reducing: that’s the picture of success at office furniture manufacturer Steelcase within a few months of completing its manufacturing ERP (enterprise system) go-live. Not only that, operations director and project manager Richard Jenkins says the firm has also bolstered its competitive advantage in terms of improved flexibility to meet short term customer requirements and set itself up to drive continuous improvement through lean thinking. Steelcase is a £60 million turnover multi-plant, configure-to-order manufacturer, with UK production in Margate and a distribution centre in Sittingbourne, headquarters in Strasbourg and manufacturing units in 12 European countries. The factories are broadly specialist and complementary: Margate makes storage cabinets and desks; Worcester produces boardroom tables and executive office suites; the French plant supplies most of the seating; and so on. Sales are via European dealers providing workspace designs from the group’s range which, with choices of size, style, fabric, colour, finish and the rest, amounts to hundreds of thousands of configurable products. The firm, which had inherited a variety of business and production systems over years of acquisitions and growth, embarked on a process of standardisation back in the ‘90s, with SAP for sales order processing, financials and logistics. That was successfully rolled out across Europe four or five years ago and SAP now provides top level master scheduling, allocating product line build to the relevant plants with sales configuration data and, after manufacture, administering order consolidation, delivery and customer invoicing. Last year Steelcase turned its attention to the legacy production systems, and it’s the implementation of IFS Applications ERP for manufacturing management, initially in Margate, that’s been responsible for the improvements this year. That site was chosen for the pilot primarily because its in-house bespoke system, extended and upgraded over 30 years eventually to Y2k compliance and RS6000, was past its sell by date. The company depends on its systems at this level not only to manage production of the sheer scale of product configurations, which is significant, but also to support the whole business of orders subject to late revision, sometimes within 24 hours of delivery, rush jobs and so on. Defined improvements Steelcase had already gone a long way to making product diversity manageable in engineering terms through rationalisation, modular construction, component re-use and combination rules. That work is ongoing, but it’s another story. On the ERP side, Jenkins’ team had also completed a thorough review of manufacturing at Margate and come to specific conclusions on system requirements beyond configuration management, which formed part of the system RFQ. Says Jenkins, “For instance, we wanted CRP (capacity requirements planning) and more ‘gates’ for reporting production progress at various points along the shop floor processes: in the legacy system we reported finished goods shipping and then back flushed, but that meant we couldn’t see overdue operations. We also wanted to move all areas to daily scheduling.” IFS was selected following competitive evaluation that included SAP. Deciding factors included its real time product configurator at the BoM (bill of materials) level using IFS’ DOP (dynamic order processing) functionality and its robust data migration utilities and SAP customer order processing interface. Steelcase spent around £500,000, including Sun client-server hardware, 100 concurrent user software licenses and associated consultancy and training. To get the pilot system up and running rapidly, the implementation itself was kept as simple as possible, with no core code customisation, and focusing on the immediate requirements, rather than the wish list. Not that it can be described as simple, with the level of factory configure-to-order and change management. Jenkins says: “We’ve implemented the system to manage BoMs and routings as generic MRP parts overlaid by configured DOP parts to whatever level of the BoM we need. SAP has the sales configurator; we receive relevant demand at the plant, and manage shop floor operations by running IFS MRP once a day and the DOP processor in real time for the configured parts.” The system thus puts actual demand to the factory floor and handles materials procurement, supplier invoice matching and inventory control. Factory integration Beyond this, it’s been set up to manage late customer amendments by ensuring the plant order book updates hourly (formerly once a day batch) with manual intervention for factory operations. Then at the work centre level, IFS CRP is now used to balance and control production. Jenkins says: “Before we just had the SAP master schedule… With no CRP to monitor or schedule the factory, we just had to look at, say, the assembly shop and infer requirements. Now we can see the work centre demand, so in assembly we can flex labour; in the press shop we can flex hours. It means we can offer better reliability to our customers. I’d say our customer performance is up 5—10% at around 97.5% now.” Meanwhile, there were the data migration and system interfacing issues. Jenkins says taking static data from the legacy system and mapping it to IFS was always going to be complex because of the scale of its BoM generation rule base and the necessarily complex data management routines. “There were big hurdles here; we wanted to transfer the database structure across rather than rewrite the BoMs, so getting clean bills and making them clear to users was critical.” It was a major exercise: “The first time around it took us three or four weeks to figure out the BoMs and export the data into the test environment... In the end we did it in four days.” Throughout, IFS’ import utility was user-friendly and provided the support he needed. Similarly, with the SAP interfacing work he says the connection was easy to drive and robust. From initial system evaluation to project completion took less than a year, with the implementation itself live in six months. First orders were booked onto the new system in January of this year and migration was complete by February, with the legacy system being allowed simply to wash itself out. Jenkins chose this over the big bang go-live partly because it provided a viable fall-back position, and partly because it enabled users to become gently familiar with running the system. Operationally, it simply meant all new orders from the SAP system were fed to IFS, kicking off MRP, DOP and the rest, while existing order amendments remained with the old system until shipping. Surplus stock was transferred to IFS as operating stock on day one, with IFS taking on all new purchasing, invoice matching, etc. About eight weeks later, when the last sales and purchase orders had been processed, final stocks were transferred and the legacy system switched off. Beyond the headline figures, Jenkins says there’s also been the looked-for improvements in WIP control and production balancing, partly through CRP, partly daily scheduling and partly the production progress reports. “Daily scheduling, for example, in the press shop and the early processes, has allowed us to define supplier lead times and delivery patterns more precisely and get away from loose buffers.” And customer service has also improved. “We always know what’s late, where it is and why. It means we can take remedial action, like consider moving some production out to subcontractors, working another shift or whatever,” says Jenkins. It also means competitive advantage, “especially where we have to commit to tight delivery schedules.” Now the firm is looking for more lead time reductions through its long term lean strategy, and analysing when to use its production IT and when ‘pull’ signals. But there will be limits. “Although currently we offer four-weeks, our cycle time on the shop floor is four or five days,” he says, the rest being materials lead time and consolidation of orders from other sites. With that kind of ratio, the focus ought to move to the supply side, but it’s not clear how much IT or lean thinking can do there with the scale of configured product. For now though, Jenkins is a happy customer. “Our mid year stock take was the most accurate we’ve ever done. I reckon inventory has dropped by five or six days. That’s about £200,000 worth directly attributable to the system.”