From inflexible MRP, to centrally-shared information

LTI is a manufacturer of purpose-built black cabs, the ones you see frequently motoring around the UK’s major cities. With an annual turnover of £67 million, LTI’s Coventry-based plant builds around 3,000 cabs each year (that’s about 17 per day), mainly for the UK market, but also exports a small volume to Europe, Japan and the Middle East. The company’s manufacturing plant employs 450 people, and is very labour intensive. It doesn’t churn out cars at the rate Ford or Honda plants do - the demand is simply not as high. Competition is only just beginning to emerge, with manufacturers like Peugeot and Mercedes now able to offer alternative taxis (which are basically converted people carriers), but they invariably beat LTI on price. So LTI has had to innovate, and concentrate on the customer, in order to stay ahead of the competition. Gary Hancock, IT Manager for LTI explains: “Our aim is to focus on what the professional cab driver wants in the cab. Quality and innovation are important, but government legislation is also an issue these days – for example, we will soon have to ensure that all our future models have wheelchair access.” LTI has responded to the legislation by introducing the new TX1 model, which has increased door apertures (six inches higher, eight inches wider) that open to a full 90 degrees. This enables all passengers, particularly wheelchair-bound ones, to get in and out safely and easily. Although stiffer competition is on its way, according to Hancock: “The company could see its business double over the next few years due to legislation alone. We therefore needed to get things right inside the plant and become more flexible and responsive to the customer, and capable of supplying an enlarged market … and IT was an area that came under review back in mid-1999.” Up until last year, the plant was using a highly tailored MRP system that ran the whole business really. This led to a multitude of disparate IT across the enterprise: [Microsoft] Access databases and [Microsoft] Excel spreadsheets everywhere, all using data extracts from the MRP system – but none of this information transfer was managed or controlled. More important, some of these disparate systems were being used for business critical functions. Hancock says the problem was twofold really: “First, we desperately needed to reduce the number of satellite systems [i.e. disparate Access and Excel] around the company … they were getting far too difficult to manage and coordinate. And second, engineering and quality [manufacturing] departments needed to share information from some kind of central data source.” Basically, the Coventry site had no mechanism for engineering change control or the transfer of design updates from engineering to manufacturing. And sales had problems with the customer ordering process – there was simply no way that sales could guarantee customers availability of necessary components. Thus a powerful product sales configurator would be required as part of the new IT system, so that bills of material (BOMs) for engineering could be generated automatically from the sales order details. After setting up an IT project management team of eight staff (including Hancock) in late 1999, LTI looked at an ERP solution from Glovia. But then the business hit a period of poor sales, and the project was put on hold. But nine months later it was resurrected again, just in time for the project team to visit the Computers In Manufacturing (CIM) Show at the NEC. This is where Tony Hancock met the IFS team (who had its own stand there). “IFS,” he remembers, “installed confidence in us from the very beginning. Their pre-sales team was excellent! And they had a great product sales configurator they could offer us.” After some initial IFS presentations, LTI began a period of training and education at the Coventry site. IFS consultants spent two days a week for eight weeks agreeing, documenting and mapping out LTI’s business processes. Hancock explains: “We used the IFS Business Modeler tool which allows you to compare your documentation with the alternatives offered as standard by IFS. We adopted standard processes wherever possible, to minimise customisation and hence further costs. But there was a little customisation as you’d expect.” So how have things changed at the plant? LTI now has an integrated, component-based manufacturing system that is both flexible and able to maintain up-to-date information for a wide range of business functions. Most of the functionality is provided by IFS (financials, planning, engineering, procurement and quality), but where specific needs could not be met by IFS, data accuracy and consistency were maintained by using Access and Excel solutions across ODBC links. The BOMs, which were originally on separate, unconnected systems, are now both managed through IFS. Engineering needs to be able to make queries on parts usage and examine the effect of changes independently of manufacturing. The difference now is dramatic. Using the latest parts information, and with access to ‘live’ stock levels, engineering can now manipulate BOMs to optimise changes before doing a transfer of updated information to manufacturing. In addition, sales are benefiting from the IFS product sales configurator. “This means customers get a more reliable and accurate price on ordering a taxi,” explains Hancock. The system ensures that individual orders for taxis are correct but a record of the components required for manufacture is retained for future use. “And we have plans to offer the configurator to our ten UK dealers across the Internet,” adds Hancock. “The actual IFS implementation,” says Hancock, “took about 10 months, with three months spent training, three on modelling and documenting business processes, and three to four months actually doing the installation stuff.” And on the subject of costs, Hancock comments: “We had a budget of close on half a million, and IFS came within this. We didn’t need to upgrade our IT networks or infrastructure at all. Cultural barriers were not an issue, as we took time to educate the workforce and we kept them informed through all stages of the project.” But has LTI spent its money wisely? According to Hancock it definitely has: “The benefits are plain to see. Users around the business can solve their own problems now … and they are constantly coming up with new, fresh ideas on how to improve the business. The ten guys in stores, for example, with a little training, now write their own queries to extract the information they need from the ERP system … employee involvement is crucial.” “There was no specific payback or ROI for the project,” says Hancock. “We simply knew that we had to better control stock levels and BOMs to cope with increased demand in the marketplace, and engineering and manufacturing needed to share up-to-date accurate information. Without an ERP system this would not have been possible!”