How is it that a Canadian manufacturer is increasing revenues by an average 40 per cent for each of the past five years when all its competitors have only single digit growth? BW Technologies Ltd. of Calgary, Alta., has racked up an impressive 52 per cent growth with the year ended this past April. Their success is due to starting off with an exceptional product backed by a multi-prong approach to streamline front and back office operations that in turn ensure a quick response to customers.
It all began when the current president and CEO Cody Slater saw a drab, bulky, expensive and hard to read device used for detecting poisonous gas in oilfield operations. Though just 24 and seemingly on his way to be an astrophysicist, his hobby of fixing TVs and tinkering with electronics gave him the insight to come up with a better alternative to the existing device. He created the Rig Rat, the first solar-powered, wireless gas detection system for remotely located drilling rigs. Soon after, Slater founded BW Technologies in 1987 and the company has since been designing and manufacturing a full range of gas detection equipment.
Earlier this fall, Slater and Barry Moore, an industrial designer and the company's vice president of product development, received the Westaim Manning Innovation Award for revolutionizing the gas-monitoring industry with their GasAlert line of instruments.
BW today makes and sells more than 15 instruments for detecting poisonous and explosive gases to customers in industrial and commercial environments around the world. The company has offices in Europe and the U.S., plus 620 worldwide distributor locations for industries such as pulp and paper, oil and gas, fire rescue, municipalities and mining. It sells about 4,000 units per month of its most popular zero-maintenance product, the portable GasAlertClip for
monitoring poisonous hydrogen sulphide or carbon monoxide. They sell portables, fixed and standalone products, with the portable units representing 80 per cent of their sales. They translate their manuals into nine different languages.
Success never rides on product alone for long. As can be expected, the competition soon followed suit with their own versions of the disposable gas monitor. But where BW maintains the edge is through customer support by streamlining operations from product design through to manufacturing and product delivery. Many of these enhancements have occurred this year.
For example, full manufacturing has been brought in-house. BW invested $500,000 in new surface mount technology to produce its own printed circuit boards, reducing manufacturing costs and improving the company's ability to keep up to global demand for its products. Last year, more than that was paid to outside Contract Electronic Manufacturers with estimates to rise to $740,000 for this year and more than $900,000 for the year following. BW management expects that by vertically integrating the printed circuit board process with the new MYDATA and EKRA automated equipment, they will comfortably recuperate the costs within one calendar year, says Kevin Meyers, vice-president of operations.
In addition, the company will be able to provide BW's research and development department with prototype boards, dropping the current outsource time of four weeks to 48 hours. This is a fully automatic process where BW will be able to produce panels of printed circuit board assemblies every five to ten minutes and run the machinery for about five hours each day. BW will be able to produce 250 panels every week with the capability of producing up to 800 in the future.
Bringing that capability in-house means BW can offer customers shorter lead times. "We're better able to react quickly to our large customers' demands," says Meyers. "If we get a 400-piece GasAlertClip order, we can turn it around in very short order."
Meyers reports that outsourcing lead times were one week to three weeks. Now, with their in-house capabilities, they've cut that down to 24 hours to do circuit boards and seven to 10 days to complete the units.
Further, the in-house capabilities boosted their R&D strength. "When we have a new product (to be prototyped), we had to hand populate all the boards or send them to an outside vendor," Meyers adds. "That took three to four weeks as opposed to 48 hours for prototyping.
Meyers says they spent $1.9 million per year in product development for each of the past two years. That includes designing, engineering and prototyping.
APPLYING CAD/CAM
Not surprisingly, the company has equipped its engineering department with computer aided design/computer aided manufacturing (CAD/CAM) programs. It uses Dassault Systèmes' SolidWorks for three-dimensional mechanical designing and Protel from Altium Ltd. for designing electronic circuits.
"CAD has had a big impact on our product development time lines," says Meyers "We do all our mechanical design in 3D CAD and our electronic design in CAD system. We are a lot more capable of developing the two sides of the product simultaneously. We can trade the CAD information back and forth and we have a very good idea of what product's going to be before we have to make an injection molding tool or board. So, that has cut down our development time with simultaneous design of various elements of the products."
"When we engineer our product, we look at engineering it to manufacture it at the lowest cost way," he continues. "If you look at some of our older units, it would take a couple of hours to manufacture one. Now we can manufacture in 20 minutes what it used to take maybe two to three hours."
Of the company's 155 worldwide employee base, 14 are in engineering, including two people dedicated to IT. There are 122 employees in Canada, 13 in the U.S. and 20 in Europe.
Along with a new 33,000 sq. ft. manufacturing facility that they moved into this year, they have implemented an ERP system to streamline operations and cut down on redundancy. It lets engineering information be accessed throughout the company, including giving the satellite offices in Dallas, Texas, and Oxfordshire, United Kingdom, access to information on the system as well.
The new system is Intuitive ERP, (formerly MRP9000), and was implemented with the help of the Canadian distributor, Automated Design Systems, a Manitoba-based manufacturing software solutions reseller. Prior to this system, they had two different systems running the front and back ends of the business with no communication between the two. There was one database for manufacturing, stock room and purchasing and another for sales and accounting.
BW spent more than four months evaluating systems. They chose Intuitive because it is easy to use, easy to create reports, and there was good support for changes and customization, says Meyers.
"Before they bought the system, we delivered a three-day, almost a training session to see how we worked through the training, how the system functioned in more of a detailed format," recalls Automated Design Systems' Dmitry Kirshner. He says Intuitive provides medium-sized companies with an easy to use tool that they can administer without having the IT department or "be on the hook with the software manufacturer when they need a new report, having to call the manufacturer and pay five grand every time they have to lift their pen. Intuitive ERP offers integration with Web so your customers can go on the Web."
"The new system streamlines what we're doing because there is one central database with all the information in it," says Meyers. "Before, we were maintaining the several databases. Now we have one central that everyone can access. They will have the part drawings, the components, the bills of material - (they) are all controlled through one system. We put in a forecast. Forecast creates demand and we purchase to that."
IMPACT OF SINGLE DATABASE
"Because it is involved at every department," adds Barry Moore, "now when an engineer is developing a new product, they might spec in a new component. That engineer can create the part numbers and create the electronic documentation to back up that part number. The buyer and buy against that information. Eventually that information will be used to cost the final product that it goes into so that accounting would use the values or marketing would use those values. Purchasing buys against it. The ERP system plans against the information that is put into that same electronic document. In a lot of cases in the past we had several databases where information had to be either manually or semi-electronically passed between them, we now have one database that everyone draws the information from. If it's a single database, it gets updated once and is universally available to everyone who has access to it."
"Having the information at fingertips allows people to make better decisions," Meyers continues. "It is more of a real-time system. The old way we were doing things was you would create your sales order, the sales order would go on the system, it would be shipped out the door and you would have to relieve your inventory from other the other system. This system encompasses all the departments. When an order comes in, it's ticked, it's shipped and the inventory is relieved immediately. You're looking at real-time data which makes it a lot easier."
And faster.
"That's where we seem to beat up the competition," adds Meyers. "We're able to ship orders practically the next day." BW holds the inventory rather than the distributors. The company stores one month of finished goods to ship to customers in 24 to 28 hours from Calgary or the satellite offices in Texas and England. Meyers notes that one of the reasons for their considerable growth in Europe seems to be the ability to take an order off the shelf and ship it the next day. "Word gets around fairly quickly."
The ERP system has been implemented company-wide so it includes everything from finance to order taking to shipping and bills of material and document control, says Moore. "Because we are design and manufacture, there is quite a broad range of what we're doing. We're not just buying components and reselling. We're buying in raw materials, manufacturing parts and designing new products so it's pervasive throughout the company."
He says they chose not to implement Intuitive's engineering change order module because they thought that was one of the weaker components. They could have used SolidWorks' capabilities to handle change orders if they weren't using Protel for the electronics design as well. "One system can't cover the whole range of products."
However, they do use these add-ons to the main product: shop floor control, location lot tracking, physical inventory, quoting, return material authorization and time line financial analyst. Alert messenger module is purchased but not yet implemented at press time.
Because Intuitive is Microsoft-based, it is easy to integrate with other databases, making it flexible and easy to modify, says Automated Design's Kirshner. He claims it is easy to use and logical, fitting well with corporate procedures so that information flows with control points - giving a controller control over sales or acceptance of sales orders, for example.
"Intuitive allows customers who don't know a lot about programming to tweak the systems," Kirshner continues. "BW has a very skilled level of IT staff… able to write different subsystems that tie Intuitive in with it. That's very important because other systems have almost like a black box. You know the data is there. It is possible to get it out but you need to know some specialized language. With Intuitive, a lot of little modifications like reports can be linked with additional features. If somebody knows Microsoft Access, they can quite effectively modify the software and add additional functionality that they might require for their company."
BETTER CUSTOMER RESPONSE
"ERP has had quite an impact on us and it's one of those things that our growth has demanded we get into," says Moore. "Its advantages are becoming apparent fairly quickly. Along with growth there's growing pains so there's always a little bit of acclimatizing to new technology and getting all the procedures and systems working properly. It is already showing that it is going to pay off for us. We will be - and are already -- a lot more capable of responding to customers needs not only from order entry to product shipment but also on specialized products. Because we have all the data at our fingertips we can put together new products and customize products designed specifically for an end user in pretty short order.
"Coupled with the growth of the company, and just the way technology is changing, we've been growing our computer network system exponentially just to meet our needs," she continues. "We're right now working on an Intranet to communicate information internally. We're linking Dallas and UK offices into the database here so they can access a lot of the same information that we have here in Calgary."
The Calgary IT staff support these satellite offices for broad brush strokes, but relationships with local IT companies are being developed to handle detailed support.
A new ERP system, new facility, newly expanded manufacturing capabilities, exponentially growing computer capabilities. One wonders how all these changes are handled. Moore explains that the company culture is one of innovation which means change.
"It's a culture of innovation that we've created in our R&D department and it's paying off," he adds. "We're recognized as the technical leaders and certainly the innovators in the industry. Our products tend to be the leading edge stuff. That doesn't just happen by accident. We challenge the old ideas and way things are done and apply new technology and keep our ear to the ground as far as new technology.
"There's certainly a lot of commitment from management to do these things," Moore stresses. "We're not a company that is afraid of change, so people embrace it. We've grown on change and that precipitates throughout the whole company and affects the way people think about new products, the development of new products and just the way we do business. People would be surprised if things quit changing for a month."
IMPLEMENTING ERP
If 'location, location, location' is the key in real estate, what is essential to implementing an ERP system? "Test pilot, test pilot, test pilot," says reseller Kirshner. He recalls the BW ERP implementation as successful and reports that they followed the resellers' recommendation for at least three separate test pilots with different objectives.
First test pilot: strictly for system familiarity. "You can use demo data just to give some familiarity to the users. Involve the broad scope of people, not just the key people."
Second test pilot: when you start populating your databases with data. "Take a subset of (your) own data and start pasting all the different business scenarios that (you're) going to encounter through that representative set of data."
Third test pilot: when they have populated everything, entering all bills of material, part numbers, customers. "(You) do more testing trying to replicate the real life scenarios again."
He notes that each pilot can last from two to three days to a month, depending on how extensive the testing.
"The 'go live' day is probably the most stressful time in any organization, no matter how well you prepare," he cautions. "Suddenly that safe traditional blanket you had is taken away from you. The more testing like that you do, the more successful is going to be your 'go live'."
BW Technologies can be reached at www.gasmonitors.com; Automated Design Systems at www.automated-design.ca