In today’s world if you’re not competitive with other manufacturers, you’re going to get left behind,” says Brahim Hoosein, information systems manager at Belvedere International Inc.
“You can’t afford to be waiting a day or two to see if you have enough inventory. Somebody else will ship to your customer and you’ve lost business.”
“The key issue is turnaround time,” echoes Wayne Puglisi, IT director at C.F. Sauer Company. “Every hour or every minute or every day counts as far as having enough notification so that we can turn that order around in the time frame customers need.”
Hoosein has expectations of boosting customer response time at the largest wholly Canadian-owned manufacturer in the consumer health and beauty industry. He has guided Belvedere to select PeopleSoft’s enterprise software, including its supply chain management (SCM) solutions, material requirements planning (MRP) and financial solutions.
Puglisi, by contrast, has actual experience in applying PeopleSoft at C.F. Sauer Company, a Richmond, Va. family-owned firm producing spices, flavourings, mayonnaise, margarine, and other food products. Since 1999, C.F. Sauer has applied the PeopleSoft order-to-cash business process and by early 2001 had also implemented the PeopleSoft manufacturing processes and supply chain planning modules.
Hoosein reports that Belvedere last year started researching changing their ERP package. He recalls that a few years ago the 200-employee firm had outgrown the size restriction on the database of their ERP package installed in 1995. However, since they had heavily customized VISUAL Manufacturing from Lilly Software when installing it, a simple upgrade was out of the question.
Rather than just continue customizing and trying to stretch the database size, they looked at new software and discovered that a lot of their customizations were now standard in some packages. In fact, they are now looking at a vanilla implementation of PeopleSoft without any customizing.
At press time, they had done pilot sessions, preliminary configuration documents and some training.
Hoosein says that during the pilot stage, Belvedere took a day on each module to study the functionality of the software. He says they found the “must-haves” they had customized in their current system already existed in the PeopleSoft program.
He hopes to go live with PeopleSoft this summer. His expectations include the convenience of a browser-based application “so that means no longer do I have to go touch every workstation.” He thinks user familiarity with a browser will reduce training time and subsequent costs.
No more firefighting
Hoosein also hopes to be rid of some major problems associated with database reporting, including dealing with corrupted data. “I’m so excited about getting this new software and relieving the majority of my headaches because most of the time with our current application, I am a firefighter,” he enthuses.
He looks forward to fingertip access to data, noting that VISUAL Manufacturing required them to use other software to pull information for reports. “It’s a tedious, time-consuming task for us, finding out the specs the users need and having someone go and write reports and make it user-friendly for end users to use it. We’re looking at cutting back costs in that area alone.”
He sees it as essential in today’s competitive world to have “real-time information on where your inventory is, where your orders are, what you have available.” Serving large companies such as Wal-Mart and Shoppers Drug Mart, “we need to turnaround orders sometimes in 24 hours or 48 hours. We have to be able to do that. If we don’t have information at our fingertips, we can’t do it.”
Hoosein especially looks forward to getting management approval to expand to real-time collaboration with customers and partners. He appreciates that they will not have to buy any additional modules to give customers or vendors access to their specific data.
“Right now, Wal-Mart gives us access to their data. We know when items are sold at their cash register. We know what inventory is on hand at every store. We know which store is doing better than another store, so we can go in and try to promote more in that area. It would help our vendors to see how we’re managing with their inventory; if they are doing well with us and if they’re not.
“It’s the same thing with our customers,” he continues. “The more information you can share with your customers and vendors, I think the more successful you can be.”
Quick access to information relevant to orders also seems to be vital for C.F. Sauer to serve a customer base that includes national American retailers and large food service organizations. Given that their customers are in food processing where products have short shelf lives, customers keep as low an inventory as possible and count on C.F. Sauer to fill their orders quickly. For the same reason, C.F. Sauer keeps little stock on hand and typically manufactures to order.
Puglisi says PeopleSoft has helped in streamlining the order taking portion of the business. All the sales come in centrally; then that information is dispersed out to the various plants. He explains that each plants’ production scheduler has the tools within PeopleSoft to see a running total of the current availability of the product on hand and any work orders that are in the system to make that product. It lists all the sales orders that are outstanding for that product and gives a running total.
“If they needed to, they could look at orders right now that were taken an hour ago and see what impact that has on the current product’s availability,” he says.
C.F. Sauer’s product mix and complexity has been increasing substantially. Puglisi estimates that the company’s number of products has grown fourfold over the past two years.
“When you start to get to a certain number of products, you can’t create a production schedule on the back of a napkin,” he stresses. “You have to have a system that makes recommendations that says ‘looks like you got an order yesterday so today I am recommending that you need to make by this date this many cases of this many product.’ It does that automatically and, by the way, it tells the purchasing person whether or not they have enough stuff or whether they’re getting critical on something; so we have planning exception reports. ‘Hey, you’re making this stuff next Thursday? You don’t have enough; you’ve got to expedite it.'”
Automated pricing and discounting
The pricing functionality in PeopleSoft Customer Fulfillment Management lets C.F. Sauer set up contracts, price programs, price sets and price lists by taking the cost of the raw materials that it takes to make a particular product, applying a formula and using the cost roll-up process to determine a starting point for the cost basis. Promotions are set up in the system with a price set that has a start and end date, so the discount is automatically applied to an order by a customer qualified for a promotion. Discounts are similarly automatically calculated and shown on invoices.
Prior to using PeopleSoft, deriving accurate prices from up-to-date costs was difficult, says Puglisi. Now, C.F. Sauer can also identify which products are making money and perform customer profitability analysis. He says the ability to aggregate data by customer and use the built-in reporting helps the company look at a customer holistically, instead of looking at individual ship-to’s or sales records.
Of the many reference sites contacted when assessing vendors, C.F. Sauer was the only manufacturer with whom Hoosein identified. Belvedere manufactures everything they sell, except for aerosols and mousses, in a 65,000 sq. ft. facility. Ten customized production lines fill shampoos, lotions, conditioners, gels, non-aerosol hairsprays, creams, etc. on a regular day shift with a 30 million unit capacity per annum. A 52,000 square foot distribution facility is linked via EDI with the head office. Bar code scanning is used for sorting, stock control accuracy and EDI interchange with customers. The company’s products are distributed in Australia, Great Britain, Eastern Europe, South America, Japan, Turkey, the Caribbean and the United States.
Hoosein is looking forward to having the production planning and order management modules up and running. He says the PeopleSoft order entry system “does everything in terms of being able to give your customers discounts in their orders, manage inventory, order management, MRP system is real-time. We can do what-if scenarios with our production schedules and we can get information today rather than waiting for tomorrow. Our current system has to be run overnight to see what it produces for us tomorrow.”
He buys into PeopleSoft’s promise that its promotions and deduction management modules help consumer goods manufacturers effectively plan and manage promotional spending with channel partners. Integrating supply chains and financial systems, these modules are said to enable forecasting, planning, tracking, reporting and analysis of promotional campaigns.
“It is a closed loop because everything ties in together — your A/R, promotion, deduction – which sometimes happens at the invoice level and sometimes after,” he says. “We have customers who send back a claim for deductions. We have quite a few staff members who work on just that. With it being more tied together in a closed loop, we can manage better.”
Hoosein describes C.F. Sauer as “identical to us in the spice industry – using bottles, caps, they are filling their bottles, they have work orders, batch, identical things. They had similar issues to us and they chose PeopleSoft.”
Puglisi says they did so because PeopleSoft was a tier one provider with longevity and offered a package that could handle the full breadth of the business from order management and pricing to the financial to the manufacturing – both make to stock and make to order – and forecasting and then supply chain.
They involved the users in the evaluation process and given more ‘say-so’ than IT staff in the choice of software. From looking at the demos and viewing functions that related to their business, they saw PeopleSoft as the best fit functionally, Puglisi recalls.
Another deciding factor was the ability to make modifications and still be able to upgrade. “The truth is no one has everything you need,” Puglisi. “They have 90 per cent of what you need which is why you buy their package – so you don’t have to recreate the wheel. We knew that we wanted a package that we could fairly easily make modifications to yet that wouldn’t preclude us from upgrading to the next version. PeopleSoft has much better facilities and tools and design for facilitating the upgrade product.”
Starting with external expertise
C.F. Sauer used consultants during the implementation of the first module to help give Puglisi’s IT staff knowledge of the package functionality without having to “go through a bunch of training and read through a bunch of manuals and try to figure it out on our own. I felt like it was more efficient to pay a consultant who had the knowledge already and come in and say when our business users said they wanted to price something a certain way, I wanted the consultant to have functional knowledge of the package to be able to say ‘all right, you can do it this way, this way or this way.'”
Puglisi reports they had some modifications to do but they came as no surprise. For example, during the demo, they realized they would have to build into the functionality special business details such as the ability to price some products based upon the Chicago Board of Trade price for certain commodities like soybean oil.
Hoosein expects to see “some small ROI” within the first three to six months and more after the first year. He hopes to realize within two to three years a return on investment close to 75 per cent. He adds that Belvedere needs to contribute to the ROI by seeking ways to be more efficient and boosting productivity. For example, they are looking at implementing bar coding after PeopleSoft goes live.
Hoosein’s ROI projections seem reasonable to Puglisi. “I’ve been on projects where we put a supply chain package in and it paid for itself in a year. We didn’t do an ROI on this project because we were on an old mainframe system and it was a no-brainer we had to get off of it.”
Puglisi says that for them, the improvement over the previous mainframe system is “like night and day. There really is no comparison with the old mainframe system. We’d take the system away from users for two hours in the middle of the day for running a planning session for the next day.
“It was hard to compete without having more timely information,” he continues. “In those respects, it has dramatically improved things and I think that the quality of information is much higher so we can better pinpoint the profitability of certain products and certain customers. That’s been a huge help to us.”