Marrying MRP, ERP and plastics processing

In any good marriage, communication is key. Marrying various parts of a business, it seems, is no different.

“As most [organizations] grow, critical information doesn’t flow from department to department,” said Kevin Newton, development manager at enterprise resource planning (ERP) vendor Made2Manage Systems Inc. of Jacksonville, Fla.

“(Since) it is in someone’s head, you lose the ability to react to things if someone is out or some information they have is not shared with others. ERP takes all that knowledge (and) puts it in one place. Nobody has to know the entire process. They just have to know their one part and the information is shared across the organization,” he added.

No doubt it makes good business sense to have a system in place that links manufacturing, customer service, payroll, inventory, financial data and human resources, and that’s precisely why today’s ERP software holds such promise. The software helps plastics processors better manage the important parts of their business, including product planning, purchasing, tracking inventory, interacting with suppliers, providing customer service and tracking orders.

ERP FOR MANUFACTURING

Sometimes, ERP is used interchangeably with MRP (Management Resource Planning), but both are fundamentally the same. MRP was first used in the 1960’s to describe the processes used to determine materials, labour and machine requirements in a manufacturing environment. MRP evolved into ERP with the advent of computer technology, which automated these processes and extended them from the plant floor to across the entire enterprise.

In the plastics industry, ERP technology is especially welcome given the way plants operate, with high-volume, repetitive tasks, multiple cavity machines and arduous scheduling.

Terry Cline, executive vice-president of Paso Robles, Calif.-based ERP vendor IQMS, said for example, a manufacturer of door handles would usually make one component at a time. In contrast, a manufacturer of computer mice would likely have to deal with four or five different components made at the same time with a single tool.

A traditional ERP system is part-focused, so it would treat each mouse component as a single item and produce four work orders, he explained.

However, ERP systems for the plastics industry are able to schedule four work orders on the same machine at the same time, saving time and money. The software can also help figure out how much resin is needed to produce a part, what percentage of that is scrap — like sprues and runners — and how much of the scrap can be size-reduced and blended with virgin material, all contributing to further cost savings.

PLASTICS-FOCUSED APPROACH

Jacob Aharon, president of ERP vendor PlastiSoft Corp. of Toronto, said many plastics processors have had some form of ERP solution in place for years and are now upgrading to third-generation products.

Unfortunately, many spent hundreds of thousands of dollars on their initial software but didn’t take advantage of all the capabilities. Some focused all their efforts on the financial aspect of the equation but virtually neglected manufacturing, Aharon said. As a result, these early implementations didn’t prove cost-effective in the long-term.

Others bought into systems that promised to do it all but didn’t, and ended up spending two to four times their budget on customization. That’s precisely why Aharon recommends choosing an ERP vendor that specializes in the needs of plastics processors.

Tempo Plastics Ltd., a Barrie, Ont.-based processor of plastic bags and rolls, is a case in point. Rick Hardwick, Tempo Plastics’ vice-president of quality assurance, recalled that their homegrown system was disjointed, making it difficult to efficiently complete complex orders, clock machine times and service customers. Employees did much of their work manually, meaning processes were slow and prone to errors.

Because the software vendor no longer supported the version of the ERP solution Tempo was using, and the same software vendor wanted a significant amount of money to upgrade to another product, Tempo was forced to look elsewhere. It wanted to find a vendor that specialized in ERP for the plastics industry, and eventually chose PlastiSoft’s TORI-FLEX.

With PlastiSoft’s TORI-FLEX, Tempo has the ability to funnel information about quotes, orders, invoicing and shipments into a single database, thereby providing more accurate inventory control and ultimately improving customer service. Implementation was completed incrementally over two years, with order entry and production coming on board first, and invoicing and shipping married in later. The solution went live last January.

Tempo also coupled TORI-FLEX’s warehousing module with a wireless personal digital assistant (PDA) for accurate mapping of the warehouse by location, row and level. This enabled shippers to quickly locate products within the plant rather than spending time hunting them down. Shippers can now easily find particular skids and verify they have retrieved the entire order, creating a more organized warehouse and a more productive workforce.

FROM LADING TO SHIPMENT

Mel O’Leary, president and chief executive officer of blow molder Meredith-Springfield Associates Inc., in Ludlow, Mass., said until recently, his company tracked its business on Microsoft Corp.’s Excel spreadsheets. Reports were updated manually three times a day, at the end of each shift.

However, Meredith-Springfield recognized that it needed to increase its efficiency and embarked on a year-long search for an ERP solution. It wanted a solution that would automatically track orders from receipt to bill, or from lading to shipment, “with the least amount of keystrokes,” and offer a real-time view of the business so management could assess profitability.

In the end Meredith-Spingfield spent US$150,000, including related customization and training, on Montreal-based CyFrame’s JobTrack ERP solution. Because JobTrack is Web-based, Meredith-Springfield doesn’t have to worry about hardware or software compatibility issues. It also opened the company up to e-commerce. Customers can log onto the Web site with a user name and password to track shipments, invoices and even receive and issue quotes, said CyFrame spokesperson Rick Dunne.

Orders are inputted into the system just once, with updates provided directly from the plant via bar code readers on the plant floor, O’Leary said. Activity associated with tracking and managing orders — from entry through to printing a bill of lading and a package label, updating the accounting system, and relieving the inventory — has been reduced by 80 to 90 per cent. The need to manually input data has been drastically reduced, letting Meredith-Springfield reduce the headcount responsible for those tasks from four employees to one. Additionally, reports are displayed in real-time, helping supervisors and production managers more quickly identify and solve problems, boosting production efficiency by 15 to 20 per cent.

O’Leary admitted there was much resistance from the workers on shop floor when the CyFrame solution first came on board. Mostly, the workers weren’t computer literate and “they had to get past the perception of Big Brother watching,” he explained. But by providing significant training (the State of Massachusetts offered a matching training grant), the transition ran smoothly.

“It’s definitely the belief of the ERP industry in North America that if you’re not lean you’re probably struggling,” IQMS’ Cline said.

“We tend to have fairly high labour rates and transportation costs aren’t the cheapest. Materials costs around the world are, by and large, the same and buying machinery around the world is the same, so it gets down to how efficient you are and what your inventory turns are. [It’s] the difference between a profitable company and a non-profitable company, and if you’re not using an ERP system … you’re going
to have a hard time competing.”