Software providers offer insights as to what service centers want, need and should anticipate in running their enterprises
March 2019 - Service centers must manage so much—inquiries, inventories, pricing, mill order schedules and lead times, where a customer’s material is at any given moment, grades, sizes, tolerances, coatings, costs at every point of the value chain, carrier availability—among other activities. They now must adopt and leverage automation. A panel of experts answer five key questions to help Modern Metals readers master their futures with all the necessary tools.
PARTICIPANTS
Benjamin Upell and Mike Voran, regional sales managers, Enmark Systems Inc., Ann Arbor, Michigan
George Walton, president, 4GL Solutions, Stouffville, Ontario
Jeff Ralyea, Manufacturing Division president, ECi Software Solutions, Fort Worth
Toros Babikian, manager-sales administration, Invera Inc., Westmount, Quebec
Kevin Ameche, vice president, RealSteel, Medina, Ohio
Kathie Poindexter, director-global product marketing, Epicor Software Corp., Austin, Texas
Q: What weaknesses or problems are service centers requesting help with?
Upell/Voran: Service centers must possess excellent inventory control and traceability. Properly tracking and applying costs, internally and through outside processors, is essential for making good business decisions. Being able to streamline the tracking and delivery of mill test reports, while validating material chemistry and physical properties, is also becoming more important. Making information available on all devices is a hot topic these days as the younger generation joins the workforce. Enmark Systems offers a web-based dashboard and the WebAccess portal, which are accessible from any device with an internet connection.
Walton: Metals have been quite volatile with significant price changes due to tariffs. Being able to very quickly and painlessly designate whether material is from a foreign or domestic mill, and adjust costs accordingly, is important. It’s also crucial to accurately reflect all costs associated with an order, including material, freight in and out, duty, processing, packaging, etc., so that orders are priced correctly.
A common complaint from service centers is delivery delays and insufficient inventories from mills. Tracking and estimating actual lead times helps them make deliveries as promised to their own customers. An ERP system that incorporates automated purchasing tools to track usage and lead times, and can suggest appropriate inventory levels to the purchasing manager, is a significant advantage. Such tools should also show on-time delivery stats for each supplier.
Far too many service centers still rely on hard copies of a variety of documents; retrieving those documents from filing systems is time consuming. ERP systems should store any document electronically and enable the customer to retrieve any document instantly. Even better is the ability to automate documentation so invoices, packing slips, material test reports, etc., are all generated as an order is processed—and either emailed or printed, depending upon customer preferences.
Ralyea: Our customers see weaknesses around scheduling. Often, how long something takes cannot be fully known. They want flexibility in the schedule and visibility into everything that’s going on in the warehouse. They want to know that, as they work on fulfilling orders, will they be able to meet the commitments they made?
Babikian: We see a new trend with companies that want to increase the amount of transactions they can handle via electronic data interchange (EDI). Companies want to go beyond sending an 856 [ship notice/manifest] to a customer and include creating orders, receiving mill test reports and the mill advanced shipment notification as well as accommodating outside processing. Invera has introduced new software to accommodate the handling of both inbound and outbound EDI transactions.
Ameche: Service centers’ customers want to offload much more of their processing and subassembly work. Service centers are transforming from distributors of raw materials to manufacturers of components. That changes the rules of the game. The processes and software they use now weren’t designed for manufacturing. They need help understanding the full scope of what the new business model means to inventory management, scheduling, resource allocation and, of course, costing.
Poindexter: One of the most common problems is how to transition smoothly from manual to automated processes. Once an organization decides to automate, they need to choose the software that fits their business objectives. We recommend they first focus on adopting technology that will make their workforce more efficient.
Being able to track efficiencies during each step of a processing sequence in real time is of value to sales, shipping, accounting and other departments.
Q: What questions are customers asking? What questions should they be asking of their ERP system providers?
Upell/Voran: Customers should ask how their ERP providers will take advantage of new technologies that can make them more efficient. A stagnant ERP solution can make growth difficult and give advantages to the competition. ERP solutions are critical for service centers—and one of the few ways they can gain an advantage is by increasing the overall efficiency of their operation. An ERP solution like Enmark Systems’ Eniteo can eliminate errors, reduce day-to-day clerical work, and allow service centers to provide better service.
Walton: A critical question is whether the software will fit your business requirements. We suggest asking your ERP supplier to conduct a business analysis of your company; insist this be conducted by an individual who understands the process flow of a service center and knows how to adopt industry best practices.
Questions that service centers should ask their ERP software providers include: Does the system allow fast quote and order creation? Does it provide tight control of inventory? Does it capture all costs associated with an order? Does it include a customer portal module, allowing customers to inquire by themselves about invoices, MTRs, quotes, etc., thereby freeing up staff time? Does it integrate documents automatically without repetitive data entry? Does it allow for custom reporting?
Ralyea: Users want to know whether the system can give them visibility into the plant. And now, they want automated alerts. ‘If I said an order will ship today, but it did not, will the system notify me about that?’
Customers face freight delays and cancellations. Material in transit fails to arrive. All this has a cascading effect on downstream jobs. Customers want to know which jobs are impacted and if they can still work on other jobs with material they do have in stock. More importantly, they want to notify customers about what’s happening and how they can adjust, too.
You want the data to be ‘listening’ and taking action for you with the alerting capability. We see more requests for that, which is why we purchased a company [VineyardSoft Corp.] that develops learning automation software. The tools apply to all parts of the business. Besides listening for late material receipts, we can listen for invoices that are over 30 days and alert accounts receivable. If the software does more than just captures data, and uses it to help run the business, that is the goal.
Babikian: Cloud or hosted solutions are high on the wish list of many service centers, and any size operation should consider it. However, there should be no compromise when choosing a hosted solution—the service center should have all the same software applications, functionality and access to data that is available on premises.
Hosted solutions should go beyond simply hosting the software on a server and have a full suite of operational services that include upgrading the ERP software and providing 24/7 emergency support.
With more software operating in real time and with fewer paper trails, the hosted option must include a very robust real-time replication environment that is in a different city/region as to provide a very high operational reliability.
Ameche: ERP technology is a tool. It’s a welder. It’s a screwdriver. It’s a hammer. It’s a drill. As they move from distributor to manufacturer, service centers need a technology tool that can handle both the wide variety of material held in inventory and manage the workflows of production. As orders move through the production process, it is critical to track attributes like gauge, grade and more—continuously. Actual production, scrap and weights need to be recorded as product flows. All that data must be collected in one place and visible to the people who need it.
Poindexter: Questions customers ask include how to provide mobile access in the field and how the ERP system supports IoT for service activities. Questions customers should ask is how to access data from IoT sensors embedded in their equipment and how to turn that data into information that will help them optimize service activities. They also should ask about how to gain greater insight into equipment performance and diagnostics to help them manage maintenance activities proactively.
Q: What features or capabilities are best for streamlining information flow and decision making from end to end within service centers’ front and back office and production operations?
Upell/Voran: Having a system with a robust shop floor application that provides real-time production information and tracking is key for value-added processing activities. This includes barcoding and production/workstation interfaces that can schedule jobs and capture processing times. Such information can be used to get a more accurate cost of processing to ensure profitability. Our customers have been able to significantly improve their on-time deliveries while drastically reducing waste, both in terms of material and effort.
Walton: Improving communication within all areas of a service center is key. The ERP software should automate the flow of information between and among personnel and departments. One example of time-sensitive items that require decisions include when a customer is on credit hold while a quote and/or order gets placed. In this case, the credit manager should automatically receive a pop-up message alerting them that approval is required.
From a production perspective, ERP systems should automatically link a sales order that requires processing to the plant’s production schedule module. Orders should be able to be grouped by raw material so operators can cut multiple jobs at the same time, minimizing machine setup time.
Ralyea: Streamlining and optimizing is what it’s all about, taking waste out of the process. ERP should let you scrub through a DSO report and see who is late with their payment and why. Or if I have material arriving late, I can realign material flow with what inventory I have so my next shift is prepared to reschedule. The people on the floor will know what they’re supposed to do and why. Everything should be up on the screens at each work station—what’s in process, what’s coming up next and which machine setup is required for that job. If a hot order comes in, you can move it up in the schedule and everyone has visibility into that change. Without all that, it leads to chaos.
Babikian: For production operations, having certain functions performed using hand-held devices such as smartphones and using bar-code scanners helps to eliminate the need to write information on paper and later enter the information into a computer.
Ameche: Data from every corner of the business should be connected. With financial management at the core of an ERP system, centralized data can be delivered to those who need it through reporting and dashboards. When that data is unlocked from the old silos, it changes everything. Any production order should capture actual activities—material, labor, overhead, outside processing—as it is processed. Capturing that data, and having visibility into it, is the foundation to understanding and managing costs.
Poindexter: The best features and capabilities help create a better informed workforce and management. By connecting service activities to the back office, there is no more losing paper billing forms or miscalculating due to illegible handwriting. Real-time and paperless processes allow operators to complete work orders and allow customers to sign off via mobile devices. You can bill the customer and accept payment on the same day, which improves cash flow. Predictive maintenance modules prompt you to repair equipment before problems occur by taking advantage of IoT sensors in the equipment.
An ERP system that can suggest appropriate inventory levels to the purchasing manager becomes a significant advantage.
Q: Once data is collected from every area of activity, what is the next step? How do customers use that data to make enterprise-wide improvements?
Upell/Voran: From our experience, the key characteristic that all successful service centers share is efficiency. Eniteo has the ability to track processing times per order line, giving an accurate real-time picture of costs. Having a true picture of your costs can allow you to focus on orders that are the most profitable, while shedding business processes that do not add to the bottom line.
Walton: The whole point of an ERP system is enterprise-wide improvement. Once the daily data is collected, a service center should be able to generate reports that help [managers] make decisions in all areas of the business. As such, the ERP system should provide timely reporting, month-end reports, real-time exception reports, analysis and all kinds of reports that satisfy queries department by department.
Ralyea: There is also trend data, building analysis tools that help executives understand what’s happening over 30 days, 90 days, or to see a three-year trend. It’s not a scientists’ area anymore. You might think you need to invest in expensive tools from IBM or Oracle, but that’s not true anymore. You can use dashboard tools for a learning perspective.
You want to be able to strategize through what-ifs. What if sales of this product fall, or rise? If this growth trend continues, what does that mean for capacity utilization? Do I need additional machines or to add a shift? If my vendor’s quality continues on a downward slide, should I get another vendor? Our customers are asking about all of that.
Babikian: The next step is using dashboards or similar data presentation tools to provide information in a concise manner so that managers can spot problems, trends and make quicker decisions on customers, products, operations and finance without having to sift through layers of data.
Ameche: The strength of the functionality of the production order cannot be overstated. With centralized data and the production order ushering the job through the shop floor and out the door, there is one place everyone can access to get the specific information they need to do their part of a job—or to take it to a level higher and balance overall production.
Poindexter: As part of the larger business strategy, service center operations supported by data analytics and IoT can function as major profit centers. When there is knowledge of exactly what’s going on, the business can be structured to meet customer needs and maintain loyalty.
Q: What is your short-term versus long-term prediction on where ERP needs to go in order to keep pace with the challenges customers face?
Upell/Voran: We see a trend toward software integration with mills and automated data transfer between the mills and service centers. Having a system that can import data directly from the mill—via Steel XML or some other interface—will drastically cut down the amount of work a service center has and will eliminate errors. This can greatly improve the efficiency of the entire metals supply chain. Long term, as the entire world moves toward e-commerce, the metals industry must follow. We produce these necessary enhancements within our ERP software, Eniteo. Specifically, Steel XML and Kasto integration have allowed our customers to become more agile, responsive and competitive. This benefits their vendors, customers and employees. Enmark uses agile development, allowing us to upgrade software rapidly, which ensures our customers can adapt quickly and take advantage of the latest technologies.
Walton: The future is access anywhere, anytime, any way. Providing flexibility for staff and/or customers to connect to the ERP application with an Open Client architecture so they can access the software, regardless of device they choose, will become required practice. Only 25 percent of ERP users worldwide are in the cloud today but many more users plan to move their system to the cloud. Doing so reduces the risk of infrastructure obsolescence as well as the cost of maintaining in-house infrastructure.
In the long term, artificial intelligence, machine learning and analytics will play a greater role. With ERP systems collecting operations data, there will soon be opportunities to invest in intelligence and automation that would help users make decisions based on customer analytics and buying information.
Ralyea: Everyone is talking about IoT. Our customers have high-end equipment with the ability to collect data, but the companies are not taking that data out of the machine. You need to connect the machine to send the data to the ERP so companies can learn whether they are getting the efficiency out of the machine they had hoped for. We will see companies, small or large, wanting to turn on the high intelligence available from the production machinery to gain improvement. That will be a big trend.
Babikian: Short term, ERP systems must improve user productivity using various facets, including mobile functions, EDI and dashboards. Over the long term, ERP systems must become adaptable and extendable to meet users’ specific business needs, while allowing them to upgrade with revisions that don’t elicit major costs or compel a complete system overhaul. This adaptability enables each customer to add and integrate functionality, controls, interfaces and applications as needed.
Ameche: It all comes down to data. For service centers, data has been frustratingly inaccessible and separated in different systems. As they get control of their data, they will find out how much can be done to fine tune inventory and production costs. Quoting, based on historic data, will be more accurate. They will be able to reduce machine downtime and balance labor requirements. Every step in the process can be improved and streamlined when they have visibility.
Poindexter: In the short term, ERP needs to support the transformation that started when products were commonly being built with IoT sensors and ERP moved to the cloud. In the longer term, ERP needs to incorporate new technologies, such as artificial intelligence and machine learning. MM
