A tale of two ERP systems
Integrating manufacturing and distribution with an ERP system was key to supply chain makeovers at C.R. Bard and NCR.
By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 12/1/2005
At first glance, catheters and ATM machines may not seem to have much in common.
But C.R. Bard, a manufacturer of catheters and heart stents, and NCR, best known for ATM's, point of sale systems and data warehouse technology, share this: both are in the midst of long-term overhauls of their business information systems.
They share a common goal: to streamline processes and gain visibility of manufacturing, warehousing and transportation operations across facilities and divisions. And in both cases, those projects began by standardizing on an enterprise resource planning (ERP) platform.
Results at C.R. Bard (800-367-2273) and NCR (937-445-5000) have been similar to date. Both projects have led to a reduction in the total number of distribution centers as well as more accurate and timely shipments to customers.
"We're putting more volume out the door than ever before while growing our business," says Craig Bentley, Bard's regional IT manager in Covington, Ga. "We now have visibility of our entire supply chain on a global basis," says Alan Beal, an ERP program director with NCR. "If we make a change in an order, that's now visible across the enterprise immediately. That just wasn't possible before."
Here then is a tale of how two ERP systems are reducing costs, improving productivity and transforming business.
Linking manufacturing and distribution
Implementation of a central ERP system at Bard began four years ago.
"We needed to get better control over our inventory," says Bentley. "At the enterprise level, we wanted to eliminate third party distribution centers and centralize in a new 400,000 square foot global distribution center in Covington. Inside the warehouse, we wanted to improve the operations and track lots within the facility."
Prior to implementing a new ERP system, Bard's IT system was developed in-house. "We had a homegrown manufacturing system to do product and lot tracking," says Bentley. "We also had an inventory system for the warehouses, but it didn't have RF capabilities and didn't track the warehouse location of product. There was a lot of manual entry."
What's more, even though a single product might pass through two or three separate facilities for manufacturing, sterilization and distribution, no one system had a global view of the business. Information was spread throughout local databases.
When product was manufactured, for instance, each facility managed its role in the process. Information was updated in the corporate system once that facility was ready to send product to the next facility. Because most processes were manual, there were opportunities for error even if product was produced correctly.
Now, the ERP system is the master record, even for lot traceability. "All the information for the company can be reviewed in one location," says Bentley.
Today, an order begins as a work order in the ERP system. Work on a catheter, for instance, may begin in a facility in Monks Corner, S.C. and be directed to Nogales, Mexico for packaging. Next, it is shipped to Covington, Ga., for sterilization.
While manufacturing systems will direct the processes between work stations within those facilities, the ERP routes the product between facilities and is updated on an order's progress in near real time. Once the sterilization and quality assurance processes are complete in Covington, product is loaded onto a shuttle truck that will deliver it to the global distribution center.
At that time, the ERP system sends a signal through an interface to the warehouse management system (HighJump Software, 952-947-4088, www.highjump.com) to prepare to receive the product.
When the truck arrives, operators scan bar codes to update the warehouse management system (WMS) and the ERP system. Product is then available to fill orders or back orders.
When the ERP system sends orders, the WMS directs order fulfillment, sending instructions over a wireless radio frequency network to operators on the floor. It also goes to the control system that manages automated systems, including a three-tier spiral conveyor and automatic sortation system.
"While we're picking the order, the WMS has real-time visibility into the status of an order, right down to the location of containers on the conveyor system," says Bentley.
The ERP system isn't updated until an order gets shipped. However, Bard's customer service personnel can access order status information in the WMS through Web screens.
The ERP system has already been rolled out in three of Bard's six divisions, with the others soon to follow. "At the enterprise level, we've dramatically reduced the time between shipping an order and invoicing the customer," says Bentley. "At the manufacturing and distribution level, we've improved our accuracy and streamlined our picking and shipping processes."
Integrating a global network
Like Bard, NCR also turned to ERP to integrate its business across divisions and countries.
"When we began this project five years ago, every country had its own ERP system," says Beal, NCR's ERP program director. But it didn't stop there. The company had 20 different instances of the order management system to interface with customers and three different best-of-breed warehouse management systems. In all, there were over 166 distributed applications spread out across the company.
There were also redundant distribution centers. "Instead of a central distribution network, every business unit and country had its own country-specific warehouses," says Beal. "What's more, we didn't have visibility between those facilities."
With the implementation of an ERP system, NCR was able to consolidate facilities into regional centers with visibility into inventory across those facilities. That allows different divisions to share common inventory.
"For example, we use computer products in solutions provided by both our retail and financial divisions," Beal says. "Now, they both have visibility into that inventory."
In addition, visibility has allowed NCR to make better use of manufacturing capacity across divisions.
What then, did NCR want to accomplish with a centralized ERP system? The first goal was to streamline its supply chain. Then it needed to retire outdated legacy systems and reduce the number of applications across the company.
Equally as important, NCR wanted to get as much functionality as possible through its ERP platform rather than continue with best-of-breed solutions. That included supply chain execution applications like warehouse management systems. "If all of our applications come from our ERP provider, we can minimize integration and customization. That maximizes our ability to leverage the ERP provider's development resources as new features and functionality, like RFID, become available," says Beal.
The exceptions are data warehousing and business intelligence applications. That functionality is provided by Teradata, an NCR company, instead of by its ERP supplier.
Today, all customer orders are entered through a single front-end order management and planning system, regardless of division. That system then determines the best way to route the order through manufacturing, distribution and transportation.
Based on lead times, inventory levels, resources and manufacturing capacity, the system can also tell a customer when NCR should be able to deliver based on given transportation modes.
Beal says NCR has rolled out ERP to about 90% of the company. The rest of the company will be online in the near future. Meanwhile, NCR is implementing a flow manufacturing system, which will begin to go live next October. Steps are also being taken to enable its processes to work with RFID. Finally, the global view and connectivity provided from an ERP system will enable NCR to work on vendor-managed inventory projects with suppliers to its manufacturing operations.
"Now we can look at the next generation of IT solutions in more detail and be more aggressive about how we utilize that functionality to reduce our costs and improve our efficiencies," says Beal.
Click on the icon to read how software systems are transforming logistics.
(Real-time tech talk - July 2005)
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