MDC Vacuum Products has been manufacturing high- and ultra-high vacuum components and systems since 1966. "One of our key industries is the semiconductor capital equipment and device manufacturers," says Kevin Cullen, MDC's vice president of finance. "These companies demand a just-in-time relationship with their suppliers."

Meanwhile, "we've had to mature from a small machine shop into a diverse company, one that is able to provide solutions in a timely manner, and as our customer's level of sophistication and their requirements have continued to change," he adds.

To do that, MDC needed a sophisticated enterprise-wide information system. Yet the company's top managers knew they couldn't do a full-blown suite of enterprise applications all at once.

Instead, they decided to implement a new business-wide information system in a step-by-step manner.

"We wanted to roll out the various modules that our vendor (IFS North America, www.ifsworld.com, Tucson, Ariz.) offered as our level of sophistication allowed," recalls Cullen. "So far, we have implemented almost everything the vendor offers except constraint based scheduling."

That's next, however. Constraint-based scheduling is the highest priority on MDC's "wish list" for the near future. It will provide better shop floor control and improve production flow and productivity. It will join the array of other modules that have been, or are being, implemented at each facility.

MDC felt it didn't need the software's human resource (HR), maintenance, and fixed assets modules. But MDC was very concerned about getting up quickly on the manufacturing applications such as the modules for material requirements planning (MRP), for inventory control, and for purchasing and distribution to improve the company's supply chain management.

The implemented software facilitates MDC's planning for demand while also helping in analyzing its inventory turns. Software also makes it easier to look at process improvements and yields, at supplier performance, and at repair response times Thousands of parts with A, B, and C levels of activity need to be built, stocked, or ordered. Information on all of them needs to be in the system. And data from multiple sites in MDC's enterprise must be shared readily among all.

MDC's operations are spread out. It employs 285 people at multiple locations. Included are a 106,000 square-foot facility in Hayward, Calif. and 25,000 square-feet of space in Sarasota, Fla. The company recently assumed a majority stake in the manufacturing capabilities of Caburn-MDC, a precision vacuum component company in England.

The company's products range from the nuts and bolts of semiconductor capital equipment to advanced electron beam guns that are low-volume, high-margin products involving a lot of technology and R&D work.

MDC must manage 15,000 different parts that run through the shop while at the same time providing them in a timely manner to customers. As Cullen says, "We must analyze inventory turns and look at process improvements, process yields, supplier performance, and repair response time – all the indicators that are available to us."

To help manage inventory, MDC has separate stock rooms for finished goods and subassemblies. To schedule and move that material to the floor, they approach forecasting from A-, B-, and C-levels of activity and keep a safety stock for the C-level.

"We meet twice a month and go through the software's demand planning module and compare forecast versus actual," explains Cullen. "We run the figures against a benchmark we have established and see if the delta is within an accepted range. We check 6-month trailing average, actual sales in the period, and peak usage. We try to analyze when and why the peaks occurred to get a better understanding of any historical volatility. And we try to make a more informed decision about the forecast moving forward."

Cullen and his team look at stock on hand and get a feeling for the purchasing activity during the period. They even overlay macro activity in the industries they serve to get a better forecast. This is all made possible by the demand-planning module.

Meeting on two continents, virtually

Twice monthly, MDC staff members meet virtually at the locations shown. Linked by a telephone conference call, individual members pull up data on their monitor screens from the company's enterprise-wide information system and participate in a forecasting and planning session.

"Demand planning can be done for all the three levels (A, B, C) of parts we track," confirms Cullen. "We're stocking, building, and ordering the A-level parts based on these forecasting meetings and with added information on existing demand and future demand as told to us by our strategic customers."

The software, he continues, "allows us to forecast by parts groups, usage levels, facility level, finished goods above the subassembly level. Its flexibility provides us the framework on how we elect to forecast and plan our business."

By having the software system's modules implemented at MDC's various facilities, Cullen is able to hold these semi-monthly meetings without incurring expensive and time consuming travel. "We can share information easily by having each team bring up the system on their screens and follow along during a telephone conference call," Cullen says. "By having the same functions active at all locations, we can create a virtual meeting even though the people are separated by thousands of miles and are on two continents."

One of the manufacturing activities MDC has undertaken, from an organizational standpoint, was to create product cells so that raw material that is pulled out of consignment goes into production in a work cell.

On some of the high moving "A" parts, the company may elect to not build to a subassembly level. Instead, it decides to build them all the way through to a finished level, then have them packaged, washed, cleaned, and stored ready to be shipped out. That allows MDC to get a just-in-time cycle moving a lot faster.

"Another production variety is what we call a recurring special," says Cullen. "It's not a catalog part, but a special that we do in a high volume for a key customer. We know what the specs are and the forecasted volumes. So it doesn't make sense to build it only to a subassembly level, so we build it all the way and it goes into a consignment-stocking program. When these specials are pulled, we generate an invoice."

It's important for the information system to be able to handle these different types of production volumes and assemblies, knowing what is in inventory and where it is, how to get it quickly to the customer, and what is needed to maintain safety stock, based on forecasts and experience.

One of MDC's near future projects is to take forecasting to the level of identifying capacity constraints on the shop floor. "We run MRP (material requirements planning) but it doesn't provide us all the visibility of the past dues, the backlogs," Cullen explains. "We need to get a better understanding of the actual capacity constraints we have and how we're going to have to either outsource to accommodate that, or buy additional equipment to solve that need. As we move forward with the new system we intend to begin integrating the constraints-based scheduling module, which will further enhance our manufacturing efficiencies."

About a year ago, MDC started work on an e-commerce initiative by putting up a Web site. The company knew it would have to have an information system that would allow it to migrate this e-commerce initiative into the new enterprise applications. The software system provides that flexibility. Indeed, the software includes both front-end and back-end resources for the complete e-commerce aspects of modern business.

"We had started with an e-commerce site prior to picking our enterprise applications," remembers Cullen. "Our greatest fear was not having that integration. Obviously, having that integration now, through our software applications, allows us to process an online order without touching it internally, all the way from the time we take it to the time we ship it."

Bringing this system into the company was a strategic choice as well as a technology choice. MDC looked at what its key operating objectives were going to be into the foreseeable future. Then management decided how they were going to implement those key operating objectives, and how they were going to qualify them. Then they selected business process models to use through the system, ensuring they could track the progress of those objectives.

"What we did," Cullen says, "was review the business processes that this system has documented in its model. It's an excellent detailed model that let's you walk through possible situations in a step-by-step way. We tried to mirror our major processes to the model to see where the big differences were between the optimal and where we were when we started. Any deltas that we found were analyzed. We'd say, 'Why do we do it this way, what's the difference between it and the model's process, and does it make more sense to do it the way the system is doing it, or do we have to do a work around?'

"From there we came up with our own work instructions. We were able to take the knowledge in the system, experience that our consultants have with a variety of different systems, and our understanding of day-to-day business processes. And we came up with a decision among the steering committee members, saying 'This is how we're going to do it going forward.'"

MDC is growing rapidly, expanding its markets and moving quickly into a new world of e-commerce. As the company goes global through acquisition and the demand for high-tech products continues to develop, the management team is constantly examining the business model and seeking better ways to run the company.

The software systems have made this easier and more accurate, providing the infrastructure needed so MDC can be sure the path it chooses will be as smooth as it can be in this dynamic industry.

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