The desire to have all of its divisions on a single instance of ERP helped one manufacturer gain increased efficiency and visibility, as well as become a more closely-tied global company.
After going live on IFS Applications in a succession of its global divisions, Armstrong International (Armstrong) is enjoying a number of the classic benefits associated with a global instance of enterprise resource planning (ERP) including reduced inventory levels, streamlined communication, standardized processes, reduced errors, and increased productivity with fixed resources.
Armstrong went live on IFS Applications at its North American manufacturing headquarters in 2008, and soon after went live at another three sites in 18 months. According to Armstrong CIO Kurt Armstrong, the company had been running multiple ERP systems in its various divisions. But the manufacturer of intelligent system solutions for steam, air and hot water utility applications, operates sales, manufacturing and seminar facilities around the world has since united its locations in the North America, Europe, China, Korea, and India on a single instance of IFS Applications.
“One big challenge was that we had four different ERP and materials requirements planning (MRP) applications running at three locations – and they were not sharing data,” Armstrong said. “We were not running as efficiently as we could. There was a desire to become a more closely-tied global company. But in our Three Rivers, Mich. headquarters, we were running Infor’s ERP MK. We had customized the MK solution to meet our every need. We had developers and analysts familiar with the process flows. It got to the point where the solution was so customized that we could not take the next release. And we still didn’t have multi-currency and multi-language features. If we wanted to go that route, we needed to do a lot of heavy lifting. Our division in Belgium, for instance, was running a product called Synchro, and our Beijing location was running Syteline from Infor. All our locations operate as a full manufacturing facility with planners on staff, operating in make to order (MTO) and make to stock (MTS). We do a lot of intercompany transactions in our organization. We might build a subassembly in China, send it to the US in bulk, and include in a final project in the US. So the ability to have all of our divisions on a single instance of ERP was compelling to us.”
“In general, as a company we started to get more globalized,” Armstrong director of global information technology Joe Letizia said. “We have a world class video teleconferencing group, and every location is connected. We became closer as this technology brought people together real quickly across the globe. That spawned the idea that if we could accomplish this in visual communications, imagine what we could do with data.”
Armstrong considered application suites from SAP, IFS, ABAS, and Infor Global Solutions. IFS was ultimately chosen for simplicity and for its ability to handle Armstrong’s needs even if further diversification takes place in the future.
Classic ERP benefits
Since implementing IFS Applications as a global instance of ERP, with all plants now running IFS Applications on servers in Michigan, Armstrong has been able to meet its goal of a 10 to 15 percent reduction in inventory. Returned merchandise authorizations are also down considerably in line with the company’s percentage reduction goals.
“What these efficiencies mean is that as we continue to increase our business in size – we have done so without adding any additional order entry staff,” Armstrong said. “Much of this is due to the efficiencies we are getting like those we are experiencing with intracompany orders. The time necessary to process, report on, and manage intracompany orders between our divisions has significantly gone down. It would have been double the work with our old system. This also reduces the chance for order entry errors, which I turn means fewer items are going to our bone yard or being scrapped due to an order entry error.”
The company has also been able to leverage IFS Applications to improve shop floor control globally, according to Letizia.
“One of the things we did in order to strengthen the company was to form end-to-end business process teams and adopt the best ideas of each region,” Letizia said. “We built them into our business flows and built IFS around them. For instance, the US has more advanced lean principles, we were able to move them to our Beijing plant. Our shop floor controls make it easier to release a shop order because we are no longer doing it in three different MRP systems, rather we figured out the most efficient way to do it rolled out that process with each go-live. We knew we would need an enterprise application agile enough to accommodate the practices we identified as most desirable.”
Armstrong also is now in a position to better manage its parts, a key factor for a company with more than 50,000 part numbers.
“Now that we are standardized on one ERP system, we are searching for parts or components based on a common nomenclature, which makes things a lot easier, and we eliminate the risk of designing something we already have,” Letizia said. “It allows better searches to avoid redesigning a part that is already in the system.”
Armstrong stresses that all of these improvements allow for improved dealings with customers and a better customer experience, in part due to the tight integration between the IFS Sales and Marketing customer relationship management (CRM) tool and the rest of IFS Applications.
“IFS Applications has allowed us to get closer to our customers because we can tie our activities closer to the CRM information,” Armstrong said. “We are more knowledgeable about our customers. Let’s say an executive at one of our customer companies is wondering if we can expedite their shipment. We can pull information very quickly and break it down by product categories or on even more granular levels. We can address any concerns they might have a lot more quickly and take action accordingly. We are now providing those tools to all of our sales offices people working on the road.”