May 2005 | Case Studies | Casebook

Bouncing Back from Disaster

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A timely IT revamp keeps operations blazing for custom rubber maker CGR Products after a fire knocks out its manufacturing plant.

Ray Katz, IT director of CGR Products, Greensboro, N.C., will never forget Oct. 22, 2001. That's the day a major fire destroyed virtually all of the custom rubber manufacturer's production capability.

"We lost more than half the building," recalls Katz. "All our manufacturing was wiped out, except for one press area."

Instantly, Katz's job changed from supporting CGR's daily operations to helping the company get back on its feet. "Within a day or two, we had trailers in the parking lot and communications cables installed to continue taking and processing orders," he says. "Our team held it together."

Holding it together is something CGR excels at. The company specializes in manufacturing precision-cut gaskets that seal components in a variety of products made by automotive, marine, and other manufacturers.

The company also works hard to hold its supply chain together, relying on and coordinating with scores of suppliers that provide the materials CGR needs to produce a vast array of custom products. CGR's product line includes approximately 10,000 different items, many of which are special, low-volume products ordered occasionally by specific customers.

But all of Katz's thoughts about production schedules and logistics management went up in smoke on that October day. Katz knew that his IT infrastructure, largely unaffected by the fire, would either carry the company through the disaster, or fail entirely.

Flexible Growth

Privately owned CGR began operation in 1963 in Greensboro as Carolina Gasket and Rubber Company, a fabricator of precision-cut gaskets made from a variety of flexible materials. In 1980, the firm changed its name to CGR Products, reflecting that it was no longer only a die-cutter and now offered splitting, laminating, slitting, and high-speed production of precision-cut rubber components.

As CGR's business grew, so did the company's physical size. By 2000, its main Greensboro facility contained 80,000 square feet of manufacturing space. CGR also opened a smaller 20,000-square-foot plant in Decatur, Ala. "Greensboro has about 100 employees, Decatur has 30," notes Katz.

In January 2001, the company opened a warehouse in McAllen, Texas, to serve customers in the southwestern U.S., Mexico, and Latin America. Most products, however, are shipped directly from the plants. "We manufacture to order," explains Katz. "We have little finished goods inventory."

For most of its existence, CGR placed minimal emphasis on IT technology. As recently as five years ago, the company was firmly mired in the IT stone age.

"We had an old IBM AS/400 computer with nothing more than green screen technology," says Katz. "It took our customer service representatives anywhere from 20 minutes to three hours to get back to customers with answers."

Because CGR continued to add new products, suppliers, and customers, the legacy IT system was eventually unable to handle the company's growth.

"We needed a state-of-the-art, integrated system providing real-time, end-to-end information flow to enhance the performance of our operations—from front-end order management, through production, to back-office processes and customer fulfillment," says Katz.

CGR's move to revitalize its IT technology infrastructure began well before the fire, in late 1999. The company created a team of high-level management, IT, and business process managers from finance, accounting, planning, manufacturing, operations, and customer service to select an IT solution that met current and future needs for fast, efficient production operations.

The team's first step was replacing the aged AS/400 with modern IBM iSeries servers running Windows. The company also installed local area networks at the Greensboro and Decatur plants, as well as a wide area network to link its sites together.

"Transforming our communications and technology infrastructure made it possible to successfully implement a sophisticated, full-featured enterprise management solution," says Katz.

CGR also needed software configured to match its business model as closely as possible without costly and time-consuming modifications. "We wanted a product that we could run as 'vanilla' as possible," says Katz, who was project leader.

The team ultimately selected Movex Advanced Production Planning (APP) as the primary software component in its new enterprise system. Movex APP, developed by Danderyd, Sweden-based Intentia, is a supply chain application that automatically schedules production orders against available raw materials and plant capacity.

Answers in 20 Seconds

The Movex solution allows planning and operations personnel to maximize production capabilities by providing global visibility and optimized scheduling, while accounting for existing constraints. The software also provides insight on a wide range of production, financial, order, and shipment issues, which greatly reduces CGR's customer service response time.

"Now it takes only 20 seconds to answer customer questions," says Katz. "We've come a long way."

The software handles financial management and accounting, material resource planning, enterprise resource management, customer order management, and electronic data interchange for CGR. It also supports procurement, manufacturing, order fulfillment, production planning, and scheduling.

CGR went live with Movex APP during the fourth quarter of 2000. For the first time, employees were able to view order status within the factory and determine when products were scheduled for customer delivery.

With a jobshop environment and short lead times—typically three days or less—CGR's bottleneck resources change from day to day. Movex APP allows managers to look forward 15 days over a volume of around 500 orders to obtain visibility and to help relieve key bottlenecks.

Previously, CGR employees had to manually sort and analyze the status of orders within the factory and when the orders were scheduled for shipment and delivery. With the new software, they can retrieve the information with a few keystrokes.

Movex APP features an advanced memory-resident simulation engine with synchronization and sequence optimization algorithms designed to minimize setup and changeover times by calculating the best possible and most feasible sourcing, production, and delivery plans. Its interactive decision-support functionality lets CGR employees quickly drill down and locate key details, make decisions, and run "what-if" scenarios.

This functionality offers easy-to-use graphic displays, including load and inventory profiles; an interactive planning board; order network mapping; and bottleneck management resources.

Rather than migrate the entire legacy database to the new system, Katz and his team sifted through the database to ensure the information was accurate, consistent, and current. They entered into Movex APP only data relevant to open orders and receivables. At that point, CGR began building a new database, entering build-to-order product information as orders arrived.

"The software gave us the opportunity to launch a fresh start," says Katz.

The Movex system, which now supports more than 50 users, was implemented in just 10 months. The deployment process was smooth because software modifications were minimum, says Katz. One modification CGR made to the software was to connect its UPS shipping application with Movex's invoicing system. This significantly increased efficiency, Katz says.

The system automatically generates an invoice for all shipments. Some special order situations still require manual handling, but of the 120 UPS-destined shipments CGR generates each day, only about 20 are now hand-keyed. UPS handles nearly 80 percent of CGR's small package shipments, and 50 percent of shipments overall, so workers save a substantial amount of time.

Tracking Transportation

CGR also relies on its new IT infrastructure to track sourcing, production, and shipping operations. For its bulk, inbound, and outbound shipments, CGR uses less-than-truckload freight carriers, including Southeastern Freight Lines, Old Dominion, and Yellow Roadway. Outbound shipments alone total approximately 120 to 200 a day, or between 2,000 and 2,500 each month.

"And 'shipments' could be multiple line items in one order," notes Katz. Additionally, each shipment can include up to 40 boxes.

Shortly after implementing Movex APP, CGR experienced an unusual result: the newly automated customer order and production processes nearly overwhelmed shipping workers.

"We quickly reorganized our shipping department to cope with the speed," says Katz. "Once we understood clearly what the automated system could do, we saw clear and measurable benefits." Indeed, CGR's revamped IT system has generated productivity gains of 30 percent, according to Katz.

Disaster Strikes

As it turned out, CGR deployed its new IT system in the nick of time. The Greensboro fire struck less than a year after the system was fully operational, and the technology played a major role in getting the company back on its feet.

Because CGR designed its operation so each plant has separate IT systems and networks, the Decatur facility continued its operations after the fire without missing a beat.

By rapidly deploying office trailers in the Greensboro plant's parking lot, and installing an ad hoc communications network, employees there continued taking and processing orders as the facility was reconstructed. In the days immediately following the fire, the Decatur site gave CGR a level of operational and logistical redundancy, allowing Greensboro to take orders for Decatur to fulfill.

"We entered orders into their system and had them ship to our customers," says Katz.

While the fire certainly put a crimp in CGR's operations for an extended time, the disaster also had an upside. The company used the loss and subsequent reconstruction to rebuild the plant to boost production and logistics efficiency. The company replaced antiquated equipment and redesigned its production flow to better align with industry best practices.

Katz and his team continue to evaluate business processes. "That's the beauty of an integrated system," he notes. "We make incremental improvements with an eye toward optimizing our processes to increase profitability and customer service."

CGR's IT system was so effective—in both good times and bad—because it implemented technology that dovetails directly with company operations, says Katz. Such compatibility should be a key consideration for any manufacturing company, he believes.

"Look for IT products that best fit your environment, and make as few changes as possible," he suggests.

Katz offers one other bit of advice: "Always expect the unexpected," he says. "Destiny has a way of catching up with you."

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