February 2006 | Case Studies | I.T. Toolkit

Wood Work: Carving One System from Many

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A wood panel maker goes against the grain, replacing numerous, mismatched systems with an integrated ERP and SCM suite.

After running a successful wood panel manufacturing business in Latin America for 20 years, a group of Chilean investors sold that firm and turned their eyes to the U.S. market. In April 2004, they founded ATC Panels, based in Moncure, N.C.

To launch the firm, they bought three mills from other companies, located in Franklin, Va.; Clarion, Pa.; and Moncure. In 2005, they purchased a plant in Pembroke, Ontario, that makes medium density fiber (MDF) board as well as a small laminating plant in North Carolina.

ATC produces particle board, used by furniture makers, and MDF board, used in furniture, laminated flooring, moldings, pegboards, and other products.

Along with the five manufacturing operations, ATC inherited numerous management software packages. It soon became clear that relying on an assortment of technology wasn't the best way to run the company.

"We accumulated a mix of different systems; trying to integrate them has been painful," says Rodolfo "Fito" Salman, ATC's chief financial officer.

For example, the company took the system that handled the order entry-to-invoice process at one plant and installed it at the other four. But that system was custom-developed for the first facility "and doesn't handle the other plants well," says Kurt Mosley, ATC's information technology manager.

"To make the system work at all locations, we kept layering it with band-aids and duct tape, but it's getting bigger and harder to manage."

More Work, More Errors

Also, because the systems do not integrate with each other, there's no easy way to move data among them. When people enter data in the system that manages raw materials purchases, for example, and that data needs to populate the financial system as well, "that process is not automated," Mosley says.

"Our workers print a report and take it to the accounting department, where they re-enter the same information," he says. That process creates extra work and opens many opportunities for error.

So in early 2005, officials at ATC started shopping for a single solution to replace the assortment of legacy systems.

First, Salman says, they sought an order entry-to-invoice system that could handle the varied and unique requirements of each manufacturing operation. ATC also wanted "the flexibility to use both a SKU-based and a non-SKU-based system," he notes.

A non-SKU-based system can distinguish among many products without assigning a different stockkeeping unit to each one. ATC needed that because SKU-based identification doesn't work for the products made in some of its mills.

"The mills cut pieces of wood that are different shapes and sizes each time; they don't repeat the cuts," Salman explains. A SKU assigned to one of those unique products would never be used again, creating a useless proliferation.

This year, ATC Panels chose the Movex suite from Intentia, a global enterprise solutions provider with U.S. headquarters in Schaumburg, Ill.

The manufacturer is implementing the core Movex modules for enterprise resource planning (ERP) and supply chain management. It is also licensing MovexSMS, a salesforce automation system; eSales, an e-commerce system; and the Business Performance Warehouse, an analysis tool.

Made for the Mid-Sized

Intentia markets its Movex suite especially to mid-sized companies—those with revenues between $100 million and $1 billion, says Steen Jorgensen, manager of the solutions design department at Intentia Americas.

The company's core markets include fashion, food and beverage, wholesale distribution, "asset-intensive" industries such as companies that rent equipment, and general manufacturing.

ATC isn't the only customer in Intentia's target market that needs to identify products with something other than SKUs. Intentia has answered that need with a feature called "attributes."

This feature allows a company to assign a SKU or part number to a product, then define instances of that product based on characteristics. Steel products, for instance, vary by grade, length, and width.

"Without attributes, a company would have to create a different part number for each of an unlimited amount of length and width combinations," Jorgensen says. "With the attributes, they can use just one generic part number and assign different attribute values."

The attributes feature was significant to ATC. But the biggest reason the manufacturer chose Intentia's solution was that some of its European customers, such as Pergo, the Swedish laminated flooring manufacturer, were already using it.

By adopting the same technology, ATC could more easily exchange data with those customers. Also, Movex offered more flexibility and a lower total cost of implementation than other ERP solutions, Salman says.

Companies that use Movex can exchange information with trading partners in two ways. One is by creating web-based screens that suppliers and customers use to enter data. The other is through the use of more than 3,000 "web services," which allow Movex to exchange information directly with partners' management applications.

If a customer sends an electronic purchase order, for instance, "we can run it through the web service," Jorgensen says. "It is handled as if a user was in our system, going through our order entry panels."

ATC expects to integrate in this way with some of its customers, and possibly with suppliers and carriers, Salman says.

"The wood paneling industry is still antiquated; not much is available online," says Mosley. "We want to bring our company up to date so customers can go online to view and place orders, check current inventory levels, and conduct other transactions."

Officials at ATC haven't yet decided exactly how they'll implement those functions, "but its the kind of functionality we want, and Movex has a good interface for it."

Planning and Execution

The Movex SCM module includes strategic supply chain planning, short-term scheduling, and execution. Tight integration between the planning and execution functions distinguish Movex SCM from competing systems.

"It does no good to create an optimal plan if you can't execute," Jorgensen notes. "And, when you do execute, you have to work around Murphy's Law. It's important that companies are notified right away when something in the supply chain is not going according to plan, so they can act."

Suppliers can use Movex SCM's browser-based screens to update the status of incoming goods as they move from the factory and through the transportation pipeline, he adds.

The Business Performance Warehouse module, which ATC is also licensing, pulls transaction data from throughout the system for use in detailed analyses.

"The system lets users conduct online queries directly in the transactional database," Jorgensen says. "And they can access more than 2,000 standard reports."

In addition, users can analyze data from the warehouse using a variety of off-the-shelf business intelligence packages, such as Cognos Business Intelligence or Business Objects' Crystal Reports.

The warehouse organizes transactional data in a series of thematic "cubes" or models. Opening one of these cubes in a reporting application lets users "slice and dice the information any way they want," Jorgensen says.

In the sales and order model, for example, "users can view delivery performance for a full year, one quarter or one month," he says.

Users can view this information for all customers, a customer group, or one customer; and for all items, an item group, or a specific item.

Mosley anticipates that the reporting module will bring major benefits to ATC. Because none of the company's existing applications are currently integrated, it's hard to pull together any sort of business performance reporting.

"Information on market trends and customer profiles is very difficult to get from our current system," Mosley says.

Using the eSales module, ATC will be able to create an online catalog that customers can use to order products. When a customer selects an item, "eSales will automatically find the price that has been defined for that customer," says Jorgensen. "It can also show the available inventory balance."

Another module in the Movex suite, Supplier Relationship Management, includes functions for procuring materials from suppliers, processing purchase orders, issuing requests for quotations, and evaluating supplier performance. It also offers an e-procurement system for the online purchase of indirect materials.

With the system up and running by the end of this year, ATC will be in a better position to grow through further acquisitions, says Salman. Adding a new facility to the system would essentially require transferring data about that new operation into Movex, either through automated migration or manual re-entry.

Movex will also bring ATC greater efficiency, as all of its data will flow easily from one module to another.

"All our different procurement, raw materials, and financial packages will be replaced by one cohesive, integrated system," Mosley says.

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