Injection mould manufacturer KEBO improves planning reliability with industry-specific order management system
KEBO AG is a highly successful, medium-sized make-to-order manufacturing company from Neuhausen in the Rhine Falls area of Switzerland. Specialising in the design, manufacture and sale of customer-specific, high-performance thermoplastic injection moulds, the company serves a global client base, primarily from the medical and laboratory technology industries. The company is going from strength to strength, as evidenced by its continuing growth.
KEBO manufactures its products on injection moulding machines. The ever-decreasing development cycles of these machines are placing the injection mould specialist under increasing time pressure with regard to delivery deadlines. As a result, the company is having to streamline the four to seven month development and production process to as great a degree as possible; which is no small task. In practice, project-specific make-to-order manufacturing requires a highly flexible order management system. This is largely because, unlike series manufacturing, where design, procurement and production are completed one after the other, with MTO manufacturing, everything runs concurrently. In order to meet the increasingly tighter delivery deadlines, therefore, production planning and control simply cannot wait until the 6-week design process is finished. Instead, one of the main requirements of a make-to-order manufacturer such as KEBO is to hand over the developed components and assemblies to production as soon as they are available in order to allow production to prepare and commence its processes at the earliest possible opportunity. At the same time, the designers continue developing the order BOM. Mechanical and plant engineering companies refer to this evolutionary process as the “growing BOM”.
As Daniel Bodenmann, Managing Director at KEBO, sums up: “Although our projects take time to refine and take their final shape, the order management system has to provide sufficient transparency from an early stage to allow us to plan our orders on time.” He also explains why this is important from a business perspective: “In addition to cross-order capacity planning, we also require simultaneous costing to give us up-to-date information about whether or not incurred project costs are remaining within the defined budget.”
Up until 2006, however, the KEBO project managers and senior management were struggling to keep track of this information because the IT environment at the time offered only a very limited degree of transparency. Instead of a company-wide management system, the company’s various departments were using a diverse range of self-developed standalone control solutions to complete their internal tasks. This had a number of business disadvantages, however. In addition to the greater time and effort required for data entry and maintenance, there was also a major risk of data loss and version management inconsistencies. However, the most serious deficiency was undoubtedly the fact that it was almost impossible for the company to achieve project-wide visibility over its planning and procurement processes. There was also too great a dependency on the individual experts within the departments who had developed these standalone software solutions. In view of these shortcomings, Daniel Bodenmann took the decision to look around for an integrated ERP system for the central planning and management of all of the company’s business processes using a uniform database. After evaluating the products available on the market and sending out requirements specifications to the various different providers, he finally arrived at a shortlist of six candidates. In the final analysis, however, none of the ERP systems on the shortlist succeeded in winning over the MD because they were all targeted too much towards the requirements of series manufacturers: “I didn’t feel that any of these products offered sufficient support for the way we run our projects. They only met around 50 per cent of our functional requirements.” This would have resulted in too much administrative effort being required to map each new project, which would have far outweighed any of the planning benefits provided by the systems. Bodenmann continues: “Given that every product we manufacture has its own unique design and is only produced the once, we need a lean order management system that is easy to configure and maps our processes 1:1.”
Undeterred by these initial setbacks, however, the MD once again set about his search. On the recommendation of Zurich-based management consultancy firm i2s, he then researched the ams.erp order management system, which had been designed by ams.Solution (at the time ams.hinrichs+müller) specifically for the requirements of make-to-order manufacturing. “You could call it love at first sight. Right from our initial contact, we could see that this provider saw things our way,” Bodenmann recalls, adding: “In fact, around 95 per cent of our business processes were already contained within the standard software.”
The key benefit of the ams.erp system for the make-to-order manufacturer was that they would be able to attach their gradually growing BOMs directly to the sales orders and would not therefore have to set up a separate item master, which would have been required by the ERP systems designed for series manufacturing. The new system also allowed KEBO to continue with the order numbering that it had been using for the previous 25 years since the company’s foundation. “Retaining our numbering system was a matter very dear to our hearts. Note that we think in these order numbers. The other ERP systems would have required a rethink on our parts, something that always results in “friction losses” for the business.”
In addition to the scope of functions, Bodenmann also looked into the administration requirements of the new software. As a relatively small company, KEBO does not have a dedicated IT department, meaning that the solution had to be easy to administer – and also had to be easy for less IT savvy users to use. “ams.erp won us over here too. Although its user interface may sometimes seem somewhat spartan, the system was by far the most user friendly. This was also borne out during the implementation stage. In fact, we required hardly any user training.”
Bodenmann managed much of the ERP system implementation himself; the reason being, as he explains, that such an undertaking required a comprehensive understanding of all the business processes: sales, design, production engineering, purchasing, delivery and also service management. As he saw it, only someone who had been with the company right from the start would have such knowledge. In the mechanical and plant engineering sector, an industry that is dominated by SMEs, this person is usually the Managing Director. “As I see it, there’s no getting around the long-term involvement of a senior manager in the implementation of an ERP system. Whether or not this person then takes the helm, however, is by no means mandatory – it’s more a question of character.”
After a project lasting five months, the new system finally went live in April 2006, coinciding with the start of the new financial year. To avoid overwhelming its users, KEBO initially went live with a single ERP core module and has been gradually adding to it since that time. The basic solution focuses on quotation management, order definition and BOM management. In addition to product-specific information, the order BOMs also contain routings which the company uses to define its operational processes on a step-by-step basis. This is connected up to an integrated time recording functionality that enables real-time progress tracking of projects.
Thanks to integrated Time Tracking, KEBO has access to all T&A and order time information at the touch of a button, allowing it to calculate the costs of work already completed for its projects in real time. Bodenmann adds: “The integrated data basis also provides greater transparency over project progress. Being able to see immediately where the project delays are happening, and why, puts us in a good position to cut lead times significantly.”
The preliminary project costing is continually updated by means of simultaneous costing, which allows controlling to offset the actual costs against the planned costs. Should deviations arise, countermeasures can be taken in good time. Given the high financing costs and lengthy project terms to which KEBO is accustomed, this information helps the company to ensure the profitability of its projects.
The transparency that this affords can, in turn, help senior management with the continuous optimisation of the company’s project management as a whole. “We become smarter every day. The more we work with the system, the more we realise that it can support us in areas we hadn’t even thought about,” Bodenmann concludes. In the future, he would like to start using additional ams modules, such as Strategic Planning, with which the company will be able to calculate the capacity utilisation of its resources over a six-month horizon.
For more information, visit: www.kebo.com