If you receive errors when attempting to view this white paper, please install the latest version of
Adobe Reader.
" VISIBILITY.net is a fully integrated enterprise resource planning (ERP) solution for complex product manufacturers. Through a suite of business applications, VISIBILITY.net enables organizations to significantly optimize business effectiveness and performance. Designed to support operational strategies, the VISIBILITY.net ERP solution optimizes effectiveness in managing customer relationships, quotes, projects, costs, manufacturing, business performance, finance, and global issues. "
Source : Visibility
ERP Multi-site Costing Challenge and Solution
Enterprise resource planning (ERP) is also known as :
ERP Network,
Software Systems,
Integrated ERP Software,
ERP Solutions,
MRP Systems,
ERP Software,
Material Requirements Planning,
Manufacturing Resource Planning,
Enterprise System,
E-procurement,
ERP Modeling,
Service Management,
Information Technology Management,
Manufacturing Operations Management,
Management Information System,
Business Process Management.
Optimizing Product Costs in a Multi-site Manufacturing Business
Today advanced technology in combination with
"best in class" business software functions enable
multi-site manufacturing organizations the ability
to comprehensively address their unique costing requirements.
Two signiicant management issues posed by Multisite
manufacturing environments include first, the
optimization of resource or capacity utilization at
each site, second, capturing the distinct ability for
each site to deliver the lowest possible cost for each
stage in the product manufacturing cycle.
To facilitate meaningful results in achieving these requirements,
the ERP software must provide tools to
ensure that the business process has the ability to:
- Define and produce part numbers at multiple
sites without requiring the maintenance of multiple
part "master" deinitions and associated bills
of material
- Make use of either actual costs and related overhead
factors or allow for the deinition of site speciic
standard costs for each part which may be
produced at selected or all sites
- Define site speciic shop control routings or build
instructions including deinition of site speciic
resource, work center and related cost elements
related to the consumption of these resources at
each site.
Multi-site Costing Example
Moeller Electric Corporation as an industry leader
in industrial control and automation represents a
manufacturing business which exhibits the primary
characteristics of a multi-site manufacturer. Moeller
operates multiple business locations, or sites,
including their North American headquarters located
in Houston, Texas, and their Canadian head oice
located in Mississauga, Ontario. In addition, Moeller
Electric has 11 service and distribution centers
located across North America.
Moeller currently makes use of an ERP system which
was irst released in 1992. This system lacks the true
multi-site functionality that this complex Engineer
to Order (ETO) manufacturer demands. As a result,
Moeller has been forced to maintain multiple
databases, with over 60,000 part numbers, and
employ custom solutions to address the movement
of inventory from one site to another. Furthermore,
each site must use a Citrix connection to allow
each remote or distributed user to connect to an
application server from a remote location. This adds
to the license cost and structural complexity required
to allow sites to enter and receive orders and to access
their data. With multiple databases that are not fully
integrated, the number of redundant part numbers
has grown excessively, thereby creating inventory
management headaches throughout the company.
In many instances, the non-integrated nature of the
distributed solution has resulted in a single physical
item to be represented for processing by as many as
3 diferent part numbers! Furthermore, there is the
need to maintain and control independent costing
for each part by database. Since cost diferences
occur for items purchased in diferent locales, Moeller
required a solution that would allow the same item to
have its cost calculated independently by database
with security controls for read and write access to the
costing data likewise subject to distinct control by
database. In summary the issues faced include:
- Common physical items or inventory parts being
represented by multiple distinct part numbers
- Lost opportunity for common part material planning
- Inability for users to have a view of common parts
inventoried across the multiple sites
- Excess material inventories / lost material eiciencies
caused by non-moving or non-visible
inventory
- Inability to easily determine true cost of production
for a selected part number as produced by
each of multiple sites
Multi-site Costing Solution
Moeller, having recognized their business operational
requirements and the corresponding opportunity
for improvement, Moeller engaged the professional
services of Business Solutions Alliance Inc. (BSA)
an ERP consulting and implementation services
organization supporting over 100 clients in the
greater Toronto area. Upon engagement by Moeller,
BSA investigated the deined list of requirements and
issues and proposed the constructive detailed list of
requirements that would yield the most efective
software and corresponding procedural solution.
Solution Requirements
The combination of issues and requirements described
indicates a need to satisfy the following functional
requirements.
- Multiple manufacturing sites must be supported
within a single database instance to facilitate
cross site inventory management in the form of
both supply vs. demand planning and ease of
material transfer between sites.
- A single part number must be able to represent
a common product as sourced from within any
number of sites which are operated within a
business operating facility at multiple locations
or sites.
- For manufactured product, it must be possible to
deine assembly instructions, commonly referred
to as shop routings which may vary by site to take
into account diferent production methods or
work centers and resources and their associated
costs as present within each site.
- Part costs must be distinctly deined in relation
to either actual or standard costs based upon
the distinct cost features of each site, and this
cost information must be accessible to support
analysis of product cost history to determine
the lowest or best cost site for production as
well as for afecting accurate cost information in
association with site to site material transfer.
- It must be possible to afect the transfer of
materials from one site to another with all
applicable cost information following materials
as they are moved.
- Where sites may be deined to share a common
material resource pool, it must be possible to
concurrently plan for the material requirements
existing within the collected sites as a single or
commonly planned "facility".
- The application should allow the ability to deine
users having access to one, selected or all sites
from within a single instance of the application.
No 3rd party software license or additional
application should be required to allow users
to have access to all site / business related
information.
- Buying Power - regardless of the business
coniguration of the multiple sites, aggregate
purchases should be facilitated, with deliveries
to the multiple companies, taking maximum
advantage of single purchase discounts
- Miscellaneous Procurement costs - Site-speciic
Freight, duty, and material overhead burdens
should be taken into account along with direct
process costs, to optimally select the producing
site. These factors should be maintainable within
the "Common Engineering Spec" framework
mentioned above.
Solution Delivery
ERP advancements in technology and associated
database structure and "best in class" functional tools
have been optimized in select ERP Solutions to the
point where all of these objectives can be achieved.
With the recent advent of .NET technology, the
problems encountered by Moeller would have been
prevented by the selection of an ERP system such as
VISIBILITY.net. 100% written in .NET-managed code,
VISIBILITY.net, has been developed from the ground
up to support multi-site ETO/MTO manufacturers.
Using Moeller's case, the following points clearly
illustrate the beneit of a true multi-site ETO/MTO
solution.
- Support for Multiple "Sites" with Distinct Product
Costs - VISIBILITY.net is a true multi-site ERP
system which would eliminate the need for
Moeller to maintain multiple databases. This can
be accomplished using either of two methods.
- Each site can be set-up as a separate
manufacturing entity within a single
database. This would allow a single listing of
part numbers to be shared across all entities.
Moreover, the part costs, pricing, and MRP
planning parameters can be unique by entity!
As the multiple business entities (where each
site is deined as an entity) are well-deined
within a single database, visibility as to what
inventory exists within any entity is easily
facilitated. Simple to perform inventory
transfers may be easily performed with
accurate material or product costs tracked.
- Multiple sites may be deined within a single
business entity. In this scenario, each site may
be deined subject to the use of a common
set of part numbers, sharing common deinitions
inclusive of bills of material, but where
each site may deine distinct costs. Site specific
costs are subject to tracking on the basis of
site speciic production routing and resource
use, together with site speciic overhead and
other expense elements.
- Single Interface with Secure User Access to
Multiple Sites - VISIBILITY.net has powerful
security features that allow each User to be
granted access to only those functions and
related information required including the
ability to restrict User access to one, multiple or
all entities (sites). In addition, security may be
selective applied to ields within the application
forms. Field level control, by user, may be set
to Active, Inactive, or Read Only. This allows full
control over which users are granted access to
costing or other business speciic or proprietary
data.
- No requirement for additional software licensing
- The .NET architecture eliminates the need
for Citrix or other 3rd party remote access
applications. Instead, users can access VISIBILITY.
net from anywhere in the world as long as they
have a browser, like Internet Explorer, and an
Internet connection. This also eliminates the need
for multiple Citrix servers, lowering the total cost
of ownership and IT maintenance requirements.
Summary and Conclusion
Selecting a new Enterprise Solution to manage a
Multi-site Manufacturing organization is one of the
most important long term business decisions a
company will make. Additional factors also require
consideration, such as; engineering complexity of the
end product and its impact on the business systems
for quoting, coniguration, costing, service, projects
and inancial management. The investment is not
trivial, especially for a small to medium manufacturing
company and the risk of making the wrong decision
is even larger. Most manufacturing companies do
not have the internal expertise or knowledge to dig
under the mounds of vendor marketing literature
and hype to truly understand the vendor's ofering.
The demo process will provide some insight into
the software's capabilities; however, as in Moeller's
case, there may be costly nuances to the technology
requirements to support the functionality that may
not be evident. There may also be functionality
missing that, unless experienced in the limitations
of some software solutions, the right questions may
not be asked to bring them to the surface. It is a small
investment to make for a company looking for a new
software solution, to hire a services organization that
can take an unbiased approach while using a well
laid out documented process to guide the complex
selection project.
In summary, a VISIBILITY.net solution yields signiicant
optimization improvements by simplifying
the complexities of a multi-site manufacturing
environment with only a single database to manage.
This eliminates the need to support separate
databases. Additionally, substantial increases in cost
collection and associated historical cost information
aids in future estimating and project costing. This
multi-site architecture also reduces hardware and
maintenance costs for multi-site manufacturers.
For more information on VISIBILITY.net, please go to
http://www.visibility.com.
For more information on services ofered by Business
Solutions Alliance, please go to http://www.bsainc.
ca.