Tracking production chain can offer big return

Specialist software is helping New Zealand manufacturers to meet face on the challenges of smaller production runs and distance from markets. Adam Gifford reports.

New Zealand manufacturers know that if they are to survive they must be efficient, flexible and able to overcome the limitations of being half a world away from many of their major markets.

One response is the early adoption of new technology and systems, something this country is known for.

In the area of management skills, enterprise resource planning (ERP) software has become essential, even for relatively small organisations.

Motherwell Information Systems chief executive John Quirk says many companies have been through two or three ERP systems looking for the right fit for their business. "It hasn't made much difference."

That's because to get the real benefits of the technology companies must be prepared to invest further in what is called the "second wave," or what Mr Quirk calls "the hard stuff."

"That's supply chain planning, execution planning, automating everything from the factory floor to the boardroom.

"If you do that you get a huge return on investment.
There are estimates that if you implement supply chain planning and optimisation, 3 to 7 per cent of revenue can be added to profit."

Planning tools such as Manugistics, Numetrics and i2 can give a whole new view of how businesses are performing.

Mr Quirk says the challenge for New Zealand is scale and distance. "Our manufacturers typically have shorter runs with more varied products. They can change what they make but they must be better at changing than other people."

Geac, a Canadian software company, has detected a similar need. "Our products are aimed for the manufacturer who may face a totally unexpected change in the market," says one of its executives, Chris Macquet.

Geac has strong presence among manufacturers here through its purchase of the New Zealand-developed TIMS software and subsequent development of the Streamline system. "Companies have to go for the niche markets where they have inherent agility and ability to change quickly," Mr Macquet says.

One example is a supplier of motor vehicle windows, which since the destruction of the New Zealand motor assembly industry has found a profitable niche turning out short runs of replacement windscreens for older models of cars.

"We are able to go to full implementations very successfully. Half of our clients have gone right to production scheduling and tracking. The world average is only 10 per cent for implementation of this in manufacturing."

The point of an ERP system is to record everything that moves.

What manufacturers are looking for is ATP (available to promise) and CTP (capacity to produce). If they know what is in their system, they can tell their customers when something will arrive.

Mr Quirk says companies are seeking fully integrated systems linking what customers want to the production schedules, cutting down on inventory, speeding throughput, shortening the supply chain and ensuring "just in time" processes.