Leading For Growth

By Don Shultz 

One manufacturer’s approach to lever aging their future with a new ERP and software implementation program. Discovery is a funny thing. Sometimes we set out looking for one thing and end up finding something com pletely unexpected, no less exciting, important or relevant. So it was in August when I made a visit to an educational and office furniture manufacturer whose primary customers are in the institu tional and governmental markets. Another one of my clients was looking for an additional manufacturing resource. At the invitation of Jim Scheidler, from Spectrum Industries, I arranged an early eve ning visit to tour their facilities in Chippewa Falls, Wis., and to meet with the President and CEO, David Hancock. We planned to dis cuss the ways in which their company and my client’s might jointly develop new market opportunities. During the tour, Dave Hancock introduced me to their head of information technology, CIO, John Hancock, and chief financial offi cer, Dave See, who explained that they were within days of launching their ERP (enterprise resource planning) software implementation. There in John’s office that August evening, I discovered something I hadn’t come looking for: a company whose core business strategy was the sole driving purpose for this technol ogy investment. Most remarkably, the strategy which my hosts imparted was simple, clear and understood across the organization. A counter-intuitive decision Oddly enough, the decision to replace their software did not begin with a decision to replace their software. In fact, John Hancock points out, "Our existing information systems were supporting the current business needs quite well." Then, if their existing software and systems weren’t broken, why fix them? "It was obvious that we were not going to be able to compete in markets where furniture had become a commodity." It was this discovery, along with the ensu ing understanding of the significant business implications, that caused them to rethink their operating model, but not their core strategy. "You cannot allow the damaging effects of a declining economy to change your core busi ness strategy," Dave Hancock explained. With the resulting business and manufactur ing complexities of customer demand for prod uct proliferation, Dave recognized the need and opportunity for Spectrum to "simplify the customers’ experience and relationship with our company. I couldn’t say exactly how, but I knew technology would play an increasingly important role in doing that." Dave recognized that in order for a mid sized manufacturer like Spectrum to compete successfully, they would have to create a com plete business system that would enable them to efficiently, quickly and profitably offer their customers what competitors couldn’t — speed and choice. "We look beyond our products. In a way, we are their business partners. We are very good at listening to our customers and creating quick, cost-effective furniture solutions that specifi cally address their needs for space, design and function." The strategic destination The customer is the nucleus of their busi ness strategy, the core energy that drives all business activity. To be sure says John, "Dave was the author of our vision. He knew where we needed to be. He was consistent in communicating the vision over time and this helped get our management team on the same page. Our job was to develop the road map that would get us there." That being done, they began to deliver on the strategy with a plan that is built on three primary operating objectives: • Improve their ability to respond quickly to specialized product applications; and get new products to new and existing markets faster.• Create more flexibility in manufacturing to meet customer demand for product variability and short order delivery times.

• Enhance their ability to identify new market opportunities by improving our data collection and analysis tools and capabilities.

The cross-functional team: small, focused and fast

At the onset of the project, the key business leaders came together as a core team that would be responsible for the research, selection and implementation of any improvements to their information management systems. The team includes CFO Dave See, the head of manufacturing, the head of customer support services, and John Hancock.

While the team recognized the value of expanding their group to include key users throughout the company, they also saw the benefit of making progress quickly with a smaller, focused team.

Opting for speed, the team did expand the group to engage the key systems users to create awareness and garner support for the project, as well as gather the intimate details of the day-to-day business operations. To round out the team, John would eventually add business consultants from Wipfli, LLP to help manage the implementation.

Creating the map

Bridging the gap between strategy and the requirements of the operating model would be the next step. Initially, the team felt they might be able to upgrade their existing system, meeting with their vendor to explore what improvement possibilities existed here. The discovery: While enhancing their existing system would provide them some additional performance benefit, it would not allow them to fully leverage some of the new technologies that had emerged over the past several years.

The team then decided to take a systematic approach at evaluating this option against installing a new system.

The team identified its core system requirements, then documented the plan and criteria for vendor selection. The plan identified five functional requirements of an ERP system that were linked to their key strategic business objectives. The integrated system would encompass the finance, accounting, manufacturing and marketing areas of the business.

Key among these requirements was the need to seamlessly integrate customer relationship management and manufacturing resource planning capabilities, as well as provide a strong e-commerce portal. Additionally, the team determined that the desktop and server operations system must be Windows, and that the databases would be SQL, ODBC and COM compliant.

Other key requirements included: a single database for the enterprise, order promising, capacity and schedule planning, and real-time visibility of actual plant behavior.

To get past the apparent genetic similarities of the software and understand systems capabilities in the context of their operational objectives, the project team invited eight software vendors to prepare demonstrations of their systems based on preliminary information provided by the team.

As a result of the demonstrations, the team narrow the fielded to four vendors. These vendors were given some sample data and asked to "script" a "proof-of capability" demonstration.

Following the final presentations, each vendor was scored on the basis of functionality and vendor expertise against specific criteria established by the team. Each score was weighted and the evaluation scores were totaled.

In the end, the ERP system of choice was a mid-market, manufacturing system from Microsoft Business Solutions called Axapta. The vendor best meeting the specification was the Wisconsin/Minnesota based business consulting firm of Wipfli, LLP.

Beginning the journey

With the selection made in late April of this year, the team spent the summer finalizing the project specification, key deliverables and contracts. The business process review began in early August, devoting one day for a review of each functional business area.

In early September, they began setup and system configuration. Training and data modeling is planned for December, with conference room pilot testing taking place in January and February of 2005. The project "go-live" is scheduled for March 1, 2005.

In total, the project life cycle is under 18 months from conception to go-live.

"This project has had an unusually aggressive implementation goal," says Suzanne Koss, manager of information technology and business process services at Wipfli LLC. "Having really just begun implementation in August, our time to ‘go-live’ is exceptionally short. Fortunately, we have well defined goals, and the resources required to succeed."

When asked if there was a single key success factor for an ERP implementation, Koss offered, "If technology is not a strategy of a company, then an ERP system is not the best tool. But if it is, as it is for Spectrum, then an ERP system can create a powerful strategic advantage."

For Dave Hancock, "our decision to invest in technology was not a cost-cutting strategy; it was a growth strategy. We did not think of the expenditure of return on investment or the cost of doing. We thought of it in terms of the cost of not doing. We simply saw no other way to serve our customers in a way in which they expect to be served, without the relevant technology."

For manufacturers like Spectrum Industries, if customers are the nucleus of strategy, technology is the circuitry that carries the strategy to the organization, leveraging opportunity.

But creating a solid connection requires leaders who can visualize and communicate a clear strategy. It requires an organization that understands the strategy and distributes the common knowledge of its operational objectives across the enterprise. It requires burning these objectives into the business processes and the technology systems that ensure high-performance for customers, colleagues, and company. And sometimes, it requires looking in unexpected places to find a new, important and relevant discovery that will foster growth.

Ed. note: A 25-year veteran of the woodworking industry, Don Shultz dedicates his energies to assisting companies in the design and deployment of strategies for improving competitive and operational performance. He can be reached at his Madison, Wis. office at (608) 279-8089 or e-mail at dtshultz@charter.net.

Reprinted with permission from Wood Digest Magazine • December 2004