Texas manufacturer realizes 50% reduction in inventory levels, improved production management and stronger gross profit margin by using MISys Manufacturing Software.
What was wrong? Howard Huffman, General Manager, answered,“everything connected to inventory”. There was no inventory management system in place at the company. The values and quantities of inventory were not remotely accurate, no item numbers existed, purchasing used multiple spreadsheets to determine if there was enough inventory on hand for production schedule, inventory costs were not accurate and not up to date, unable to price jobs accurately because of lack of true costing of the inventory. Sage 50 did not have the functionality needed. The cost of processing Purchase Orders (departmental expense allocated to purchasing activities/number of POs issued) was really high.
The team at NTPV brought considerable experience working with other MRP systems such as Symix and Oracle. The demo that was done by the MISys sales rep (Al Alessi) showed them that MISys had the functionality they needed to implement an effective MRP system.
Working with their SureStart coach (Darrin O’Connell), NTPV got MISys set up properly and trained their personnel. The coach provided excel templates that made it easy to organize the data for uploading into MISys. They loaded 19,000 inventory items into the system. Howard Huffman, General Manager, stressed that it is critical to take time to do it right, to get all of the players involved in the implementation and to do system training before going live (they used a test database for training). They did have to get some customer reports written for them and spend some money on it but they expected to have to do that anyway. It was also critical for them to take time every week to STOP doing their regular jobs and to focus on the implementation of MISys. The SureStart coach took time to fully understand their business which made the implementation much easier. Went live on January 1st to start a new year with the new system.
- Reduced inventory levels from $800k to $400k inside of 14 months from going live. The cash that has been freed up has been critical to the operations of the company.
- Enabled them to manage their PO processing in much less time and gives them total visibility into process to identify the POs that are late and what still needs to be issued. The purchasing agent has been able to take on other roles, negotiating better terms with suppliers and proactively manage the supply chain. (They never use the “buy all” button from the MRP results because of many factors that affect quality and price that cannot be programmed into the software.)
- Transformed the weekly production meetings and made them much more effective by displaying on a large TV screen-the production schedule, purchasing activities (outstanding POs, etc.) and related reports, instead of having to read from printouts of excel spreadsheets.
- Sales department can more easily and accurately quote jobs by revising existing BOMs of a similar product to reflect the specifications of the new job, using current raw material costs. As a result the sales department can negotiate prices with greater confidence and accuracy.
- Gross profit margin has improved. Though the slowing oil and gas industry reduced the gross revenues of the company in 2015, their gross profit exceeded 2014 levels because MISys enabled them to better manage their raw material and production costs.