Recession-hit business goes lean

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Published on the 09/10/2010 | Written by Epicor Software Corporation

AT A GLANCE

Oasis Engineering

INDUSTRY

Engineering & Manufacturing

BUSINESS OBJECTIVE

In recessionary times, get a lean manufacturing software implementation solution

SOLUTION

Epicor ERP manufacturing software from COGITA

THE BENEFITS

Productivity improved by 32%.
Improvements in delivery, quality and now pricing
Inventory reduced by 37%

FOR MORE INFORMATION

EPICOR
W: www.epicor.com
P: +61 2 9927 6200
F: +61 2 9927 6298

Tauranga-based engineer to order business, Oasis Engineering was hard hit by the effects of the global financial crisis but took advantage of it to implement lean manufacturing initiatives…

Oasis could have done what some companies do at a time of economic meltdown – hide in a bunker and wait until the storm clouds went away. Instead, it took the opportunity to invest in research and development, along with a lean manufacturing software implementation project.

It chose Epicor ERP manufacturing software from COGITA, to improve the processes not only of manufacturing but also across the entire business. This process took approximately one year to implement, much less than the 2 to 3 years that it can take. “A big investment in person-hours allowed this to happen in such a short time frame,” said Kevin Flint, Oasis’ General Manager.

Worrying times
Oasis Engineering (Oasis) is a precision engineering production facility specialising in the manufacture of products for the Oil & Gas, Pharmaceutical, Food Service & Hygiene Industries. Oasis operates from Tauranga, with key markets in Australia, Europe, USA, Canada, South America and Asia. It has been a user of Epicor ERP from COGITA since April 2004.

During March of 2009, the order volume dropped off dramatically. Not only were orders rare but Oasis’ competitors were being forced to quit their inventories at whatever price they could get for them.

“We are now seeing a dramatic upsurge in orders and requests for quotations. This situation is welcome but we are now facing problems with sourcing additional staff. We have to be very careful that when we accept orders, we will meet our order demand,” said Flint.

The market situation is highly competitive but Oasis is winning from the competition because it can respond much quicker to demand and can produce smaller runs, more efficiently. Margins are now smaller so this puts even more emphasis on efficient production and cost reduction. Key to Oasis’ lean manufacturing initiative is the Kanban inventory system, which has significantly reduced inventory levels.

The effort in research and development during the quiet time has allowed Oasis to develop many new product concepts that are now ready for launch. Customers are asking for rapid turnaround of product so this investment is allowing Oasis to meet this demand.

Kevin Flint is pleased with the most visible sign of permanent improvement to the Oasis team. “We used to have racks full of WIP. Now they are office furniture racks used for filing office stationery! It is unusual for a small business such as us to have the functionality of a fully featured ERP manufacturing software such as Epicor ERP. This enables us to offer traceability of our products to a level unmatched by our much larger competitors.”

The solution
Oasis looked to the Epicor ERP manufacturing software as a part of maintaining a competitive edge. They wanted to have full visibility of costs. Oasis was able to tailor the Epicor ERP manufacturing software to work with a lean manufacturing implementation.

Being a make-to-order company, Kanban jobs are used in the system to help improve response to customer demand and reduce non-value adding processes -a range of standard products that are make to stock. The inventory for these products uses Kanban triggers for replenishment. With agreements with suppliers to keep stock at Kanban replenishment quantities, lead times for raw material are kept to a minimum.

Scheduling uses Theory of Constraints (TOC) methodology to determine throughput through the constrained resource. They track the constraining resource and release jobs at the rate the resource can produce. Oasis knows exactly when products can be delivered.

“We have put a lot of effort into eliminating unnecessary processes and waste. We provide our customers and suppliers with the right information every time so there are no mistakes. We also have an opportunity for Improvement process that can be initiated by anyone for any part of the business. We change our systems and processes as we see fit.”

An Oasis of benefits
The key to a successful ERP lean manufacturing implementation “is getting the people onboard. It is a long-term process. It can take 3 years or more. Using the system is crucial to a successful implementation. Previously some people would say Epicor ERP is wrong. Once people understood that it is the process, not the software that is wrong, that’s when people come onboard and makes things work.”

He lists the outcomes as being:

1. Teamwork – everyone worked towards a common goal and shared the workload.

2. Productivity improved by 32%. Revenue and profitability are now greatly improved.

3. Customers appreciated the proactive approach that the Epicor ERP lean manufacturing process instills. Oasis is achieving 98.9% of planned dispatch due dates.

4. Less work for Oasis. Because customers were confident that they are going to get what they asked for when they asked for it, they didn’t ask for expediting unnecessarily.

5. Improvements in delivery, quality and now pricing, by value adding and quality assurance on receipted goods.

6. Flexibility in meeting the changing needs of their customers in a time frame and price that they liked. Despite Oasis being smaller, it occupies a unique position in customer responsiveness.

7. Purchasing and administration has improved, especially traceability of product in the field. The Epicor ERP manufacturing software also helps with ISO 9000. It is important to know material specifications for each product.

Oasis also holds a powerful position in the industry being able to offer full traceability of each part in their products.

8. Epicor ERP reference numbers are engraved on all critical parts to ensure accurate traceability and avoid non-authentic part substitution.

Supply is now based on Kanban stock for standard product.

The agreements Oasis has with suppliers on Kanban replenishment quantities have allowed it to reduce inventory by 37%.

9. Teamwork, cleanliness and orderliness. Customers are impressed when they visit the site and the appearance encourages business with Oasis. Pride in the workplace is part of the Oasis culture with everyone, every morning, spending a few minutes cleaning up.

10. The reduction in inventory has generated a lot of extra workspace.

11. Work in progress has been greatly reduced. It used to be around $250,000. Now it is a fraction of that.

12. Better work relationships.

Looking ahead
Kaizan projects are run every six weeks to work through different areas of the business in turn. For the Epicor ERP manufacturing software side, the next scheduled improvement will be Advanced Print Manager – handling documents electronically and CRM for sales tracking and marketing.

New products are also in the pipeline backed up by processes in place ready to ramp up production. Oasis plans to grow the business as a specialist R & D manufacturer by focusing on final assembly, quality assurance and traceability.

An example of the results from investment in R&D is the improvement in performance of their bespoke bus CNG filler. A normal filler would typically take four hours to complete the filling operation. With Oasis’ new design, this operation is now accomplished in 10 minutes.