From Manual to Automated: ERP Provides Full Integrated Package for Leaner Operations
Headquartered in Easton, Pennsylvania, MW Components (formerly Sussex Wire) specializes in the design and manufacture of precision specialty metal parts and components. The company’s highly skilled engineers use cold-forming technology to form metal wire and specialty alloys at room temperatures into highly engineered micro-miniature components in a faster, more cost-effective manner than traditional machining, stamping, metal injection molding, and casting methodologies.
Founded in 1973, MW Components serves a variety of global customers in the medical, electronics, connectors, computer, automobile, transportation, appliance, semiconductors, and glass-to-metal seal industries. Their products include cold-headed leads and pins, cold-headed button and cap parts, glass-to-metal/hermetic seals, mini/micro fasteners, electrical contacts and terminals, micro medical and valve parts, and miniature electronic parts. MW is ISO 9001-2008 certified and ITAR (International Traffic in Arms Regulations) compliant.
Prior to Global Shop Solutions, MW operated the business using an assortment of manual spreadsheets and unrelated software applications. Inventory was tracked in an Access database. Hand-written work orders and traveling tickets were used to guide workflow through the shop. To improve the visibility of data and drive leaner operations, the company invested in Global Shop Solutions ERP software.
“We wanted a fully integrated package that could take us from quote to cash collection, and had full inventory controls and cost measurement in between,” says Candace Kelly, controller for MW Components. “Most of our people had no experience with ERP, so we also wanted a system that was easy and intuitive to use. Global Shop Solutions seemed like the right size for our business, and had the integrated functionality that would allow us to accurately capture our costs.”
Improved Job Costing and Quoting
In the past, getting a handle on job costs was hit or miss at MW. Now, managers can determine the cost for each job with remarkable accuracy.
“Having all the production data reside in one integrated system makes a huge difference,” says Kelly. “We now have the ability to lay out material to work orders and restock material when it’s not used. We can capture accurate time records at every operation in the production process. And we can easily roll all those costs into finished goods when we move WIP to finished goods. As a result, we know the true costs of every one of our products.”
With accurate job costing also comes more accurate estimating and quoting. To improve these processes, MW uses Global Shop Solutions to build a “shell” router that includes every chargeable labor line involved in making a product. They also use historical data within Global Shop Solutions to analyze past experiences when making similar items with the same size wire. Having all the historical data so easily accessible enables MW to quote new products faster and more accurately.
“When we get an RFQ for a similar part, we can look back at the previous work order to see whether our estimate was on target or not,” explains Kelly. “We also use the data to conduct regular cost review meetings. That way, we can compare actuals to original estimates and incorporate any large variances into the next quote.”
Global Shop Solutions has also eliminated the duplicate data entry that used to plague many production processes.
Previously, data often got manually entered into three separate spreadsheets, a time-consuming and error-prone process. Now the data gets entered once and is automatically populated throughout the system.
“For example, if we had to keep track of specific information at the request of a customer or locate information for ISO purposes, everything had to be tracked in triplicate,” recalls Kelly. “Now it goes in once and only once. Eliminating all that extra work produced immediate and dramatic efficiency gains.”
25% Reduction in Raw Materials Inventory
Management of finished goods inventory has also improved by leaps and bounds. When shipping, workers previously had to track down the right spreadsheet and manually remove the part from finished goods. Assigning raw materials to a job required the same cumbersome process, leading to consistently inaccurate inventory counts.
“Now, when a work order goes to a department responsible for completing WIP to finished goods transactions, all they have to do is scan the work order and the data is instantly recorded,” says Kelly. “We can rely on the transaction being accurate, and we no longer have to worry about someone forgetting to update the spreadsheet.”
Global Shop Solutions has also helped reduce raw material inventory levels by 25%.
Previously, MW lacked the data to accurately determine raw materials' annual usage. They knew what they bought, but couldn’t determine beginning and ending levels with any degree of accuracy. By using estimates within routers and demand coming from customer orders, they can see exactly what’s needed and establish appropriate lead times for bringing in raw materials.
The use of barcoded labels upon receipt of incoming materials and when issuing raw materials to the job has also created a leaner inventory management process.
“When we receive incoming materials, Global Shop Solutions automatically assigns the next lot number,” says Kelly. “We receive the material on the purchase order, and Global Shop Solutions prints a barcoded label with a 5-digit lot number. This eliminates all the manual data entry we used to do and ensures the integrity of the data in the system.”
Faster, More Accurate Financials
As controller, Kelly now handles all of the accounting and generates all of the company’s financial statements through Global Shop Solutions, cutting in half the time it takes to close the books at month’s end.
Closing the books used to take seven days, in large part because the inventory valuation alone took up to five days to complete. With Global Shop Solutions, Kelly receives those reports as soon as she decides the cutoff date for AP receipts, and closes all the books in only two days.
Financials aside, Kelly points to the real-time visibility of operations throughout the company as Global Shop Solutions’ most valuable feature.
“The Supply & Demand screen provides amazing visibility into every aspect of operations,” she says. “From one screen we can open a work order and see who’s logged on at what operation. We can tell where the job is in the process and see if we’ll hit the delivery date, giving us amazing flexibility with our production process.
“Suppose a customer needs to move the shipment date up two days. We just open the work order and all the information is right there, so we can usually give the customer an answer within minutes. We’ve never had an issue with on-time delivery. But the ability to respond to customer changes, and know with confidence whether we can accommodate their needs, is huge.”
Fast, Efficient Implementation
Having worked with other ERP systems at different companies, Kelly knows the initial implementation process can easily get off track. Thanks to the hard work of her team and the experienced Global Shop Solutions consultants, the MWM Components implementation went remarkably well.
To save time and minimize data entry, MW decided not to run a parallel system as a backup during implementation. This required less work for everyone, and the company got every scheduled shipment out the door on time the first week of going live. A few issues cropped up in the following weeks, but those were easily resolved.
Kelly points to thorough training as one key to success.
“We made sure everyone received enough scheduled training on the modules that would impact their jobs,” she says. “We also encouraged people to ask questions so they wouldn’t repeat mistakes. Overall, the implementation went amazingly well.”
Supporting the Growth Strategy
Ask Kelly to identify the areas where Global Shop Solutions has made the biggest difference and she rattles off a long list of improvements.
Faster turnaround on customer quotes. Faster order-to-cash cycle because jobs move through production quicker. Improved cash flow from better job costing and more efficient production processes. Perhaps most important, Global Shop Solutions enables management to make informed decisions regarding the company’s long-term growth.
“We’re currently in the middle of a strong growth strategy,” notes Kelly. “But growth is not about taking any business, it’s about taking the right kind of business. Global Shop Solutions tells us where we’re making money and where we’re not. It helps us understand which products, customers, and markets are most profitable so we can target our growth in the right areas.
“We’re also starting to use Global Shop Solutions to measure productivity on the work floor to get a better idea of what each worker should be producing. The more we use the system to lean operations and improve efficiencies, the more we can sustain profitable growth.”