When your company makes a product that customers can order in any of 400 trillion possible variations, it’s unrealistic to consider assigning a SKU, or Stock Keeping Unit, number to each one.
Yet that’s exactly the suggestion that Dave Pung repeatedly encountered several years ago when he set out to automate the business of Corrugated Supplies Corp. (CSC), a Bedford Park, Ill., manufacturer of made-to-order corrugated cardboard sheets. “Every outside consultant and every third-party software vendor I talked with always tried to push us toward a SKU-driven operation,” says Pung, CSC director of information systems. “The first thing I’d always have to get through any consultant’s head is that we’re not a typical, job-shop kind of business.”
In the end, in fact, after surveying commercially available enterprise resource planning (ERP) system solutions and their associated manufacturing modules, Pung decided that the system he needed didn’t exist. So he set out to develop his own system geared to the special needs of CSC’s business.
The result was a package of customized enterprise application modules that work with an Internet Protocol (IP)-based networking system to automate CSC’s processes from beginning to end. At the front end, CSC’s order entry module ties directly into customers’ purchase order systems online to accommodate Web-based order entries. The system not only accepts orders for CSC’s product in all of its multitudinous variations, but it also automatically schedules and configures CSC factory machines for production—while also enabling instant, on-the-fly order changes when needed. Nearly 90 percent of all CSC orders are now placed by customers over the Web, says Pung, replacing an earlier system of facsimile- and phone-based orders.
Wireless, as well as hard-wired, Ethernet links throughout CSC plants also enable the company’s personnel—ranging from management to machine operators, fork-lift truck drivers, shipping clerks and others—to easily stay on top of the latest data and make smarter operating decisions. The system relies on a single Microsoft SQL 2000 database, enabling instant access to accurate, real-time information by any of CSC’s 95 employees using standard Internet browsers.
Fork lift trucks that load finished product onto trailers are equipped with wireless computers and bar code scanners, for example, enabling drivers to quickly determine the disposition and loading order of finished product. “They’re scanning the product and they’re scanning the truck, and the system builds a bill of lading automatically,” Pung relates.
Other features of the network include voice-over-IP technology—enabling the same Ethernet backbone that carries data to also handle CSC’s telephone voice traffic. And Pung has also installed IP cameras at some locations in the plants, with an eye toward remote trouble shooting and plant security applications.
The factors that drove Pung to develop the system included the continuous nature of CSC’s production process and the multiplicity of product variations offered by the company. For CSC’s business—and in fact, for many similar paper-based operations, says Pung—SKU-based production approaches offered by traditional ERP vendors are inadequate.
As one of an estimated 700 corrugators in the United States, CSC’s business does not involve multiple components and products, but rather, a single product that has multiple attributes, Pung explains. The production operation starts with 8,000-pound rolls of paper, which CSC feeds into one of three 300-foot long, continuously running process machines that produce corrugated cardboard sheets at rates of up to 1,000 feet per minute.
CSC’s customers—who use these sheets to produce boxes for their own customers—can specify any of 275 board grades in sizes ranging from eight to 98 inches wide, and 19 to 220 inches long, in 1/16th-inch increments. Other variables include five types of flutes (the wavy middle layer of the corrugated boards) and a variety of options for scoring the boards for folding, in terms of the number, locations, dimensions and types of scores.
It’s the combination of all of these variables that produce the theoretical 400 trillion number for CSC product variations, says Pung. And that’s not the only automation challenge. Complicating matters further is that many of the orders CSC receives come with special instructions, such as requests for deep scores, customized load tags to be printed or specific shipping procedures. Customers sometimes also make last-minute changes to their orders.
Moreover, CSC’s business tends toward small orders and short lead times. Order quantities range from a maximum of 300,000 sheets to as few as 10, and more than half of all orders are for delivery within 24 hours. “We’re a made-to-order business. Everything we make, ships,” Pung declares. “We carry no finished inventory.”
Pursuing the vision
Pung arrived at CSC in 1997 with about a dozen years’ experience in the corrugated industry, including a background in designing software for the machines. At the time, CSC was already recognized for its aggressive pursuit of automation, Pung says, and then-President Rick Van Horne had long had a vision for tying his customers more closely into the process. With a mandate to further streamline CSC operations, Pung saw the still-emerging Internet business-to-business space as a way to more tightly integrate CSC customers, and he quickly settled on IP-based Ethernet technology for the company’s internal network standard.
When Pung joined the company, CSC was relying on disparate systems and databases for its ERP, scheduling and shipping functions, an approach that was prone to problems and inefficiencies. If a customer called in with a change or an inquiry about an order, for example, CSC service representatives had to search multiple systems. And the lack of integration among the systems sometimes caused errors and misplaced orders, Pung relates.
To solve that problem, Pung set up a Microsoft SQL database system to house all of the company’s data, eliminating the need for separate legacy systems. “Our goal was to have one single database for the entire process, so that when customers wanted to find out anything about their orders, they would be looking at the same thing that manufacturing was looking at, and the same thing that shipping and customer service was looking at,” Pung notes.
To handle CSC accounting functions, Pung acquired an MAS 500 ERP system, supplied by the Mid-Market division of Best Software Inc., Irvine, Calif., a unit of The Sage Group plc, based in London. Like other ERP systems, MAS 500’s manufacturing module is SKU-based, says Pung, but its accounting functions integrated well with the custom manufacturing software and other applications that he was developing.
“I wasn’t going to write an accounting system, so we set out to find a good one that’s built on the same platform we have, which is Microsoft SQL Server 2000,” Pung explains. “We chose MAS 500, and we’ve made several interface points into our system so that accounting has proper visibility, and the purchasing, billing and other accounting functions are handled smoothly.”
In developing CSC’s Web-based order entry system, as well as the software to drive the company’s corrugating machines, one challenge Pung faced involved the special instructions that arrive with each order from many CSC customers. “The software we had at the time wasn’t automated to push that information into the plant and down to the floor, so we always had to rely on the operators, and just hope they would see the message to make sure that the special instructions were carried out,” Pung says.
So as he developed the order entry system, Pung solved the problem by working directly with individual customers to develop standardized formats for commonly used special instructions. Now, whenever special instructions come in as part of an order from one of CSC’s 80 regular customers, “our system will parse those instructions looking for certain things that we’ve agreed upon, and that will trigger some of the settings in our system,” Pung explains. The instructions then become part of the order that the system schedules and sends to the corrugator machine for production. “This way, we’ve taken the human factor out of it, so we make sure that the special instructions get done automatically every time,” Pung observes.
Customers may place their orders on CSC’s Web site. But Pung has also created interfaces directly into customers’ purchase order systems, meaning that can send their orders electronically to CSC without retyping them into the Web site. Customers can use the system to track the status of their orders, and as long as an order has not been scheduled, they can modify or even delete an order after it has been placed.
Within two years after joining CSC, Pung had the system up and running at the company’s 130,000 square foot plant in Bedford Park, Ill. And when CSC in 1999 expanded to a second, 220,000 square foot building, housing a second, 300-foot long corrugator machine, Pung took the opportunity to extend the system’s capabilities further.
Beam it over
The company’s Ethernet network already made extensive use of wireless technology based on the IEEE 802.11b wireless standard—for links to computers on the company’s fork lift trucks, and on the clamp trucks used to move paper rolls from rail cars to CSC’s warehouse. Pung wanted to use the same wireless technology as a cost-effective way to also link the new building to CSC’s original plant. And while he was at it, he wanted to save on phone costs by adding voice-over-IP capability to the network.
But he received a less than an overwhelming response when he put that idea out to the network vendor community. “Most vendors were instructing me to put another communication system in the second building and go out to my local provider and lease a T1 line,” says Pung. “There was really only one vendor that came back with a solution for what we wanted to do, and that was Cisco Systems.”
Though the approach was unusual at the time, CSC ended up installing rooftop, dual-channel, 22 megabit/sec Aironet BR500 wireless bridges supplied by Cisco, of San Jose, Calif., to provide a point-to-point connection between the two buildings for both voice and data traffic. The system complements a variety of Cisco wireless components and other networking gear used throughout the CSC plants.
The solution enabled CSC to eliminate conventional phone lines in both plants and instead run a single network wire to each desktop for both phones and computers, providing flexibility and administrative cost savings. Similar savings accrued when CSC opened a third plant in Cullman, Ala., last September. The connection to that plant was made via a T1 line, but the cost benefits are similar to those of the first expansion in the sense that both the phone system and the manufacturing system are run from the home facility in Bedford Park.
“We’ve duplicated the manufacturing at the Alabama plant, but none of the layers above that. All scheduling, customer service, accounting and everything else takes place right here in Bedford Park,” says Pung. “At any time, right from my desktop screen, I can tell you exactly what they’re running in Alabama and how fast. Because these are all Web-based applications, it’s a very efficient architecture for driving an enterprise.” CSC plans to use a similar centralized set-up when it opens a fourth plant in Madison, Wisc., later this year, Pung adds.
CSC counts a number of savings and other benefits from the system. The number-one savings, says Pung, comes through a reduction in paper waste—an extremely important metric in a business in which margins are thin, and paper represents up to 70 percent of costs. Through reduced errors and more efficient operations made possible by the system, CSC has trimmed overall paper waste from about 11 to 12 percent down to less than 7 percent today, Pung says.
Other savings have come through reduced staffing requirements. Since 1997, when CSC required a staff of five customer service representatives to handle around 300 facsimile-based orders per day, says Pung, “we are now handling around 800 orders per day with only two or three people.”
Other benefits are less tangible. Customer satisfaction has improved, due to the ease of Web-based order entry and the ability of customers to track the status of their orders through the CSC production process. And by extending the power of its employees to access real-time data about the business, CSC has also benefited through more active employee participation and better decision making, Pung believes. “Whether they’re in accounting, shipping or production, our employees are not afraid to log in, see what’s going on and make decisions to help us better run the business,” Pung concludes.