Forecasting, data collection valued as ERP add-ons

The notion that wringing more value from ERP systems is a journey, not a destination, is something Greg Clauser, general manager of Lakin General Corp.'s roller division, can attest to. Five years ago, the Chicago-based supplier of engineered components to agricultural and industrial equipment OEMs gained a raft of benefits from an ERP system, but has since done upgrades and added modules to improve the system.

One project, says Clauser, involved a shop-floor data collection module. "There have been two main benefits from data collection," says Clauser. "First, we have more up-to-the minute knowledge of what's happening in the plant. Second, there is much less clerical effort involved in getting data into the system, and no confusion about written notations and details like how many pieces were produced on an order."

Lakin General exemplifies what many small to midsize enterprises (SMEs) are doing: building on their core ERP systems with add-on modules or third-party software packages, says Joel Schneider, president of Liberty Technology Advisors, a Northbrook, Ill.-based consulting firm. Schneider's firm assists manufacturers with evaluation and implementation of enterprise systems.

In helping Lakin and other SMEs with ERP "phase two" projects, Schneider says these companies are after specific operational gains. The top add-on among Liberty's clients, he says, is third-party forecasting applications, which reduce inventory and stock-outs. "There are good forecasting packages out there for this, but first you need a good core ERP system in place," he says.

An ERP system provides accurate sales history and customer and item master data to feed the forecasting engine. According to Schneider, most ERP packages geared to SMEs have forecasting modules with limited collaborative capabilities and fewer analytical formulas than best-of-breed packages. As a result of this, as well as unfamiliarity with forecasting packages, many manufacturers use spreadsheets to forecast.

However, says Schneider, SME-focused ERP vendors are stronger in other areas, including data collection and EDI. Lakin, for instance, uses a data collection module from Epicor Software, its ERP vendor.

Clauser says the 1999 deployment of Epicor's Vantage ERP package improved Lakin's access to timely information on costing and inventory levels. At the same time, later projects—such as an ERP upgrade with more price list functionality, and the data collection project—have further improved the system.