Airtight ERP

Imagine working in an environment where the greatest obstacle to successfully completing your job is the very air you breathe. That's exactly what MDC Vacuum Products Corp. (www.mdcvacuum.com) faces on a regular basis. MDC Vacuum Products is a manufacturer of vacuum components for the semiconductor industry. The company makes more than7,500 parts and products that contribute to the manufacturing process of computer chips, X-ray scanners, and motion detectors that are produced in an air-free environment.

Failing To Plan Means Planning To Fail
One area of MDC Vacuum Products' production that was not airtight was its supply chain planning process. "Our legacy computer system didn't allow us to do MRP (materials resource planning) or CRP (customer resource planning)," says Kevin Cullen, VP of finance. "As a result, we couldn't do constraint-based planning and therefore were blindly guessing how much raw material to order and guessing when we could turn around certain products." Due to the nature of the materials that MDC Vacuum Products uses in the manufacturing process, it is especially costly for the company to over stock raw inventory. Additionally, when customers place an order, they want to know exactly when they will receive it. To meet this demand, many manufacturers are incorporating principles such as JIT (just in time) inventory into their supply chain planning and execution protocol.

MDC Vacuum Products consulted an outside CPA firm to help find the right supply chain planning and execution solution. After evaluating 50 different solutions, MDC Vacuum Products selected an ERP (enterprise resource planning) software solution from IFS (Chicago). "The main factor that set the IFS solution apart from the others was its ability to scale its solutions with our company," says Cullen. "We knew we wanted to take a phased approach - starting first with inventory control, distribution, and costing, and eventually adding functionality such as CRM and PDM (product design module) to our overall solution."

ERP Fills The Vacuum
Seven months after deciding on an ERP software solution, MDC Vacuum Products went live with the first three modules in place. When asked what was the biggest obstacle going from "choosing it to using it," Cullen lets out a long sigh. "We were determined to get this thing up and running by November 5 (seven months after purchasing it). Toward the end we were doing data entry around the clock - for 72 hours straight the weekend before going live. We wanted to meet our deadline, and we also needed to migrate our billing information and routers from the legacy system to the new system. This would ensure we would have clean data going into the new system." The company's efforts paid off and they avoided falling prey to the costly GIGO (garbage in garbage out) principle. "Our ERP system gives us real-time access to our information," says Cullen. "Secondly, it enables us to efficiently plan our shop floor production by giving us an accurate forecast of the materials we will need for upcoming jobs and the resources we have available to complete the jobs." This new functionality alone has permitted MDC Vacuum Products to give its customers an ATP (available to promise) on their orders, which it could never do before. "The new system also enables us to drill down into various levels of the order process and to know specifically how many specialized parts we need and where any bottlenecks exist in the production process," says Cullen.

By projecting money saved in production time and labor costs, as well as improved customer service, MDC Vacuum Products predicts that it will realize a savings of more than $18 million within the next five years. Also, within that same time frame the company plans to add a few more modules to its solution. "Two upgrades we are looking at in the near future will enable us to accept Web-based transactions from our customers and to have EAI (enterprise application integration) functionality for our customers and suppliers," says Cullen. "By sharing our supply chain information with our customers and suppliers we will be able to even better streamline our forecasting, production, and delivery of our products. For example, if a customer wants to see how close his order is to being completed, he will be able to log on to our system via the Internet and use a password to access his job. If he wants to make a last minute modification to his order, and he sees in real time that his job isn't finished, he will be able to call us or send an e-mail and alert us to the changes." MDC Vacuum Products' suppliers will benefit from the added functionality by being able to see an up-to-the-minute status of the company's materials and make sure they produce enough raw materials so that there are minimal delays when MDC Vacuum Products is ready to place an order.

One of the biggest challenges that Cullen cites for the benefit of anyone who is considering installing an ERP solution is to allow sufficient time for employee training. "The biggest difficulty was getting certain employees to see the big picture with the new system," recalls Cullen. "Besides this retraining of employees' paradigms, most of our end users needed only about two to four hours of training to feel comfortable with the new system and our managers needed four to six hours." Overall, MDC Vacuum Products' users find the Windows-based ERP system to be user-friendly and much better to work with than the legacy software. And as for the company, they find their ERP system akin to a breath of fresh air.