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An Insider View: For One Auto Supplier, Branching Out Brings Complexity |
I've been with Cascade Engineering since August 1989, so I've witnessed the highs and lows of the automotive industry. Currently, the declining fortunes of U.S. automakers are behind our decision to ratchet up efforts to diversify our business and expand into non-automotive markets. These initiatives require that IT deliver solutions that are flexible and configurable yet still low cost and standardized.
One of our initiatives was to become more vertically integrated in the plastics industry by compounding our own resins. We've also begun selling specialty resins to other molders. Another upcoming venture is the conversion of recycled material into resin, which we intend to use internally and sell to a variety of industries. We've also decided to get involved in the automotive after-market. We'll provide electronic system assemblies directly to the Ford, GM and DaimlerChrysler dealer networks. Lastly, we just launched a medical device assembly business.
To varying degrees, all these initiatives are a departure from our traditional injection molding business and, accordingly, require changes in software system configuration. While from the user standpoint buying a point solution for each different business type is ideal, costs forced us to utilize existing software solutions. We've been able to achieve our three system objectives -- which are lower costs, standardization and configurability -- with a single system: MFG/PRO from QAD Inc.
Setting Standards
We haven't always been all about standardization. During my first three years on the job, I wrestled with getting everyone on the same page for a re-implementation of an enterprise resource planning (ERP) package that was purchased before I arrived. The package was acquired without getting buy-in from all business units, so the process of getting support across the company proved instructive. I learned that Cascade's small business units tend to be entrepreneurial and exercise a lot of creative license when it comes to solving everyday business problems. That tendency -- coupled with the auto industry's declining fortunes -- means that one of my biggest challenges is implementing standard technologies and functionality.
My IT staff of 14 supports about a dozen business units, and the department is not a traditional one in the sense that you might think. Several staff members are certified in the production and inventory management disciplines. They are trained to understand the theory behind and techniques for using standardized ERP systems. So one of our primary jobs is to educate ERP system users in the various business units.
In this capacity, the IT group does a lot of business analysis. We also spend a lot of time working with power users to enlist their help in preparing documentation and in training other users.
The Reconfiguration Mandate
As the company diversifies, IT has to continually look for ways to reconfigure software systems rather than replace them. For example, supporting the after-market business required us to build new electronic data interchange (EDI) translations and maps as well as to create new order management functionality in our ERP system. That's because the standard EDI transactions for a production operation are different from the EDI transactions and processing we do for the after-market business.
Supporting the medical device business will also require significant changes. We must comply with U.S. Food and Drug Administration requirements for parts labeling and material lot control, so we need to reconfigure our bar-code system and several inventory and billing transactions.
In a nutshell, diversification has introduced a lot more complexity not just for IT but also for finance and shipping. Years ago, when the auto industry was healthy, it was desirable to be 100% in the automotive business. Profit margins were higher, as were order volumes.
But now that both have shrunk, we've diversified. So even though we're doing about the same amount of business overall, we have more orders spread over more business units and industries, which has complicated the IT picture considerably.
Mike Malone is the IT director at Cascade Engineering Inc., a manufacturer of engineered plastics and components based in Grand Rapids, Mich. Write to him at InsiderView@ciodecisions.com.
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