Successful Software Integrations Cut Costs and Boost Manufacturing Efficiencies
by Charles E. Morris, Senior Editor

Gilroy Foods (Gilroy Calif.), a seven-plant ConAgra unit producing dehydrated capsicum (pepper), onion and garlic ingredients, integrates warehouse and manufacturing operations with the SCM/Enterprise WMS Warehouse Management System supplied by HK Systems (Milwaukee, Wis.). The system integrates production execution (PE) with warehouse management (WM) and can be implemented either as a point solution or an integrated component of HK Systems’ SCM/Enterprise suite of supply-chain management solutions, which link customer-order, warehouse and transportation operations.

Systems integrator Centek Associates (Seattle, Wash.) implemented SCM/Enterprise WMS for Gilroy Foods. According to Centek Principal Ty Hansen, a typical supply-chain management system handles the ERP planning function but does not adequately execute the complexities of order fulfillment. Integrated software applications known as supply chain execution systems (SCE) have therefore emerged to address the execution component. An SCE system automates and integrates order/distribution management, warehouse management, production management and transportation management. This eliminates the cost of customized software or stand-alone applications to integrate warehouse management with production execution. "Integrated WM/PE extends the benefits of a traditional warehouse-management system by tracking, managing and automating the order-fulfillment process for both customer orders and production order," says Hansen. Bar codes and radio frequency (RF) technology enable paperless, real-time operations.

ConAgra purchased Gilroy Foods in 1996, added to the company’s United Specialty Foods Ingredients (USFI) group, and absorbed a dehydrated capsicum processor acquired by ConAgra. As part of this restructuring, Gilroy was required to change its host ERP software to the system used by other USFI companies. Gilroy had been using a system developed in-house to automate many of its production and warehouse data-collection activities. This system was tightly integrated with Gilroy’s existing ERP application and could not be efficiently converted to work with the new ERP system. Gilroy realized great benefits from its existing execution system, yet could leverage further benefits with a more functional execution system that met the company’s business requirements: to support the new multisite business structure; meet the required ROI; achieve the benefits of the new ERP system; minimize project risk; and minimize project schedule.

In evaluating available solutions, the Gilroy team realized that the risk, schedule and ROI requirements would be compromised unless only integrated WM/PE solutions were considered.

Among its PE functions, the integrated system plans production orders by destination and allocated production to customer orders; allows paperless picking of raw materials and work-in-process; records inventory issued to a customer order as well as receipts against a production order; and prints bar code labels for new production. Among its WM functionalities, the system plans customer orders by lot, item, staging, sequence and dock; allows paperless receiving, picking and putaway; enables order/shipment scan verification at loading; and prints bar code labels for receiving and shipping.

Gilroy Foods rolled out its new SCE system on schedule last June to seven sites at a cost within 5% of original budget. The system eliminates 90% of manual data entry and 90% of the paper formerly consumed in order fulfillment. It also eliminates double handling, improves warehouse space utilization and shipping accuracy, and enables order-fulfillment cycle-time reductions of up to 35%. The projected payback is 2 ½ years.

 
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