Last month we reviewed the emergent Supply Chain Execution (SCE) system marketplace by discussing software supplier strategies, their integrated application offerings, and the benefits of a SCE versus standalone application approach. In review, SCE systems focus on automating the processes and associated transactions within the order fulfillment cycle through the application of integrated software products. These processes include:
- order/distribution management (OM/DM)
- warehouse management (WM)
- production execution (PE)
- transportation management (TM)
We then focused on the often-overlooked benefits of integrated WM and PE systems by exploring the functional and infrastructure advantages of a WM/PE combination. This month, we will review the process that ConAgra/Gilroy Foods went through in designing, justifying, and selecting their integrated WM/PE system.
Gilroy Foods, the leading supplier of dehydrated onion and garlic food products, was purchased by ConAgra in 1996 and added to their family of United Specialty Food Ingredients (USFI) companies. As part of the ConAgra induction, a dehydrated capsicum (pepper) processing company was merged with the Gilroy Foods operation. Additionally, Gilroy Foods was required to change their host ERP software to the system being used by the other USFI companies.
Challenges - Gilroy Foods was using a system they developed in-house to automate many of their production and warehousing data collection activities. The system was tightly integrated with their existing ERP application and could not be efficiently converted to work with the new ERP system. Additionally, benefits from the new ERP system could be leveraged if a more "functional" execution system was used to provide timely and accurate data. Gilroy Foods’ challenge lie in the fact that they realized enormous benefit from their existing execution system - benefits they could not realistically live without. They needed a new SCE system.
System Requirements - Gilroy Foods set out to leverage the benefits of package software and the latest hardware technology with their new system. Their high-level requirements include:
- expanded Production Execution functionality
- radio frequency based paperless order fulfillment
- complete Warehouse Management functionality
- new data collection hardware and network
- system availability independent of ERP availability
- system portability to other ERP hosts
- support new multi-site business structure
- provide required ROI for WM and PE systems
- support rollout and enable benefits of new ERP system
- minimize project risk
- minimize project schedule
System Selection Process- The following steps were pivotal in determining which WM/PE system would enable Gilroy Foods’ business processes.
- Design an order fulfillment process that enables increased operational benefits by leveraging available software and hardware technologies. It is not necessary to reengineer your entire operation but it is imperative that you develop a detailed system design describing how the business will operate using a new system. Knowledge of available system capabilities is crucial in attaining a realistic design that minimizes software customization and implementation schedule.
- Develop detailed functional and technical requirements to evaluate and validate solution alternatives. Even if you have a single software supplier in mind, you need to document your understanding of what the software must do so it can be communicated to the supplier. Until you have given your requirements the thought necessary to accurately document them, they have not been sufficiently covered. These documents are used to validate the SCE software and serve as contract documentation with the supplier.
- Quantify system benefits. Quantify tangible benefits in terms of total project costs and make your system investment decisions with related benefits in mind.
Issue (non-integrated systems)
Requires in-house development of interfaces for two products from two software suppliers.
Extended schedule due to in-house integration, setup, and testing of two independent systems.
Provide Required Return on Investment
Increased costs for interfaces, dedicated computing hardware, dedicated RF networks, non-interchangeable user licenses, and longer implementation cycle.
Gilroy Foods' business requirements dictated they select an integrated warehouse management/production execution system.
Solution Approach -Unsure if a viable integrated WM/PE system would be found, the Gilroy Foods team developed separate requirements documents for each system. In evaluating available solutions, it became apparent that the risk, schedule, and ROI business requirements would be compromised if non-integrated best of breed WM and PE applications were pursued. In order to satisfy the business requirements and achieve anticipated benefits, only integrated WM/PE solutions were considered.
System Functionality - Possibly more important than the seamless sharing of data, is the functionality provided by the software. Without the required functionality, Gilroy Foods’ system design cannot be properly implemented or the operational benefits realized. Below is a summary of Gilroy Foods’ SCE WM/PE system functionality.
Gilroy Foods' WM/PE Functionality Summary
System Benefits -The benefits resulting from the new WM/PE system allowed Gilroy Foods to cost justify the project even though savings generated by the existing data collection system could not be included as "new" savings. The SCE system enables Gilroy Foods to increase efficiencies in both the production and distribution segments of the business while satisfying the defined system and business requirements.
WM/PE Benefit or Feature
Expand PE Functionality
Real time transaction processing and expanded functionality reduces data entry and paper processes.
RF Based Paperless Order Fulfillment
RF terminals outfitted with bar-code scanning replace all hardwired and batch devices.
Complete WMS Functionality
WM SCE system component provides best of breed WMS functionality.
New Data Collection Network
Wireless RF-based open systems network replaces aging hardwired data collection network.
Availability Independent of Host
Distributed client server system architecture allows local processing when Host is unavailable.
Portable to Other ERP Hosts
Distributed application and data architecture allows connection to a variety of host ERP systems
Support Multi-site Business Structure
Multiple server architecture supports more than six sites.
Provide Required ROI for WM and PE
Tangible savings justify the existing system replacement and the expanded PE/WM technology.
Enable New ERP System Benefits
Provides key functionality that enables enhanced ERP system usability.
WM and PE components are fully integrated and provided by a single software supplier.
Setup, installation, testing, training, and support are required for "one" system from one supplier.
Ty Hansen is a Principal with Centek Associates; a Seattle based consultant and integrator of supply chain execution systems Ty can be reached at 425-413-1090 or email@example.com