Resources > APICS Magazine > September 2004 > Spotlight > The Well-Informed Supplier

The Well-Informed Supplier
A unique ERP solution generates streamlined operations and happy customers

Information technology is one of the mainstays of the automotive industry. As customer schedules become less and less predictable—and requirements become more and more demanding—effective information technology leads to timely, accurate, companywide visibility. The results are synchronized cycle times, tightened inventory control, increased responsiveness, and simplified operations.

“We operate in an intensely competitive industry … customer schedules are very fluid—and they become more so by the week, month, and year, as car makers continue to respond to increasing consumer demands,” says Mike Mitsch, vice president of operations at Keihin Aircon, North America. “We have to have information quickly, and it must be accurate.”

Keihin Corporation is a $1.8 billion manufacturer of fuel systems; electronic controls; and heating, ventilating, and air conditioning components. The company, a principal supplier to Honda with facilities in Japan, North America, and Canada, recently discovered how best to use information technology (IT) to its advantage by incorporating stand-alone applications into one solution.

System integration
In 1995, leaders at Indiana Precision Technology (one of Keihin’s premerger divisions) realized the company was wasting time and duplicating effort by using stand-alone PCs running a variety of individually procured applications. The rapid growth and associated disjointed applications—combined with more stringent and unpredictable customer schedules—made a strong case for changing business processes and implementing an enterprise resources planning (ERP) system. The goals were to restructure operations, enhance overall awareness, and meet customer demands.

“We thought our operation was unique within the industry, so we spent 12 months researching our processes and procedures. In parallel with that, we began coding, based on an existing system in Japan that was to be converted for use in North America,” Mitsch says. The main challenge was to integrate a financial system with Keihin Corporation’s manufacturing system. Initially, the company began looking for accounting packages that would run on their Oracle database development platform. “What we found was that most potential suppliers already had the type of modules that we were trying to develop,” Mitsch says.

So instead, they focused their research on modules, including material requirements planning (MRP), the master production schedule, inventory and production control, purchasing, and so on. “In the end we concluded that Glovia International’s ERP product, glovia.com, met our needs,” Mitsch says. “We procured and implemented the solution within two months, which ought to be some sort of record!”

A common software platform
Keihin Corporation, having successfully implemented glovia.com at Indiana Precision Technology, used that experience to extend glovia.com to Keihin Aircon, its heating, ventilating, and air conditioning subsidiary.

“The transition was very smooth and clean,” says Matt Snyder, IT manager for Keihin Aircon. “We imported some data from [Indiana Precision Technology], then added our own financials and bills of material. Glovia professional services helped us to get the different modules up and running.”

Keihin Corporation now has implemented glovia.com in its three North American companies, and the common software platform facilitates incorporation of new factories into the manufacturing chain. Snyder has no doubt that this coordination has simplified IT management. “Now we only have to support one package instead of several, smaller, independent modules,” he says. “But the key operational benefit is the combination of the financials with the MRP modules: It’s fast and convenient—and the multicurrency facility is going to be a major asset as we expand internationally.”

Mitsch agrees, “If there was one attribute that influenced us in favor of Glovia, it was the multisite, cross-company capability. This has made it easier and more economic for us to expand in North America.”

Going lean
Keihin Corporation’s North American operations also have become more efficient and responsive by revolving around Honda’s needs and operations. By optimizing cycle times to match those of its primary customer, finished goods come out at the same rate, and surpluses and shortages are virtually eliminated.

“The great thing is that glovia.com is geared up to our industry,” Mitsch says. “We are now confident that our inventories are correct, that we have accurate sales figures and an accurate full breakdown of material costs. Glovia has given us a tighter ship and a more efficient business.”

Glovia’s Factory Planning module enables Keihin Corporation to assimilate customer information and run simulations looking at inventory, production schedules, finished goods, and more. The company can react within minutes and has visibility into line loading and time lines for jobs, which makes it easy to see operations status and identify problem areas quickly.

A synchronized production line also requires tight integration between Keihin Corporation and its suppliers, so the right inventory—in the desired amount—arrives at the correct time. The company uses Glovia’s supplier and customer releasing modules to manage consumer requirements and distribution. “Our customer orders go straight into customer releasing from [electronic data interchange]. This is very smooth and intuitive and has made a big difference in the way we operate,” Snyder says.

The requirements are then converted into the supplier releasing module and made available via the Internet. This quick and accurate communication speeds the coordination process between Keihin Corporation’s purchasing agents and its suppliers, as they are now looking at the same information, in real time, as it arrives from the customer.

Inventory control plays a critical role in this streamlined flow. Keihin Corporation employs what it calls a “roaming warehouse,” meaning the company does not use the vertical racking found in most manufacturing plants. Instead, floor storage is used, which is easier and faster to access. However, because less quantity is held, the need for tighter inventory management is heightened. In response to this, Keihin Corporation suppliers pack their trucks to allow parts to be unloaded and put on the line immediately, rather than being stored until use.

By adopting this methodology, Keihin Corporation has reduced a great portion of time and space spent storing parts and has virtually eliminated employee overtime. Because the trucks are the warehouse, the tightest inventory control is imperative. Glovia provides Keihin Corporation with full visibility of all material movement through an enterprisewide system, with integrated, interactive management of all inventories, including the physical stockroom and items in transit.

“Prior to implementing glovia.com, we kept roughly four day’s worth of inventory in stock. Today, we have only half a day’s inventory,” Mitsh says. “We do not have to build a larger building to store the inventory or hire more people … It allows us to do more with less.”

Downtime also has become minimal with glovia.com. “We don’t have any problems with people waiting for long reports to print out or for processes and functions to finish,” Snyder says.

A global perspective
As a single IT solution, Glovia’s scalability makes it possible to serve Keihin Corporation as it expands. “As we grow, we will need to share information and add more users and more installations at other locations worldwide,” Snyder says. “Glovia was well suited to serve in such a capacity.”

Mitsch agrees, “Within North America, we’ve already used glovia.com in our three facilities. The next step is to take the systems that we have implemented and introduce them into the Asia Pacific market, starting specifically with some of our plants in Japan. That is a target that we would like to hit soon, and we are hoping to do it with the latest release of glovia.com.”

Another strength is Glovia’s language kernel. This allows Kanji to be displayed on the application screens—and the reporting modules support both Japanese and Chinese character sets. “As a company, we need to use the same system,” Mitsch notes.

“Modern business is very fluid. The rules change all the time, but not the principles,” he adds. “The keys to success are know your inventories, know how much money you have, know how much you have to spend, and know how much you are going to make. Glovia.com covers a good 80 percent of our business needs, and it gives us the information we want.”