For years, Gibraltar Industries walked the tightrope that many manufacturers in the metals industry face: The $1.4 billion company wanted to invest in packaged enterprise applications that could help it improve operational efficiencies, scale more effectively, and deliver better customer service, but it couldn't find software that fit the way it did business.
Like most companies in the metals supply chain, Buffalo, NY-based Gibraltar makes products that are transformed through a variety of fabrication processes, turning basic forms like coiled steel or slabs into different shapes, parts, or products. It's essentially a hybrid operation, combining features of discrete and process manufacturing. Traditional enterprise applications such as enterprise resource planning (ERP) and even manufacturing resource planning (MRP) are not designed to handle that kind of manufacturing. Instead, most ERP systems are oriented around an inventory management system based on discrete, functional parts.
"We stayed with proprietary solutions because our shop floor and manufacturing processes had a lot of very specific requirements that didn't lend themselves to basic MRP functionality," explains Dave McCartney, Gibraltar's corporate vice president of information services. "A proprietary system was the best way to get specific to the metals manufacturing process."
At the time, that may very well have been the case. Yet, Gibraltar's decision to go custom spawned its own set of problems. Like many companies in its sector, Gibraltar found itself faced with a mixed bag of systems -- at one point, 19 homegrown and highly customized ERP systems running throughout its different divisions. Maintaining an IT development staff to support and adapt them was a growing burden. Moreover, the applications didn't support the kind of sophisticated capabilities and real-time information delivery that Gibraltar and its customers were demanding.
Eventually, Gibraltar was able to find a packaged ERP system that was a match. The company's Processed Metals Group in May 2005 began rolling out Axiom, an ERP suite designed specifically for the metals and wire and cable industries and available from Axis Computer Systems Inc., which was acquired by Made2Manage Systems Inc. this past February. Other Gibraltar divisions are following suit, and the company is now embracing a variety of other packaged enterprise applications, including a cash flow performance management application from Aceva Technologies.
"To the extent we could standardize on packaged applications, we could leverage a relationship with the software vendor and avoid having pyramids of programmers doing development," McCartney says. "Now, we can leverage IT resources on value-added applications, like customer-facing systems or those for the supply chain."
After years of wrestling with mismatched, off-the-shelf software and plunging millions of dollars into failed ERP deployments, Gibraltar and its metals industry peers are starting to take another look at packaged enterprise applications. A fresh wave of specially tuned software for this sector is now available from mid-size players like Axis and Ross Systems Inc., as well as from giants like SAP AG. Vendors such as Steelman Software Solutions Inc. have also surfaced, delivering specialized enterprise applications and business services specifically for this group.
Coinciding with the emergence of these new, vertical, off-the-shelf applications is a change in the mindset of metals manufacturers, who are now more inclined to invest in business information systems. The emergence of the global economy -- particularly with China as a consumer of raw materials -- has boosted metals prices dramatically, giving manufacturers in this space the capital to expand beyond their traditional investments in production and shop-floor technology.
And metals companies' customers are demanding new capabilities such as automated real-time order status and inventory checking, something that's only possible in the presence of integrated business systems.
"There's a push upstream in the channel from large, end-market customers for supply-chain visibility and information sharing that has not been demanded from metals companies before," notes Chris Marti, vice president of research and technology for the Metals Service Center Institute, an industry organization. "They can't accomplish that request without a heavier IT investment."
Opportunity Knocks
Recognizing that demand, vendors such as SAP have responded with industry-specific offerings. SAP has built features into its base mySAP product for addressing metals industry requirements such as support for configurable products or the need to describe products by characteristics or attributes. The SAP for Mill Products suite leverages SAP's NetWeaver and mySAP platforms to deliver industry-specific best practices and business process templates for companies in the metals, forest products, textiles, and building materials markets.
Perry Zalevsky, metals industry principal for SAP, admits it has taken time for manufacturers in these sectors to see the value of packaged applications. But now, he says, it's picking up, thanks in part to the frenetic pace of consolidation in the metals sector.
"Through consolidations, companies are recognizing the general inflexibility of custom software," Zalevsky says. "To try to combine disparate homegrown systems is quite difficult because each company has customized their software for their particular application." Moreover, many of the people who built the custom systems are no longer around, he says, making support more onerous.
Axis Computer Systems, which has been selling specialized ERP to the metals sector since 1984, has always differentiated its solution by its ability to address the needs of both process and discrete manufacturers. While discrete manufacturers work around the concept of a bill of materials (BOM), process companies orient their production around the notion of a recipe. Metals companies use elements of both approaches, says Ron Greco, director of sales for Axis Computer Systems. "We've taken the concept of a BOM and routing, along with recipes, and defined something called process routing, which addresses both sides of the equation," he explains. "We offer discrete tracking and costing, and on the process side, we can handle mixing, blending, and heating things together -- that's the big difference."
Axis's Axiom also lets metals companies define products around characteristics and attributes, another unique requirement of this sector. "You don't call a metals company and order out of a catalog," Greco says. "You say, 'Give me a grade, shape, size, or particular chemical composition.'"
Another unique requirement of metals manufacturers is the need for visibility throughout all levels of production. Unlike discrete manufacturers who focus on the finished product, companies in the metals supply chain need to have information about the product at various intermediate stages of production, from its raw materials through stages such as polishing or melting, notes Beth Berndt, director of industry solutions for Ross Systems.
No Customization, Please
Until it found Axiom, which could handle such unique processes, Gibraltar's Processed Metals Group (PMG) was stuck dealing with the limitations of custom software and legacy mainframe systems, according to Jerry Biagini, PMG's director of technology and business processes. Visibility into inventory was a huge challenge with the homegrown systems, Biagini says, and PMG employees spent a lot of time adjusting quantities and orders and padding schedules to meet customer needs.
Since Axiom came online in May 2005, PMG has made substantial strides. The group has cut the time needed to do physical inventory from three days to three hours. "The software allows us to perform tag reconciliations as we are scanning the inventory," Biagini says. "We used to operate in more of a reactive than proactive environment," he explains. "Axiom gives us real-time visibility into where any order is in any part of the manufacturing process."
Jennmar Corp., which manufactures roof control technology for the mining industry, was also determined to bolster real-time, enterprise-wide visibility across its five plants and corporate offices with a move away from customized software. Ted Benham, Jennmar's vice president of information technology, had implemented ERP at other metal companies and was determined not to repeat the mistake of over-customizing the software. "There were serious scars -- we had to shut down a steel mill at the company I worked for, for several weeks, because the software we implemented was not well suited for metals," he explains.
As a result of that experience, Jennmar opted for a "no customization" policy when it began to deploy Ross System's iRenaissance ERP package in January 2001. Although that policy was modified and some exceptions have been made, Benham says the iRenaissance package was flexible enough to adapt to Jennmar's business processes right out of the box. For example, Jennmar was able to add the ability to conduct electronic data interchange (EDI) transactions for some customers as well as change its invoicing practices to a monthly statement without having to modify the software to any great extent.
Being able to add these kinds of new capabilities without much IT work, coupled with a high level of visibility that was never possible before, has made Benham and the Jennmar team finally comfortable with packaged software.
"It's much less of a burden on our IT department," he says. "It allows us to focus on other things and we don't have to spend all our time coming up with the same solutions for problems that others are willing to solve for us."