First things first: The production cycle begins in the office, so you’ll want the right computers and software
By Bridget McCrea
For a new or growing precast manufacturer, the “to do” list is seemingly never-ending. There’s land to buy, buildings to lease or construct, plants to staff, materials to buy – the list goes on. There is also an office to equip with computer hardware, software, inventory management solutions and other tools that keep a precast firm running like a well-oiled machine.
At The Fort Miller Co. Inc. in Schuylerville, N.Y., a well-equipped office serves as a strong backbone for the 150-employee firm. Ira S. Adler, manager of quality assurance, says the single-location company has been investing in office equipment and technology since it got into business 55 years ago.
Key technology investments include a Windows-based platform that allows the firm to communicate with business partners worldwide via computer modem. Equally as important is a new mainframe computer for which the company shelled out a seven-figure sum about eight years ago. The package included the Microsoft Office suite (Word, Excel, Access and PowerPoint) and equipment such as scanners, copiers and digital cameras. A team of IT professionals handles all of The Fort Miller Co.’s technology installations and integrations in-house. “That’s all they do,” says Adler.
“We have a separate computer and hard drive dedicated to digital photography,” says Adler, who remembers the days when sending repair diagrams to the state Departments of Transportation meant sketching them out by hand, transferring them to an AutoCAD system and mailing them. “I can go out into the yard, snap a few photos and fire them off to an engineer who is 500 miles away in a matter of minutes.”
A scanner is also important, says Adler, in that it allows precasters to take regular shop floor drawings, scan them into a PDF format and e-mail them to customers.
The company’s mainframe system handles inventory control and all aspects of corporate administration in a PC-based environment. Key pieces of information like mix histories can be pulled up on any of the firm’s desktops and delivered quickly to customers who request them. A software package called RebarCAD allows the firm to take AutoCAD drawings and create products that maximize the use of rebar. “It really minimizes waste and errors,” says Adler.
Adler’s technology wish list right now includes Palm Pilots, which he envisions the shop floor team using as a reporting tool. Information would be stored on the electronic devices, then conveyed back to the front office with a simple “syncing” maneuver on a daily or even more frequent basis.
“Right now it’s all done on paper, which is cumbersome,” says Adler. “Every product takes up two sheets of paper, and we’d love to get that streamlined.”
For new precasters, Adler says the best technology advice he can offer is: Get the best, most up-to-date products available on the market. Don’t overbuy, he cautions, but don’t skimp either. With technology changing at the speed of light, he says, “Equip yourself for five to 10 years down the road, at a minimum, because it is going to take you a little time to get into it and get a return on your investment.”
Back to basics
Outfitting an office with the right mix of computer equipment and software is no easy task. After all, the latest and greatest product today could easily be obsolete within just a few months, leaving manufacturers to question their tech buying decisions. One option for the precaster on a budget is to check into used or refurbished equipment such as desktops and laptops, which are often just a few years old and perfectly able to handle a startup firm’s needs. Realize that you may need to upgrade sooner than you would if you purchased new, but also understand that the strategy may save you significant amounts of money up front (sometimes 50 percent or more off the cost of new).
It’s a little harder to skimp in the area of software, although many vendors now offer “Web-based” solutions that allow you to run the programs off the Internet rather than purchase them outright. For a monthly or quarterly fee (which varies according to the number of users and the product itself), you can use the software in an “ASP” (Application Service Provider) environment online.
No matter what computer platform you are using – Macintosh or Windows-based –a host of programs are available that will cut down on the time and expense of accounting, billing, creating financial projections, letter writing, creating graphics and drawings, and even organizing the workday. When making such purchases, you’ll want to first determine your needs in order to adequately fulfill a function, and then shop for the software package that will best meet your needs and your budget.
You’ll also want to add to the mix one or more copiers, fax machines, printers and scanners, all of which can greatly enhance productivity in the office. Options in these categories include leasing (particularly for copiers, whose larger models run into the thousands of dollars), buying new, or purchasing used or refurbished. Some models cost under $100 and run up to $1,000 or more, depending on your needs.
Philip Seagraves, director of business development at Atlanta-based Latham Time Corp., a manufacturer of time-recording devices and employee-scheduling software, suggests new precasters also invest in a lead-generation/marketing software package (such as eGrabber or Leads360), a good phone system and multiple phone lines, high-speed Internet access and an accounting software package like QuickBooks or Peachtree.
When purchasing equipment and software, Seagraves says business owners should keep an eye on the prices; a scanner that costs $499 this month may cost $399 next month. “Just because you have the funding or the line of credit, it doesn’t mean you need to go out and buy the equipment today,” says Seagraves. “If you’re not going to open your doors for another three months – and unless you have an urgent requirement for the equipment – you’ll probably get more for your money if you just wait.”
Getting a handle on inventory is no easy matter. There are raw goods like cement, aggregate, connectors and sealants to keep tabs on, finished goods to inventory and myriad other elements (such as forecasting, planning and accounting) to consider when implementing a viable inventory management system. “Inventory management has a lot of different facets,” says Jeffrey Bodenstab, vice president of marketing for Boston-based Toolsgroup, a provider of inventory optimization software solutions.
At their simplest, Bodenstab says “inventory optimization” systems handle tracking and tracing of inventory and ensure that inventory counts are accurate. Some companies handle the process manually, he adds, while others use software tools that calculate optimal inventory within the supply chain to ensure that, when a customer calls for 10 pieces of precast pipe to be delivered the same day, the order can be fulfilled.
From a financial perspective, having a good inventory management system goes beyond just keeping customers happy, says Bodenstab – it can also add money to a company’s bottom line. “Inventories are expensive, particularly in the construction industry where everything is heavy and difficult to move,” he adds. “Holding too much of the wrong inventory can really eat into a company’s profits.”
For precasters, Bodenstab suggests finding a Material Requirements Planning (MRP) system designed for smaller manufacturers that specialize in build-to-order products. Such a system, he says, will be able to handle the special considerations that precasters deal with, such as measuring inventory, manufacturing inventory and determining whether each order is attached to a specific customer or not.
The price of such systems varies and is based mainly on the size of the company’s operations. Bodenstab says he’s personally installed an MRP system that cost $10,000 to $15,000, and that was used successfully by a $20 million company. At the other end of the spectrum are solutions from companies like SAP, which can run into the millions of dollars and are used primarily by multinational companies. “One of the advantages of MRP software is that it’s been around for decades,” says Bodenstab. “As a result, there are a lot of different flavors out there that are well-suited to different companies’ needs.”
Just how quickly a company sees a return on that investment depends on what shape its inventory management was in to begin with, says Bodenstab, who advises organizations to seek out solutions that address their specific inventory management challenges. If a company is having trouble managing orders as they move through the plant, for example, then it should consider a system with strong factory management capabilities.
The firm that is highly dependent on raw material prices, on the other hand, should opt for a setup with excellent sourcing capabilities that can be used to track vendor performance and variations between planned and actual raw material costs. “For a precaster, a 2 to 3 percent increase in raw material costs that wasn’t picked up early, understood and factored into costing,” says Bodenstab, “could have a major impact on the company’s net result and net profits.”
Because precasters tend to manufacture a high number of custom products, Magda Muka, partner at Freehold, N.J.-based Muka Development Group, recommends a financial and inventory management package that’s been developed with the precaster in mind.
Where such systems can be particularly valuable, says Muka, is in tracking both custom and production items, and helping to cultivate a just-in-time environment. “Cash flow is always an issue, and you don’t want to be manufacturing anything that you won’t need in the foreseeable future,” says Muka. “You want to make it when you need it, and not hold onto inventory that sits in the corner of the yard.”
A good software system can also help streamline processes and save on labor costs by having one person effectively handle both dispatching and scheduling, for example.
To precasters who are shopping around for equipment and software right now, Muka says, “Do your homework.” Check with associations and trade groups, see what others are using and look for those that cater to the precast manufacturing industry. Ask for demonstrations, and keep an open mind about new products that you may not have heard of in the past, rather than simply sticking to what you’re familiar with.
For precasters who want to avoid shelling out a large investment for office equipment and software up front, there are options. One that’s used quite often by new firms is leasing, an arrangement through which you basically “rent” the equipment for a monthly fee. To get such financing arrangements set up, check with the equipment manufacturer, independent leasing firms and your local bank.
Auctions are another good option for affordable equipment. Bankruptcy auctions, for example, offer a great opportunity to acquire furniture, fixtures and equipment. You can often pick up desks, computers and chairs for a fraction of what they would cost new.
David Ross, Ph.D., education group manager at Shaumberg, Ill.-based Intentia Americas Inc., a supplier of Enterprise Resource Planning (ERP) software, says precasters should be careful during the technology-selection process. “Too many small companies get caught up in the possibilities that technology solutions promise,” says Ross, “without understanding the knowledge, skills and integration requirements that are required to fully implement the solutions.”