Managing all the details in a pallet business can be like juggling 50 things at once. Growth adds complexity as more people need to communicate. Old systems may not foster enough open channels of communication to keep everyone informed. Customers continue to demand more and more causing pallet companies to have to become more precise and better managed. All of these factors have created an environment where many medium to large size pallet companies are hamstrung by their information systems. There is too much going on for management to keep on top of it all.
Automated Machines Systems (AMS) of Jenison, Mich. has developed a solution to help pallet companies better manage their data, improve order processing, generate better management reports and overall reduce wasted administration steps while improving office communication. Palmate™ Enterprise Resource Planning (ERP) software covers a wide variety of office functions for purchasing, receiving, shipping, order processing, production scheduling, inventory management, cost monitoring and general management. Palmate ERP allows company leaders to make smarter decisions using real-time information. It helps keep managers on the same page as they share data across a centralized system.
Chad Hoffman, the project manager for Palmate software, said that prior to switching to a system like Palmate ERP, most pallet companies rely heavily on handwritten records, large production boards, or basic spreadsheet program to share information. This causes a lot of unnecessary work and can make it hard to find out certain things when key employees are gone for the day. Very few pallet companies have a centralized program that stores all key data while integrating various functions of the business together. That is exactly what Palmate ERP does.
While there are other generic ERP solutions out there, Chad said this is the first system he is aware of for the pallet industry that covers all aspects of managing the order and production process from initial order to delivery. Initially, AMS is targeting new and recycled pallet manufacturers as well as crate manufacturers with its ERP solution.
ERP Implementation – Getting Started
The primary ERP system is currently in the test phase (Beta stage for the computer junkies out there). A number of leading pallet companies are putting the system through its paces and helping to refine the program.
Steve Yelland, president of Rohrbaugh & Co., Inc., Hannover, Penn. is one of the primary testers. His pallet company jumped right in and has begun using the Palmate system for a number of key business functions.
Steve said, “Our old system was very fragmented. It was very difficult to track the flow through the plant. I just felt that there had to be a better way.”
Rohrbaugh considered developing a custom program. But once Steve heard about AMS’ program, he decided to give it a try. Steve said, “Even if there was some trial and error as we went along, it couldn’t get any worse.”
Rohrbaugh’s problems resulted from significant growth in a short period of time. Basically, the company doubled over the past 2-3 years, according to Steve. He said, “It wasn’t my dad’s pallet shop any more. As we grew, things were getting confusing.”
Rohrbaugh started using Palmate ERP in early 2006. It has continued to use Business Works, an off-the-shelf program, for its general ledger and accounting functions. Given the number of quality programs on the market for accounting and ledger management, AMS decided not to develop its own accounting module. Instead, AMS has developed interfaces for most common programs, including: MAS 90, Business Works, Peachtree Complete and are working on Quickbooks Manufacturing Edition.
Currently, Rohrbaugh is using the Paldraw drawing program in addition to the customer, order taker, scheduler 1, shipper and inventory modules.
Steve said, “Palmate ERP has made the entire system run smoother. Now, it is a live-time deal. The software enables us to give our customer an answer right away and allows anybody to check on loads at any given time.”
As new modules come on line, Rohrbaugh plans to use those including: scheduler 2, purchaser, and receiver modules. Steve said, “Keep in mind they are still developing the program. There have been some hiccups along the way, but we knew that going into it.”
Steve explained, “My job is to be the cheerleader and to go out and keep the troops positive. That’s one downside of our running the software live. I am not the only one checking. I do have other people using it.”
John Rock Inc. of Coatesville, Penn. is another major test location for the new Palmate ERP. John Rock took a different approach than Rohrbaugh.
John Rock is only using Palmate as side-by-side test for order entry, production scheduling, order flow, and pallet inventory. In fact, they started doing this at the beginning of November 2006. By the end of 2006, the company had begun scheduling the delivery drivers and nailing room with the Palmate system. Integration with John Rock’s accounting package, Peachtree, is in the final stages.
Ed Healy, operations manager for John Rock, has been the primary tester and project implementer.
Ed said, “I did not want to disrupt our basic operations while we were proving out the basics of this program and making sure it is functioning properly. We are taking baby steps. We have been getting the data in the system and working with AMS to alter the order entry and navigation to work well with our processes.”
In the past John Rock has used simple techniques to track much of its information including paper records and spreadsheets.
Explaining why John Rock is excited about the prospects of the ERP, Ed said, “The bottom line is our hope is to save time. The goal here is to have one point of entry to disseminate all the information. It starts with the order entry. The ERP ties everything together and will hopefully lead to better inventory flow.”
He added, “AMS’ system seems pretty unique to us. I have not seen anything tailored to the industry as deep as this thing is now or could be in the future. By saving time out on the floor, we are hoping to have better staff utilization, which will help us maintain a respectable inventory and keep everything running smoother.”
Ramp up time can vary depending on the company and how organized its data is. While the basic install can be done in a matter of minutes provided that the server and network meet the requirements, full implementation including the importing of user data and establishing best business practices can take months or even longer. Chad says, “It is very important that we develop a sound implementation strategy with each company. Implementation has to be tailored around the needs, requirements, and timeline of the users.
The drawing module is where the whole process starts. Pallet drawings are the basis for entering inventory data for components as well as finished goods. These must be entered first before the system can take order requests. Companies can either use Paldraw or Pallet Design System (PDS) that is marketed by the National Wooden Pallet & Container Association (NWPCA). AMS is in the final process of creating an interface that allows its ERP to work with PDS designs.
The second major step is to get all your customer and business data integrated with the ERP system. AMS handles this process and has already developed a number of interfaces with major accounting systems.
Implementation usually takes place in stages with companies using the inventory and order modules first. Chad said, “For most pallet companies, it is difficult to keep even a semi-accurate perpetual inventory.”
Chad typically starts with finished goods inventory. He works with the customer to get accurate data then moves to precut pallet stock and finally to cants or lumber. In much the same way, scheduling starts with shipping, then pallet production, and finally the saw line.
Beyond using the program, AMS looks at how it can help customers gather accurate data. Sometimes companies have to change processes or begin capturing data that previously had been ignored. Companies must ask the following question:
• What business processes do we have to put in place to get valuable data?
• Who will enter the data?
• How can we gather it in an efficient manner that is usable and accurate?
Chad said, “The ERP system could be phenomenal, but if you don’t have the business processes in place to capture the data and enter it in a timely manner, it doesn’t matter how good the system is because you won’t have anything of value at the end of the day. Data collection is necessary, but it doesn’t have to be cumbersome. Our goal is to find the simplest, most efficient process for collecting data in a given situation.”
AMS has provided one-on-one training as it perfects the program. The software provider hopes to offer detailed training manuals in the future. Currently, it does a lot of Web-based meetings and training. AMS has a 24 hour technical support line with an expert on call at all times.
Chad said, “Our software is so user friendly. It is very intuitive.” Both Ed and Steve agreed that the ERP is fairly easy to learn for anyone with basic computer skills.
ERP Economics
The initial sticker price may shock some potential customers. But when you consider the efficiencies that the program can bring and its ability to improve overall management information, the software can be well worth the initial investment.
“You’re not going to find anything that can be considered an ERP program for under $10,000. It just doesn’t exist,” said Chad.
ERP software usually runs $30,000 to several hundred thousand dollars. The price all depends on the complexity of the software. The full Palmate ERP starts in the $25,000-30,000 range.” The price can vary depending on any customization done to the software, total number of users, total modules used, etc.
AMS has developed Palmate ERP where users can get started with a basic, one user inventory tool for as little as $1,500. Although this single module is far from a complete ERP system, the price point is a very reasonable investment to begin pulling together the tools that will help run your business. This could then integrate with PDS or Paldraw.
Chad said, “By modularizing the program, we made it easy for someone to get their foot in the door.”
The ERP system helps with many of the functions that would typically be handled by an office manger. When you consider what it costs to hire a full-time office manager, the software begins to make a lot of sense.
According to AMS, here are some criteria to consider whether or not ERP is right for you:
• How much data entry is your company doing for orders and transactions? Sit down and look at how many times employees are keying in or writing data in different places. This hurts efficiencies, can lead to more order errors and can generally cause chaos.
• Does your company struggle with keeping track of inventory?
• Do you spend so much time struggling with mundane data details that key managers can’t focus on improving or growing the business?
Chad said, “The ideal ERP customer is a company that is growing and it has a couple of key people in its organization who are juggling a ton of information. They are running around in circles all day long.”
Relating to what Chad described, Steve said, “Our old system could be good for maybe one person. But when that one person was not available, it was very chaotic here when a key person was off. It was a disaster waiting to happen.”
Steve added, “In my mind, I wanted a system where everyone was looking at the same thing. Now if everybody is doing what they are supposed to do, it will show you where you are as a company.”
There has been more than $600,000 invested in the development of the Palmate™ ERP software to date, which will exceed $1,000,000 by the end of 2007. It would cost a lot of money to tailor a standard package or develop a custom system that fits many of the unique requirements of the pallet industry.
The Palmate ERP did not require any computer upgrade or significant hardware cost for either John Rock or Rohrbaugh. Neither pallet company reported any surprises as far as the cost of the program.
The basic database architecture behind the ERP utilizes a MS Sequel database. The system can be accessed remotely using the Internet. However, most installations are designed to be used on a local network.
Key Features
Palmate combines primary business functions into one database. The key is how the system handles inventory. Everything is connected so that an action in one area triggers the appropriate response in other departments. This automated process reduces a lot of time required for data entry or account management.
Beyond a basic ERP, the system is tailored to specific challenges and needs facing the pallet industry. Chad said, “The inventory items and the properties the system has have are very specific. For example, the pallet type could be strap–notched, chamfered, or four way. You don’t record that kind of information with a standard inventory package.”
One example of how the specialized program saves time is the brokerage module. Pallet brokers may source one order from three different people. When a company creates a sales order, it will marry a purchase order associated with the order. This can help the pallet broker better calculate gross profit and find the best price. The system allows the user to easily create a freight purchase order. The system even remembers previous experience and suggests possible vendors based on pricing and availability.
Multi-level inventory analysis allows the user to track inventory through the system on a value added basis accounting for waste and processing costs. It tracks multiple levels from raw logs and cants to pre-cut lumber to finished goods. The system calculates actual cost on first in, first out basis.
The Palmate ERP helps improve the productivity of equipment and human resources, provides better data to reduce waste, and calculates actual cost to report true gross profit on a per item/per order basis.
Implementation Road Blocks
Anytime a company makes major changes, there will always be slow adapters or possibly even those within an organization that oppose the new program. Old habits can be hard to brake even for those who are excited about the new way of doing things.
Steve explained that some people just want to have a piece of paper. He tells his staff that once a piece of paper is printed it has become obsolete. Real time data allows people to know up-to-the-moment what is going on with the business.
Neither Rohrbaugh nor John Rock reported problems with employees accepting the new technology. While there have been some bugs along the way, everyone seems to be taking the process in stride. A key for John Rock has been upper management support. Ed said, “The owner and upper management strongly supports this new ERP system. They see the need to integrate all of these different functions.”
Getting one person to drive the implementation of the program and management support seems to be primary factors for project success.
Still in Development
AMS still has nine months of development left on a few of the last major modules. The Palmate Plant Floor Inventory Management System is in development. This module organizes production reporting off the plant floor. It ties in with your receiving of materials and plant floor inventory transactions. Data can be captured in the following ways: Barcode scanners, wireless handheld computers, touchscreen terminals mounted on a forklift, and directly from PLC’s of equipment. In the future, the system will be able to directly capture data from nailing machines without requiring data entry.
A customized reporting tool is in the works. This gives management greater flexibility to examine unique data key to any one business. Also, AMS is working on Scheduler 2, which covers the scheduling and production for the saw line.
Currently Palmate offers a variety of solutions for recyclers and supports specific inventory types such as recycled pallets and cores in the ERP system. However, a more comprehensive module for recyclers is in the early development stages. This enhanced module for recyclers will integrate on a deeper level with plant floor data collection as well as maintaining piece rate payroll. This expected to be released early 2008.
Ed from John Rock said that the process was going slower than his company expected. There is a lot more to successful implementation than they anticipated. But they believe the process will be well worth the effort in the end.
A problem with fixing bugs is that sometimes efforts to fix one problem actually cause another bug in some other aspect of the software. The integration of the various parts means that everything has to be just right for the program to work as intended.
Ed said, “This has been a learning process for me as they go along. In the beginning I was kind of skeptical, but in talking with some other technical people outside of AMS, I have learned that this is how it is when you are developing a new software program.”
Steve from Rohrbaugh said, “The software is still in development. If you think that you are going to go out and buy the AMS software, and all the questions in your business are going to be answered today, then you’re going to be disappointed. AMS still has some work to do on it. Keep in mind that in my opinion, there is nothing out there that works any better. AMS’ software is tailored to the pallet business.”
