The March 2007 issue explored the idea of using enterprise resource planning (ERP) software solutions to improve sawmill and lumber operations. That article reviewed a number of leading suppliers as well as introduced the major concepts and reasons for investing in ERP technology.
This second installment goes into some of the nuances that you should consider based on supplier interviews. The number of options on the market today is amazing. Some suppliers seem like they are just jumping on the band wagon. Others have helped blaze the trail.
As the production sawmill industry gets more competitive, having smart solutions to drive your business can make all the difference in the world. A number of the unique approaches mentioned here could help you improve the visibility of your operation to identify bottlenecks, improve tally and inventory data, and pinpoint ways to maximize profit.
All of the software solutions researched for this article already offer a Windows/mouse-driven interface or have one in development. Older keycode-based systems are becoming obsolete as companies work to make systems as easy to use as possible.
Wale Elegbede, sales and marketing manager for Unique Data Solutions, said, “If people don’t like the way something is, they are not going to use it. Inventory management systems need to be intuitive.”
All of the systems reviewed appeared to offer fairly easy-to-use environments although some were simpler than others. It all really comes down to personal preference.
Mobile Technology Developments
The ability to access and upload data from remote locations has become increasingly important for some companies. There are a few ways to do that including remote desktop programs or Web access using a browser, handheld computer or Blackberry device.
Unique Data Solutions offers LumberCell as a software service that allows salespeople to connect to the corporate hub using a Blackberry or PDA while they are on the road. Salesmen can complete orders and check inventory to facilitate faster order processing.
A number of other companies offer limited Blackberry/PDA interfaces or are working on them. Unique Data Solutions provides LumberCell as a monthly subscription service.
Other suppliers do not see a need for Blackberry/PDA interfaces because they claim these technologies have yet to catch on with most sawmills, even large operations.
Bob Jump, sales manager for Logical Systems Inc., said, “Blackberry/PDA devices have not proven durable enough for the environments where our customers use it.” The handheld devices used in sawmills are more industrial strength than mobile devices designed for office environments.
Bob added that the new software his company is developing could be adapted to be accessed through the Internet although customers have not been asking for that functionality yet.
Some solutions are Web-based programs that can be accessed from anywhere using a browser. Forestry Group Software produces Web Tally, which is a Web-based inventory system. The advantage of these systems is that it can be easy to get back up and running quickly in case of a computer problem.
Web-based applications do have some drawbacks.
Terry Neal, director of sales and marketing for ISIS, said, “We have not seen a need to be purely Web enabled. All the advantages of Microsoft technology are lost in a Web-based system. It doesn’t matter whose system it is. Our take was that you can get the advantage of Web access with remote desktop with full ISIS functionality.”
Neal mentioned that Web applications tend to run slower than server-based systems. He also said that Web-based applications may not be as seamless in their integration as traditional server-based software. Plus, Neal explained, “This is lumber. And a lot of folks just don’t have access to the Internet yet.”
Having been one of the pioneers of lumber tally solutions, Pat Jinks, president of Forestry Systems Inc., has seen it all. Forestry Systems redeveloped its Yard Master system in 1999 to be Internet-based. The company even developed an interface for cell phones so that a salesman could log in remotely and do basic inventory queries.
The Web product never got off the ground according to Jinks. He said it was probably because the lumber industry is so conservative and slow to adapt to new technology. Forestry Systems specializes in tally solutions for hardwood lumber, which tend to be the most old school part of the lumber industry.
Jinks added that some customers were concerned about their data streaming over the Internet. Even if it was encrypted, many potential users saw it as a new concept that was too risky.
Visual Tally & Camera Systems
Beyond operator tally processes, sawmills are starting to use visual tally or camera devices. Jinks said, “Forestry Systems is the only company in the world that has an environmentally sealed, handheld unit that has a five mega pixel color camera built in.”
Vision Tally allows lumber companies to show customers the quality of a particular bundle utilizing a five mega pixel picture. It also serves as a bar code scanner.
Jinks said, “Vision Tally really opens up a lot of doors. Hardwood lumber is sold based on quality not quantity. Each manufacturer produces lumber with best grain and packaging. There are a lot of problems with marketing hardwood to try to make it not look like a commodity.”
A different approach is used by Picture Tally that actually counts the amount of lumber in a bundle using a digital camera and scanning software. Picture Tally is designed to reduce the amount of labor and time it takes to count lumber bundles.
Picture Tally’s unique approach has attracted a lot of attention. Drew Helmus of PW Hardwood said, “We were using three people to tally and now I’ve cut that down to one and kept the same footage per day.”
Picture Tally helps improve the accuracy of counts because most manual tally requires a lot of guess work. Users can save a photograph of each bundle and tally for accurate records and communication about count discrepancies.
A number of ERP suppliers have developed interfaces with Picture Tally. This includes: Progressive Solutions and Web Tally. A number of other suppliers, including ISIS, said they could easily do an integration with Picture Tally if requested by a customer.
Scott Marcus of Forestry Group Software used to work with the company that developed Picture Tally. Now he has developed Web Tally, an inventory system designed to work seamlessly with Picture Tally.
Marcus said, “Web Tally is the only inventory software that will allow you to see the picture of the end of the bundle of wood or do a yield analysis or metric tally. We can do more with data than other companies that have integrations.”
Not everyone is high on visual tally methods. Jinks said that his company developed a similar picture tally device years ago. When you consider the cost and the fact that it requires the bundle to be moved to the device, Jinks claimed it was the least productive way to count bundles.
RFID – Is it the future?
Radio frequency identification (RFID) uses tags that emit radio signals. These signals can be detected without having to manually scan the tag. This automates scanning, which can help improve real time analysis of finished products inventory. A number of the ERP solutions are compatible with RFID data.
The technology is used more for raw logs and is just beginning to be considered for lumber operations.
Jinks said, “RFID is the future in inventory control and ERP. Where RFID truly pays for itself is analyzing the productivity and bottlenecks in an operation.”
RFID provides greater visibility throughout a supply chain or organization. The major problem at this point is the high cost of tags and equipment compared to barcodes. Although tag costs are coming down, the technology is not quite at a level to be cost effective for most lumber applications.
There are two types of tags – active and passive. Active tags have a battery, which means the tag can emit a signal without having to be energized by a close proximity reader. Passive tags do not have batteries and therefore have much smaller read ranges.
Jinks claimed that one current application for RFID is tracking sea containers of lumber shipped to foreign ports. Active tags can be equipped with GPS functionality that allows a load to be tracked no matter where it is on the globe.
Larry De Smet of Exact Modus said, “RFID is more of an outside of the states practice. Will it get there? Yes it will. I don’t see it being utilized on a regular basis though.”
Monte Jensen of DMSI said, “Our philosophy is to be ready when the industry evolves that way. It is still a bit early yet in that game. I think it will definitely come.”
Service – Each Supplier Has Pros and Cons
Progressive Solutions is one of the larger ERP solution providers. It services customers ranging from five users to Weyerhaeuser. Russ Maximuik, inside sales manager for Progressive Solutions, said that his company does a business process analysis that looks at requirements by customer, data capture strategies and report requirements.
Some of the other suppliers conduct these analyses too. Others do not or they work with a third party to do it. The more analysis is done, the longer it takes to implement the software. Of course, the upside is you get a solution more tailored to what you need and how you conduct business.
Another major option for companies to consider is whether the software is bought outright or as a monthly service. Scoopsoft, a major ERP solution used in Canada, offers both options. With the Application Service Provider (ASP) model customers rent the software for a monthly fee, which significantly reduces the amount of money a customer must pay at any one time.
Alan Dubois of Scoopsoft said, “It’s starting to turn. If you look at previous years, customers preferred the server route because the wood products industry is a more conservative industry. People like to have their data on premise. They are starting slowly to look at the ASP route for being a cost effective, efficient, secure solution.”
DMSI, which has a strong reputation in the wholesale lumber market, is another leader in the ASP model. Monte Jensen, Agility sales manager for DMSI, said, “The hosted option has been very widely accepted by our customer base. They enjoy advantages, such as reduced cost and reduced time. They don’t have to worry about fighting viruses. All the backup and updates are done for them.”
DMSI has also developed a number of unique e-commerce solutions for customers. Agility has EDI capabilities. DMSI has developed Internet-based catalogs and Web portals for clients. It even has a sales version that runs from mobile devices.
Most ERP suppliers offer custom integrations. The big question is whether or not the manufacturer of the device or software is willing to allow a third party to easily integrate with its product. Terry Neal of ISIS said, “As long as the technology is fairly current, writing interfaces is fairly easy to do.”
What Does “Real Time” Really Mean?
Some of the solutions are not really ERP or tally devices in the traditional sense. Exact Modus is one those solutions which takes the concept of real time data to the extreme.
Larry De Smet oversees U.S. hardwood sales for Exact Modus. He said, “Our system allows you to be very proactive at understanding what is going on in the mill and helps identify bottlenecks early in the process.”
Gladys Chamberland, marketing coordinator, said, “We are in between sawmill optimizers on the mill and ERP solutions and tally systems. We have the same claims that they do. We just go about it in different ways.”
Exact Modus is a production module that collects information off the production line and imports into other companies ERP.
With the Smart Lumber Grading Solution, lumber is measured as boards go down the chain. This allows for exact dimensions taken immediately versus tallying at the end of the line. This approach uses scanners, limit switches, and sensors to measure. It also marks boards on the line.
Automating these tasks allows the inspector to focus on grading, improves real time accuracy, eliminates double handling a bundle and can improve overall quality by allowing the inspector to be more focused on getting the right grade or improving the grade of the product.
Exact Modus is currently marketing its software solution to hardwood mills in the United States. It also has softwood solutions actively being used in Canada.
De Smet said, “If I am an owner and can see my production on real time, the system can notify me of board thickness or other problems. Management can make corrective action immediately rather than wait until after it is cut. For example, if the setworks are off on the carriage and no one catches it in time, then you have just cut a lot of thin boards that you can’t sell.”
Exact Modus can integrate with stackers, bin sorters, bay sorters or other production equipment. One major benefit is the reduction of variance that occurs when humans measure or input data.
De Smet said, “Any time you have a human being measuring or imputing the data, it opens up the opportunity for variance.”
Mapping Software Takes ERP Data to the Next Level
ERP systems do a good job of providing basic, management-level data. But when it comes to in-depth analysis and forecasting, ERP solutions are extremely limited. ERP mainly functions as a vehicle for gathering and sorting data so that a mapping or forecasting module can be applied to it.
RiverLogic Inc of Dallas, Texas has worked with paper and forest products companies to develop intelligent business analysis using its mapping software. Used in a wide variety of industries by major companies, some of the original research behind the software was done in the forest products industry.
RiverLogic maps a company’s entire operation including: sources of raw material, production, distribution, sales, marketing and procurement.
Carlos Centurion, vice president of marketing for RiverLogic, said, “This is the only product that can map an operation holistically and will tell you the impact of any scenario on an operation site.”
J.J. Buley, senior director of research services for RiverLogic, used to work in the forest products industry. He said, “A lot of solutions that are out there will ignore a number of key variables. Maximizing profitability is drastically different than maximizing production volumes.”
Buley pointed to optimizers used on saw lines. These may be able to maximize the volume of wood or minimize the loss to saw curve. But this is not the same thing as maximizing the line for profit using proven forecast modules.
RiverLogic can help companies decide how to utilize resources, especially cross a large network of facilities. One example Buley mentioned was a sawmill that had five facilities. It had one mill that it thought was hemorrhaging red ink. The company wanted to know if it would be better to shut down the mill or sell it, which could create a competitor in the market.
The company further asked if it shut down the facility should it moth ball the equipment with the hopes of starting back up again or sell off equipment thereby moving the production capacity in the region.
RiverLogic built a model and found that the real answer was that the mill the company thought should be shut down was really its star performer. The mill they thought was the best mill was really causing a lot of problems. This resulted from the transfer prices they were associating with each log. By reallocating the log based on the true economic advantage of each plant, they were able to boost profitability and keep all the mills running.
Buley explained, “We prevented them from making a bad decision.”
How detailed the analysis can be depends on the sophistication of the customer. Some users buy the software. At other times people want to just buy an answer.
Conventional ERP systems lack the “what if” capability that allow RiverLogic to forecast various scenarios. RiverLogic works by drawing a flow diagram, connecting objects and then asking questions about relationships as you create a map. You would then start importing data into the model. Finally, you would apply scenarios to the map. Sometimes companies have to go in and do recovery studies to have enough data to answer some questions.
RiverLogic helps large companies improve budgeting and forecasting for various divisions. The software sells on a subscription basis. List price is $2,500 per month for analyzer versions per user and $5,000 per month for full developer licenses.
A white paper on the benefits of mapping software for the forest products industry can be downloaded from http://www.riverlogic.com/docs/Forest_Products_White_Paper.pdf.
