Part 1
The first of a two-part series on software solutions for lumber companies. Look for the second half in a future issue.
Managing a sawmill or lumber operation used to be something done just by human intuition. Now in the computer age it involves software that aids managers in connecting various parts of the operation to improve production and profitability.
There are a number of different approaches, and the most common are enterprise resource planning (ERP) software solutions.
As the level of sophistication in the industry has increased, it has become more complex to manage the information produced on a daily basis. ERP solutions help managers juggle 50 different things at once. These programs also make it easier for different parts of the company to interact and share information.
The term ERP means different things to different people. It has become a catchall term over the past few years. Generally, ERP solutions cover a wide variety of office functions including: purchasing, receiving, shipping, order processing, production scheduling, inventory management, cost monitoring and general management. Usually, these programs have a built-in accounting system or interface to integrate with popular accounting software.
Over the last five years, the number of companies offering software solutions has exploded. This means more competition and more options. It also means that customers will need to be more discerning to find the right fit for their operation.
Implementing or changing ERP solutions involves more than just software. Programs rely on data, which must be generated by your workers or machines. Companies use a variety of methods from scanners, programmable logic controls (PLCs) that integrate with machinery, handheld devices, touch screen panels and more to generate data. This data combined with the right software solution allow a company to keep track of information in real time. Managers don’t have to wait for the end of the month or even the end of the day to know how things are going.
Different software suppliers have various definitions for real time. Thus, it is important to understand what the various vendors mean by real time information. You cannot assume this means the same thing across the board. Additionally, the software will only be as good as your process to capture data. Some sawmills and lumber operations must change how they capture information in order to track the level of detail that managers want to achieve.
Another major difference is how users access the ERP system. Some solutions are provided as software that resides on a customer’s network or individual machines. A few vendors offer solutions that are accessed remotely through the Web. The actual data for these systems typically sits on a server run by the software supplier. Many companies prefer the first option because it gives them greater control over the data. Some companies are leery about having their sensitive information on servers belonging to a software supplier or accessible via the Internet. On the other hand, Web access can make it easier to access information if key personnel travel or work from more than one plant. Web-based systems can reduce downtime in case of a problem. This might be a desired feature for companies that don’t have redundant servers. Regardless of the method of access, all ERP solutions offer security to keep out unwanted access or limit what certain users can see or use.
Depending on your preference, there is a number of different sized and focused companies in the market. From a large telecommunication company to small, independent suppliers, this article reviews a wide variety of solutions. Some suppliers specialize in hardwood or softwood lumber. It is important to find out if the supplier you prefer has a specialty. Hardwood grading and tracking tends to be much more difficult than the softwood business, which generally focuses more on production.
Some vendors offer complete solutions that extend to payroll, human resource functions, maintenance, log procurement/management, etc. Others are more focused on inventory management and production.
Given the number of players in the market, it is important that a prospective buyer feels confident that the supplier has the right solution and will be around in the future. There are so many suppliers in the market now that it would not be surprising to see some either go out of business or be acquired in the near future. You want both a good software solution and a company that will be around to backup its product.
Longevity is connected with customer service. Even for the best systems, there comes a day when you need support. The level of customer care should be analyzed from your first phone call. Their responsiveness to your questions and ability to communicate must factor into your vendor selection.
Like most business concerns, the decision may come down to price. You should expect to pay $20,000-$30,000 for a bare bones system. Most robust systems will run $50,000-$60,000 plus hardware and implementation costs. This number can easily climb to $70,000-$100,000 for more features or customization. When calculating your total cost, consider computer hardware, software, additional modules, customization, tech support/upgrade and data capturing hardware, such as hand held tally devices, etc.
Having personally reviewed most of the systems covered in this article, below are some tips to consider when making your decision. The end of the article is a review of major systems on the market. This information is intended to be a springboard to help you evaluate your current system or help you look for your first one.
