One Product for Large and Small Manufacturers: Challenges and User Recommendations
Written By: Predrag Jakovljevic
Published On: April 9 2005
Despite its indisputably astute offering for a few selected high-volume industries, and its growth and expansion over the past few years of economic uncertainty, IQMS is not without challenges. For one, while this privately-held Paso Robles, California (US) company is focused to keep pace with trends in technology and customer requirements in its target niche, too narrow a focus comes with its liabilities.
Part Six of the IQMS Prospers by Helping Enterprises Work Smarter series.
IQMS' irrefutably small size may create a perception of negative viability when many believe "bigger is the better". On one hand, the time for comfortable stealth selling through word-of-mouth is running out, and IQMS has to find greener pastures in order to grow and be able to enhance its offering. The North American and European plastic processors markets are slowly, but surely becoming saturated. While there are few suitable products beside EnterpriseIQ, there are competitors including DTR International's TMM (now part of Made2Manage Systems), SYSPRO, and Matrikon.
The realities of plastic manufactures can present challenges for IQMS. The products of plastic manufacturers tend to be high-volume, labor intensive and manufacturers do not have huge expenditure for research and development (R&D). Moreover, they are in a great part under pressure to supply giant, heavy-handed retailers like Wal-Mart or Target with ever cheaper goods, and do so by exploiting opening manufacturing facilities in remote geographic regions with much cheaper labor. Given all of this, IQMS should make sure that its product is fit for serving these markets too. Some of its domestic customers have already shifted markets and introduced new products. They have also honed their use of plastics molding technology and automation by adopting a so-called triad plan for positioning, where productive capacity is divided in diverse global regions based on several factors, but particularly according to high, moderate, and low labor cost regions.
Yet, penetrating blossoming markets like China will be difficult because of limited financial resources, nascent distributor relationships, and low visibility and brand recognition. IQMS might likely lose some deals because of its current inability to support prospects in many remote markets; its recent forays in Asia notwithstanding. Yet, it remains a good practice for manufacturers that are selecting solutions to factor in costs, the financial viability of the vendor, local support, and many other criteria even if it may not favor IQMS at this stage, despite its superior functional offering.
This is Part Six of a six-part note.
Part One presented the company background.
Part Two began a discussion of the market impact.
Part Three presented more product differentiation.
Part Four covered the single database system and quality management.
Part Five discussed integrated EDI, miscellaneous utilities, and repetitive versus project based requirements.
Can One Product Work for Large and Small Manufacturers?
IQMS has made notable strides into tier one and tier two automotive suppliers and appliance manufacturing sectors by leveraging its functional capabilities to garner a number of germane functional nuggets for these sectors, in part through the AIAG membership. For example, integrated electronic data interchange (EDI) (including XML), serialized label generation, customer, and supplier release control management and cumulative order tracking, just-in-time (JIT) production traits, and specific shipping requirements, including container management, pool/master bills of lading, and integrated communications such as XML. Its offering of QS-9000 tools with integrated preventive maintenance, document management and quality tracking and reporting, and others will also be welcomed by the automotive suppliers.
In addition to these, appliance manufacturers will appreciate consignment inventory management including remote location visibility via Web-based tools, including stocking level management and invoicing on consumption, and usage reporting. Still, in these sectors, IQMS does not have the status of "incumbent" as it does in the plastics, and will face fierce competition from a slew of competitors of all sizes with much higher visibility, global presence, and resources. Its mid-market competitors include QAD, Infor Global Solutions, MAPICS, Intuitive Manufacturing Systems, Microsoft Business Solutions, Epicor, and SSA Global.
IQMS' total reliance on the Oracle database and its exclusion of all other databases presents prospects with another dilemma. Typically, discerning customers expect and like comparative choices. Likewise some companies of IQMS' target market will have already made a significant investment in Microsoft technology and will be reluctant to bring in a new database design. Although IQMS mitigates this problem by providing a single and total source of implementation and as part of the standard, and ongoing maintenance agreement, will be responsible for support services, user perceptions and often religious-like attraction to certain technologies cannot be ignored.
Thus IQMS may have an "identity crisis." By targeting smaller enterprises with technologies and a well-rounded product, will, in an odd way, label IQMS with being "too much of a good thing" because its product appears more amenable to the upper-end of the market. Namely, the tight integrated nature of the EnterpriseIQ and its high interdependence between modules, which cannot be that easily decoupled or turned on or off might be too overwhelming for some prospects that might not need many of the core EnterpriseIQ modules.
Also, given that some transactions within the system are not easily reversible after a user has made an error (a second transaction at a later date might be necessary to clean things up), the training and proficiency of users becomes critical. This might be a deterring factor despite its relative ease of use and the favorable ratio of software license fees versus implementation costs of 2:1. This may also mean that the IQMS' user-based license fee is not aggressively priced, as the vendor does not want to undersell its powerful capabilities. IQMS does, however, take full advantage of the built-in Oracle database rollback features, which ensures that a power failure or something catastrophic does not leave rogue entries in the database tables, if the transaction could not be completed.
For reasons of simplicity, some prospects may prefer a less functional and less tightly integrated product. They may reach for a more flexible and customizable competitive solution on the more familiar Microsoft technology—particularly if the solution has stronger multinational capabilities. Also, many global prospects still have notable mixed-mode manufacturing environments in addition to their geographically dispersed plants that handle a significant number of complex products and require certain, non-repetitive job shop/ETO manufacturing and inventory management functionalities. Here, IQMS may not be nearly as competitive as in clear-cut repetitive environments.
Furthermore, often, buying a completely integrated solution is not an option when companies have either an accounting or project-management system at a plant, which they will not simply rip-and-replace. Thus, prospects might prod IQMS' flexibility to integrate into legacy and other third-party applications, and how it keeps up with new versions or upgrades to both solutions. This may not be the vendor's forte, given it best performs when dealing within the EnterpriseIQ's Oracle-based domain. IQMS thus has to "beef up" and become more flexible or it has to better advertise its product's interconnectivity, employee-facing portal solutions, supply chain execution (SCE), and e-collaboration and product lifecycle management (PLM) offering. While a comprehensive PLM strategy (see The Many Faces of PLM) might be a tall order for IQMS to deliver on its own, its sporadic projects integrating EnterpriseIQ with the product data management (PDM) providers should be parlayed into more strategic alliances.
IQMS might be showing us that functionality is not exactly unimportant, but that it needs to be combined with a fairly simple-to-use application that actually gets used rather than languishes on the shelf. EnterpriseIQ is best suited for plastics processors, but a number of its extended-ERP features, such as its wireless WMS, EDI-XML, real-time production monitoring, quality systems, plant maintenance, etc. make it amenable to other repetitive manufacturing environments. Potential IQMS customers within the geographies the vendor covers, whether single plant or with multiple divisions with less than $100 million (USD) in revenues per location include the following discrete manufacturing industries: automotive, consumer products, appliances, electronics, medical devices, packaging, etc. Such companies should certainly consider IQMS' offered product line, bearing in mind what the competitors have to offer. IQMS should certainly be evaluated to raise the bar for other vendors' offerings in the selection process in terms of demonstrating how solutions manage the many aspects of high-volume, repetitive manufacturing, such as real-time production monitoring, graphical scheduling, the ability to account for family tooling capabilities, track scrap, etc.
On a more general note, companies that are repetitive manufacturers should think carefully when selecting an ERP system. Given the maturity of the ERP market, its ongoing consolidation, and the fact that competitive advantage is hard enough for manufacturers to find, they should not compromise on their requirements. Small and medium enterprises should especially ask hard questions about the scope of an ERP system, and how it supports high-volume idiosyncrasies. The less time they spend interfacing their ERP system with other relevant software systems such as quality systems, preventive maintenance, document, and workflow management, the happier they should be. After all, a new system should always be about improving the business and not a mere technology initiative.
The vendor that listens to your needs instead of telling you what "cool things" its software can or cannot do, one that speaks your language and uses your terminology and vernacular (e.g., cavity, family tool, a cycle time in seconds, a product weight in grams, etc. for plastic processors) is a good candidate to be a vendor that understands your business. Still, as a sort of a litmus test, prod each vendor to tell you what percentage of its sales would belong to your industry. Vertical focus indicates that software contains industry-specific features and that ERP vendors have certain industry expertise.
Also, in implementing an industry-specific application, it is important to ensure that the application provider's implementation team includes members with in-depth knowledge and experience in that industry. Vendors geared toward certain industries should have solid integration skills or strong relationships with systems integrators that have industry-related expertise. This should significantly streamline implementation time by eliminating a lengthy vendor or integrator learning curve.