The Sweet Spot of One Merging ERP Vendor

April 2007 saw the merger of CMS Software and XKO Software, two of the smaller players on the enterprise resource planning (ERP) field. The two companies will now be known as Solarsoft Business Systems and Solarsoft Business Systems Limited in their respective Canadian and UK markets. Although some might question the significance of this small-scale merger, the market impact is not insignificant, at least for the two parties concerned. CMS in particular had seen notable growth and development, entering successfully into new markets in countries such as Turkey and China.

For an event summary of this merger, see A Quiet Software Vendor Merger That's Worth a Closer Look.

Solarsoft's ERP products serve more than 450 customers at over 2,500 sites worldwide. From the enterprise system, existing and prospective Solarsoft customers are looking for a nearly perfect, vertically oriented fit and functionality, within a tightly integrated environment, and backed up with service and support, all provided by the same entity. Solarsoft provides all implementation, education, maintenance, and support. This is owing to the fact that these small- and medium-sized manufacturers within certain repetitive discrete manufacturing environments (for example, automotive suppliers, consumer goods producers, metal stamping shops, plastic molders, etc.) have increasingly powerful customers demanding on-time delivery, perfect order accuracy (see The Perfect Order—Inside-Out or Outside-In?), and comprehensive traceability. All these requirements must be met by these suppliers, with less expensive internal IT and staff.

Through their inexpensive (less resource-intensive) and yet functional ERP solutions, these manufacturers must achieve immediate and ongoing collaboration with their trading partners via electronic data interchange (EDI) to ensure better order accuracy and on-time delivery (EDI is the electronic—or paperless—exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices [ASNs], invoices, etc. from one computer system to another using standardized document formats).

This is particularly true for the automotive supply industry: missing a shipment or otherwise causing a “high-and-mighty” (imperious) original equipment manufacturer (OEM) to delay—or even shut down—its production line can result in the supplier paying severe penalties and being blacklisted (which means eventually going out of business). The OEMs often require receipt of an ASN within a half hour of the time their driver (or a hired third party) signs the bill of lading (B/L) at the supplier's dock, in order to eliminate the risk of tainting the supplier's ratings (scorecard) for any new business with that customer in the future. In the automotive industry, suppliers live and die by EDI, strict OEM-imposed bar code labeling, and advanced serialized container management requirements.

Embedded EDI Goes a Long Way

Despite some promise of standardization, EDI has to be customized and flexible for each trading partner, which is not an easy feat. To that end, both CMS ERP products (now known as Solarsoft CMSi5 and Solarsoft CMSm5) support EDI transaction sets for thousands of companies, including all major automotive OEMs and retail chains, distributors, and manufacturers. The pivotal EDI release accounting module provides EDI order entry and releasing, invoicing, shipping management, sales history and analysis, vendor releasing, and other related functions, all in one tightly integrated ERP system package.

On the customer side, the EDI order releasing and shipping management functions integrate the processing of incoming and outgoing transactions, bar coding and serialization, shipper control, and radio frequency (RF) scanning. On the supplier side, the solution integrates the generation and communication of vendor shipping schedules and material releases, as well as the receipt of ASNs. The vendor releasing function automatically creates material releases and shipping schedules from the demand generated within the material resource planning (MRP) module, and sends them to suppliers via EDI, e-mail, or fax, or posts them to a Web portal (in extensible markup language [XML] format) with summarized net and cumulative shipping positions, as the release progresses. The system can distribute demand quantities based on the vendors' capacities, and can also define release intervals as daily, weekly, biweekly, or some combination of these.

CMS ERP systems can collect EDI information using a number of EDI transaction sets (i.e., X.12, EDIFACT, and XML Documents), including material releases, shipping schedules, inline vehicle sequencing (IVSL) documents, and purchase orders. Bank remittance advices, inventory advices, invoices, incoming ASNs, functional acknowledgement, and update or change releases are also handled through the CMS solutions.

Many traditional CMS ERP modules, such as general ledger (G/L), accounts receivable (A/R), and accounts payable (A/P), have been retrofitted or designed from the ground up to accommodate these EDI requirements. The trading partners master file is an extension of the regular customer and vendor master files in the ERP database for EDI-related activities. Within this master file, transaction set details are defined to trading partner specifications, while customer- and vendor-specific part number definitions are managed and mapped, and all inbound and outbound transactions are supported and related to the specific trading requirements. In this regard, CMS EDI capabilities are quite similar to the equally impressive ones of its main competitor, IQMS (see When EDI Goes Native, Everything Falls in Sync with IQMS).

The EDI release accounting function uses EDI to automatically receive customer documents, such as purchase orders and just-in-time (JIT) schedules, and processes them to the exact specifications of each trading partner. It tracks the manufacturer's cumulative (CUM) or year-to-date (YTD) orders versus shipments, and feeds the "net new" (or net requirements) demands into its MRP module. In MRP, the net requirements for a part or an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled receipts, and safety stock. Net requirements, lot-sized and offset for lead time, become planned orders.

The key solution works with the rest of CMS's ERP modules to compare these net new requirements with the availability of finished goods inventory to automatically determine purchasing, production, and shipping requirements and schedules. It then updates the CMS ERP inventory, and A/R and G/L modules, and maintains its own sales analysis module. Material releases and shipping schedules can then be downloaded from an electronic mailbox, so that users can process the necessary EDI documents. CMS supports direct application interfaces to the Inovis' TrustedLink EDI transformation software for Microsoft Windows or IBM iSeries.

Bundled with the above EDI capabilities is a feature that addresses these manufacturers' need to track resources and materials in real time in order to be able to curb costs from receipt of raw materials to finished-goods shipping, and to optimize their human resources, machines, and processes. These features must also have the ability to measure and track quality, incorporate engineering change notes (ECNs), and trace raw materials from source to final destination. Such manufacturers want serialized bar coded labels on their shipments, as well as the ability to scan those shipments with a radio frequency identification (RFID) reader and to integrate the shipment information into an EDI transmission (to include JIT and kanban numbers by customer, location, and part). Somewhat resembling food and drug producers in terms of their needs, these clients want total traceability, so that if there is a problem at any time in the future, they can identify the source of the problem, and know what other products could have been affected by the problem. Container serialization and labeling enable simplified inventory reporting and control in terms of traceability too.

Pervasive Traceability and Label Serialization

To that end, the bar code labeling/serialization module can maintain and compile various label formats by selecting label variables in the label design software. Labels can be printed automatically, as often as required and in the format specified by the user. The module supports Crystal Reports, Bartender Label Printer, TL Ashford Barcode400, and LabelView software, and has integrated label creation, preview, and printing capabilities. As for serialized container labels, these can be part-specific, container-based, mixed-load, or master-load, allowing the user the ability to create, maintain, and print customer-specific serialized labels. Furthermore, automated, event-driven label printing can facilitate real-time production reporting, permitting the user to place any serialized label on hold (of course, one can still create serial numbers with no labels at all).

Naturally, bar code labels can be generated from EDI requirements and scanned to create or verify a shipment and ASNs, as well as any additional shipping and invoicing documents that are automatically generated. Further, there is the option to send and receive serial (or master serial) numbers on ASNs. The use of serialized bar code labels in conjunction with individual material containers (whether for raw materials or ingredients, work in progress [WIP], or finished goods) throughout the enterprise permits the ability to achieve the required tracking results without added staff or custom software development. Tracking is helped by real-time posting of all material moves via serialized label movements, whereby one can link master and mix-load labels to serialized labels. This also helps with receiving customer returns; the number of scans made against a B/L can be counted by a scan counter, and users can then choose to scan receipts either by the vendor part number or an internal number.

In summary, the CMS labeling/serialization system is designed primarily for companies that have to provide tighter inventory accuracy, but that are also concerned about the demands placed on their shop-floor staff. Stricter tracking requirements can place a significant burden on these workers, as well as take time and attention away from production tasks. Properly implemented, container serialization can even support the requirements for complete “backflushing” (a method of inventory bookkeeping that automatically reduces an inventory of components after completion of an activity) of lots, steel coils, plastic resins, and subassemblies, making the system also suitable for some esoteric industry segments (see The Tricky Enterprise Applications Needs of Plastics Producers and Mill Industries: A Generic ERP Challenge).

Pervasive serialization logically integrates the supply chain, physical inventory management, quality recording, production reporting, release management, and customer service operations, since managers can, on a single screen, visually assimilate all pertinent information relating to the production or usage of a particular lot of material. As a result of all these features and functions, CMS recently earned the Intermec Honors Partner designation.

Other CMS ERP capabilities worth pointing out are its robust preventive maintenance features and its warehousing and distribution features. These features include JIT shipping, maintenance (updating) of shipping rates, carriers, duties and brokers, and international B/L harmonization, given that these are seldom native capabilities even within the much larger ERP offerings.

Such is the case with the CMS Time and Attendance (T&A) module, which allows users to capture employee attendance data by including employee classes and groups to establish custom shift schedules and assignments, and to set up absence reason codes. It also enables advanced scheduling to meet forecasted labor requirements (since vacations, holidays, and leaves can be scheduled in advance), and supports departmental transfers as well as hours accumulated to job number and job class.

In addition, the module enables supervisor-employee links listing, and can be interfaced with multiple software programs and services. The T&A module houses a centralized employee master file that feeds and draws related information to and from inventory management, production control, preventive maintenance, order entry, purchasing, and other CMS ERP modules.

Last but not least, a relatively recent addition to the functional scope was the White-Board Scheduler tool for shop floors, which emulates the traditional shops' practice of setting up a magnetic whiteboard with colored magnets. CMS thus harnessed the concepts of the spreadsheet and whiteboard within CMSi5, whereby the Java-based program allows shop floor supervisors to evaluate alternative production scenarios for their impact on material and capacity availability, and in an easy-to-recognize, color-coded format.

This concludes part two of this three-part series, A Quiet Software Vendor Merger That's Worth a Closer Look. Part three investigates the challenges of merging not only the management aspects of two small software companies, but also their product offerings.

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