Intuitive Manufacturing Systems Shows Maturity in Adolescent Age Part Two: Market Impact

Market Impact

On April 1, Intuitive Manufacturing Systems (www.intuitivemfg.com), a privately held company offering enterprise resource planning (ERP) solutions for small and mid-size manufacturers, announced its ten-year anniversary. It was created in 1994, when the founders of the other ERP vendor PRO:MAN sold all interest in their company and started a new one: Intuitive. Since then, Intuitive has been offering enterprise software for small and midsize discrete manufacturers around the world with the flagship product, Intuitive ERP, which was designed from the ground up with 100 percent pure Microsoft technology and with well-established manufacturing practices in mind. The relative young age of the company has provided an organization and a development environment free from the burdens of supporting unwieldy sets of legacy systems and technologies; however, the company is founded on a solid foundation of many of its staff members' thirty-years-or-so of experience in manufacturing systems.

Intuitive Manufacturing Systems can be a crown example of a small vendor with brave and fresh ideas, which are by no means the prerogative of the biggest and the richest. Thus, Intuitive belongs to a group of a handful of vendors, which have chosen to rewrite their applications on a new, possibly future-proof, application framework. The intent of these visionary vendors was to address the ever increasing market awareness of the following facts:

1) that almost every business changes, and that software must change with the business;

2) even small businesses are really unique—one size can never fit all;

3) the high cost of development, support, and enhancements in term of money, time, and quality limit the ability of installed legacy software to meet many demands of business; and

4) that custom software is a requirement for many enterprises, even for the smaller ones. At the same time, these vendors have been maintaining or improving their functionality, although some observers may contend that their "bold" moves have been virtue made out of necessity.

The persevering tough economic climate may still mean opportunity for the nimblest companies. It appears that a large number of manufacturing enterprises within the lower-end of the market have yet to deploy an enterprise package, particularly in emerging markets. Some of them have cited the complexity of ERP and associated enterprise applications as intimidating and a deterrence to implementation. Still, like their bigger counterparts, smaller enterprises also have to efficiently run and expand their operations while maintaining strict control over costs and expenses; cash flow; and inventory turns and levels.

To that end, Intuitive is one of the vendors that has long attempted to mitigate the actual and perceived barriers to ERP acceptance by smaller enterprises. However, in a time in which many peer vendors had to backpedal product development and expansion because of market conditions (such as the post Y2K slump combined with the ongoing recession), Intuitive continues to pragmatically expand its product depth and breadth and geographic coverage, and renders itself as a more apparent ERP solution for the small and mid-sized discrete manufacturers.

This is Part Two of a four-part note.

Part One presented the company.

Part Three will continue to discuss the market impact.

Part Four will cover challenges and make user recommendations.

On Being an ERP Adolescent

Still being an ERP adolescent (given that there are many competitors that are a few decades' old) has been both the company's curse and blessing. The curse is that remaining a little, obscure, relatively unknown vendor (with an estimated less than $15 million [USD] in revenues) means still developing a client base and the global presence. On the other hand, coming later to the market has given the company the chance to make better choices and avoid the proverbial traps of many of its peers. Namely, the rapid pace of global business nowadays places a unique set of challenges on all enterprises looking to improve and automate their operations, and at the same time, remain poised to adapt quickly to change. With increased competition, globalization, and mergers and acquisition activity, enterprise software buyers increasingly realize that product architecture plays a key role in how quickly vendors can implement; maintain; expand or customize; and integrate their products. The product architecture is going to do much more than simply provide technical functionality, user interface (UI) or presentation, and platform support. It is going to determine whether a product is going to endure, whether it can be scaled to a large number of users, and whether it will be able to incorporate emerging technologies, all in order to accommodate increasingly evolving user requirements.

However, it takes excruciating efforts, industry domain knowledge, and resources (often estimated in hundreds of "man-years") to devise and build an enterprise system from scratch. Therefore, when that compelling new technology does appear, it is quite common in the industry for an enterprise application provider to surround its old ERP and accounting core software in a "wrapper" of newer technology, whose goal is to effectively obfuscate the old technology, giving it the latest graphical "look," or providing an easier means to access the core business logic and data from other, more-modern systems, devices, or from the Internet.

For a comprehensive discussion of the effort it takes to devise and build an enterprise system from scratch see Rewrite Or Wrap-Around Old Software?).

The precursor of Intuitive's ability to rewrite its applications into .NET was its choice a decade ago to use only contemporary Microsoft technologies and platforms. Written in Microsoft Visual Basic for Applications (VBA), straight Microsoft Visual Basic, and Microsoft Transact SQL (T-SQL) languages, using Microsoft Access as the UI for forms and reports, and exclusively Microsoft SQL Server as the database, Intuitive ERP has never been "corrupted" by other, now detractive legacy technologies (such as, Microsoft DOS or some proprietary database like FoxPro, Pervasive, or Progress). Once other proprietary technologies are introduced into the research and development (R&D) equation, any vendor has to deal with translation, interface, and performance issues, not to mention the pain of migrating existing customers or maintaining multiple product versions. On the other hand, using technologies that are intrinsically compatible should result in faster and less costly development. As a result, Intuitive ERP does not have to contend with technology conflicts, trade-offs, or inefficiencies resulting from mixing or wrapping technologies.

The company's strategic relationship with Microsoft has consequently proven to be of a great importance given its market segment's infatuation with the technology, whose performance, reliability, and scalability has long been improving as well. By leveraging the capabilities of the Microsoft platform only, Intuitive now seems to also be in a better position to be responsive by delivering new functional features that its customers may demand. In contrast, a smaller vendor that covers multiple platforms often spends more than a half of its R&D budget on porting issues; thus making a cross-platform solution remains largely the prerogative (and a consequent burden) of only bigger vendors.

Furthermore, the early adoption of the .NET platform should help Intuitive transition from a traditional two-tier client/server architecture (where the entire business logic resides at the client front end) to the one where the business logic resides in a set of business logic components that can be used by the rich UI, alternate UIs, or it can be integrated with other systems through Microsoft BizTalk, which bolsters the systems interconnectivity and flexibility. The framework should also provide a "hands and administrator free" deployment model allowing the application to be distributed from a single web site, while product updates, enhancements, and new releases should, in future, be automatically deployed to the client, which should allow businesses to cut down on expensive client/server administrative time.

Functionally Appealing to the SMEs

However, it would be quite a misstatement to brand Intuitive as an enterprise vendor only focused on technology, given the other trump in its hands—its many employees' discrete manufacturing industry's experience and focus. The company's founders have ever since their involvement in the IT industry put all of their efforts solely into serving small and medium manufacturing enterprises in need of enterprise application solutions that are, well, "intuitive", and, thus, easy to use and implement. The company has long demonstrated a deep understanding of this market dynamic and its requirements of competitively and scalable priced, functional products, ease of modification, short implementations, and strong service and support.

Consequently, Intuitive has been offering its customers exactly needed (neither overwhelmingly complex nor meager and insufficient) functionality they can easily digest but still deploy to its beneficial use. The modules can be implemented in a gradual fashion to tackle the most burning issues first. Also, the simplicity and flexibility of the product, bundled with the experience of the company's staffers within the manufacturing sector, often do not impose serious business process reengineering (BPR) but still produce benefits like pervasive information sharing and improved visibility and process efficiency.

One of the biggest Intuitive trumps is pricing that suits small, cost-conscious, risk-intolerant manufacturers. As the company prides itself on fast implementations (often less than ninety days) and on implementation costs being often equal or less than software license costs, it does not take a rocket scientist to calculate that most of projects' price tag of only a couple hundred thousands of dollars might be attractive even in the current era of reduced IT budgets, especially given the current US dollar's weakness abroad. In addition, Intuitive offers the services of experienced consulting and technical support teams, implementation documentation, planning guides, customization services, and training classes available either on-line, on-site, and at the Intuitive corporate classroom facility. The vendor also offers a thirteen-day "Solution Start" program for new customers, designed to give them a solid foundation for their implementation, and which ensures an application consultant is present on-site at the critical phases along the way, to guide and mentor the customer through the implementation process.

Standard Intuitive ERP functionality includes ample accounting and manufacturing features, with costing, and production and inventory planning being the core pieces. The product modules are also grouped to underline typical business cycles and processes like "plan", "buy", "make", "store", "sell", etc. While no single module requires a nuclear physics-level of knowledge, it does, however, require a commonsense knowledge of production and inventory management, as prescribed by APICS' experts. Even the Intuitive ERP 5.2, which was released mid-2001, has added significant functionality to many areas of the product, including e-commerce, key process indicator (KPI) tracking and reporting, international improvements, major enhancements to the planning functionality, as well as enhancements throughout the order processing and accounting areas. The later product versions are possibly more focused on the technological rewrite, but the vendor contends that it was an investment worth the trouble, given any new functional enhancements will be facilitated by the more development-friendly .NET architecture.

Material requirements planning (called "Dynamic MRP" is a completely memory-resident MRP planning system which achieves several dozens times faster calculation than traditional MRP planning engines), purchasing, production and inventory control, engineering change control, sales order entry, complete accounting (including accounts payable [AP], accounts receivable [AR], and general ledger [GL]), sales analysis, and shop floor control are typical capabilities that offer general small manufacturers the opportunity to increase productivity while reducing costs throughout the organization, by performing fast and accurate closing, job costing, and financial reporting.

The planning capabilities are more than worth mentioning, given their intuitiveness while solving quite intricate situations on the fly (i.e., on demand, rather than overnight). The user can fairly easily analyze material requirements with graphical pegging information and make delivery commitments on the fly with dynamic available-to-promise (ATP) and capable-to-promise (CTP) tools. The "Visual Order Pegging" module, which utilizes the Dynamic MRP module, allows the user to trace up or down the production hierarchy (multilevel) to track the source and use relationships, and then to visualize those relationships, graphically display problems areas in the schedule, and highlight the effects of things like new orders or a late-arriving material delivery.

While ATP functionality just interrogates and analyzes the current production plan, CTP is actually an advanced planning process that can generate new planned orders. In other words, if through ATP simulation the user is unable to find sufficient inventory to cover a new demand, CTP can then be invoked to take the next step by providing the ability to determine whether the new demand can be filled by creating additional production or purchase orders. Furthermore, CTP calculates the earliest feasible date that this new production could be completed and the demand covered, and it also informs the user of the new planned orders that would be required (such., what items need to be produced or purchased, order start, and end dates, quantities, etc.) and allows him or her to then decide if those orders should be added to the production schedule.

Tactical Production Level Features

The Intuitive ERP product is also strong in terms of tactical level production status monitoring and work in process/progress (WIP) management (with, for example, bar coding, and time and attendance tracking facilities). The WIP value report provides a summary of all of the costs that are currently in work in process, and in conjunction with the stock value report, it provides a complete inventory valuation, including both stores and work in process. Also, while performing a physical count, Intuitive ERP supports the process of taking a full count of inventory on both stocked and WIP items. At the beginning of the process a snapshot is taken of stock and WIP balances from inventory data within the system. When the physical inventory is complete, the user can roll the recorded counts recorded into the inventory records and the system automatically makes any necessary GL transactions to adjust inventory account balances.

The Intuitive ERP costing feature keeps track of standard, average and last (actual) costs for inventory items, while the user can select which costing type should be used as the accounting value for each of the items in inventory. Whenever the accounting value is updated, inventory is re-valued at this new cost. The system also provides a one-step method for calculating material, labor, out-plant, fixed burden, material burden, and variable burden and overhead costs, which process updates routing costs and the standard and accounting costs for inventory items.

The product offers several visualizing functional capabilities, such as visual bills of material (BOM) form that is used to display a graphical representation of the BOM, and users may drill-down into any component relationship from the Visual BOM. The typical methods of convenient BOMs maintenance, such as mass replace, copy bill, loop check are available as well. One can also generate engineering change requests (ECRs) to view the impact and benefits of the proposed changes and then relatively easily convert the ECRs to engineering change orders (ECOs) or temporary deviation authorizations (TDAs).

Another intuitive visual drag-and-drop scheduling functionality provides customers the ability to reschedule the shop floor in real-time and to balance workloads. The system also allows detailed lot and serial number traceability and audit trails to help the company orient itself towards meeting ISO 9000 or QS 9000 requirements. The system also accommodates the regulatory requirements like European EN46001, Food and Drug Administration (FDA) Quality System Requirements (QSR), and Federal Aviation Administration (FAA).

Some notable functional modules have been delivered through partnerships, but astutely in an OEM manner, which is transparent to the end users, and which leaves Intuitive as the single point to contact. Such would be the case of the Intuitive's SPC module, which originally comes from Zontec (www.zontec-spc.com), and which provides real time statistical process control (SPC) at all inspection points throughout the Intuitive ERP system, including work-in-process, purchasing, and material review and return. This module completes the Intuitive ERP quality cycle with a dynamic tool that can capture and analyze high-level data using statistical techniques to help maintain and improve the user company's process capabilities.

More than just a data entry and charting tool, Intuitive's SPC module is a real time system that combines data collection, charting, monitoring, analysis, communication, and reporting all in a single screen. The Intuitive SPC module includes advanced SPC features such as: variable, attribute, and Pareto capabilities within a single file; customizable scaling, point sizing, and viewing options; and gauge repeatability and reproducibility (R&R) with scheduling feature, has become mandatory for many companies who supply the automotive industry, and is now an integral part of the QS 9000 automotive industry standard. Many other companies in a wide variety of industries also use gauge R&R to ensure that their measurement system is of acceptable low variation within the process.

At a glance, any authorized user can then check on the exact status of any process at any workstation, department, or plant locally or around the globe. Then, the user can activate program functions with one mouse click, choose from one of five ways to input data, and close the loop with an "out-of-control" warning for corrective action before operators can proceed. The module also allows the user to cut and paste graphic and table data into virtually any other Windows-based application. Further, analytical capabilities of Intuitive SPC allow users to display up to three sets of control limits on charts, choose estimated or calculated sigma for control limits and process capability calculations, and generate charts from refined data queries.

This concludes Part Two of a four-part note.

Part One presented the company.

Part Three will continue to discuss the market impact.

Part Four will cover challenges and make user recommendations.