ALL IN THE FAMILY

When Keith Hasty and his wife, Diane, graduated from college 27 years ago, they joined with other family members in starting Best Foam Fabricators. As a family affair, their simple hope was to have a small slice of the American pie, something that would support and sustain them over the years. Little did they know back then that nearly three decades later, Best Foam would grow into being a major parts supplier for the Detroit auto industry.

Today, in their plant on the south side of Chicago just across from Chicago State University, the Hastys oversee a foam fabrication operation that now includes two additional out-of-state satellite facilities.

Another thing that has changed over the years is the way Best Foam takes care of their business operations. What once was, by their own accounts, a small business that was running at less than peak efficiency is now an ultra-lean manufacturing operation that is increasingly reducing costs. The key to this success?  Their enterprise resource planning (ERP) software.

"We have three locations now and we will be adding a forth location, and we see that with this number of remote locations the need for control becomes more and more important. A system that allows us to control both the inventories and labor usage is critical, and will especially be so in the future, states Keith, the president of Best Foam.

Since their acquisition and implementation of Global Shop software in 2002, Best Foam has experienced the fortunes of having their business grow while their costs-both direct and in-direct-have gone down. "This ERP system helped make us a better company overall." Hasty adds, "It is a primary reason that we are who we are today."

NO MARGIN FOR ERROR

Being a vendor/supplier for the automotive industry requires a keen sense of time and timing. Because of the number of parts inherent in vehicles, and the strict production scheduling necessary for assembly, automotive customers require very narrow windows of delivery dates.

"When the customer truck arrives on your dock on the expected due date, your parts products had better be waiting there for loading. Otherwise, it will be up to you, and at your expense, to ensure the parts arrive in Detroit or any number of various subassembly plants before their expected need date. Otherwise, it is certain you will lose the customer very quickly," Hasty explains.

For Best Foam, additional expedited shipping expenses due to missed delivery dates was something that was considered the cost of doing business, but still a substantial cost nonetheless.

"Getting our company on track in terms of on-time deliveries has been the greatest benefit of acquiring this ERP system," Hasty insists. "Our on-time delivery has improved from the mid-80s to 99 percent, and this is the rate that our customers really demand. This year we spent about $500 in expedited freight, while before ERP, we might have been spending $40,000 or $50,000 per year on expedited freight. For us, this is a substantial cost reduction. Clearly, the big change has been in our ability to see problems in advance through ERP and not waiting until the last minute to see that we're going to miss a due date and then have to foot the shipping ourselves."

Advanced planning and scheduling, as well as the auto purchasing features of the ERP modules, are the primary reasons for the on-time delivery performance turnaround at Best Foam. This is particularly true when it comes to receiving unique parts from their own vendors.

According to Diane, vice president of finance and comptroller of Best Form, "Some of our components are specialty foam items and our suppliers sometimes only run them every six weeks or so-they're not part of their normal run. So if we miss placing our purchase order for one of these specialty parts, it could be a very big problem. The Auto Purchasing system is a great help in not allowing us to make this sort of oversight in materials inventory."

REDUCED LABOR COSTS

Another cost reduction benefit Best Foam has found in using ERP has been in the area of labor costs. Through the lean efficiencies offered by the real-time integration of system-wide data, the system is able to reduce labor overhead through both cost accounting of each job performance, as well as the front office administration of functions such as payroll and purchasing.

According to Keith Hasty, "We had three times as many employees in our Chicago facility as we do now before we installed the ERP. Utilizing the system, we've been able to re-engineer our labor tasking and, therefore, our labor costs. In other words, we've been able to streamline our operations ? ERP, in the engineering area, has made us focus on processes. We're looking at the processes, making sure we understand where the excess labor was in a job, and in this, ERP has eliminated a lot of that excess labor."

Once Best Foam is able to eliminate excess labor, they can then go back through the tracking in ERP  to see the profitability of a job. In these reviews, crucial decisions are made with regards to the bottom line. Often, it will be apparent that labor costs cannot be reduced enough to make certain jobs profitable, and so these jobs are considered for elimination. "Before ERP, we didn't have a good handle on knowing what the labor should be first of all, and what our labor costs actually were second of all," adds Keith.

Diane Hasty agrees and observes that, "With ERP we've been able to get our various processes organized and run in different matters with our engineering BOMs. We've been able to reduce our labor from about 150 people (before the ERP system) to about 110 employees today."

Of course, the best ERP software should be, by its very nature and purpose, a flexible and simple to use tool in the manufacturing operation. However, far too many ERP packages prove to be unwieldy in scope and complex in function. This was the situation Best Foam found themselves in with their first ERP software purchase. In time, as the IT administrative and maintenance costs for the software continued to rise, Best Foam started to look around for something better.

"The bottom line for us," states Keith, "was that we were looking for diversity in functions as well as ease of use in an ERP software package. And, after several site visits to other manufacturers using Global Shop, we knew we had found the one that would best fit in with our own production environment. Now we use this ERP for everything we do-accounting, purchasing, inventory control, production. And, what really got us going was the jump-start we received with their training services."

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Best Foam Fabricators, Inc., 9633 South Cottage Grove, Chicago, IL 60628, 773-721-1006, Fax: 773-721-5257, www.bff.com.

Global Shop Solutions, Inc., 975 Evergreen Circle, The Woodlands, TX 77380, www.globalshopsolutions.com.