Manufacturer Eliminates Physical Inventory While Boosting Inventory Accuracy and Delivery

Challenge: To eliminate physical inventory while boosting inventory accuracy and delivery performance
Product Solution: Rapid Response Manufacturing, ProfitKey International
Manufacturer: McAlpin Industries, Inc.
Facility: Rochester, NY
Website: www.mcalpin-ind.com
Operation & Industry: Discrete manufacturer that provides a variety of sheet metal-related manufacturing services to the computer, business machine, medical, telecommunications, electronic, and automotive sectors.
Total Employees: 150

McAlpin Industries is a full-service, vertically integrated precision metal working company providing a variety of services to the computer, business machine, medical, electronic, telecommunications, and automotive sectors. Capabilities include design engineering, value engineering, prototype, fabrication, stamping, mechanical assembly, electro-mechanical assembly and test, tooling, and zinc plating.

The challenge
McAlpin Industries had a problem common to many small- and medium-sized manufacturers—business was growing rapidly and existing homegrown legacy systems could not keep pace with the growth.

According to Mike McAlpin, CPIM, executive vice president and co-owner, "We were spending an excessive amount of time manually planning and scheduling work orders. Our products were becoming more complex and we needed software that could support such product structures. Poor delivery performance was affecting our ability to maintain our customer base. We knew there were better ways to plan and schedule, but were concerned that just because a new system was faster, it might not be better. We developed a set of criteria," continued Mr. McAlpin, "that allowed us to measure any software solution against our needs. These criteria included improved delivery performance, inventory accuracy, reducing inventories and improving inventory turns, and better cost control. Finally, the software had to be able to run on an IBM RS/6000 server, as IBM was a very important customer!"

The solution
McAlpin Industries selected ProfitKey International's Rapid Response Manufacturing (RRM) system for four main reasons, according to Mr. McAlpin: "For the scheduling, first of all, because the algorithm used and the flexible options available were unique. Then there was the inventory cycle counting workbench for inventory accuracy; user-friendliness, because we did not want to spend unnecessary time and money on extra training; and references and reputation because we knew we would be living with the software and vendor for a long time." McAlpin Industries liked ProfitKey's "common sense scheduler," a combination of backward finite scheduling and forward scheduling that best emulated how their shop floor truly operated.

Planners were able to plan based on work centers' defined capacities. The company was able to balance between several optional scheduling methods, including "pull" manufacturing, to optimize delivery performance and minimize labor, set-up, and material costs.

Additionally, all labor transactions used to be hand-written on labor reporting cards and batch processed every night, causing a one-day lag in order status. Associates now enter their labor transactions via bar code technology. Because labor is updated continuously, order status is real-time. If a customer calls, employees can confidently provide accurate order status.

Order confirmation, once a time-consuming and painstaking process, is now fast and flexible. Customer service can do an immediate "availability check." This process not only checks for material availability and lead-time, but also performs a finitely or infinitely scheduled "what-if" scenario, checks the current shop load for available capacity, and calculates a realistic delivery date. Customer service associates may even enter work orders on a "proposed" status until production planning formally verifies and releases them.

The results
Delivery performance improved from 77 percent to over 93 percent on-time. Manufacturing began working to unbiased dispatch lists (rather than "hot lists") output by ProfitKey. Every day, key people from planning, customer service, and purchasing conduct a 20-30 minute "sunrise meeting," where exceptions are highlighted and problem resolution is assigned. Inventory accuracy soared to more than 98 percent. McAlpin's annual physical inventory became an exercise of the past because they were now able to demonstrate quantifiably that their inventories are accurate. Cycle counting occurs daily, taking full advantage of RRM's Cycle Count Workbench, ProfitKey's solution to cycle counting.

With ProfitKey, McAlpin Industries is able to link materials to the specific operations where they are required. This in turn affords the buyers a realistic need date, thereby reducing total inventory investment and improving cash flow. Materials inventory turns improved from less than five (5) to nearly twelve (12) since 1996.

Rapid Response Manufacturing has streamlined the planning and scheduling process, according to McAlpin, enabling the company to more effectively balance staffing and capacity and identify and manage bottleneck work centers. RRM has helped improve productivity, especially through the use of bar coded labor reporting and Crystal Reports. By using exception reports, problems with operation run standards are quickly identified and resolved. Mr. McAlpin adds, "ProfitKey's RRM has helped us manage unprecedented business growth as well as fluctuations in overall demand. We are now better able to "flex" with upturns and downturns in the business because we have the information readily at hand to make the tough decisions. All the while, we continue to show improvements in on-time delivery performance, inventory turns, productivity, and customer satisfaction." McAlpin continues, "After twelve years of using ProfitKey's RRM, staying current with the latest releases and technology, and keeping tap on other ERP solutions, we remain convinced that we made the right decision."

Submitted by ProfitKey.