Posted by Ranga Bodla, Industry Lead, Wholesale Distribution
Expanding internationally is a great opportunity for manufacturers to tap into new markets and source lower-cost materials. That has been especially true in the electronics industry, which relies on complex parts and specialized assembly processes, and where maintaining a low price is important for staying competitive.
However, being a global company requires a great deal more flexibility in IT systems than most manufacturers have with their traditional on-site ERP. With proprietary formats and inflexible business processes, legacy ERP simply can't provide the customization, integration and business process management (BPM) that an international supply chain requires. Global manufacturers need to pass orders, inventory data, sales contracts, shipping information, product specifications, and other data to widely distributed offices, warehouses and shop floors, as well as to buyers, suppliers and distributors. Yet, legacy, on-premise ERP cannot collect data from all of these locations and provide visibility into the business without time consuming integration work between the disparate systems.
What manufacturers need is an ERP transformation. As one U.S.-based manufacturer, Epec Engineered Technologies will attest, moving away from legacy ERP to an entirely cloud-based platform is an essential first step to any major expansion.
In 2007, Epec, a leading designer and manufacturer of custom components for the electronics industry, hit a wall with Epicor Vantage, its on-site ERP system. The company was expanding its supply chain into Asia, contracting with manufacturers there to produce its customized components. But Epicor Vantage was making it difficult to exchange data with its partners. The legacy ERP system was time-consuming to customize, often requiring costly workarounds and spreadsheets for exchanging data, and could not integrate well with third-party systems, thus preventing Epec from sending and receiving real-time data on orders and production status. It was also difficult to create the custom forms, workflows, dashboards and reports that Epec uses to run its business.
After deciding to abandon the legacy system, Epec evaluated several options and selected NetSuite. Today, all of Epec's 120 employees, from the New Bedford, Mass. headquarters to Colorado, Florida, the U.K. and China, use NetSuite's standardized cloud platform. Epec has benefited significantly from the move, according to its CEO Ed McMahon.
For one, the company can now do bi-directional data exchange with its four Asian contractors and pass work orders, bills of material, work in progress and other files through NetSuite. Although its other two dozen contractors aren't up to that level of integration, all of them now receive orders via NetSuite, ensuring fast delivery and an electronic paper trail.
Using NetSuite's customization tools, Epec can create custom fields, scripts, order management and workflows that span sales, fulfillment and accounting. Another big benefit is NetSuite's SuiteApp developer marketplace with "Built for NetSuite" applications from NetSuite's partners. For instance, Epec is leveraging two custom-built configure-price-quote (CPQ) tools from Selectica that are natively integrated with NetSuite. InstantPCBQuote is an online quote and ordering tool that lets customers configure and order their own printed circuit boards and flex circuits built to their specifications on Epec's secure website. The second tool is used internally by Epec’s customer service team for quoting PCB’s. Thanks to that tool, Epec has almost doubled the number of customer quotes it can produce per day, from 40 to 75, without the need to hire more staff. This in-house tool eliminates many of the time-consuming manual steps in quote generation.
After migrating to NetSuite, Epec estimates that it has achieved an ROI of $500,000 between 2008 and 2013 from the move and boosted revenue by 233 percent to approximately $50 million in 2014. The company now has a customer base of more than 5,000 companies around the globe, including leading firms such as GE, Siemens, Honeywell, Raytheon and Northrop Grumman.
By having a single, centralized computing platform and data repository for all of its units also ensures consistency in data and workflow. This enables Epec to evaluate performance and trends in one part of the business or across the board. Epec can operate some of its units as separate businesses, yet still roll up their financials into the corporate ledger.
When it comes to keeping on top of the performance of such a wide-ranging network of contractors and branch locations, maintaining consistency in reporting and workflow is essential.
"One of the biggest roles of NetSuite is allowing us to standardize processes across all of our locations," said McMahon. "We run our entire business through NetSuite; from design to manufacturing to managing vendors in Asia. It's a competitive advantage over competitors who still do things the old fashioned way with spreadsheets and disparate applications."
To learn more about Epec, please visit www.epectec.com.