Saturday, March 8, 2008

Microsoft Dynamics™ and Formula Manufacturing

manufacturing ERP software
Ask most ERP analysts and they will agree that Microsoft has entered the ERP software space and they are now a player to stay and they are in it for the long run. With four applications with strong and broad installation bases of customers Microsoft is a key player in the ERP industry.
Formula manufacturers should know that Microsoft Dynamics has offerings to help make your company more profitable. I will spend a few moments bringing you up to speed on how Microsoft Dynamics can deliver for you.
Microsoft acquired the four applications from 2001 - 2003 and each had a strong track record in providing core financial and distribution functionality prior to the acquisitions. These products include
  • Microsoft Dynamics AX – Axapta
  • Microsoft Dynamics NAV – Navision
  • Microsoft Dynamics GP – Great Plains
  • Microsoft Dynamics SL – Solomon
Each product has been branded – along with Microsoft CRM – as Microsoft Dynamics. So when you are on the Microsoft web site and see the term Dynamics – this is the brand name for all four ERP solutions and CRM.
Each application has strengths and should be viewed independently. They have their own development groups but share core Microsoft technology that assist in rapid development. As time moves on the products are moving toward each other and share functionality written by developers working across the products – such as web services and sharepoint. Also realize that not all Microsoft Dynamics resellers (VARs) sell and support all the products – in fact most VARs only support one or two Dynamics applications. So when evaluating Microsoft Dynamics it is important to match a reseller with the specific product being offered.
Each of the products compete successfully against all other similarly priced solutions.
Microsoft Dynamics AX (Axapta) – Written for the larger organization. I would recommend it for companies over $150 million in annual sales. The implementation requires significant consulting resources and is best suited for companies with significant IT resources.
Microsoft Dynamics NAV (Navision) – Navision is a major player in Europe and is known for it customization capability. It fits well for those companies that need significant localization and customization to address unique business issues. Companies of $5 million - $150 million in sales should consider this product.
Microsoft Dynamics GL (Great Plains) – Great Plains has been a well known ERP application in North America for many years. It has consistently been the leader in the market for English speaking countries. It fits well for those companies that need only limited customization and are looking for strong out of the box functionality based on US business standards. Companies of $5 million - $150 million in sales should consider this product.
Microsoft Dynamics SL (Solomon) – Solomon is becoming the Microsoft Dynamics solution geared toward project accounting. It should known that Solomon is very strong in inventory control and order processing. So while this application is moving away from manufacturing it competes very well against all other inventory, distribution and financial applications in the market. Solomon has strong customization capability and a very loyal install base. Companies of $5 million - $150 million in sales should consider this product.
As a formula manufacturer if you review Microsoft Dynamics on your own - without the assistance of a VAR experienced in formula manufacturing -you may not see how these solutions can address your manufacturing needs. This is because Microsoft Dynamics evolved from a financial and distribution application with strong discrete/assembly manufacturing offerings. Out of the box Microsoft Dynamics is challenged by the unique requirement of formula manufacturers and are critical for you to run your business. Issues such as MSDS, scheduling by formula, QC tracking, variable yields by batch and weight/volume conversions are foreign to Microsoft Dynamics. But there are great resources in the Microsoft Dynamics family that address these challenges.
Microsoft has been very public in its position that it will provide deep core functionality for each of the ERP solutions. They have written the applications to fit well into certain key industries. They do realize there are unique requirements in various industries that they are not able to provide by themselves. Formula manufacturing is NOT one of those industries Microsoft targets directly.
While developing the applications Microsoft has allowed Independent Software Vendors (ISVs) to extend Microsoft Dynamics into various vertical industries – such as formula manufacturing. Because of this you are able to achieve tremendous economies of scale with Microsoft Dynamics and still maintain the industry focus written by industry experts with years of domain industry knowledge.
When Microsoft Dynamics is extended with an ISV solution (such as Vicinity – the result is a feature reach, technology advanced and widely accepted ERP solution at an affordable price. Microsoft Dynamics delivers the most popular financial and distribution applications in North America and Europe and the ISV (Vicinity) provide business critical specific formula manufacturing functionality such as
  • Formula management
  • Compliance documentation (MSDS, COA, Country of Origin)
  • Lot control and tracking
  • QC results and analysis
  • Batch yield analysis
  • Scheduling by formula
  • And much more
So if you are in the market for an ERP solution you would do well to consider Microsoft Dynamics matched with an ISV solution like Vicinity.
Contact information:
Microsoft Dynamics –
Vicinity –

Sunday, March 2, 2008

It is time to retool – managing a shrinking economy

manufacturing ERP software
It is no secret that the US economy is tightening and the months ahead may be leaner than the months that have passed. As I travel from one formula manufacturing facility to another and meet with owners, managers and line workers I have gained a few insights that I would like to share with you.
If you are over 40 years of age you have now experienced at least one economic pull back and at least one economic expansion in the manufacturing sector. If you are over 50 you have probably experienced more than one.
One fact remains true - The US economy will change and eventually it will be stronger than it is today. With this change we will be faced with different challenges then we have in front of us now. The key is to ride out the down times while preparing for the next wave. The most successful companies are able to manage down times while retooling for the expansions.
How do you do that?
The key to a down market is cash flow and liquid working capital. In other words find ways to increase the cash flow and increase working capital. But don't do that at the expense of your future. Don't get caught flat footed when the market begins to come back. Your competition is hoping you will do just that.
Below are some ways to squeeze out working capital while investing in the future. It is all centered on cash. If you can watch the cash and working capital you will find you have plenty to make it through the slow times and will be in a position to complete as the market comes back around.
Reduce the inventory part numbers – Examine inventory levels of raw materials, packaging, intermediates and finished goods. Look for ways to reduce the number of different inventory items you are carrying in inventory. The more items you carry the more you will need to invest in safety stocks or relationships that you need to manage. Are there raw materials or packaging that can be consolidated my adjusting the formulas slightly? Look at your top 20 raw materials by value – which of those are only used in a small number of finished goods or intermediates? Those items may be able to be consolidated or the formulas may be able to be reworked.
Identify domestic suppliers - Look for local suppliers of the items even if they may cost a bit more per unit. You may be surprised that the offset in transportation and carrying costs may out-pace the cost savings of supplying from a foreign supplier. Additionally during an economic slowdown in the US foreign products become more expensive due to the currency exchange rates. Take this time to help your neighbor. You may appreciate the same attention from one of your local customers.
Collaborate with suppliers around your schedule - By working with your suppliers you can commit to a schedule that they can expect and you can live with. The result is lower carrying cost for both of you and a lower price per product. Remember that if your customers could give you insight into the future sales you would be more willing to reduce prices. The same is true with your supplier. The better your schedule the lower the price you will pay.
Shrink safety stocks - Take this opportunity to reduce safety stocks to an appropriate level considering a slowdown in business. When you are running an operation at 25% more volume you may need more safety stock. When business demand decreases the requirement for this inventory is lowered. Take a realistic look at the inventory levels for each of your items. Start with the items you carry the most – sort in descending order by value of inventory.
Promote most profitable items – If the market is absorbing a shrinking amount of sales then make sure you are selling the products that bring you the most return. Don't promote those items with limited return. Instead invest in advertising of those items that have the highest chance of sale and greatest return. Look at each of your finished goods and compare average selling price to actual production costs. Start with the finished goods that you sell the most by quantity (not price). Are you selling the most of the items that you receive the least return?
Review formulas yields – Concentrate part of your R&D money on refining the products that you will continue to sell the highest quantity. Once these are identified look for ways to reduce the costs and increase the yields. This will provide more profit for the same sale. Only focus on those items that have a high likelihood of sales. You may be amazed at the cost savings by squeaking 1-2% more yield out of each batch. Slow times are the times it pay to be frugal.
Reinvest in systems – In a down market there are often incentives in interest rates or government programs to assist companies to reinvest in the future. Many states provide tax credits for retraining your employees on newer technologies. Additionally as a market slows down it is common for interest rates to lower. Take advantage of this time to wisely invest in your information systems. As the market comes back the companies that have re-tooled will be ready to win in the recovering market. If you wait for a better market you will be fighting growing demand with limited supply.
All of these items are very manageable. The key is to get started. The sooner you look into managing cash flow and working capital the easier any economic downturn will become. Additionally don't trade long term successes for short term benefits. This economy will be back stronger than ever. Many companies make it through slow times only to be crushes as the business returns.
If your existing systems are not delivering the data I outlined above you need to do the best with what you have and address your systems issues immediately. I can guarantee that having the right information will pay for itself many times over in a shrinking or a growing economy. Putting this data at your finger tips is not as expensive as you may be lead to believe.
The primary message is to get started today and if you need help ask for it. There are some real challenges ahead of you but each can be addressed with creative thinking and access to accurate data.
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