When should you go to the cloud? Vicinity Manufacturing's story.

There are a a number of arguments to be made about transitioning to "the cloud." I wanted to share our story on how we went to the cloud to help give some perspective on what the cloud is an why it is an option to consider.

I was trying to remember when we went to the cloud.  Was it when we moved GP into the cloud in 2014 or when we changed our phones from an on premise PBX to the cloud in 2013?  Maybe it was when we moved our Microsoft Dynamics CRM from our server in the office to the Microsoft Cloud in 2012 and got rid of our Exchange Server for Office 365 around the same time?  No, I would argue it was at inception when we put our web site in the cloud in 2001 and have been refining it ever since.

You see going to the cloud is not a moment in time.  It happens when it makes sense as a solution.

For us I never even thought to host our web site in our offices.  I could have. It just did not make sense.  We rely on GoDaddy for our hosting and have been satisfied.  It is has gone through many server upgrades as well as redesigns.  Some of that we were involved with and some of it we were not.  In the end it has grown and changed with us over the years.

I remember a time where our users were having trouble getting their email from our in-house Exchange Server.  If I re-booted the server they were fine.  But 24 hours or so later they would be kicked off.  Instead of sitting down and figuring out the problem I would set an alarm every morning and reboot the server remotely.  Sounds crazy today but that is what I did for a few months.  Eventually I decided to end the non-sense and looked into Office 365.  We transitioned all our email over the weekend and our email issues were solved.  A month later I destroyed the Exchange Server and sent it for recycling.

Similarly an upgrade of our on premise CRM required that we change our CRM server hardware.  Faced with a $5,000 or more expense I took the opportunity to move it to the Microsoft Cloud.  We were able to upgrade immediately and have never looked back.  A side benefit is that we are now able add bolt on solutions for CRM in a snap.  We don’t have to worry about being on the most recent version or if our hardware can support it.

We went through a CRM upgrade a couple months ago and have another one scheduled for a couple months from now.  Our users will not know that it happens and all we had to do was approve the upgrade.  That cannot be more simplistic.

One day our phones went down.  We rebooted the PBX and things were fine for a while.  They went down again.  We have a service person come out and look at the box.  The PBX had not been touched in a few years and it was old and out of date.  The technician was not able to resolve the issue beyond what we already did.  Frustrated I contacted the developers of our existing PBX.  They had a cloud offering.  In about an hour we had all users back up using phones and our clients never missed a beat.  Today our PBX is in the cloud and I cannot tell you the last time I accessed it – nor cared about it.

Finally, when we decided to move Dynamics GP to the cloud it allowed for a great test environment.  We setup GP on the new version we desired.  We used that process to test the migration and allow users to play with the integration.  I happened so fast that we decided to just stay on the cloud as our live environment and never looked back.  The original plan was to perform the migration again when we were ready.  But we were ready immediately – so we just stayed in the cloud.

So for us going to the cloud happened when events made the decision really easy.  The transition is still ongoing. But to this day we do not own a server.  

We work with interconnected hosted solutions and we spend more of our time helping clients, solving problems and making the best software we can.  We do not spend time configuring, upgrading and disposing of servers.

For us it has been great.  I hope this help and we look forward to seeing you in the cloud.

To Yield or not to Yield?

Formula manufacturers need to keep a keen eye on the yields they experience by formula. It is easy to be lulled into sleep by average yields and not realize a potential for significant profits or significant losses.

If a company typically experiences a high yield when measuring raw material input vs finished goods output it is hard to see that certain products may be achieving far less than standard. These differences can be masked by total production averages - total usage vs total production.

Identifying yields by formula over time provides the following benefits:

• Efficient use of R&D - allows a an R&D department to focus on those few formulas that experience an lower than normal yield on a regular basis
• Reduce Inventory - permits the reduction in finished goods inventory by reducing the likelihood of finished good shortages because the scheduler is not being caught off guard by not achieving expected results - many companies hold excess finished goods inventory to buffer from these variations
• Improve Costing Accuracy - provides accurate costing data to calculate finished goods selling prices - if a formula yield drops from 90% to 80% that has the effect of reducing the selling price up to 10%

The address this issue a formula manufacturer should routinely compare actual production yield (raw material input vs finished goods produced) at a batch level. If the company is running a manual batch management system this can be done on a sample basis.

Newer manufacturing systems can notify specified users when any formula experiences a lower than anticipated yield. This allows immediate action to be taken if necessary.

In summary, potential profits are easily masked by neglecting to observe yields at a formula level. By relying on total production yield calculations the details are lost in the averages.

Take a look today at some of your highest moving formulas. Is the yield what you expect? Could the yield be better? The time spent may have a dramatic impact on your bottom line.

Editor’s Note: This post was originally published in November 2011 and has been updated for freshness, accuracy, and comprehensiveness.

Understanding the Importance of Lot Traceability in the Food and Beverage Industry

Food and beverage manufacturers rely on consumers’ faith that the food they eat is safe. Most manufacturers consider living up to that expectation a solemn duty, and they take every possible step to ensure that, in addition to being nutritious and delicious, their products are worthy of that trust and that their manufacturing methods comply with federal laws such as the FDA Food Safety Modernization Act. Lot traceability in your ERP system is one of the most effective ways of meeting those expectations.

Ensure Quality and Safety
Consumers are increasingly interested in knowing the origins of the ingredients in their food, as shown by the rise in popularity of limited ingredient goods and the “Farm to Table” movement. At the same time, global supply chains have introduced new sources that may not have the same dedication to quality standards. Using lot traceability, manufacturers can know exactly where every lot of every ingredient came from, and easily verify that it met quality specifications. The increased visibility into sources helps both manufacturers and consumers feel confident that the food they eat was manufactured with care.

Optimize Inventory Usage
Many ingredients are natural foods, so flavor, freshness and potency may vary. Using lot tracking, manufacturers can ensure that they use older inventory first to prevent spoilage. Lot tracking also helps with balancing the characteristics of ingredients used in each batch to ensure that product flavor and texture are consistent from batch to batch to help ensure customer expectations are always met.

Prevent Counterfeiting
Another side effect of more complex supply chains is that there are more opportunities for counterfeit goods to mingle with authentic supplies. Using lot tracking and tracing, manufacturers can help ensure that all goods reaching the consumer are authentic. When counterfeits do make their way to store shelves, tracking and tracing can pinpoint the location where the counterfeits entered the supply chain, enabling the manufacturer to take steps to prevent future issues.

Validate Deals, Deductions and Rebates
Retail and distribution supply chains rely heavily on rebates, deals and deductions to promote sales and consumption. The complex nature of these promotions makes it hard to know whether deductions are derived from legitimately qualified sales. Using lot traceability helps to validate that the business claiming the rebate actually purchased qualifying goods.

Manage Cost of a Recall
Despite their best intentions, manufacturers must occasionally recall their products, often because of problems with a specific ingredient or an issue that occurred in the manufacturing process during a specific time. Knowing the affected lots and tracking them to the retail or distribution centers can help to limit the scope—and the cost—of any required recalls. Since recalls have cost up to $600 million, according to Aberdeen Research, it’s in a company’s best interest to use every tool to limit the scope of a recall. Lot tracking and tracing is the most effective tool available for managing recalls.

Prevent Damage to Your Brand
Adulteration, recalls, counterfeit goods can all erode the trust that consumers place in your brand. An ERP system that includes effective lot tracking and tracing capabilities can help prevent damage to the brand by ensuring the quality and purity of all the ingredients you use and everything you produce. When the unthinkable happens, you will look more in control if you can immediately identify the lots that must be recalled. Track and trace are essential functions for every food and beverage manufacturer.

Source: http://v1.aberdeen.com/launch/report/research_report/10422-RR-ERP-process-discrete.asp

How an ERP Implementation Can Go Off The Rails

There is very little that has a greater effect on a company’s success than it’s ERP system, which functions as both the memory and conscience of the business and forms the backbone of every business process. Yet many companies fall prey to the same common implementation errors, which may cause the project to fail or be less effective than it could have been, Here’s a look at those common traps and tips on how to avoid them.

No Full Time Project Leader

An ERP system has tendrils in every part of the business, and it is a complex project involving multiple people from every department and many decisions that affect them all. Most companies wouldn’t plan to build a new brewery without a project plan and a strong project leader, yet companies neglect to develop a plan and to appoint a full time project leader with the authority to arbitrate decisions. The project is too complex and too time consuming to be done as an additional task along with an already full plate. It can’t be done effectively by an external consultant or a person with no organizational clout. Without a full time in house project leader reporting directly to the project steering committee, the project will not do as well as it should.

Selecting the Wrong Software

There are hundreds of ERP software applications. Some are broad in scope, designed to fit many industries; others are unfocused and don’t fit any industry well. The best solution, especially for small or mid-sized companies in less than mainstream industries—craft breweries, for example—are ERP systems designed specifically for that industry. By selecting a solution designed for your industry, you can be assured that the business processes reflect industry best practices and you will minimize the number of customizations and workarounds you need.

Lack of Goals

If you don’t know why you are implementing a new ERP system, you will never know if you have been successful. Take the time to define your goals and express them in measurable ways. “Reducing order cycle time to less than 1 day” is a better goal than “entering orders faster.”

Scope Creep

Without goals and a strong project lead, many companies drift through the implementation process and add new processes, customizations or departments to every phase of the project. Resist the temptation by sticking to your goals.

Lack of Training

Companies have limited resources, and training often seems like an easy place to cut costs. Training a few people who are then tasked with training everybody else seems like a good idea until you realize that most people only retain about 25 percent of what they’ve learned after a few weeks. Your team will not know what your new ERP system is capable of, and you will not achieve the ROI you expected because of it.

Treating ERP Like an IT Project

ERP supports your business. It may run on computers, but that doesn’t mean it’s an IT project. You need to make the line of business people responsible for its success, or it won’t succeed.

Management Commitment

If many of these points of failure sound like they stem from lack of management commitment, you get the point. Without management commitment, the project is doomed. Make it the top priority for people charged with the implementation, and take the time to get involved. With management commitment, an ERP implementation has a good shot at success. Without it, ERP is doomed to failure.

5 Must-Have tools for first-class R&D

Ask anyone in my family or in my company they will tell you I am not “Mr. Do-It-Yourself”.  I am what you might call “skills challenged”.  My grade in Jr. High shop class was “Absent”.  My 5 year old once asked me if I needed help with a repair project.  I think you get the idea.

So for this blog post we are going to use the word “tools” a bit loosely.

 From my observations in working with R&D labs over the years there are a few common elements that differentiate the truly gifted from … well … me with a hammer.

Sophisticated Lab Notebook- Most R&D labs have some form of Lab Notebook. They take many shapes and forms.  Many are still literally notebooks – you know – pad and paper.  Others have progressed to excel.  Yet others have created a custom Access database via a once employed lab intern who is no longer employed by the company.  The star students however have taken their game to the next level.  All the project work is in a database that is searchable and archived for easy access.  User fields are able to be added without programming and all this data is available to all members of R&D without complex copy & paste or band-aides and sneaker net.   The time saving is just shy of miraculous. Imagine an environment where marketing supplies an electronic requirements document.  Data from that request is passed into R&D where similar projects results are evaluated.  A large list of potential formulations are filtered to a manageable number.  A sample batch ticket is generated and samples are submitted for evaluation and are all tracked and measured as a routine KPI.  Utopia?  Well that is a reality today and more and more R&D companies have that vision at their fingers.

Access to historical, current and future RM costs – Most companies today have integrated access to the current cost of materials within formula development.  The ERP purchasing system automatically maintains the last purchase costs and little effort is spent on tracking these costs.  Fewer clients can look backwards and analyze formulation costs based on historical material costs.  This is helpful to understand why profits for a formulation may be eroding in time.  The real goal however is to incorporate anticipated material costs changes into the R&D formulation activities and selling cost analysis.  Where do you fit in this spectrum?  If you spend your day looking up current costs then you are 10 years behind the times.  If you can compare current formulation costs to 3 months, 6 months and 12 months ago you are better than average.  If you can use material cost predictors to estimate upcoming material costs and identify the current production formulations most affected by these changes – well you my friend are firing on all cylinders.

Ability to search historical formulations – why recreate the wheel if you have already solved the problem.  You would be amazed at how often companies formulate for the same requirements without even realizing they are doing it.  Once you have centralized your formulations out of excel and in a searchable database you next need a tool to query the database without adding programming staff.  Some of the key elements to search are existence of specific raw materials, quality specifications, material and labor costs, suppliers of raw materials and physical properties of materials such as allergens or hazard properties.  The search engine should also weigh the formulas by whether you current make these products and what some of the yields you have achieved during production.  Imagine your life if you had this information.  Well there are tools out there that are affordable and integrated that can help deliver this vision to your organization today.

Feedback look from Production to R&D – This is one of the simplest tools to implement but rarely is it done consistently.  Every commercialization process should include a review of all new formulations immediately after the first batches and then again after the formulas have been running for a while.  A focused informal meeting between production, quality and R&D on a routine basis can change the trajectory of your company.  First and foremost discuss yields.  Are there ways to improve the process?  Every % saved in yield is profit. Consider quality additions.  Should we change the process or the formula to eliminate or reduce the need for a second pass through quality? Every time a batch has to go through quality a second time it costs the company money.  Are there alternate ingredients or physical processes that could make the processing more efficient?  Getting three people in a room once per week to discuss 5 products is not difficult to do.  The results are amazing.

Track samples generated by R&D and measure conversion rates – How much time and effort does your company spend from sales through marketing into R&D and shipping to process just one new formulation sample?  It is VERY expensive.  How much time and what systems are in place to track the conversion of that sample into a sale?  My bet is there is 10 times the effort to make a sample as there is in tracking the conversion to sale.  How many samples turned into sales?  What customers have the highest (and lowest) conversion rates?  What is your cost of creating a new formula and how long will that formula be sold?  All these are valid questions to ask and there are tools available today to answer those questions.  Quite literally for $60/month the samples could be tracked using Microsoft Dynamics CRM.  It can be stand alone and hosted so the setup is literally minutes and it can make the world of difference to your company.

So those are some of the tools I see in the ideal R&D tool box. Some are simple to implement and others are more challenging.  All can have a positive impact on your company and all are available today.  If you are interested give us a call at Vicinity and see how we can implement some or all of these tools for you today.

The real question is – are you a do-it-yourself kind of person?  Or are you more like me?  I know my limitations and I have no issue asking for help.  Well many a little issue, but as I age I own my shortcomings a bit easier and call in a professional.

Happy hunting.

The Zen of Formulation

The process to develop a new formula or recipe is a unique as the research chemist.  However there are some key elements that could make the process more productive and more efficient.  I will share some of my insights in this article.

Define the R&D Process - A standard process for the R&D department should be identified, communicated and tracked.  Following a standard process or workflow will reduce miscommunication and missed steps.

• Create a tracking system for the project.  This should include a unique project identifier, description, customer/contact, due dates and key milestones.
• Document requirements from marketing or the customer.  This can be as simple as an email request or as formal as a structured form completed by the customer
• Store notes on the R&D process including formulas and versions considered and responses from the customer
• Track samples sent to the customer this is a great use of Microsoft Dynamics CRM
• Communicate resolution of the project to interested parties.  This includes sales, marketing, production and procurement.

Utilize a centralized database to track activities – Microsoft Dynamics CRM is a terrific tool to organize the workflow of the R&D process.  An opportunity can be created and linked to a customer or contact.  It can manage the steps of the process ensuring key steps are not overlooked and shares key data with relevant contacts.  One of the most important parts is to store the data in a sharable, searchable and reportable platform.  While this could be done in Excel for the prices of Microsoft Dynamics CRM at $45/month it seems silly not to utilize this tool.

Leverage the formula database to support queries – Most formula manufacturers today have access to formulas in their production system. Batch tickets are often created from these production formulas for commercialized formulas.  A far fewer number of R&D departments use their formula database for R&D.

This is a shame and should be changed.  Many of the same tools used to make product are needed for R&D.  This includes item lists, current costs, available inventory and usage data.

If your company does not have a comprehensive production formula database or if it is not flexible enough to support experimental formulas and ingredients you should really reevaluate your current system.  Vicinity software supports production and R&D formulas in the same databases.  This allows R&D to search and select from the entire list of formulas to meet a specific project requirement and to create new formulas from existing formulas for versions of formulas.

Obtain feedback from procurement, quality and production as a routine process – When a new formula is introduced into production a review process including members from procurement, R&D, quality and production should be present. You should be discussing unique elements of the new formula, special processing requirement and specific quality concerns that may exist.  This review should also be performed after the first few batches are produced and then again after 10-20 batches are produced.

This information could be critical to each department and getting ideas on how to address processing challenges is likely to occur.  Multiple heads is often better than just a few.

My hunch is that most R&D departments do some of these items but very few do all of them.  The key is structure and to leverage tools available to your organization. If the tools do not exist in your organization then look around.  They exist and are less expensive and more powerful than you may imagine.

Essential Advice for Lab Management

“No man is an island” is certainly a true axiom for R&D efforts.  I have a few observations that you might find helpful in reviewing R&D activities.

1) Integrate R&D in the production process – For most manufacturers one of the goals of the R&D department is to develop formulas or processes that can be performed by production.  The feed back loop is critical in the evolution of a formula and a company.

R&D understands the functional requirements of a formula and ways to deliver to the customer. Production understands how to make that vision.  The most successful R&D labs evaluate formulations based on the impact to production while still keeping the creative and problem solving element alive.  Not giving too much emphasis on either theoretical development or actual implementation can make for a nice balance.

Producing a feed back loop is the key.  R&D should be reviewing metrics like- how many part numbers/ingredients are they adding to inventory?  Are there ways to use equipment that is not part of a bottle neck rather than processes using sought after devices? How many QC modifications are being made by formula?  What materials are experiencing the highest cost increases in the next 12 months?  Is is possible to adjust existing or future formulas to account for these questions.

So meet with Production on occasion to discuss formulas that are working well and those that need adjustment.  Identify those formulas often run on the most active equipment and see if there are changes to be made to uses other equipment.  Get your system to report significant yield variance and QC adjustments by formula.

Once it has been brought to your attention look for ways to solve the problems. The changes could really affect the profitability of your company.

2)     Link CRM data to R&D data - With the advent of Microsoft Dynamics CRM (and others) the ability to record and track customer activity is not only cheap it is easy to implement.  One of the fastest ways to gain insight to your customer is to watch their patterns.  CRM can do that.

An effect R&D department will track the progress of a new formulation from the time a request is made, through preliminary development all the way to commercialization.  Hooking up your formulation/R&D database to a CRM opportunity management system makes this a simple task.

Imagine seeing the current R&D project backlog, customer history of requests vs sales and new requests statistics by product type.  These are simple queries once the data is joined in a logical manner.

Microsoft Dynamics CRM and Vicinity can do just that.  Add the opportunity in CRM and link it to a Vicinity Project and now all the related data in either CRM or Vicinity is forever joined. Analysis of history and trends becomes a by-product of the normal day to day activities.

3) Leverage your formula database for new formulations – few R&D departments start from scratch with a new formula request.  Most R&D labs scan through test formulas in excel or manual lab notebooks to get started.  Once they have a base to work from they add or take away ingredients or processes to achieve a desired result.

Why all the manual effort?  Imagine a system where all historical work was in a database that was searchable by user defined attributes.  The results could be compared and a potential candidate(s) reviewed further for consideration.  Now that would be helpful.

Vicinity software allows you to do just that.  Store all formulas, experimental trials and results in Vicinity.  The next time you are looking for something similar it is will be right there.

If you are not yet ready for Vicinity and are forced to use Excel make sure to use a standard format for your formulas.  Leave room in your design for user definable and validated data. This will make a search across spreadsheets possible – I never said it would be easy.

Get started today – get your work in an electronic format and use the right tool to get the job done.  The result will pay for the investment in short order.