ERP propagates growth for builder of plant research chambers

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1 Industrial Research Assistance Program Programme d aide à la recherche industrielle Digital Technology Adoption Pilot Program Digital Technology Adoption Learning Series BioChambers ERP propagates growth for builder of plant research chambers Case Study February 2014

2 Introduction For more than 40 years, Winnipeg, Manitoba-based BioChambers has been manufacturing some of the world s finest chambers and walk-in rooms for plant growth research. Plant biologists and botanists use the equipment to conduct studies in genetics, horticulture and agriculture. Much of the research done on our equipment affects world food production, says Bruce Kettner, senior engineer, BioChambers. Some research is also important to marketing, such as pinpointing conditions that prompt plant flowering. For example, if poinsettias don t flower for the Christmas season, they have no market value. At the moment, the company manufactures for North America, Australia, China and Europe, with an eye on developing markets. Plant science research demands complex equipment of the highest quality and reliability. Experiments often take months or years and environments inside the chambers must be highly customizable, tightly controlled and continually monitored. The use of digital technology in parts of its operation has helped BioChambers become a leader in product innovation and customization. Researchers often want to control the temperature, humidity and other factors themselves, so we build in the capability to customize as required, says Kettner. Most chambers are either completely custom-made, or have custom features since they must accommodate different sizes of plants from seedlings to trees, emulate different climates, and provide a vast range of options for researchers. Customer service and maintenance support are huge components of what BioChambers delivers. Ensuring that the equipment functions without hiccups for long stretches of time is critical to the success of any research project, since one failed component can ruin months of research. Sensors on the equipment allow customer service representatives in Winnipeg to monitor and diagnose the performance of chambers located anywhere in the world. As soon as an issue is identified, they can connect online immediately and solve it either remotely or locally by engaging a contractor. Kettner points out that, with only 25 employees, BioChambers is very small to be supplying this kind of equipment and support worldwide. We re proud of our ability to do diagnostics from a single location in Canada to service the world with only a few people and do it effectively. Digital technology allows researchers to customize the environment inside the chambers. However, as the company s reputation grows, so does the business. And in a world that relies heavily on digital technology, BioChambers knew that moving to a cohesive digital ERP system from disparate manual ones was the only choice. 2 ERP propagates growth for builder of plant research chambers

3 Situation: Identifying the need Like many small businesses, BioChambers had multiple stand-alone systems for accounting, inventory control, sales and other functions. We had a homegrown database for customer service, engineering calculations and records, says Kettner. Several sets of client contacts were housed in different programs and created lots of paperwork and files. The company s goal was to integrate all these into one enterprise resource planning (ERP) system to make the databases accessible centrally and improve communications. This move would also introduce efficiencies and eliminate redundant data entry. The performance of each chamber can be monitored and controlled from anywhere in the world. In addition, the outdated 2D engineering software for engineering drawings and photos had to be upgraded with a 3D modeling system that would add transparency and accessibility to the design process. The ERP system also had to provide a strong foundation for communications as the company grew. We had been surviving because we are small and can all talk to each other easily, notes Kettner. But as we expand, we can t continue doing that in the same way. For reasons such as these, and the vision of penetrating new global markets, BioChambers began implementing a large ERP umbrella system in It was bigger than most small companies would have considered, but Kettner knew they were in for some fast, significant growth and only wanted to go through the process once. We operate in a digital world now, so having a large ERP system that s accessible to everyone in the company from anywhere just makes sense, he points out. We need customer service information captured in a timely manner, located centrally and accessible while travelling. And the growth is well under way thanks to the company s deliberate and ambitious investments. Since the period just before the ERP system was installed, the company has seen some significant improvements from its investments in software, property and people. Production capacity has increased by over 50 percent, and the Value Added per Employee (VAPE) increased over 60 percent. By the end of the current fiscal year, export sales are expected to be up by more than 60 percent since the ERP system went live. ERP propagates growth for builder of plant research chambers 3

4 DTAPP: Helping to fine-tune the solution Managing a larger-than-life ERP system was a challenge for a small company, and Kettner sometimes wonders if the company took on too much at once. However, he confirms that this strategy has positioned them nicely for the future, and that support from the Digital Technology Adoption Pilot Program (DTAPP) delivered by the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) was integral to conquering what might otherwise have been insurmountable issues, given the company s limited internal resources. After three years, we were at the stage where we really understood what we wanted the ERP system to do, but we didn t have the funding and human resources to progress as quickly as we would have liked, he says. With DTAPP s support, we accomplished in a year what would probably have taken us five on our own. With DTAPP s support, we accomplished in a year what would probably have taken us five on our own. Bruce Kettner, senior engineer, BioChambers Guidance and support from NRC-IRAP Industrial Technology Advisor (ITA) Tim Mitchell played an important part in helping the company identify priorities and tackle them in the most effective way. This included identifying barriers to success and creating a backup plan. At first this just seemed like more work because we were anxious to get on with the project, says Kettner. But it was quite helpful not only because it was so important to unearth the issues, but also to focus on them through monthly reporting. Mitchell introduced BioChambers to experts in various manufacturing and technology specialties, including lighting and refrigeration. In addition, he leveraged his contacts at the Natural Sciences Engineering and Research Council (NSERC), through which BioChambers is now partnering with a leading North American university specializing in plant science to develop an innovative product. Such opportunities are a great advantage because they allow us to access the right kind of expertise on a shortterm basis rather than making long-term hiring commitments, says Kettner. Post-implementation: The outcomes BioChambers is seeing some encouraging results from the ERP system that they will in time be able to quantify. Job costing and engineering design are two key areas. Job costing is one of the most critical priorities for sales, and data now available through the new ERP system is helping the company conduct thorough analyses of past jobs. Even though no job is identical, this does provide a database of component costs and staff time. Integral to job costing is managing foreign currency exchanges for out-of-country orders. 4 ERP propagates growth for builder of plant research chambers

5 Engineering design is benefitting from the new 3D modeling system that uses synchronous technology, which is more robust, easier to learn and simpler to use. It is also particularly useful in capturing revisions to drawings, which in previous systems could get lost. As a result of the new technology, the engineering design team is already achieving a number of efficiencies that include increased drawing speed and fewer frustrations for drafters. Kettner also points out that Placing refrigeration and mechanical units on the tops of chambers has freed up footprint that can be used for productive research. shop-floor employees embraced it because it is so helpful for them to see in advance what the product will look like when it s assembled. The DTAPP contribution has also funded employee training for one shop floor employee and six staff members not previously involved in design. This means that more people can contribute to more processes because they have gained new knowledge. And one of the employees has decided to continue his studies toward a drafting career. Other productivity improvements have also been realized, among them: Data management 3 a significant reduction in errors; 3 greater detail and visibility of cost information; 3 an estimated minimum 30 percent drop in duplication; 3 human resources formerly needed to find and correct errors channelled into more productive work. Manufacturing productivity 3 data tracked to better assess manufacturing productivity an important step toward improving productivity; 3 greater amount and quality of data tracking to a very detailed level. This provides added visibility into the system and leads to better metrics for tracking and improving company performance across departments. Customer service and purchasing 3 customer service response time faster by 25 percent; 3 better oversight of the purchasing function. This enables the company to take advantage of buying and payment discounts for savings in procurement costs, which amount to thousands of dollars of savings. ERP propagates growth for builder of plant research chambers 5

6 The journey: Lessons learned Through the DTAPP process and the development of an adoption plan, I gained a new appreciation for the importance of the company s structures and procedures, says Kettner. Even though our procedures were functioning, it forced us to define them more clearly and find new ways to do things so everything would work harmoniously within the ERP system. During the time they spent adapting the BioChambers infrastructure to the ERP system, Kettner and Mitchell learned a number of lessons they believe are worth sharing. FIVE TOP LESSONS LEARNED Lesson #1: Invest in planning Kettner admits that the company had not done enough planning before the ERP system went live. We had enough critical things in place so that the operation didn t grind to a halt, but I was really surprised at how much introspection we needed to do and how much work it was. He points out that the importance of such introspection cannot be underestimated. He believes that without it, the company would not have been able to keep up with customer demand, let alone grow or develop. If he were to do one thing differently, Kettner would invest much more time in upfront planning and preparation to avoid making mistakes that consume unnecessary time, energy and communications. Before you begin to develop a staged plan for technology adoption, take the time to understand the timing and impacts on maintaining business as usual, he emphasizes. An effective plan identifies tasks associated with specific functionality of the new system, as well as task dependencies, required inputs, and time and personnel estimates. Through the DTAPP process and the development of an adoption plan, I gained a new appreciation for the importance of the company s structures and procedures, Bruce Kettner, senior engineer, BioChambers Lesson #2: Customize selectively BioChambers opted for an out-of-the-box ERP solution that wouldn t require any customization. To avoid the constant expense and maintenance of a customized system, they decided to adapt their processes to the ERP system rather than customizing the software to fit their processes. However, with any large ERP solution, some customization is unavoidable. For example, the types of reports the system generated were not satisfactory for their purposes. Fortunately, customizing the reports didn t require any systemic changes, just in presenting the information, says Kettner. The company customized 10 reports to help them with job costing, customer service and other critical factors. Know your business, understand your needs, research your options and select the software solution that gives you an acceptable and manageable level of customization. 6 ERP propagates growth for builder of plant research chambers

7 Lesson #3: Encourage team solution-building Kettner soon realized that enlisting the whole team in changing how things were done was critical to the successful adoption of digital technology. BioChambers team members wanted to see the business succeed and grow, so getting them involved in finding solutions to problems and designing the actual changes solidified their support. People are willing to go along with change if they have hope of seeing some payback, he says. And the key to getting their buy-in was to encourage and support their input. He adds that to maximize the effectiveness of your operational changes, it is important to involve a team of employees who know the job and will continue to do it. Lesson #4: Share for mutual benefit Kettner sees good value in comparing notes with other enterprises that are at some stage in the digital technology adoption journey. He and representatives from about six local companies all in different businesses meet monthly to discuss their experiences. Small businesses have commonalities, even though their products, services and processes are different, he says. For example, we are all trying to be competitive so we need to improve internal structures and processes. He finds it comforting to see what others go through with their ERP systems. In addition, some things said at those meetings have helped steer me toward good solutions or away from problems. Learning from peer-to-peer networks can save money, time and frustration while helping you achieve better results. Lesson #5: Build for growth BioChambers selected an ERP system that was bigger than their immediate requirements. The strategy was to build for the future size of the company so they wouldn t have to go through the process again. Some of the things we re putting into place are helping to show the world that we have the foundation of a bigger company, says Kettner. You have to assume the properties of a large company in order to do large business, and our owner and president, Rob Pauls, has courageously taken this step The new 3D modeling system is more robust, easier to learn and simpler to use. Before you begin to develop a staged plan for technology adoption, take the time to understand the timing and impacts on maintaining business as usual. Bruce Kettner, senior engineer, BioChambers ERP propagates growth for builder of plant research chambers 7

8 to support our becoming a world-class biochamber provider. When selecting technology, Kettner advises making sure it will deliver your firm s existing needs, and that it is robust enough to handle future growth as well as more comprehensive system and data consolidation. Conclusion The ERP system has clearly turned out to be the right one to support BioChambers in its vision to become a global supplier and access marketplaces that were previously inaccessible to such a small company. Some of that progress is already evident, with sales and installations in Europe. They are also targeting some huge developing markets internationally. This success and positive momentum has given BioChambers the confidence to plan for future digital technology adoption that will introduce more efficiencies and boost their competitiveness. This could include moving to a paperless shop floor with monitors at every station, and bar-coding parts to help track inventory through production. It could also include enhancing the company website so customers can configure, design and price their products online. Among the many contributors to their success so far, according to Kettner, are high-calibre staff, a tremendous production force and visionary leadership. I really appreciate that Rob Pauls, our president, values innovation, reliability and quality. With such support, I m sure we ll continue to succeed. 8 ERP propagates growth for builder of plant research chambers

9 About the Digital Technology Adoption Pilot Program (DTAPP) As part of the Government of Canada s Digital Economy Strategy, NRC-IRAP is delivering the Digital Technology Adoption Pilot Program (DTAPP). DTAPP was created as a pilot program to deliver support from November 2011 to March 31, DTAPP represents a significant investment in the Canadian economy to increase the productivity growth of small and medium-sized enterprises (SMEs) in Canada across all sectors through the adoption of digital technologies. An important component of DTAPP is to assess and measure the outcomes of digital technology adoption on the productivity of SMEs. DTAPP will utilize this aggregate knowledge and transfer successful practices and lessons learned to the broader SME community in order to: improve the rate of digital technology adoption by SMEs improve understanding of the link between digital technologies and productivity raise awareness of the benefits and importance of adopting these technologies This information will be a critical tool to encourage prospective adopters of digital technologies and will continue to impact the potential productivity growth of the Canadian economy well into the future. ERP propagates growth for builder of plant research chambers 9

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