Family Controlled Building Products Company Improves Operational Efficiency

Background

As many organizations try to focus their capital expenditures on their products and services, they find themselves facing a hard question that tends to grow in impact with time: how long should they keep their current IT systems and infrastructure, and when is the right time to upgrade? This success story is about a company facing that exact question. They decided it was time to assess their IT systems and, perhaps, modernize it from top to bottom. The client was a $500 million manufacturer of windows and doors and a distributor of building products. With dozens of warehouses and showrooms and several large highly automated manufacturing plants, their IT infrastructure was very complex, and they turned to two E.L.I. Partners for help.

Situation

The goal was to improve operational efficiencies in both manufacturing and distribution. The company wanted to better understand their current IT situation as well as the potential benefits of moving from older proprietary technology to a modern manufacturing and distribution system.

Using extensive lean-six sigma manufacturing experience and a deep understanding of modern Enterprise Resource Planning (ERP) systems, the E.L.I. Partners’ first step was to evaluate the client’s use of information technology. Was the current system properly supporting current needs? Could it support future needs? To find out, the E.L.I. Partners applied a comprehensive analysis of IT strategy, process model, application architecture, infrastructure, operations, and organization.

What they found was a huge opportunity. The E.L.I. Partners’ detailed financial model projected that, under the most conservative assumptions, the company could realize a potential savings of hundreds of thousands of dollars per month in operational efficiencies.

Solution

The E.L.I. Partners guided the client through selection methodology focused on articulating and, more importantly, validating their specific business-critical needs for the upgrade. There would be cultural and operational changes, and the E.L.I. Partners ensured the client was aware of the nuances upfront. A detailed Request for Proposal was developed with more than 2,400 requirements spanning 52 major processes. Working closely with the executive team, the E.L.I. Partners guided the evaluation of each bidder’s proposal, resulting in the optimal selection of an ERP application. After the selection, the E.L.I. Partners assisted the client in negotiating the contracts and obtaining significant discounts on the software and implementation contracts.

Other solutions included:

• Negotiation with multiple vendors of software, hardware, implementation services, and hosting services.
• Creation of a governance structure and a program management office to oversee the successful implementation of the program.
• Selection of a customer implementation team and training in project management leading to approximately a dozen of the clients personnel becoming certified as Project Management Professionals by the Project Management Institute.

Results

Subsequent feedback from the client a year after the implementation confirmed that the benefits had exceeded the E.L.I. Partners’ conservative payback projections. The selection of SAP as the base ERP system was completed, and the E.L.I. Partners were able to successfully implement the financial and distribution systems in approximately seven months across the entire geography. A second phase of the project involving the manufacturing operations began immediately afterwards and was successfully completed in approximately 20 months with a complete outsourcing of the systems hosting and management. And the ROI envisioned in the financial modeling done as part of the assessment was more than doubled in actual fact post-implementation leading to a less than 16 month payback of the system.