March 14, 2002
Tube Specialties of Tempe, Ariz., wanted to get off the paper trail to streamline its production, accounting and inventory processes. This article looks at the reasons for the change, obstacles to the change and its benefits.
From quotes to invoices, Tube Specialties Inc. of Tempe, Ariz., improved its efficiency by following the road to the paperless shop.
To reduce time spent creating, distributing, and filing paper forms, the company implemented manufacturing software that handles as many processes as possible electronically.
Tube Specialties fabricates complete tube assemblies to customers' drawings and specifications. In addition to bending tubing, the company also performs other operations such as end forming, machining, welding, brazing, swaging, pressure testing, and assembly. It designs and builds its own tools, jigs, and fixtures.
Its products include fuel lines, oil lines, and lubrication lines for aircraft engines. Honeywell is the company's main customer, purchasing parts for its gas turbine aircraft engines. The company also supplies products to aerospace, defense, aircraft, and medical manufacturers. In business for 28 years, the company employs 58 people.
The firm had been using the traditional paper-based method of tracking orders through its manufacturing process and dedicated a great deal of time to managing documents to meet quality assurance requirements. With its new system, it generates, routes, and manages documents electronically, from the preparing of a quotation all the way through to creating invoices.
Now, instead of printing multiple copies of requests for proposal (RFP) and mailing them to suppliers, the company uses manufacturing software to generate RFPs automatically and faxes them, eliminating paper in that step entirely.
The most important requirement for the new software was that it be easy to use.
"Many of our employees are not familiar with computers," said Otto Flori, operations manager at Tube Specialties. "We wanted a system they would be comfortable with and able to use without extensive training."
A secondary requirement for the new software was the ability to manage the quality assurance process in addition to handling the usual manufacturing activities.
"Before we started using this software, we used to generate so much paper, and we spent a great deal of time managing it," Flori said. "Now the only paper forms we print are those needed by our customers, such as travelers, packing slips, and invoices. By cutting out most of our paperwork, our profitability increased while our administrative staff decreased."
Flori estimated his company saves $5,000 a year in paper costs.
Previously the firm used accounting software to manage its finances but had no manufacturing software for scheduling, tracking production operations, ordering, and inventory management. It used paper-based methods to manage these activities, which required a lot of time. Because the company is a supplier to the aircraft industry, managing all this documentation is critical.
"Documenting every aspect of the manufacturing process is a key requirement of the AS9100 quality assurance standard that governs the aircraft industry," Flori said.
Complying with AS9100 meant setting up formal processes for managing engineering items such as CAD models, drawings, and change notices; supplier requirements and certifications; purchase orders; manufacturing documents such as work processes, test procedures, equipment calibration, and maintenance records; and nonconformance reports and disposition forms.
The company evaluated 20 programs by reviewing the software vendors either demonstrated or provided on demonstration disks. In evaluating the software, Flori said the company had two primary critera.
One important criterion was traceability. It was important that the company be able to trace the origin of each component back to the raw materials used, and that it be able to verify where else those materials were being used.
Another criterion was ease of bar coding for tracking labor. By using bar coding, the system captures the time spent on a particular project. With bar coding, it takes only a couple of keystrokes for an employee—who may not be, or need to be, computer-literate—to enter that information. And it's entered into the system instantly. Some systems require owners to run a utility program overnight to update the database with such information.
After it had completed this process, the company chose VISUAL Manufacturing® from Lilly Software Associates, provided by Alpine Systems. According to Flori, the most important requirement this software met was that it was easy to use.
"Almost no typing is required because everything is accessible from a series of pull-down menus," Flori said. "It's also very difficult to make a mistake with it because when you want to do something that will affect the database, such as deleting a record, the system asks if you're sure you want to do that."
The software included modules to handle estimating, scheduling, order entry, timekeeping, job costing, material requirements planning (MRP), purchasing, inventory, and financials—all working from the same database. For example, order entry is linked to materials forecasting and requisition, ensuring that raw materials arrive in time to meet the production schedule.
The company also purchased a companion program that automates design, preproduction, production, and postproduction quality activities; manages documents; and analyzes quality data.
To implement the software, the company bought a new file server, which it was going to purchase anyway, 20 new computers, and three bar code readers. It also upgraded some of its old computers, but was able to use the Novell network it already had in place.
The company implemented the new manufacturing software without the help of consultants or an in-house information technology staff. Flori set up the system by entering information about the company's processes into templates. Flori said he did not rush the transition.
"We took it slow and ran our old system alongside our new one for a long time," he said. "It took us about six months to complete the conversion.
"For each of the major operations we have a template that shows the setup time and run-time. Other templates cover the operating capacity of various machines," he said. "I also entered other information, such as the cost of materials we purchase from suppliers and the lead-times, our labor costs, and so on."
Flori was the only person who attended formal training. From what he learned, he taught the rest of the users how to operate the software.
The company's products have a long lead-time, 26 to 27 weeks. Because the major customer, Honeywell, typically sends purchase orders only a few weeks before it needs delivery, Tube Specialties manufactures products in advance, according to 18-month forecasts Honeywell updates weekly.
The first step that takes place in using the manufacturing software is that the forecast is entered into the customer order entry module. The planner runs the MRP function daily, which creates a shortage report for purchased and fabricated items.
The purchasing department prints a shortage report daily (it is able to project shortage for the next 18 months) and from there, through the vendor request for quote (RFQ) module, faxes the quote request to the appropriate vendors from a list stored in the system. As the vendors reply, their quotes are entered into the system.
"When we get quotes from outside vendors, this information is combined with the information already in the system, such as labor costs and how long each operation will take. The software uses the information to determine the unit cost for the job. This way, we make sure that our prices reflect our costs as accurately as possible," Flori said.
Next the MRP module determines when the various subcomponents of the order are needed to meet the target shipping date.
"It tells us when we have to buy materials to make the subassemblies, when we have to start the subassemblies, and when we have to start the final assembly to deliver the part on time," Flori said.
The system generates a traveler that lists all the operations required to produce the part. The traveler includes a bar code for each operation. When production personnel start an operation, they scan the bar code on their employee identification badge with a reader. Then they also scan the bar code for the task on the traveler. The system automatically records that the job has been started and by whom.
Shop personnel repeat this process when finishing the operation, adding how many pieces they processed. This way, the system keeps track of the time required to complete each operation.
"The system multiplies the operator's hourly rate by the overhead in that section and by the amount of time required, so we immediately know the exact cost of that operation," Flori said.
When an order reaches inspection, the quality module pulls up the inspection report for the product, which had been entered previously. This report lists all the dimensions that have to be checked according to both national standards and the customer's requirements.
The quality module can tell from the part number which components in the product have been purchased from outside suppliers. If there is a problem with a component, the system can trace it by its lot number to all other products that use components from the same lot.
"This kind of traceability is very important in the aircraft industry, and this software handles it beautifully," Flori said. "We once had a case where a supplier told us it might have a material problem, and in a half-hour we were able to identify where we had used 1,000 of its pieces."
When an order is finished, the parts go to the stockroom. Workers there use the computer system to print a daily shipping report that tells what parts have to be shipped each day. They can view any range of dates. When they are ready to make a shipment, they print out a shipping label and the appropriate paperwork for the customer. The last step is printing the invoice.
Since installing manufacturing software, Flori said his company has seen a boost in productivity of 10 percent, and administrative costs fell 15 percent. The key to these improvements was the significant reduction in paperwork.
After getting on the paperless trail, the company received accreditation from the National Aerospace and Defense Contractors Accreditation Program (NADCAP) for brazing and fusion welding, as well as status as a partnering supplier with Honeywell International, making it one of a select group of U.S. tube fabricators that supply 15 Honeywell business units.
Andy Pratico is a field representative with Alpine Systems Inc., 170 S. Main St., Pleasant Grove, UT 84062, phone 801-756-8200, fax 801-756-6682, e-mail firstname.lastname@example.org, Web site www.alpinesystems.com. Alpine Systems markets and supports the VISUAL Manufacturing ERP suite of software products and offers network design and local-area network installation, maintenance, and support.
Lilly Software Associates Inc., 500 Lafayette Road, Hampton, NH 03842, phone 603-926-9696, fax 603-929-3975, e-mail email@example.com, Web site www.lillysoftware.com. Lilly Software Associates provides integrated, end-to-end supply chain systems.