Canadian General-Tower (CGT)
Finance, Supply Chain Management System Saves Auto Parts Manufacturer $850,000
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Company Overview
Canadian General-Tower (CGT) supplies auto companies in North America, Europe, and Asia with vinyl fabric for seat covers and the covers of doors, dashboards, and car interiors. Close to 85 percent of the cars and light trucks produced in North America use vinyl fabric from CGT.
Business Challenge
In addition, the company manufactures roofing materials, construction supplies, and plastic liners for swimming pools and ponds.
Although the company’s technology for producing auto interior parts is state-of-the-art, its finance and supply chain management systems were on the verge of a breakdown. Last year, the vendor maintaining CGT’s 20-year-old VAX system notified CGT that it could no longer be covered by a support contract. All future maintenance would be on an hourly basis, with no guarantee of results or uptime.
Obsolete Systems Threaten Business
Another key system used a batch-processed database in an unstructured, flat-file format that only one employee knew how to maintain. “Our next system outage could have put us out of business,” explains Tim Armstrong, the Vice President for Corporate Systems at CGT.
”With multiple manual steps and no overall view of company operations, closing the books on operations took more than five days,” says John Ropell, formerly the company’s Controller and now Director of Continuous Improvement at CGT. “You’d start work on a new month without even knowing whether you made money last month or not,” Ropell says.
When a shipment left the warehouse, a worker faxed the bill of lading to the main office, where another worker typed it into the accounts receivable system and created an invoice.
Important Information Missing
In addition, the purchasing department had difficulty keeping up with changes and the dynamic marketplace for the basic commodities the company used for primary production. “Our old system didn’t have a way to record pricing history. Whenever we updated a blanket price, our history just vanished; it wasn’t recorded anywhere,” explains Joan Hanrahan, Corporate Senior Buyer for the CGT purchasing department.
The end result was a lack of understanding and a lack of management control over basic operations. “When I arrived here two years ago, the main topic of discussion at management meetings was who had the right information,” Armstrong says. “We’d spend more time arguing about the data than about solutions to the problems.”
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Solution
CGT analyzed the costs of trying to continue with the status quo—and the business risks of a failure in any one of the obsolete systems—compared with the options available to them from a new business management system. With his deep background in the automotive industry and his familiarity with enterprise resource planning systems from other vendors, Armstrong recommended a Microsoft® solution. CGT chose to implement Microsoft Dynamics AX as the business management solution to lead CGT’s supply chain management out of the dark ages of the 1980s.
Although the old system was clearly past its useful life, Armstrong prepared cost justifications to help top management make the decision to move ahead with the implementation. The figures showed that Microsoft Dynamics AX would pay for itself in reduced maintenance costs and improved operations within three to nine months.
The company launched a multipart strategy to replace the aging inventory management system and start connecting the finance system to purchasing, inventories, manufacturing operations, shipping, and receiving.
Now, the company runs its general ledger, accounts payable, and both commodity and materials requisition ordering purchasing through its new Microsoft Dynamics AX solution.
Microsoft BizTalk® Server 2006 will handle the integration with the flat-file legacy system until the old systems can be phased out and replaced with direct links between Microsoft Dynamics AX and programs such as Synchrono that CGT uses in its manufacturing operations. The flat-file legacy database is being replaced by Microsoft SQL Server™ 2005 Standard Edition and SQL Server 2005 Reporting Services.
The flexibility of Microsoft Dynamics AX was key to implementing the solution in CGT’s unique environment. Selling products to the auto industry requires using the customer’s part number; Ford, Chrysler, and GM all have different part numbers for the products they buy from CGT. The old system had a four-digit limitation on the fields that described or classified these numbers, and made managing parts a very complex process. Microsoft Dynamics AX allows CGT to add new fields to make the tracking of parts easier (see Figure 1).
“This functionality is extremely valuable to us, and because of the flexibility that [Microsoft] Dynamics AX gives us, we were able to add that functionality to our system in less than two days,” says Armstrong.
Business Benefits
Even shortly after the initial implementation, Microsoft Dynamics AX is transforming the way CGT does business. The company is saving money compared with the cost of maintaining the previous system. Staff and managers in operations, finance, and IT are more productive, while giving top management a much more accurate picture of the company’s business. “We’re still implementing Microsoft Dynamics AX, and it’s already transforming our business. We couldn’t be happier with our new system,” Armstrong says.
$850,000 Cost Reduction
The first benefit to the new system has been the cost savings compared with the cost of continuing to operate the obsolete, existing system. Armstrong estimates that the eventual cost savings will total $850,000, and he’s already seen a substantial part of those savings in just the first few months.
“We’ve already reduced our head count by one position and increased our productivity, so the new system is already well on the way to paying for itself in less than nine months—just about what we estimated,” Armstrong says.
The impact on the Purchasing Department at CGT has been equally dramatic. “I've personally saved an hour or two a day ever since the new system has been up and running,” says Hanrahan. “I used to have to reconcile 5 to 10 invoices a day with price discrepancies. In the old system, we had to back out the receipts, change the price, and re-enter the receipt. That was a big chunk of my day.”
The need to resolve price discrepancies is now almost completely eliminated under the new system. “I've only had to do one manual price adjustment since the system went live,” Hanrahan says.
Increased Supply Chain Productivity
With fewer manual entries and less duplication of effort, CGT employees are more productive and the supply chain information is more up-to-date and accurate. Employees no longer fax or hand-carry shipping records from the warehouse to the main office. “We have 24 truckloads leaving our plant every day, and each truckload carries multiple shipments. We used to have one person spend their entire day taking paper records and typing up the entries into the system,” Armstrong says. With data automatically integrated between the warehouse and the main office, that person has been reassigned to higher value tasks.
Improved Purchasing and Supplier Management
With Microsoft Dynamics AX, Hanrahan spends more time negotiating with suppliers. The company buys seven key commodities from 35 suppliers and another 2,000 other items (everything from toilet paper to spare parts for the complex machinery) from a network of other suppliers. “These commodities are all very dynamic markets, and it’s very good to be able to have your pricing flow with the market,” Hanrahan says.
In addition, Hanrahan is working on supplier performance indicators, which are reports that track pricing and delivery results over time, to help with future negotiations and purchasing decisions. “Our whole purchasing system has been much, much improved since we started using [Microsoft] Dynamics AX, and once we get the rest of our phases implemented, it’s going to be even more robust” she says.
With the ability to create complete part numbers for every customer with the new system, CGT managers can now track products and results in much greater detail than ever before. “We can say: ‘Give me all the Ford parts; give me all the Honda parts that are seating applications; give me all the Toyota parts that use a particular kind of vinyl.’ The new system gives us the ability to parse the data with the characteristics that are important to us when we manage the business.”
“Our CEO thinks Microsoft Dynamics AX is absolutely great—and we haven’t even implemented the phase with the most expected cost savings: when we integrate parts inventories and manufacturing operations,” Armstrong concludes.
Microsoft Dynamics
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
For more information about Microsoft Dynamics, go to:www.microsoft.com/dynamics
For More Information
For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to: www.microsoft.com
For more information about Canadian General-Tower Ltd. products and services, call (519) 623-1630 or visit the Web site at: www.cgtower.com
