Finding Software With the Right Fit: Shop Floor Report
Metal Center News, July 1999

An inventory management system should fit the way you do business. If you have to change your business methods to suit the program, experts say, it might not be the right one for your company.

"Rather than be impressed initially with the bells and whistles, you need to determine the numbers the system can generate that will impact your business," says Brian Shinkle, vice president of Federal Steel Supply, St. Louis.

Evaluating inventory management software took about a year for Steve Kenney, operations manager at East Tennessee Steel Supply Inc., Morristown, Tenn. The company had been using a generic accounting package, but sought a more detailed analysis of its business and its inventory. "We adapted it to our business, but it wasn't specialized for service centers," Kenney says.

He narrowed his initial list of 15 vendors down to three, talked to references from each one and scheduled demonstrations. Once he’d settled on the preferred vendor, he took a trip to its headquarters. "I felt very comfortable with them," he recalls.

Arthur Louis Steel Co., Ashtabula, Ohio, operates both a service center and an industrial fabrication shop, and had to find a software program that would suit both.

"About five years ago, we were completely manual," recalls J.T. Kanicki, vice president. "We had difficulty finding a software package that could handle both businesses and be user-friendly."

The company finally opted for a program with a database preloaded with standard steel shapes and sizes.

"With inventory reports and on-demand reports, we can avoid running out of stock," says Kanicki, who also does the purchasing for Arthur Louis Steel. The software also streamlined pricing by eliminating time-consuming manual invoice searches.

"I use the quote system constantly," he says. "We are so much more efficient now than we ever were. I have no doubt this system has paid for itself several times over."

How did the company solve the dual-business issue? By setting up the software to treat the fabrication shop as it would any other customer, Kanicki adds.

With more than 40 locations of various sizes in North America, Marmon/Keystone, based in Butler, PA, needed to find a system that could track inventory regardless of the personnel available on-site.

Jay Powell, director of MIS for the pipe and tube distributor, says about three-fourths of those locations had their own inventory systems, making it difficult to get a handle on company-wide inventory levels.

Within the past year, Powell and his team put all the facilities on the same software package. "Now we see material as it's used. Before, we had to wait a month's cycle to see where the inventory stood," he says.

Marmon/Keystone is using reports generated by the new software as part of an employee incentive plan. Bonuses are based on increases in line items completed per hour.

At Honda Trading America, the central metals purchasing unit for Honda Manufacturing, a metals inventory tracking system (3rdwave) has been in place for about five years.

By keying in each coil's mill tag number, whether the coil is received at the Marysville, Ohio, facility or shipped directly to a customer, senior administrative manager Greg Norval and his staff can track the metals, which include carbon flat-roll, tube and bar and some aluminum ingot.

Norval says serial numbers assigned to coils that go to a few service centers for storage or processing are also tracked. The mill and service center tags are kept in the system.
When a coil is slit, the slit pieces are assigned unique identifying numbers, too.

Along with the purchase cost, processing, storage and freight or import costs, if applicable, are keyed in at each step (but only keyed in once). "Ultimately, when we invoice that material out, we can generate profitability and individual cost categories," Norval says.

By using the tree structure in 3rdwave software, Norval can start with the finished slit piece and see where costs were incurred and which original coil the piece came from. Honda Trading America has also expanded the program to help manage its future inventory.

Parts makers and other users of the company's metals always have orders placed 120 days out. That information can be turned into a report, which helps HTA's purchasing staff always keep the proper amount of materials on hand.

For related information, please go to:
3rdwave MTD (for Metals Trading and Distribution)
3rdwave CGD (for Consumer Goods Distribution)
3rdwave Global Logistics
3rdwave Inventory
3rdwave Accounting & Finance
Honda Trading America Case Study