Building a better bottom line

March 1, 2004
SWITCHING TO NEW manufacturing software was the main reason why Western Trailer increased its profitability by reducing money-losing orders by 90%. In

SWITCHING TO NEW manufacturing software was the main reason why Western Trailer increased its profitability by reducing money-losing orders by 90%.

In the past, pricing was difficult because of the lack of accurate costing information and changes required due to mistakes in the initial production configuration. The trailer manufacturer implemented VISUAL Enterprise software from Lilly Software Associates, which accurately tracks all of the labor and materials used in each order, making it possible to generate accurate historical costing information.

This information was used to set up rules in a product configurator the company uses to specify customized trailers with virtually no errors. The configurator automatically generates the price. The result is the number of unprofitable orders has been reduced from 25% to 2% of the total. In addition, time saved by automating the production configuration and many other processes has made it possible to double the company's sales volume and number of employees while keeping the number of administrative personnel constant.

“The new software provides a wide range of benefits that have substantially increased the profitability of our business,” said Craig Whitehead, production control manager for Western Trailer.

Western Trailer builds flatbed, agricultural, forest products, and refuse trailers. With more than 300 employees, the firm occupies a 100,000-square-foot plant and has the capacity to produce more than 1,200 trailers per year.

The company configures flatbed trailers with a range of options to meet customer specifications. For example, a curtaintop can be added to its Elite flatbed for convenience and load protection. Its forest products trailers operate over rough terrain and carry chips and other wood byproducts. Western's refuse drop-center trailer allows larger capacities to be hauled and then dumped using a hydraulic tipper.

Complex customization process

The fact that every trailer produced by the company is customized results in a complicated product configuration process.

In the past, sales engineers would sit down with each customer and map out their requirements. Design and manufacturing engineers reviewed each order, pointed out errors, and sent the order back to the sales engineer to review with the customer.

For example, one page of the order might specify an air-ride suspension, while another part of the order might call for springs. Or the distance from the kingpin to the rear axle might have been specified at 41 feet, even though one of the states where the customer will operate the trailer requires a 40-foot distance.

These errors were always detected before the trailer was built, but they often led to changes that delayed the order, took up the sales and engineering staff's time, and in many cases, led to extra manufacturing costs.

It was also difficult to determine true manufacturing costs in the past, which further increased the risk of losing money on an order.

To address these problems, Western Trailer selected VISUAL Enterprise because the software integrates the complete manufacturing process, from product configuration through financial statements.

The process begins when one of the company's sales representatives makes initial contact with a customer. Customer information is entered in the VISUAL CRM module, which tracks every contact with that customer as well as information on the status of the sales process. It provides the sales representatives with a platform for managing their schedule, prospects, and individual order pipeline.

Management can summarize and review information as part of its sales forecasting. Sales representatives around the nation synchronize with the server at headquarters to send and receive the latest customer information.

Product configurator prevents errors

Western Trailer engineers use VISUAL Product Configurator to define engineering rules for each of the company's 10 product families. The sales engineer and customer can sit down and select any product features they wish, and the configurator works in the background to ensure compatibility of the different features as well as compliance with state regulations.

The design is configured by clicking on different options. A user picks the type of trailer from the category window. He selects different options, such as a suspension or chassis, from the sales code window. Whenever an option violates any of the defined rules, an error message appears and the software does not accept the option. The product configurator ensures that the design is specified without any mistakes, so the order is nearly always final once the customer agrees on the specification and price.

Ensuring the accuracy of the specifications from the beginning and the use of pricing information based on accurate cost histories has nearly eliminated the potential for losing money on an order. The software also calculates the weight of the trailer with a user-defined formula.

Once a customer places an order, the software automatically provides detailed material and resource requirements.

“We now know exactly what materials are needed to produce our backlog and when they are needed,” said Whitehead. “It used to often take two to three weeks from when the order was received until we placed our materials orders. Now we normally buy materials within an hour of when the customer entered the order. This is partly because we don't have to spend the time to manually break down the order and figure out what is required and partly because the configurator gives us confidence that the order has been specified correctly the first time.

“This provides a significant reduction in lead time to our customers,” said Whitehead. “In most cases, we can provide a trailer two weeks faster than our competitors, which is a major competitive advantage in this market. The fact that we know exactly when materials are needed means we can schedule purchases so they arrive at just the right time, which reduces our inventory levels.”

The work orders have bar codes printed on them so each worker scans the work order along with their employee badge when they start and finish a particular operation. Since this information is entered on nearly a real-time basis, costs are accurately tracked for each job and management can check on the current status and cost versus budget at any time.

Managers can easily determine the status of each job on an up-to-the-minute basis. This gives them plenty of time to react when costs are exceeded. They can also evaluate the performance of departments, workstations, and employees.

Western Trailer developed a simple routine that taps into the VISUAL database to produce all documentation required for each order. The routine prints 400 to 1,200 drawings, one for each of the components in the trailer. This eliminates what used to be a tedious manual task of printing the drawings one by one.

Automated scheduling

The company's master schedule, which determines what trailers need to be delivered when, is maintained in Microsoft Project. To actually meet this schedule, the company uses Lilly Software's finite scheduler, which provides a graphical scheduling window that looks very much like the whiteboard that the company previously used. The software allows the user to drag and drop jobs from one resource to another or switch the sequence of orders with the click of a mouse. With the push of a button, the user can run the schedule, and VISUAL determines completion time for every operation and job. Jobs that will be finished after their scheduled due date are highlighted in red.

This approach has dramatically reduced the amount of paperwork required. Only 12 administrative staff members are needed in production control, purchasing, and accounting.

For more information, contact Lilly Software Associates Inc, 500 Lafayette Rd, Hampton NH 03842; phone 603-926-9696; fax 603-929-3975; e-mail: [email protected]; or access