[From iSource Business, July 2001] Sometimes, great isn't good enough. That was Larry Caltagirone's philosophy when, a year ago, he surveyed the state-of-the-art enterprise resource planning (ERP) system he'd woven together for Randell Manufacturing, a Weidman, Mich.-based maker of refrigeration equipment for restaurants and hospitals. Caltagirone, Randell's manager of information sciences, had just spent three long years installing the ambitious information system throughout the company. He wanted a way to leverage the considerable investment he and his firm had made by expanding its uses. The likeliest solution was to hook the system up to the Internet and allow purchasers to conduct Web-based transactions. But, in order to reap the same efficiencies they had experienced by installing their new information system, how was that to be done?
The fortuitous answer came from an unexpected source: a Chicago-based aggregator of manufacturing materials and supplies, named Prime Advantage, that Randell had started working with two years earlier. By working together closely, the companies were able to develop a transactional process that integrated the two systems, resulting in even further benefits for Randell.
How It All Began
Caltagirone first came to Randell four years ago with a weighty mission: develop and implement a top-of-the-line information system that would give the company a definite leg up in the highly competitive refrigeration equipment market. Randell, a 25-year old company, which had been bought by manufacturing giant Dover Corp. in 1986, was struggling to stay on top in an industry going through heavy consolidation. We needed a system that would allow us to thrive at a time when it was getting more and more difficult to be successful, he says.
So, Caltagirone set out to install an ERP system that would turn Randell into an efficient fighting machine. It would integrate just about every function imaginable purchasing, accounts payable, logistics, shipping, manufacturing, sales into one process. Once an order was made, it would automatically trigger the shipping or manufacturing of a product; and every step of the way would be visible to customers who could tap into the system whenever they wanted to see the status of their orders.
It wasn't an easy job. Some areas in the company weren't even computerized. Purchasing, for example, still kept track of inventory levels on index cards. So Caltagirone unfolded his plan systematically over a period of three years. He rolled out the system functional area by functional area, with each department spending about six months in intensive training. By 1999, with three Hewlett-Packard minicomputers hooked up to 100 workstations in two locations, every department was up to speed and Caltagirone's work was done.
Or was it? The system, which cost in excess of six figures, was a hefty investment for a company with $70 million in consolidated sales. Caltagirone determined that, to get the biggest bang for the company's buck, he could use the system as the foundation for other technological innovations, which, in turn, would create more benefits to the operation. He had designed the system to be Web-enabled. The logical step was to transform it into a source for making interactive transactions and linking the purchasing and ordering systems to suppliers' order-entry systems. And, since purchasing was one of the first areas to get up and running on the new system, the department was particularly proficient at using the technology. But how to do it? We couldn't afford to link up with each individual supplier, says Caltagirone. And we didn't know how to go about it otherwise.