Spotlight: Joe Ungashick
In the Spotlight this month, we talk with Joe Ungashick, CEO, ShickUSA. Headquartered in Kansas City, Mo., Shick was founded in 1956 by William F. Ungashick, an aeronautical engineer. Today, Shick is an industry leader in the design, manufacture, installation, and service of single-source, automated ingredient handling systems and equipment.

Joe explains the history of ShickUSA, the opportunities and challenges his company faces today. Read full interview.

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Going Live
Bradford Products, LLC
Founded in 1982, Bradford Products, LLC is America's premier manufacturer of high quality stainless steel pools, hot tub, SwimSpas®, water features, SteamRooms®, therapy vessels and other aquatic vessels. Located in Wilmington, N.C., the company has over 40 years of experience with stainless steel fabrication, and over 25 years of experience with the design and manufacture of stainless steel aquatic vessels.

Bradford recognized the need to move beyond existing methods to grow their business and to better meet client demands. Recent growth meant that the company could no longer rely just on spreadsheets to track jobs and control inventory. "Up to this point, production, purchasing, and inventory control was maintained manually," said Peter Miller, national sales manager.

In the fall of 2007, Bradford started looking for a new business system. "Our business is ETO and our products are 95 percent custom," said Miller. "We initially looked at six different software products, but soon narrowed it down to a shortlist of three. We selected Encompix ERP because we believed it was the best fit for our business."

Bradford Products went live on Encompix ERP over Labor Day weekend. "We are already seeing the benefits," said Miller. "Encompix ERP gives us the information we need to control costs and provides visibility of potential cost overruns. Understanding our true costs has enabled us to develop better pricing strategies to ensure that we stay competitive, especially in the current economic climate. In addition, Encompix has helped streamline our purchasing process and improve inventory control."

R&D Tool and Engineering
A supplier of expert technical solutions to the global plastics industry, R&D Tool and Engineering offers a wide range of products and design solutions to packaging, food and beverage, cosmetics, household, and personal care markets. Recognized as one of the world's leading suppliers of tooling for the global packaging and medical markets, R&D Tool and Engineering specializes in one- and two-stage injection stretch blow mold (ISBM) tooling for PET containers, injection blow mold (IBM) tooling, and custom molds.

With the recent addition of a new, larger manufacturing facility in Nottinghamshire, England, R&D Tool required a customizable ERP system that would achieve overall operational improvements and keep the lines of communication open between its Lee's Summit, Mo., and Nottinghamshire plants, as well as among its different business units.

R&D Tool began their implementation in January 2008 and went live on Encompix ERP in November. "The Encompix implementation was more challenging because of the distance, and the six-hour time difference between the two locations," said Chris Foster, IT director at R&D Tool. "The implementation support we received from Encompix was superb. The communication was top notch, and they kept all their promises."

Even though R&D Tool has only been live for just over a month, Foster is expecting big benefits. "By implementing Encompix ERP, we will be able to mold the system to our specifications and maintain our competitive advantage with faster time to market for our customers. It will provide greater visibility and control over companywide costs, improve scheduling and tracking of current jobs, and enable us to make more effective use of company resources."

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Customer News
E-Tech, Inc.
Founded in 1970, E-Tech, Inc., was originally built around the largely neglected area of material handling in commercial laundries. Located in Minneapolis, Minn., E-Tech's TC-Trak systems load washers, washer/extractors, and dryers without the strain of manual loading. In 1987, E-Tech developed E-Rail, the first material handling product designed specifically for the laundry industry.

As the company grew, it became clear that the collection of disparate business systems could not meet E-Tech requirements. "For financial accounting we used QuickBooks®, but we didn't have a real manufacturing system," said Greg Combs, controller. "We just used spreadsheets and different in-house databases. As we grew, it became increasingly difficult to keep track of material costs, inventory and production, because all the information resided in an individual's spreadsheet or in their head."

E-Tech selected Encompix because of its focus on engineer-to-order (ETO) companies. "We looked at a lot of systems, but most of them were designed for discrete manufacturing," said Combs. "We are an ETO company and Encompix was a great fit. We had a lot in common with other Encompix customers, as we build the same type of products."

Combs expects to see many benefits from implementing Encompix ERP. "One of the biggest benefits will come from using a single integrated system, instead of everyone having their own spreadsheet. This will enable us to control our project costs by accessing all the information from a single location."

Nearfield Systems Inc.
A high technology company located in the greater Los Angeles area, Nearfield Systems Inc. (NSI) manufactures instrumentation used to measure the RF performance characteristics of microwave radio antennas. Since its formation in 1988, NSI has been very active in the antenna measurement community and has delivered more than 400 near-field and far-field measurement systems throughout the world. NSI has established itself as a clear leader in the development of antenna measurement technology.

NSI operated for many years with a homegrown system that went through many technical rewrites over time. "One of the major problems was that our in-house developed system wasn't integrated with our accounting system," said Ed Reed, IT manager. "The result was a lot of additional work, especially in the accounting department. We would print out information just to rekey the data from one system to another. It came to a point where the system could not produce the information we needed to run the business effectively."

Even though NSI had looked at several ERP systems over the years, the search for a new system intensified at the beginning of 2008.

"Previously, we had several different ERP vendors present their solutions, but none of the systems really fit our business. There was always a major flaw," Reed recalled. "After some research, I realized that we needed a system designed for engineer-to-order. The more I researched Encompix, the more it seemed a perfect fit. Encompix demoed their solution to our senior management, and it was the first time we saw a system that was a really good fit. Every question we asked had a viable answer, and we could see how the system would work in our organization."

NSI is planning to go live in March 2009 and is looking for some immediate benefits. “Our hope is that it will make us more efficient," said Reed. "Our lead times range from three to 18 months. We want visibility of all aspects of a project as it progresses through the shop. Currently, project mangers don't see the cost of their jobs, in some cases, until after the product has been shipped."


Encompix Customers Honored at Consona User Conference
Consona held its annual Consona Connect user conference at the MGM Grand Hotel and Casino in Las Vegas, October 15-17, 2008.

During the conference, Consona recognized select customers who have used Encompix products and services to significantly manage and grow their operations by presenting two distinct Summit Awards. This year, two Encompix customers were among the 17 companies honored with Summit Awards.

MSI Mold Builders, a Cedar Rapids, Iowa-based manufacturer of high quality, low maintenance and efficient plastic molds was the 2008 recipient of Consona’s Best Overall Use Award, which honors a customer that has demonstrated excellence in utilizing multiple products (modules, features, add-on, third-party) and services from Consona.

Reading Bakery Systems, a Robesonia, Pa.-based producer of machines and systems for bakers of pretzels and snack foods was the 2008 recipient of Consona’s Transformation Award, which honors a customer that has been able to either reinvent its business or achieve a strong return on investment in a relatively short period of time.

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Product Update: Vendor Portal 2.0
The Encompix Vendor Portal 2.0 streamlines the purchasing process between the buyer and vendor. It provides a website where vendors can view and respond to requests for quotations (RFQs), view purchase orders (POs), and track material as it's received.

The buyer generates an RFQ, and the information appears on the Vendor Portal page for each vendor. An e-mail alert is sent to the appropriate vendors. The vendor enters the price and delivery date and submits the quote. An e-mail alert is sent to the buyer, who evaluates the quotes and generates one or more purchase orders. When the PO is approved, the information appears on the Vendor Portal page, and an e-mail is sent to the vendor. The vendor confirms the PO by adding promise dates. When the material is delivered, the vendor can track receipts via the Vendor Portal.

The Encompix Vendor Portal provides both buyer and vendor with many benefits, including:

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Consultant's Corner: Hugh Alley
The childhood rhyme "Eeny, Meeny, Miny, Moe" was useful when, as a child, you were choosing an ice cream flavor. But this simple counting-out game is not likely to give you great results when you're about to spend money on a new piece of software. In this article "Eeny, Meeny, Miny, Moe: Software Selection, Its Pitfalls, and How to Avoid Them," Hugh Alley explains four basic rules that can improve an organization's decision making process.

Hugh Alley is an experienced industrial engineer who has helped a wide range of businesses and organizations improve their operational performance. Alley joined Alco Ventures Inc. in 2007 as operations manager, where he oversees a staff of approximately 85 in four plants. He is responsible for all activities related to order fulfillment, including supply chain, production, quality assurance and logistics. He came to Alco after seven years with the consulting arm of Grant Thornton LLP, where his focus was improving processes and productivity and helping select, implement and manage enterprise software.

Hugh can be contacted at halley@alcoventures.com or at (604) 888-7655.

Read full article.

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Encompix Analyzer
The Analyzer is a quick test to determine if Encompix is right for your company. Answer a few simple questions and the Analyzer will help identify critical weaknesses in your current system, and propose the types of solutions you need.

The test only takes a few minutes, and at the end you may download the white paper, "10 Secrets Every Software Buyer Should Know."

At the conclusion of the checkup, you will be provided with recommendations that you can print out or e-mail to yourself or a colleague. Take the Analyzer now.

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Spotlight: Joe Ungaschick (continued)

Tell us about your markets and competitors.
Two of our largest international competitors are European. With the recent weakness in the U.S. dollar, we've seen an increase in the number of opportunities. Our business often rises and falls based on the number of large projects we win, very much like a construction company. There is fierce competition for large projects. For example, Tastykake in Philadelphia is building what will be the second largest bakery in the country, a 345,500 square foot building on 25 acres that will include the production facility, a warehouse and a distribution center. We won that contract at the beginning of this year. It's projects like Tastykake that make a big difference to our financial performance. Everyone in our industry is always looking to see who wins these large opportunities. They provide credibility and an opportunity for marketing. They show that we can handle the largest projects.

How do commodity prices affect your business?
Commodity prices have been a particular problem this year. Controlling raw material costs is one of the benefits we can get from Encompix. We use a lot of sheet steel and cast metal in our business. Historically, we could hedge commodity prices, as projects turned around in four to six months, but many of the larger projects have 12-18 month lead times. These are fixed price contracts. When Encompix is fully-implemented throughout our organization, it will improve our ability to control costs and quickly identify potential problems.

How do you differentiate yourself from the competition?
It's really our capabilities and experience. There are many competitors because the barriers of entry to this market are low. All it takes is some experience, because almost all of the pieces for an ingredient handling system can be outsourced. All you need is to buy vessels, dust collection, controls, valves, and you can build a system. We focus on the more complex opportunities to differentiate ourselves. The fact that we offer liquid and sanitary handling systems gives us an advantage. Also, when our competitors are international, recently we've had exchange rates working in our favor.

Relationships are also very important. We like to be involved in a project from its conception. We view ourselves as consultants, and we don't charge for our support services. We like to get involved with a project 18 months before an order is released. We work with the customer's engineers to collaborate on designs, and that can be very helpful during the sales process. By partnering with our customers we get an opportunity to see what their capital spending plans are a year or two in advance.

You have been doing business internationally for some time now. How did this start?
About 20 percent of our business is international and it's growing. The main reason we expanded overseas was because we were beating our international competitors in the domestic market, and we wanted to take them on internationally.  We decided that Southeast Asia was the right market, and we wanted to be a long-term player. We wrote a five-year plan, and for the first three years we were meeting our goals. Then the Asian economic crisis hit, and we had to come up with a new approach to that market. We opened an Asian headquarters in Singapore that enabled us to sell effectively in Malaysia, Indonesia and the Philippines. Today, China is our largest international market, and we now have an office in Beijing.

What are some of the challenges you have faced in China?
There are not as many challenges as people would believe. In other words, people expect things to be radically different, but they are not as different as you would expect. The Chinese act very "western" in terms of how they justify projects, and how they conduct business. We've certainly had some challenges, and that's one of the reasons why we want to in-source over there. Everything you may have heard about stealing intellectual property is probably true. Ultimately, our plan is to source products in each of the markets we serve. Our challenge is making complex machines in China and ensuring our intellectual property in protected.

What are some of the major challenges facing Shick down the road?
I think the real question for Shick is to what level our customers are going to invest in capital equipment in the future. They have been bullish on growth, and fortunately the grain-based food industry has been strong. But if our customers start cutting back their capital investments, that affects us. We have broadened our market by adding the packaging company and expanded two other divisions. We are focusing on environmental systems and hoping that after the election there will be a continuing focus on grain. We have systems that are used in power and incineration plants to reduce mercury emission levels. That's an emerging market. By diversifying, we hope to be somewhat recession proof. We hope that some of these emerging markets take off, if our traditional markets decline.

What are some of the strategies that you have put in place to improve your business?
We are a 52-year old company, and we didn't implement an enterprise-wide system until 1997. I thought we did a good job, compared to many other companies, with our first system implementation. But I have found it's very difficult to incrementally advance the organization without the impetus of a new system. We felt that the Encompix implementation last year was critical. We are a project-based, ETO company, and Encompix fits our business very well. We are now implementing Encompix in the new packaging business, and it will also be implemented in the Asian market. With the volatility in commodity prices, and length and complexity of projects, it's increasingly important that we have a system that provides us visibility and control, especially in the area of cost management. We believe Encompix will be a significant improvement there.

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Consultant's Corner: Hugh Alley (continued)

The childhood rhyme "Eeny, Meeny, Miny, Moe" was useful when, as a child, you were choosing an ice cream flavor. But this simple counting-out game is not likely to give you great results when you are about to spend several hundred thousand dollars or more for a new piece of software. In my experience though, the decision processes of many organizations are not a great deal more sophisticated. Criteria are identified and software is assessed, but what criteria are selected and how the assessments are weighted is not clear. There is a sense that, at the end of the day, everything is thrown up in the air with the hope that there will be a clear result when it all lands.

Is there a better way to select the right software for your company? Yes, there is. Following are four basic rules that can improve an organization's decision making process.

Don't Confuse Criteria with Functions
Criteria are the decision factors—the elements that will lead you to choose one piece of software and reject others. Functions are what the software does—specific tasks it can carry out or automate. Many decision processes confuse the two.

When you have a large number of "criteria," look closely to see whether you are truly describing criteria, or if you are just providing a list of functions you would like—that is, reciting the requirements document. A common trap for many decision makers is to add functions as criteria to make sure nothing is missed. So, for example, a team may include as a criterion, "Commission rates can be assigned by product." This may be a real requirement, but setting it up as a criterion may not be helpful to the decision process.

In some instances, one of the criteria is that certain functions must be present or be easy to use. The way to deal with these "musts" is to create a list of required functions, and set a criterion that all required functions must be present.

Distinguish between functions and criteria, and your decision process will be easier.

Distinguish between Gatepost and Poker Chip Criteria
In general, there are two broad types of criteria to consider: gateposts and poker chips.

Gateposts are non-negotiable criteria. They must be met, or the alternative is abandoned. For example, in one recent selection process, the budget needed to be less than $190,000 (CAD). The organization didn't really care what the cost was, so long as it was below that gatepost level. Other examples of gatepost criteria include the ability to track lots (used in the food and pharmaceutical industries) and the ability to calculate commissions.

Gatepost criteria are binary; they are either true or false. Ask whether a piece of software will be ruled out if the criterion you are considering is not met, regardless of how great the rest of the application is.

As an example, one client set as a requirement—a gatepost—that the reassignment of warehouse locations for stock must be easy. The issue wasn't that reassignment had to be done—it had to be easy to do. The client knew that almost all enterprise resource planning (ERP) solutions will allow you to reassign warehouse locations, but it was also aware that this task happened frequently in its business, and knew that the warehouse staff was not at ease with computers. If reassignment was difficult, it wouldn't get done. Since this engineer-to-order (ETO) firm was highly dependent on knowing the availability and location of its components, it was willing to drop any solution where reassigning locations was difficult, regardless of the rest of the application's features.

The number of gatepost criteria should not be large, and the number of very specific criteria should be much smaller. In one recent analysis, a client had 63 gatepost criteria. This number reaches the recommended upper limit. Most of the criteria were general statements. For example, one criterion was "Capable of supporting ISO 9001 documentation requirements." Notice that this criterion states nothing about how easy it is, only that it is possible. Of the 63 criteria, only a dozen or so were very specific—and this is about the right number to have. If more than 65-70 gatepost criteria are listed, you probably should re-evaluate whether they are all truly necessary.

Remember: the test of a gatepost criterion is that if it is not true, you will abandon the option. Most selection teams, when challenged by this stipulation, see that many of their "musts" are really just strong preferences. They realize that if enough of the other criteria are met, they could accept a solution that misses on that one item (that one "must").

The other type of criterion can be described as a poker chip. Poker chip criteria are tradable. With this type of criteria, you will be willing to give up performance in one aspect of the software in return for better performance in another. Deciding on the trade-offs is where the hard work happens.

Poker chip criteria are assessed on a continuous or stepped scale rather than the binary evaluation of gateposts. The assessments are what you use to make the trade-offs. If a software solution is twice as easy to use, how much can you give up in terms of the reliability of the vendor? If an application performs only half of the desired functions (but all the necessary ones) and costs half as much, is that a good trade-off?

Measuring the performance of an option requires a structured approach. For example, in a recent evaluation, ease of use was one of the criteria. The team was given an established test plan for the software. For each task, it rated how intuitive the software was. In a discussion at the start of the testing, the team decided what the expectations were and what would count as intuitive. The team decided to consider how many errors it made while executing the test, how often team members had to ask for help, and how many screens they had to navigate through. The average rating across all the test tasks was the measured score for ease of use. The differences among the scores of the different alternatives provided compelling input into the decision.

Distinguishing between gatepost criteria and poker chip criteria will make your job easier. But how do you account for all the requirements that are not gateposts? One effective approach is to assess what percentage of the requirements is met by the alternatives being considered. If necessary, you could divide your requirements into two different priority levels and assess each one independently.

Use No More than 10 Poker Chip Criteria
How many criteria should you consider? Eight to 10. Use too few, and the complexity of the decision will probably not be captured effectively. Use more than 10, and one of two things will happen. One possible outcome is that you will measure the same aspect of the solution more than once. The other possible outcome is that you will measure elements that really don't matter much. If you have 10 evenly weighted criteria, then each is only worth 10 points. But criteria are rarely weighted evenly, so adding an eleventh criterion will probably not improve your chances of making the correct decision.

In fact, there is a good statistical reason why adding extra criteria actually makes it harder to decide. The law of large numbers states that as the number of independent variables grows, the sum of the variables converges on the sum of the means. In essence, with large numbers of independent variables, the normal variations of the variables cancel each other out. So with large numbers of variables, the ability to discriminate between alternatives actually declines. If the variables aren't independent, you're back to the problem of measuring attributes of the solution twice.

How do you exclude criteria? A simple example illustrates the reasoning. If you are looking to buy a new car, it is possible to assess the styling of the headlights on each alternative. However, at the end of the day, it is highly unlikely that headlight style will actually drive your decision. The fact that you have preferences and can rate the alternatives does not get around the fact that you should not formally include headlight style as a criterion. Similarly, you may have preferences for the typeface used by the application or the background color of the screen, but it would be a very rare situation where either of these features would bear directly on what computer software to purchase. One exception is that if the typeface was difficult to read, or if the background didn't have enough contrast, then these could affect an ease of use rating. The focus, then, is not on the aesthetics, but rather on ease of use.

Getting down to the eight to 10 criteria takes work. The team must spend time working through which factors really matter. And the criteria need to be practical. Table 1 indicates five tests for determining effective criteria.

Limit the Weighting of Criteria
Excluding alternatives that don't meet the gatepost criteria and using eight to 10 important poker chip criteria make reaching a decision on software selection significantly easier than it would be otherwise. The work required to identify the criteria helps the selection team reach a common understanding of which alternative will be the most suitable solution. As a result, the decision is often more obvious. Because the team is only considering issues that matter, there is less clutter from data that should not affect the decision in the first place.

There is often debate about whether to weight the scores of the various criteria when making the decision. Weighting turns out to be not that critical. Research in the mid-70s demonstrated that a decision outcome was far more influenced by the selection of criteria than by how the criteria were weighted. A key finding was that independence of criteria was essential. It is more important to get the criteria right.

If you do decide to weight the criteria, in my experience, it is sufficient to use three different weighting levels: 1, 1.5, and 2. This gives enough of a spread to place emphasis on certain criteria that can support broader organizational strategies without making any of the criteria under- or over-weighted.

Easier and Faster Decisions that Stand Up to Scrutiny
Software selection decisions will be easier and faster when teams don't confuse functions and criteria, distinguish between gatepost and poker chip criteria, and limit the number of poker chip criteria and the weighting of the various criteria.

There is one more significant benefit from this approach to software selection decisions in addition to its speed and ease. The focus on getting the criteria right at the outset makes it much easier to defend the solution. For example, one firm selected software from a third party firm despite its general preference for an integrated solution. But because the criteria were clearly described and the assessment methods clear, there was no significant debate with the project team's conclusions when they were presented to management. What could have been a source of controversy became a non-issue because the management team felt comfortable about the decision process.

Although the methods described here are not difficult, they are rarely practiced. Software decisions have historically been focused on features and functions, so the decision process has tended to result in comparisons of checklists. Limited consideration of how to assess the decision criteria has often resulted in incomplete or inconclusive assessments that seem to depend more on individual preferences than an evaluation of evidence. And confusion of functions and criteria has made it difficult for decision teams to know what to focus on.

The structured approach to selecting criteria offers immediate help in the software selection process. Distinguishing between functions and criteria means the team can focus on what matters to the organization. Making the distinction between gatepost and poker chip criteria simplifies the trade-offs the team will face. Well-selected poker chip criteria will be easy to assess and will limit the influence of weighting. Furthermore, the process as a whole will increase the confidence of those who must eventually write the check.

About the Author
Hugh Alley is an experienced industrial engineer who has helped a wide range of businesses and organizations improve their operational performance. Hugh joined Alco Ventures Inc. in 2007 as Operations Manager where he oversees a staff of approximately 85 in four plants. He is responsible for all activities related to order fulfillment including supply chain, production, quality assurance and logistics. He came to Alco after seven years with the consulting arm of Grant Thornton LLP where his focus was improving processes and productivity and helping select, implement and manage enterprise software. He guided the ERP selection process for a wide range of clients. As a key member of the Manufacturing and Distribution Practice, Hugh helped clients achieve significant performance improvements in lead time, capacity and quality.

Prior to Grant Thornton, Hugh worked for WorkSafe BC for five years where he played a key role in several major software projects as business owner and project manager. Before that he had his own consulting industrial engineering firm where his clients were primarily small and mid-size manufacturing firms. Hugh is a graduate of the University of Waterloo (Systems Design Engineering), Cornell University (Resource Economics) and Vancouver School of Theology. He is an occasional lecturer at UBC's Faculty of Commerce and has taught at Simon Fraser University. He has written frequently about lean production and business decision-making. Hugh is currently on the BC Advisory Committee of the Canadian Manufacturers and Exporters, is vice-commodore of the Burnaby Canoe and Kayak Club and reviews professional credentials for industrial engineers for the Association of Professional Engineers and Geoscientists of BC.

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