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As in many manufacturing industries today, the home furnishing and joinery sectors are under increasing pressure to transform their businesses from make-to-forecast operations to short lead-time, small batch make-to- order (MTO) production. The initiative comes from lean manufacturing practice, putting the emphasis on just-in-time deliveries and minimal stockholding throughout the manufacturing process. The main driver is to optimise the use of working capital. For products such as fitted kitchens, customers are buying style and quality as well as utility. Much of the value is in the final installation, the worktops, doors and the appliances, all of which are purchased from specialist suppliers. The cabinet units for kitchens, bedroom wardrobes and home office storage are produced at the company’s factory in Darlington. As rigid carcase structures these are relatively low in value but costly to store in terms of space they occupy. Magnet Limited is a vertically integrated manufacturer and retailer, serving two main customer sectors; retail and trade. Typically retail buyers will use an installation service to fit a new kitchen. Trade customers include small local builders and they will come to Magnet for joinery products, such as windows and doors. By working in partnership with key suppliers, Magnet also markets a wide range of hardware, staircases, panelling, conservatories and decking. Ultimately MTO delivers better customer service levels. Choice can be supplemented by complementary products. Delivery commitments are assured as every item is ordered specifically for the customer at the point of sale. The company has 208 branches throughout the UK and one in Dublin. These are supported by two factories; the headquarters site in Darlington, Co Durham, produces kitchens, bedroom and home office products. The second site in Keighley, West Yorkshire, specialises in joinery products. Magnet’s joinery division was the first to see a marked increase in the volume of make–to-order business. Investment in production facilities has introduced greater flexibility enabling the division to offer tailored solutions, allowing for easy installation. Managing such complexity however requires a modern computer system capable of underpinning the business operations from financial through to sales order processing, production and distribution. Implementing such a system is a challenging process in which the business case, cost benefits and potential risks must be assessed very carefully. For Magnet Limited, making the decision to invest in a replacement system was fairly straightforward because the company’s previous system was becoming increasingly unreliable. Problem
As well as poor availability, the functionality of this system was also limited and many departments were relying on disparate cul-de-sacs of information expertise. Effectively the core package had reached the end of its life. This was confirmed subsequently when the software owners announced the closure of all support services from January 2003. Plans for a replacement had already reached a conclusion during 2000 but this decision was cancelled after Magnet Limited became part of the Swedish furniture group Nobia. The reason for this was the experience of a German subsidiary with the same ERP package that Magnet was planning to install. Immediate alternatives included Nobia’s existing system, which was subsequently eliminated because it did not fit Magnet’s business profile. So in May 2001 the company started another selection process. A project team was set up comprising representatives from IT and key user departments. The initial remit was to establish priorities, evaluate possible vendor solutions and put forward a budget for Board approval. As the project progressed a full time Steering Group was formed to support the project team. Group IT Manager Aidan Phillipson was appointed Project Manager. Proposals were requested from four vendors including IFS and Magnet’s incumbent supplier. "We needed to give our existing supplier a reason to continue to support their system,” says Aidan Phillipson. In the final analysis it was a very close decision between IFS Applications and a competing ‘Oracle’ based solution. Deciding factors for IFS included the screen presentation. The look and feel of the user interface was preferred to its competitor. Another important point was the support provided for purchasing and validation of invoices. This was a high priority for Magnet.
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