From a three-room operation delivering milk and cream locally in 1894 to a 500,000-sq-ft plant churning out 11 million servings of shelf-stable dairy products per week today, Gehl's Guernsey Farms, Inc., Germantown, WI, has grown by adapting and modifying its business when required to deliver the best-quality product in the most efficient manner possible. "Most people hate change," says Andy Gehl, president of Gehl's. "I firmly believe that change is a requirement, and a necessity.
"Every company that I have ever seen is either moving forward or backward. Very few companies stand still, and if they do, they can only stand still for a very short time before they start going backward. At Gehl's, we partner with suppliers that are committed to constantly moving forward. Because if they are not moving forward, that impacts our ability to move forward."
In the late 1990s, Gehl's was on the cusp of great expansion, but Gehl—joining his father in the family-owned business after years in the IT industry—recognized that the company's lack of computerization could jeopardize that growth. "While we did have some software running here prior to Ross," he says, "it was truly bad news; it was just a step up from doing things manually."
After months of evaluating available enterprise resource planning (ERP) solutions, Gehl selected the iRenaissance ERP software suite from Ross Systems, Inc. (www.rossinc.com). Installed at Gehl's module-by-module since 1999, the system was chosen because of its ability to manage process manufacturing environments such as Gehl's, spanning the enterprise, from manufacturing, financials and supply-chain management to customer-relationship management, performance management and compliance. "The biggest benefit by far of the Ross ERP system has nothing to do with any one of the individual modules," explains Gehl. "It is the integration of those modules into a single entity that allows the information between the modules to flow freely that is the real advantage."
Gehl's manufactures specialized, aseptic dairy-food products, including private-label puddings, nutritional drinks and cheese sauces, for more than 100,000 U.S. stores, restaurants and concessionaires. In 1996, when Gehl began considering ERP systems, the company was just one-third of its present size, with 80 employees and a "relatively small" stockkeeping-unit count of 50 items, "but of those, only ten or fifteen were truly high-volume," explains Gehl.
Until that point, communication between individuals in the company with purchasing, accounting and logistics information was fairly smooth. "When you're a small company, you're able to condense a lot of information into a single person, and into a single 'brain,' and that works really well," notes Gehl. "As you grow, all of a sudden, you start to fracture, and you start to have all these local areas of expertise, and they don't always integrate well." In this environment, information existing within one department often was not visible to the rest of the organization.
In terms of computerization, while some departments were utilizing software programs, many tasks were still being performed manually. For example, audits were done manually, requiring the resources of as many as seven people and taking up to three hours to complete. Then, after the team created the audit report, it still had to double-check the information for accuracy.
Without spreadsheets or other tools to track inventory, the company was also forced to perform manual, physical inventories anywhere from once a day to once a month, depending on the item. This process also presented potential pitfalls to customer service. "Without the ability to accurately track inventory, we would commit to orders and not have complete assurance that the inventory was available to fill all requests," says Gehl. "In addition, inventory was often overlooked if it was hidden outside the direct line of sight, and expired products cost us money in unusable product, as well as shipping and handling fees for returned goods.
"What happened as we grew is that we started to get so many balls in the air, and the way that we compensated was to buy in bigger quantities so we could buy less often. When you buy in bigger quantities and buy less often, your inventory goes up, and your warehouse space goes up."
Illustrating the risk of this type of inventory-management method is an incident that occurred at Gehl's before implementation of iRenaissance that Gehl says was the "final nail in the coffin." Assured of continued business from a major new customer, Gehl's stocked its warehouse with a year's worth of product labels valued at more than six figures, only to find after three months that the customer wanted to change the label. "From that point on, it was all computerized," says Gehl. "Now, we never have more than a six-week inventory of labels on hand."
Installation of computers, servers and the iRenaissance software system at Gehl's began in early 1999, with one or two implementations added each year since. The system currently in use is v. 5.7, Service Pack 2, run on clustered Oracle (www.oracle.com) servers. According to Gehl, what sets Ross apart from its competitors is the fact that it allows its users access to the underlying code. "This has allowed us to understand the system better, understand why things work a certain way," says Gehl. "It also allows us to tie in third-party pieces of software where necessary, integrating them directly into the Ross system, which has just been phenomenal."
The full iRenaissance ERP suite comprises modules for financials management, including budgeting, accounting and reporting capabilities; manufacturing-operations applications for recipe and formula management, work orders, product costing, maintenance, materials planning, inventory control and production; and quality control management, including batch scaling, date-code tracking, shelf-life expiration dating, lot tracing and yield-optimization capabilities. Other modules provide logistics, supplier and customer management, as well as integrated regulatory management capabilities that allow users to streamline their compliance efforts.
According to Gehl, features such as inventory control have been essential to his company's growth in recent years. From having only 50 finished-goods skus in 1999, the company now handles approximately 200, as well as 200 ingredients, 300 different packaging materials and 200 dispenser components. "All told," he says, "we're right around 1,000 items in inventory that are actively moving on a high-volume basis. Without the ERP system, we just couldn't manage. Or, we'd need so many people to keep track of inventory that it would throw off our entire structure."
In the case of audits, not only does the software system save time over the previous, manual method, but more importantly, it has also enabled Gehl's to retain a major customer. As Gehl explains, audits are performed twice yearly to simulate emergency recalls. A mandate by one of Gehl's larger customers required that the audits take a maximum of one hour to complete. "With Ross, we're now down to about twenty-five to thirty minutes," says Gehl. "In this particular case, the software allowed us to keep a customer that we otherwise would have lost."
Another advantage of the system is its ability to keep Gehl's in the forefront of changing technology and emerging standards. Areas where Ross has steered the company in new directions include the adoption of electronic data interchange (EDI) systems and bar-code scanning for internal use, which respectively eliminate human input errors in job orders and help track inventory throughout the plant.
Since implementing the iRenaissance ERP system, Gehl's has seen its annual sales triple and its workforce expand from 80 to 230 people. And, while Gehl is not comfortable with attributing all of this success to the Ross software suite, he does concede that it has been instrumental in allowing the company to grow without losing control of its inventory, management and production. "We could not have grown to the level we are at now without a robust system like iRenaissance focused on addressing the unique needs of our industry," he says. "iRenaissance has allowed us to conduct business with large retail and fast-food customers, expanding our operations and product lines."
He concludes: "As a manufacturing company today, you have to compete not just locally, but also globally. A lot of that comes down to efficiency; you have to be the best in class in every facet of your business. I firmly believe that you cannot do that today without high levels of automation and computerization. As a small company, it's difficult to devote a lot of resources in those areas, so you have to partner with companies that you feel are going to make good decisions and will keep you world-class.
"When we picked Ross, we knew that they had a good product, but we had no clue whether they would still have a good product in ten years. We've been very lucky in the fact that they still have a good product, and we're still very happy with it."
|More information is available:|
|Ross Systems, Inc., 770/351-9600. www.rossinc.com.|
|Oracle, 650/506-7000. www.oracle.com.|