Material Yield System
High Remnant Valuation Forces Tri-Star Plastics to Seek Solution
As a supplier of cut-shape plastics, Tri-Star Plastics maintains a large inventory of plastic sheets, rods and tubing which it custom cuts to customer specific dimensions. While the custom cutting service produces satisfied customers, it also produces huge quantities of remnants at Tri-Starís three U.S. stocking locations. In fact, Tri-Star estimates that approximately 40% of its inventory sit in remnants at any one time. Until recently, the companyís attempt to return remnants to stock for consideration in filling future orders was very time consuming. New stock codes had to be assigned, and the remnants had to be valued. Once back in stock, more calculations were necessary to determine the most efficient yields from the odd-size scraps. Because these calculations also had to take blade widths into account, they were complex and prone to error. Explains Richard Cedrone, president of Tri-Star, "While calculating yields on numerous line items was extremely time consuming, the situation was exacerbated by the need to deal with the changing sizes and shapes of remnants in inventory."
Tri-Star Plastics Corp. is a supplier of high performance plastic materials. They also offer self-lubricating plane bearings, custom-machined components and manufacture a line of specialty composites.
In late 1999 to support the companyís various operations Tri-Star opted for new Enterprise Resource Planning software. After extensive investigation, they selected IMPACT Encore from the Syspro Group.
IMPACT Encore soon enabled Tri-Star to add efficiency to its manufacturing operations, reduce costs and implement more stringent inventory control, with one exception. The software provided no solution for the companyís remnant problem. In fact, says Cedrone, at the time he could find no ERP vendor that offered a viable solution.
Subsequently, Cedrone convinced Syspro to apply its application development expertise to come up with a system. He reasoned that all cut shape suppliers, including those in steel, rubber, paper and lumber, had the need for such software. Moreover, he pointed out the highly favorable environmental impact of such a system. Very simply, by maximizing the use of remnants, the amount of scrap relegated to landfills could be significantly reduced.
Syspro agreed to work with Tri-Star and, concurrently, with industry specialists and other plastics manufacturers and consultants. The goal was to develop material yield software that could be utilized by cut-shape suppliers in a variety of industries to maximize yields, reduce waste and return remnants to stock.
Tri-Star has now been using the Syspro Material Yield System for several months and is extremely enthusiastic. The ability to include remnants in inventory is producing a rapid return on investment. Moreover, the systemís ability to perform automatic yield calculations has alleviated costly, labor-intensive estimating. In addition, the system has speeded order turnaround, a powerful contributor to Tri-Starís efforts to enhance overall customer service and secure repeat business.
Says Cedrone, "When quoting a cut piece, the program displays an instant snapshot of yield options, including remnants, across all branch inventories. It even suggests what inventory should be purchased if current stock is unavailable to fill the order." He continues, "From an accounting perspective, Syspro offers what I consider the standard in the industry." He explains, "The system allocates selected material to a job, with the option to restock remnants at no cost. On the next job, you can use the remnants, and it will be calculated at zero cost, making the job that much more profitable. Also, for multi-site locations, the system displays the stocked remnants at the other locations, so you can cut and ship from other inventories without having to buy additional sheets."
The systemís ability to perform automatic yield calculations reduces the training time for new Tri-Star employees, and, as a result, they become productive more quickly. Moreover, because sales professionals no longer have to be involved with yield calculations, they are free to devote more time to what they do best Ė sell.
Tri-Star has developed an ROI formula that calculates savings based on the number of inside sales professionals, the average number of yield calculations done per day, per sales person, the average time to calculate a yield and the average inside sales personís yearly salary. For example, if a cut-shape supplier employs 8 inside sales professionals at an average salary of $32,500, and, if each of these individuals does an average of 8 yield calculations per day, with each calculation averaging twenty minutes, the total annual savings in hours would be 5,547 or in dollar terms would be $86,667 in direct salary charges. If the supplier employed 5 inside sales professionals at this same annual salary, and each performed only 5 yield calculations per day, the total estimated yearly dollar savings would be $32,500, while the number of hours saved would be 2,167.
Cedrone's enthusiasm extends to the system as well as to Syspro, as an organization. "Sysproís application group worked extremely hard to understand the application and come up with a unique solution that has applicability across many industries, including plastics. While we were hoping for an automated solution for managing remnant materials and generating quotes, we had no idea it would be fulfilled so completely. I sincerely believe that this new system will do for the software industry what the Internet has done for communications."
Syspro is marketing the new Material Yield System as an extension to the inventory control functionality in its IMPACT Encore supply chain software. The Material Yield System is an automated solution that enables a cut-shape supplier to fill orders for customer specific dimensional requirements in the most efficient and economical manner. It automatically calculates yields from full sheets and remnants and returns remnants to inventory, creating new part numbers. The system accommodates orders from existing inventory, another branchís inventory and the purchasing of material from a vendor or a combination of each.
For more information, contact the Syspro Group at 800-368-8649, E-mail: email@example.com, Web: www.sysprousa.com.