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Tech Talk: Food Maker Grows with ERP
Posted By Elizabeth Wasserman On July 1, 2009 @ 12:00 am In Business Software | No Comments
Ateeco, based in Shenandoah, Pa., is the parent company of Mrs. T’s Pierogies, a leading manufacturer of the pasta and potato delicacies that can be purchased at supermarkets and other retail outlets around the country. Since the overwhelming majority of the firm’s customers order electronically, Ateeco grew and streamlined processes by moving to a new enterprise resource planning (ERP) solution, Tim Coyle, director of technology, tells IncTechnology.com.
Elizabeth Wasserman: Why did your business need an ERP system?
Tim Coyle: We service all the major supermarket chains and big box retailers all across America. Some of those companies are pretty sophisticated. We need a system for bringing in EDI orders since 96 percent of our invoices and orders are sent electronically back and forth. We need a system that can process that, as well as show us inventory balances and keep accurate counts of our inventory. We have 13 frozen warehouses around the country, as well, and we need to know how much product by SKU we have at those facilities so we can plan and have an accurate balance sheet. Since we’re a food manufacturer, we also need to do lot tracking and we need to know what raw materials go into today’s production run and what customers have ordered in that production run in the even of a major recall.
Wasserman: Have you ever had a major recall?
Coyle: Never. Knock on wood. But we’ve had some minor ones.
Wasserman: What type of system did you have before?
Coyle: We had a legacy system that was a solid system for us from a financial perspective but it only provided us with tools to provide functions for light manufacturing. However, we’re a heavy manufacturing company that also does distribution. We tried to make accommodations to do what we needed but we reached a crossroads where we had to decide in order to satisfy growth and profitability and our strategic objectives over the next five to 10 years whether we would customize this system or find a new platform that was a better fit.
Wasserman: I guess you decided to find a new platform. How did you go about doing that?
Coyle: First we developed criteria. We felt we needed a vendor that had experience in food and beverages, was financially stable, had good references, and had proven methodologies. Most importantly, the vendor needed to help us provide a promised return on investment. ERP systems don’t come cheap. We needed a promised ROI that could be delivered. We went through the request for proposal process and chose two dozen vendors. We received responses back from 10. Then after a review process we narrowed our choice down to two vendors. We actually chose a company but our management team was uncomfortable with the platform they ran on. So we went back to the drawing board and re-reviewed our vendor list. We had initially included SAP in the RFP process but they were not a vendor to small and mid-sized businesses. They were going to charge three or four times what we were going to spend. But when we went back to the drawing board, we found on an Internet search IDS-Cheer. They did food and beverage systems for small and mid-sized businesses and has a product called Aris Smartpath SAP All-in-One. It was an SAP produce preconfigured for a small or mid-sized company and further configured for a food and beverage customer. That allowed us to fin a price point in SAP that we could afford. We went live Jan. 1, 2007.
Wasserman: What have the results been?
Coyle: We’ve been able to reduce our finished goods inventory and be leaner on inventory balances that we carry. We’ve had a record sales year with a record low level of inventory. That sounds like it shouldn’t be able to happen. The ERP system didn’t cause that but it allowed us to manage our inventory with a system that we could trust. With our old system, inventory accuracy could swing anywhere from the mid 60s to low 90s. If you’re not really sure what you have on hand, it’s impossible to plan accurate. Now our inventory at all locations is 98.9 percent accurate. We can say with certainty what we have on hand and carry lower inventory balances. We also close our books now in two days, where it used to take somewhere between 7 and 10 days. We’ve been able to clean up some of our processes with better controls in the system. Our data doesn’t get off base. We’ve reduced our finished food inventory by 25 percent on average. We’re in a period of record sales with record low levels of inventory. It’s the best of both worlds.
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