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November 2007 - IAS Turkey

CANIAS ERP - Ar-Can Makine We are happy to share in our customers' successes, thanks to our flagship product CANIAS ERP, whose quality has been proven many times over and which continues to make a difference for businesses.

Ar-Can Makine is a leading manufacturer of food preparation equipment, and has recently transitioned its ERP implementation into production use. Cem Inam, Ar-Can Makine's General Manager and, Can Inam, Assistant General Manager, describe to us the environment at Ar-Can Makine prior to the deployment of the ERP system, the criteria that was used during the decision making process for the ERP vendor selection, as well as the newly gained advantages in starting to use the ERP system.

Ar-Can Makine, a leading name in its industry, started in the food preparation equipment business back in 1983, and has recently been making a name for itself through the innovative investments it has undertaken. Since 1998, it has been using solid modelling in its design processes, and in 2006, it embarked on its ERP implementation project, to enable all its manufacturing processes to be monitored through CANIAS ERP. Cem Inam, Ar-Can Makine's General Manager and, Can Inam, Assistant General Manager, who have both been present during the implementation of the ERP system, describe to us the legacy systems that were in use at Ar-Can Makine prior to the deployment of the ERP system, as well as the criteria that was used during the decision making process for the ERP vendor selection.

IAS: Please describe to us how Ar-Can Makine was founded, and what it does.

Cem Inam: Orhan Inam, our father, was a plant technical manager at Ulker, a position he held between 1969 through 1981. After he left Ulker, he founded Ar-Can Makine in 1983. 2008 will mark our 25th year anniversary in the business. As the food preparation marketplace was not a large one back when Ar-Can Makine was founded, the company manufactured several types of machinery until 1990, including ones for industries outside of the food preparation business. In 1991, the company started focusing on equipment for the food preparation business.

Our first export was accomplished in 1994, to the country of Iran. Today, between 65% to 75% of our output is allocated for exports. We have an installed base comprising nearly 40 countries. We have equipment being used in all continents, except for the Americas. Aside from Romania, Bulgaria, and Russia, which are your more typical export targets for Turkey, we also manufacture equipment destined for Australia, the Fiji Islands, India, Sri Lanka, South Africa and Ethiopia.

IAS: It would be fair to say, then, that your export business is very important to you.

Cem Inam: Yes, very much so. Working with customers outside of Turkey provides benefits in several categories compared to working with domestic customers. For example, in Europe we get the opportunity to be ranked against some of the leading companies operating there. Our customers have mentioned that they would rate us at 85 to 90 points out of a possible 100 compared to the best companies in the business. And as our prices are about half that of the competition, so our customers choose us. We are easily the preferred choice for customers looking for quality in their equipment. And if we get to do business for a certain elite and select group of companies in a given country, that makes us happy.

An example is our activities in India. The market there is highly price-sensitive, but because we have such local clients as Nestle and Cadbury, we get to enjoy two or three new orders every year. About 70% of our orders are from repeat-customers, and the remaining 30% are from new customers. One third of our new customers are referrals, one third are through contacts established at trade shows where we exhibit, and the remaining one third are through other means. These ratios have been fairly consistent through several years. Therefore, we get most of our orders from our existing customer base. We have never had a customer who started working with us and was not happy.

IAS: Please describe further for us the advantages you mentioned of working with customers outside of Turkey.

Cem Inam: Our customers located outside of Turkey tend to request from us various product details that our domestic customers do not. In fact, this was the reason that we moved to using "solid modelling" back in 1999, a technology which has completely expanded our vision. Once we moved to solid modelling and left the wireframe-only world behind, design-based errors almost completely disappeared. In solid modelling, having a part not fit its counterpart, or having two screw holes misaligned, simply do not happen.

After getting the solid modelling technology fyrmly established in the company back in 1999, we have since formed a large database of product design information. We currently maintain a database of at least 45 thousand design drawings. In our business segment, a design inventory of this size is not easy to come by.

IAS: It is obvious then that the requirements posed by your customers outside of Turkey have contributed significantly to your company vision. Turning our attention to ERP technology, please describe to us the legacy systems and the technology infrastructure that were present in your company prior to your switch over to ERP.

Cem Inam: As late as 2001, our manufacturing planning was being realized through the use of Excel spreadsheets. We had reached the limits of that technology, and started looking at MRP II (Manufacturing Resource Planning) technology solutions. Until the end of 2006, we made do using a product developed by a local company. The capabilities of the said software product hardly matched the MRP I level (Material Requirements Planning), let alone MRP II.
"CANIAS ERP fully supports such advanced functionality, and thanks to its capabilities, our performance figures across the company are moving past 90%, when before they averaged about 75%."

Using the legacy MRP product, we had implemented product trees and routing information, and utilized them to execute all of our purchasing since 2001. Inventory management, generation of job orders and the assignment of these orders to shop floor equipment, as well as the tracking of job order start and end times, had all been implemented, with the exception of automated planning. And for the past 2 years, we had been using this product to execute performance monitoring, at least for certain manufacturing centers.

However, that product did not provide certain critical features we needed. For example, say that a job is defined within the product tree to consume 10 minutes of labor. Six such identical jobs would consume 60 minutes total sequentially. When we observe the start and end times of the actual six jobs on the shop floor and see that they take 70 minutes total to complete, we can compare that value to the advertised time for that job, 60 minutes in this case, and initiate the required action to remedy the situation. The previously used MRP product did not support making such comparisons. CANIAS ERP fully supports such advanced functionality, and thanks to its capabilities, our performance percentage figures across the company are now pushing upwards of 90%, when before they averaged about 75%. Therefore, when we are determining our sales pricing now, we can calculate in the actual labor cost for a product with precision, say 110 YTL, when for the same product in the past, we may have incorrectly specified 125 YTL, which would have needlessly inflated the final sales price. The functionality I have described has been a major advantage for us.

Our past experience with MRP systems benefited us greatly when implementing our ERP system, as we had already implemented product trees, purchasing, exchange rates and labor costs using the legacy MRP product.

We have a lengthy manufacturing cycle. We deliver a product 3 to 4 months after the receipt of the corresponding order. Now, we are able to see real-time costs immediately, even during such lengthy manufacturing timeframes, and for us, this really has meant the return of investment in this technology.

We did prepare a plan using the legacy system, but we were never able to follow that plan. In 2004, we had been certified for our quality systems, but the mentioned planning system continuously created problems, and as a result, we were not able to be re-certified in 2005. Because we tend to shy away from paper trails in the company and opt to use electronic processes wherever possible, to be able to take all data with us on our laptop wherever we go, we wanted to achieve our goals electronically and not manually using paper. The legacy MRP product did not allow us to do that.

The old system also did not allow us to track certain processes. For example, in the assembly line, the system had to be kept in a continuously integrated state. The accounting did not exist, and that created a bottleneck. So we again started searching for a new, suitable software solution. We examined some domestic software vendors. We did not even consider certain well-known international vendors because their costs were prohibitive. We focused on the details for products from a couple of vendors.

IAS: What criteria did you focus on during the product selection process?

Cem Inam: We focused on three criteria:

1. The product had to have full and complete support for performing manufacturing planning. This entails comprehensive support for MRP and advanced scheduling.
2. Ease of use, and a user-friendly interface.
3. Integration with the accounting systems and HR (Human Resources), so that we would not have to resort to using applications from office suites, such as Word and Excel.

However, the overriding criteria for us was the first one, the capability for carrying out manufacturing planning. And in the end, we decided on CANIAS ERP.

IAS: What were the reasons you decided to go with CANIAS ERP?

Cem Inam: As a company, we operate on custom order basis, where each order is defined as a project. For a project that we will be taking on, we do not embark on manufacturing activities before the sale has been finalized. Among the products we examined, CANIAS ERP was the only system that would be a fit for the way we do business and provide the functionality that would meet our requirements.

Another reason we decided on CANIAS ERP was the referrals, which were all very positive. IAS had a local organization staffed with young people, which we felt would be a dynamic team. We decided to work with IAS.

IAS: How did you begin the implementation? How far along are you currently in the implementation process, and how is everything proceeding?

Cem Inam: Can Inam: One of our requirements was to have our product tree data automatically transferred from our old MRP product to the new ERP system; we did not want to have enter the data manually, one at a time. Sure enough, within a time period of two weeks, the product tree data was made available for us in the ERP system. This opened the way for us to proceed with our remaining tasks.

After obtaining the product tree data, the next step we tackled was manufacturing. We wanted to understand how manufacturing planning would be accomplished. It was a tough task, but it did get accomplished. Now, we are managing everything through CANIAS ERP.

The strongest feature of CANIAS ERP is its ability to create product trees through EDI (Electronic Data Interchange) integration. This capability removes any opportunity for errors. Once a design is completed using the solid modelling process, we transfer the design data to CANIAS ERP, and as a result, the corresponding product tree gets created automatically. Also, if the design incorporates a new material without an existing material data card, a data card is automatically generated. For a business that operates on a project basis, where each product and each project is distinctly different than the others, this feature provides an incredible advantage.

Congratulations should go out to the architects of the CANIAS ERP software for putting together a system that makes development so easy. What we currently accomplish in a day, we would not have been able to complete in a month using the old system.

Another critical requirement for us was to be able to have the system identify our production output based on the customers for whom they were manufactured. The base system came with two options; one was the regular manufacturing configuration, and the other was custom manufacturing for a specific customer. However, we had a further requirement where all identical parts, albeit targeted for different customers, had to be manufactured together as a group, for us to be able to take advantage of the resulting economies of scale. While the system did not initially have this capability as part of its standard configuration, I am happy to say that we are currently using just this capability. It was made possible through the flexible customization that CANIAS ERP offers. One of this product's strongest points is its approach where the system and the customer requirements meet each other halfway, rather than having the customer change the way it does business so as to accommodate the product.
"We are now able to perform all manufacturing operations solely through the ERP system, without having to consult any resident guru in the organization. All operations are consistent each and every time. All reporting is top-notch, with data obtained in its basic and true form, not obscured by any layer of interpretation."

Currently, a single push of a button accomplishes what purchasing personnel in the past had to labor for days to get done. Today as personnel perform their work using CANIAS ERP, the data they enter becomes visible in real-time to other users on the system.

Few businesses in the machinery industry make use of ERP systems, as their business requirements do not match what is provided by typical ERP products. However, CANIAS ERP is not a typical system: it is extendible in a flexible manner, and IAS, for its part, completed all of the customizations on time. During the customization process, we worked with IAS as part of a team. All decisions were the result of team consensus. Sometimes they accepted our ideas, and at other times, we decided to go with what they encouraged us to do. As a result, we feel that the system we are using now is better than any that can be found in our industry.

Another benefit of the system is the capability it provides us to retroactively track our manufacturing. We are now able to perform all manufacturing operations solely through the ERP system, without having to consult any resident guru in the organization. All operations are consistent each and every time. All reporting is top-notch, with data obtained in its basic and true form, not obscured by any layer of interpretation.

Initially, we viewed accounting functionality as having a lesser priority. But then we realized that if an organization requires a clear picture of its cost accounting, and wants to utilize its accounting system as a management tool, it requires, without question, a software system that is an integrated solution. All features need to be well integrated, so that, for example, actual costs can be determined early in the process and cost accounting can be utilized.

ERP systems are, without exception, an absolute necessity for all businesses. In any case, it is an investment that pays for itself. In its simplest form, the system allows you to see your costs not annually, not every three months, but in real-time, and allows you to either reflect these costs to your sales pricing, or gives you the opportunity to take the appropriate action in a timely manner. As an example, if the cost of stainless steel increases, rather than making an educated guess, you are now able to see directly how that cost increase affects each and every one of the products that you are in the process of manufacturing, thereby enabling you to take corrective action in your pricing.
"ERP systems are, without exception, an absolute necessity for all businesses. In any case, it is an investment that pays for itself. In its simplest form, the system allows you to see your costs not annually, not every three months, but in real-time, and allows you to either reflect these costs to your sales pricing, or gives you the opportunity to take the appropriate action in a timely manner."

IAS: What are the benefits and advantages you have realized using an ERP system?

Cem Inam: Proje bazly i? yapan bir yerde önemli bir ?ey ba?ar-dyk. Nedir bu? We brought about significant accomplishments at an organization that is in the challenging business of custom manufacturing. We are now able to aggregate several manufacturing operations, reduce manufacturing timeframes, and at the same time implement monitoring for all manufacturing operations. This is no small feat. Although we do custom manufacturing, we run our business as if it was volume production. We plan the manufacturing, and perform the monitoring on a per-project basis. This is a significant advantage for a business that requires traceability of its materials and costs.

Earlier, we had a variety of software which we were using. Alone, each performed its given task and was functional for the most part, but together, there was no integration among them. With CANIAS ERP, we achieved integration with a single database and we are now at a point where actual costs are visible in the organization with ease. These constitute significant advantages for us. IAS was instrumental in the success of the implementation. The IAS project team was highly motivated, and had control over the implementation. Team members from IAS and from our company are all very happy regarding the point we have reached in the implementation. The first stage of the project is on its way to becoming a success.

Accounting and HR functions should be tackled during the implementation planning stages. Initially, we failed to pay close attention to them, and did not go into the required details. We are now pleasantly surprised that the implementation of these modules have also turned out to be extremely useful for the organization, thanks in large part to the integrated nature of the product.

With the legacy systems, we had problems making our delivery deadlines due to problems with the software. Now, we are able to plan our manufacturing operations ahead of time and as a result, we are currently making plans to increase production by 15%. We now have much better visibility into our operations. The CANIAS ERP system also provides a feature that forecasts, in under 10 seconds, the duration required for the completion of a given task. This is an incredibly useful feature, one that would have otherwise required us to assign several personnel to accomplish manually.

IAS: What are the future goals you have in terms of the use of your ERP system?

Cem Inam: We are planning to start to make use of the advanced features of the system. We currently do not have plans to extend the system, but rather to make full use of the existing capabilities of the system. I believe this will further strengthen our abilities to perform manufacturing planning. Later on, we intend to add the maintenance module to the system. That will allow us to do away with the paper charts currently on the walls, and enable us to transition all that to the electronic environment. We also intend to transform accounting into a department that provides strategic information to management, rather than one that is busy calculating tax rates.

IAS: What are your recommendations for other companies interested in starting to use ERP systems at their businesses?

Cem Inam: Businesses should analyze their current operations and ask themselves whether there are situations in their organization when someone answers a request for information with the reply: "I don't have that information, but so and so in another department would have it." This would be a concrete indication for the need of an ERP system in that organization.

At the end of the day, problems of an organization will get resolved one way or the other. The question to ask is whether they are resolved consistently, or by using different criteria and different guidance each time? Do people have to take extra initiatives to resolve a problem each time? Such questions and their answers are important for moving towards an ERP system.

It is critical that the implementation team be willing to share information, have patience, and have a sense of responsibility, as the ERP systems do not always provide ready-to-use solutions for each individual business case, but rather, are customized to meet the expectations of the customer.

Here are some points to consider before embarking on ERP use:

  • Production items and their sub-items should have their inventory codes and operations well-defined ahead of time, and the recipes (product trees) should be ready.
  • During the ERP product selection process, the systems should be tried out using real-world data, instead of relying on vendor demos. This will provide a better indication of whether an ERP system will meet an organization's requirements.
  • An ERP system should not be expected to be an off-the-shelf application, ready for immediate use. It is an advanced tool for information storage and sharing, but the users should be certain to first transfer their business processes and data to the system in a sound manner.
  • Implementation project team leader or leaders should be assigned from upper management. We feel there should be two project managers, one for controlling accounting and sales activities, and the other for controlling manufacturing and post-manufacturing activities.
  • The vendor should be questioned for its willingness for customization and/or further development of its software, rather than pushing for a one-size-fits-all solution.
  • And finally, the organization's expectations from the ERP system should be spelled out in detail. Instead of vague goals such as "increase productivity", detailed objectives should be described to the vendor and the product should be examined closely to see whether it provides the corresponding functionality.

CANIAS ERP - Ar-Can Makine Ar-Can Makine, was founded in 1983 by mechanical engineer Orhan Inam. From 1970 through 1980, Inam worked at Ulker, a leading packaged food company of Turkey, as technical manager and plant manager, at a time when the food industry was getting established in Turkey. After leaving Ulker, Inam settled in his home town of Izmir, Turkey, and recognizing the fact that the food industry was completely dependent on imported machinery, started the manufacturing of food preparation equipment.

Until 1991, Ar-Can Makine manufactured equipment used for the production of chocolate, stick crackers, cookies and chocolate wafers. After 1991, it started specializing on the manufacturing of fewer types of equipment with a focus on rapidly increasing the quality of its products. Accordingly, it concentrated on equipment used for the production of chocolate covered foodstuff, candy bars, stick crackers and marshmallows, and stopped marketing imported equipment that it was manufacturing itself at home.

Ar-Can Makine is now a business managed by the second generation of the Inam family, where designs are implemented using 3D solid modelling technology and all phases of manufacturing, from product trees and purchasing to production and inventory management, are controlled by ERP systems. Precision manufacturing is accomplished using CNC-driven machine tools. The company has a 75% export ratio and a workforce totaling 65 personnel.

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