|Virtual Single Company Simplifies Buy-Sell Transactions for EnerSys
A business that requires a flexible single company, multi-manufacturing site structure can be frustrated when it tries to implement such a framework in the context of its Baan IV system. To achieve the desired exchange of goods between internal facilities, the business is required to complete separate 'buy' and 'sell' transactions between separate Baan companies for each exchange using inter-company EDI. This constraint is a source of frustration because it results in unwanted complexity, overhead, and paperwork.
A case-in-point is EnerSys Inc., a manufacturer of Direct Current (DC) storage products and battery chargers. EnerSys operates a number of manufacturing facilities and warehouses in the United States.
Barry Silverman, a founding Disus partner and 25-year IT veteran, was called in to consult on the EnerSys implementation. "There's no question they were frustrated," Barry says. "With their decentralized operations, EnerSys was being forced to create at least two sales orders for each customer order. Their manufacturing sites were stuck managing inter-company sales orders, goods were being shipped twice, and changes had to be manually entered because EDI couldn't support batch entry. All-in-all there were a large number of less-than-zero value steps needed just to process an order and a large inter-company financial overhang." What EnerSys really wanted from their Baan system was control, simplicity and flexibility. Careful analysis and customization fulfilled their wish list.
The key to fulfillment was the 'Virtual Single Company' (VSC), a customization and associated procedures that satisfies the requirements of Baan and permits EnerSys to run their business their own way. "We defined 'gateway' warehouses that exist in both the sales company and the manufacturing company," Barry explains. "The inventory in a gateway warehouse is visible to both companies and the demand from sales is visible to the planning engine in manufacturing. Inventory is deposited in a gateway and then gets 'magically' transferred across companies with all the inter-company financial details captured in the transaction." The 'magic' in this case is the Virtual Single Company customization, where multiple locations and facilities conduct virtual intra-company, instead of inter-company transactions.
EnerSys describes the VSC implementation as "the most cost-effective IT project we've ever done." The customization is small - less than 1,000 lines of code created over two work-months, start-to-finish. The real effort went into the rollout. Staff at all the facilities was trained on the new procedures, and the rollout included synchronizing the finished goods item master and converting existing orders. Naturally, there was a lot of testing to maker sure that real orders weren't getting lost in virtual space.
The benefits of VSC for EnerSys are tangible. Customer service only maintains a single order. Manufacturing sites do not process sales orders and only ship once. Finance does not see inter-company transactions. From the IT perspective, there's a significant decrease in transactions, disk space requirements and processing. The end result is satisfied client and a Baan ERP system delivering its full potential.
The EnerSys solution suggests a similar approach to resolving other business frustrations. The restriction that one Baan company must map to one legal entity is becoming an anachronism in today's world of restructuring, mergers and acquisitions where manufacturing facilities get transferred from legal entity to legal entity, and where legal entities merge. By forcing plants into separate Baan companies, the current multi-finance structure in Baan imposes multiple balance sheets and P/Ls on operations staff and logistics.
Recognizing this as a source of frustration, Disus is now developing an analogous customization in the finance world that will provide similar benefits. Virtual Single Finance (VSF) will allow all finance transactions including A/R and A/P, to map to a legal entity 'dimension'. When combined with some reworking of cash management procedures and a set of new reports, VSF will allow multiple legal entities to operate within a single Baan Finance Group company.
Interestingly, the biggest issue that arises from this approach is cultural - Controllers and Finance V/P's are not used to thinking that multiple legal entities can be mapped in one piece of software. However, once the leap of faith has been made, the benefits of single finance are truly enormous.
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