20 Dec Herrbaier improves its business with Preactor
With annual revenues of around $3m, Herrbaiers is a classic example of a successful small and family business. The key is their continuous investment in technologies and management to enhance its customer service levels.
Founded in 1971 in Curitiba-PR, South of Brazil, by Alberto Herr e Jorge Baier, Herrbaier is nowadays focused on production of standard and custom adhesive labels for several industries such as banks, food, beverages, pharmaceuticals, transportation, automotive, chemicals and industrial automation.
In 2002 a new management team was appointed with the challenge to make the business even better and leaner. They redesinged the entire business model and did not dissapointed the founders. Employing 41 people today the company has achieved great results since then, providing its products to companies like HSBC, Thyssenkrupp, Treves do Brasil, Providência, Sysmex, Novozymes, Faurecia, Becton e Dickinson and many others.
The production of adhesive labels is much more complex than people realize. There are several types of final products and each one involves different production steps. There are alternative resources for some of the operations, but in all phases there are a different set of constraints that complicates production management. Besides, when you are committed to delivery from small to large quantities on a make to order and make to stock basis then balancing resource utilization is a key for the business.
Edenilson Maia, Managing Director of Herrbaier explains.
“In 2009 we achieved all results that we could using spreadsheets to schedule our production. Then we realized that our stocks were too high, there was no visibility on order delivery nor could we plan predictive maintenance on machines, essential to save money and time! We needed something that could really help us to make more accurate delivery promises. At that time we received about 15 customers orders per day. Each order could have up to 8 production steps. We had 9 machines to schedule, but also we had to consider about 2000 different constrains such as knives, cylinders, paint, anilox, and operators. Much too complex a problem to work with spreadsheets.”
Before Preactor, for personalized products, the company received the customer order and input it into their system. A production order was then printed and sent to shop floor. The Production Manager then defined the production priorities supported by a spreadsheet. There were no start or end time per resource, just a simple list of what should be produced first.
Edenilson again. “The consequence you can imagine. Huge stress and high costs to deliver the products. For the standard products things were no better. They compete for same production resources and sometimes the stocks were too high, sometimes too low or there was no stock at all for some important item.”
At first glance, Edenilson and his team thought that they would find the features they needed in an ERP product available in the market, at least some vertical ERP specific to their kind of business. Unfortunately it was not the case, but when they have invited APS3, a Preactor Solution Provider based in Curitiba, to evaluate their needs they were immediately impressed by a Preactor demonstration.
Edenilson again. “That presentation opened our mind. We decided to keep and enhance our in-house ERP and link it with Preactor. The concern at that moment was about the cost, but then APS3 showed a rental option for the software and it fitted our pocket.”
Aparecido Martins, Director of APS3, said that Herrbaier would benefit a lot with Preactor, but budget was an issue. APS3 deeply evaluated their needs to identify the right entry level product from the Preactor family. “We concluded that Preactor 300 FCS would fit their main needs and we offered it based on the rental model. Herrbaier would not have a permanent license, but this was the best option for them. Besides, with the savings they could consider to invest more in the future.”
The first phase of the project took about 6 months and this was the time necessary to change the way they worked and improve the quality of data in their ERP system. It was not enough to produce a feasible scheduling.
The whole of the business processes in the plant were reviewed to schedule and re-schedule the production by Preactor every time it was necessary. Part of Herrbaier’s in-house ERP was then re-designed to hold production process data with standard times which is then reviewed for each new order that comes in. This is done already during the sales process, before customer confirmation, which is decisive to promise a delivery date and get the customer order.
A Preactor configuration was customized to meet Herrbaier’s needs of integration, scheduling and reports. “From the Preactor point of view the changes were quite simple. We were able to produce their first production scenarios within Preactor very quickly. Customer dedication to the project at this level was decisive. They knew about their process and their constraints and what they wanted as a result. It allowed the team to tune the systems and the data at the same time” added Aparecido.
Even before the end of the project they have started another one to add an in-house shop floor data collection system to allow them to refine the production times and update Preactor faster.
“Much less stress”. This is the first answer given by Edenilson when asked about the benefits achieved with Preactor implementation. “We are using Preactor for about 40 months now and it became a critical system for our business. Our reputation for on time delivery is growing and bringing us more customers. Our energy is where it should be.”
Looking to the 3 months after the go-live yet in 2009, Herrbaier experienced a big change on the shop floor. Production flow was much smoother. Lead times have been reduced significantly and they have begun to split bigger orders into smaller ones to better use their capacity without impacting delivery dates. The error in delivery dates dropped to just 5%.
They also obtained benefits to their cash flow because of improved material purchasing, but Edenilson also described other huge productivity gains.
“With Preactor we started a routine to evaluate our opportunities every day. At the beginning the changes were big, now they are small, but still very important. We used to work two shifts per day and very often we had overtime to keep delivery promises. We are now producing more than before in only one shift. A huge gain in productivity and operational cost saving”.
Aparecido Martins from APS3 sums up the results.
“Herrbaier is a great example of company that is determined to succeed. They could use the excuse of a small budget, not enough resources or something else, but no. They identified their pain points and worked out how to fix it. The benefits they have achieved are worth all the efforts. We are proud to work with them.”