Competitive advantage is fleeting. Companies need to take every opportunity that presents itself to gain ground over their competitors, or else they will all too quickly fall behind. And competitive advantage is even harder to gain and retain if your product is not your own – if, in the modern jargon, you don’t own the intellectual property rights. If, in other words, you are a subcontractor.

Subcontractors compete exclusively on operational effectiveness. Their only source of advantage over their rivals is the speed with which they can respond to customer requests, their level of quality, and – the most unforgiving source of advantage there is – the price at which they can sell.
Subcontract manufacturers have it tough. Their product is not their own; they tend to be called on by customers at short notice; they are rarely irreplaceable; and their overall quality of product and service is extremely transparent. So they need all the help they can get.

Accrington-based Callender Aeropart is one such subcontractor. Callender makes turbine blades for jet engines and power transmission applications, including Rolls-Royce, Pratt & Whitney, Siemens and other manufacturers. “Customer service is paramount as a subcontractor,” says Callender MD Ian Hindle. “We have no product of our own, and we are often tied by our customer to particular suppliers. So, in the final analysis, all we have to sell is machines and man hours. Competitors can easily go out and buy the same machines we use. When the place empties on a Friday, it’s just bricks, mortar and cast iron. We’re just selling people in the end.”
“Our targets for on time in full (OTIF) delivery are very demanding,” says Finance Manager Andrew Ibbotson. “Rolls-Royce specify that we should hit 97-98 per cent, and if we don’t, they could rethink our position as a subcontractor. Our customers demand change constantly, not just in manufacturing, but also in terms of the service and paperwork we deliver. For example, one of our customers decided to change all the part numbers of every item they used. That’s a great deal of work for us, but, as a subcontractor, you have very little choice but to comply.”

Callender moved into a new, purpose-built factory in 1998, and, shortly afterwards, realised that it needed to move off the mainframe-based IT systems it had previously shared with other subsidiaries of its Isle of Man-based parent company

“We are a capital-intensive business,” says Ibbotson. “Machine tooling is very expensive, so achieving high utilisation is absolutely crucial to our success. We needed to change systems in order to support new manufacturing practices, and we needed much more flexibility from our IT.” Callender’s manufacturing lead time can vary according to product type, but it receives goods – especially forgings – on a just-in-time (JIT) basis.

When it came to selecting a system vendor, Ibbotson says that Callender had come to the conclusion that it wanted to partner with a supplier that specialised in medium-sized companies, not a global giant. “We knew that, as a subcontractor, we would need flexibility in our solution, and that it would have to evolve as our manufacturing processes changed,” he explains.

After evaluating a number of different suppliers, Callender selected the TROPOS fast-response ERP suite, developed and supplied by SSI. TROPOS is built around a process model of manufacturing, and thus supports lean manufacturing much more effectively than traditional MRP-based systems.

IT manager Gerard Swinson says that the decision to pick SSI and TROPOS was largely down to the rapport established with SSI staff during the selection process. “We actually believed what the SSI people were telling us – which wasn’t necessarily the case with all the other vendors,” he says. “SSI were realistic about what we would achieve, and they didn’t parade lots of young whiz-kids in front of us. Their watchword was ‘no surprises’, and that appealed to us and they were realistic about the amount of effort we would need to put in to achieve success.”

MD Ian Hindle agrees. “From the outset, SSI had a clear and concise plan of how we should go about the implementation,” he says. “Other providers didn’t have the same planning tools and didn’t demonstrate the same degree of sticking power."

Callender’s implementation was remarkably rapid, even by the tough standards that SSI sets itself. Starting in late June 2000, the main ERP system was live by the first week of December that year – exactly to schedule. And the project was demanding: Callender was already in the midst of upheaval caused by two new contracts it had just won, and they were absorbing much of the company’s time and attention. SSI’s ability to manage the implementation project across a number of different areas was crucial in this regard. “We needed one supplier for all our requirements,” says Swinson. “We simply didn’t have the resources available to get involved with sorting out interfaces and managing integration between different systems. We made a conscious decision to get the core TROPOS system in and working before moving on to other parts of the final solution, and I think that made a big difference.”

This was especially significant in relation to the implementation of time and attendance (T&A). SSI’s partner for human resources systems, York-based Mitrefinch. T&A is vital to Callender, because most of the company’s staff are hourly paid. Replacing a previous – largely manual – system, Callender was the first time Mitrefinch’s system had been implemented in conjunction with TROPOS, and, says Ibbotson, has been a significant boon. “The Mitrefinch system is very user-friendly, and is already saving lots of time,” he says. “We’ve recently put the payroll modules in as well, and we intend to implement the rest of the HR suite, covering employment history, training management and skills profiling, in the near future.”

“You’ve got to take all your people with you,” says Gerard Swinson. “That means the people actually pressing the buttons, not just the managers and department heads. No big IT project will succeed without active top management backing, but buy-in from the shopfloor and the admin staff is just as important.” Ian Hindle agrees. “If we hadn’t made it clear to the whole company that we were taking the project seriously, then it wouldn’t have flown,” he says. “So we made sure that we sat down each week to review progress, set targets and resource projects.”

Go-live, when it came, was relatively painless. “We shipped everything we should have shipped, and invoiced everything we should have invoiced, with no major panics,” says Swinson. “That was the acid test for us,” says Andrew Ibbotson. “Would people come into work the next day and say ‘Was that it?’ And mostly, they did.”

“SSI’s people were really committed on an individual level to achieving a successful implementation,” says Swinson. “Our lead consultant, Mike Brown, wore his heart on his sleeve – it was a real partnership.” Part of this partnership is that SSI’s managed services division has taken full responsibility for running Callender’s solution. “The server is here, but SSI manage the system remotely, under a facilities management (FM) agreement,” says Gerard Swinson.

“Customer expectations have increased dramatically in the subcontracting market,” says Hindle. “It’s not good enough to get back to a customer with a price next week – you need to be able to give an answer today, or tomorrow at the very latest. Through implementing TROPOS, we’re now better able to make good decisions based on up to date information, rather than making guesses based on intuition.”

And, Hindle adds, working with demanding customers like Rolls-Royce is much easier with the power of TROPOS. “One of the things the system allows us to do is to get our customers’ schedules straight off the internet and squirt them into TROPOS,” he says. “That makes a big difference to the speed and accuracy with which we can plan and schedule our own production. And in the future, we want to be able to give our suppliers the same ability to plan their businesses that we have.” Callender has been working hard to reduce its batch sizes, so it can be more responsive to customers’ demands – and Andrew Ibbotson says, TROPOS has been vital in this regard. “Reducing batch sizes generates more transactions and more paper,” he says. “Our old system simply couldn’t have coped.”

A fast and responsive supply chain is of critical importance to Callender’s success. “We know that we have to hold inventory to meet customer demands, though obviously we’d like to reduce the amount we do hold,” says Hindle. “But it must be held in the right place, to minimise the cost and maximise the availability. With the tools that TROPOS provides, we can see our inventory position much more clearly, and so get closer to the ideal.”

Callender also wants to move in an e-Business direction. “We are making our first steps towards e-Business,” says Hindle. “Mostly it is customer-driven – for example, one of our customers wants to schedule their orders by us taking production plans from their intranet – but we would also like to be able to send automatic replenishment orders to our own suppliers when stocks drop below a certain point.”

Managers and supervisors are now far better informed than before the TROPOS project. “Our managers and production controllers have real information at their fingertips,” says Ibbotson. “ The unity of the system has produced benefits to the entire organisation – people know their input affects colleagues further down the line, so they take much greater care.” Callender has implemented reporting tools from SSI’s partners Cognos, and Ibbotson describes their impact as “absolutely superb. Cognos is essential to us now. We have sales and stock analyses, turnover reports, WIP and delivery figures at our fingertips. We are now achieving 14 full stock turns each year, a dramatic improvement. Before Cognos, obtaining accurate stock information required a full physical count. Now, it’s instantly available, in the form you want it. Moreover, it has helped reduce our close-off period to within three days.”