Which overseas automobile manufacturer used ERP first?

Clean processes thanks to integrated ERP

Some like it hot. The Lower Rhine plant manufacturer Schwing is a specialist in high-temperature systems. The core business is the thermal cleaning of parts and tools that are used in the plastics industry. The family company is considered the market leader worldwide. No reason to rest for the managing directors Ewald and Thomas Schwing. The establishment and expansion of new business areas is right at the top of their agenda. Together with controller Theresa Helmus, they explain their plans and explain the role their integrated ERP solution plays in this.

ITM: Mr. Schwing, your systems clean tools and machine parts. There are no residues. This sounds like magic to laypeople. What is actually behind it?
Thomas Schwing:
Pyrolysis, i.e. the thermochemical splitting of carbon chains. It may sound abstract, but it's actually not that complicated at all. First of all, you have to be clear about the types of pollution our systems are dealing with. This is about means of production that are mainly used in plastics and fiber production. Foil blow heads or spinnerets z. B. The longer these parts are in use, the more polymers adhere to them, such as polyester or PVC. At some point the parts then literally run into it and the quality of the end product that our customer wants to manufacture deteriorates.

ITM: High time for cleaning.
Thomas Schwing:
Exactly. Depending on the process requirements, we then bring the right cleaning technology to the start. Our fluidized bed systems are a very vivid example. Put simply, these consist of a cleaning chamber, a fan and a heater. The chamber is filled with sand. The fan lifts the sand slightly until it is completely whirled through and behaves like a liquid. Meanwhile, we heat the chamber to a specific temperature - usually somewhere between 430 and 520 ° C. As soon as the contaminated parts are then immersed in the fluidized sand, the polymers that adhere to them decompose without abrasion on the parts. And thus also without waste water or other residues.

ITM: Which customers use your know-how?
Thomas Schwing:
On the one hand, companies from the plastics, fiber, automotive, consumer goods, metal and chemical industries. These are medium-sized specialist suppliers as well as corporate customers such as DuPont, Evonik, Lanxess, Lego or Nike. On the other hand, we also work for industrial suppliers who build production lines and supply the appropriate cleaning technology or use it themselves in their technical center. One customer in this segment is e.g. the German packaging plant manufacturer Windmöller & Hölscher.

ITM: You have been on the market since 1969 and have grown continuously since then. The global financial crisis has hardly got you off track either. How do you explain this success?
Ewald Schwing:
We focused on diversification early on. In 1969 we started as a pure trading company. We got the technology from the USA and mainly resold it here in Europe. Sales and engineering were our core competencies. Little by little we also acquired very specific skills in the areas of manufacturing and assembly and built up a small series production. With this strategy we are expanding our room for maneuver: We can increase the quality of our products and adapt them to the requirements of our customers. At the same time, the achievable margins increase. This is particularly evident in a product line that we bought in 2006 and have been continuously developing since then. This portfolio area alone now accounts for around 30 percent of sales.

ITM: When it comes to new pillars, many industrial companies rely on services. They also?
Ewald Schwing:
Absolutely. The contract cleaning business was added in the 1990s. More and more customers no longer wanted the cleaning systems in their own factory. Instead, they outsource operations to us. We get the parts out of your production and clean them here with us. This area accounts for a further quarter of our sales.

ITM: trade, small series production, contract cleaning - is that the end of diversification?
Ewald Schwing:
Definitely no. If we want to have a future in a high-wage country like Germany, innovation management must continue to be part of our self-image. That is why we started to apply our thermochemical knowledge to new fields of application three years ago. Here we build customized reactors in which the surfaces of powdery materials can be treated. For example the surfaces of catalytic converters or soot particles that are used in car tires. With systems of this type, we are developing into a development partner for larger industrial companies. We are talking about engineering projects that take several years and involve seven-figure investments.

ITM: Classic project business. At least now you are asking yourself how you can organize all of this under one roof.
Theresa Helmus:
Our central planning and control tool is the enterprise resource planning solution ams.erp, which we introduced in 2011. With the ERP we record all technical and commercial information that arises in the course of our customer orders. The range of processes extends from development and sales to scheduling, production, purchasing and materials management and extends to the areas of assembly, shipping and service. In addition, there are cross-sectional business processes in financial accounting, human resources and controlling.

ITM: There are still three-digit numbers of ERP offers. How did you manage to find the right system for you?
Thomas Schwing:
As a medium-sized company, we don't even give ourselves up to the illusion that we can answer such a question on our own. When it comes to tasks that are beyond our core competence, we bring in external consultants. In this way we can concentrate on the requirements that are directly related to our added value. Keeping an eye on the ERP market is definitely not one of them. This task requires specialist knowledge that only a professional selection advisor can provide. That is why we turned to Trovarit analysts in 2010.

ITM: At that time, mechanical engineering was still suffering from the effects of the financial crisis. Hardly anyone thought about investing in business software.
Ewald Schwing:
We deliberately started the selection at a point in time when the market had bottomed out, but was still not buzzing so strongly that one can only think about the core business. Because in cyclical industries like ours, that is unfortunately often the crux of the matter: Either demand falls and everyone cuts costs and, with it, investments. Or the order books are so full that no one has the resources to rethink their business processes. Small and medium-sized companies in particular can actually only get out of this dilemma by making targeted use of the phases with lower demand.

ITM: How did you know at the time that it was time for a change?
Thomas Schwing:
Our old IT had definitely reached its limits. At its center was a PPS software from the nineties, the development potential of which was completely exhausted. Over the years we have mapped more and more sub-processes in individual IT tools. These were preferably Excel solutions, between which there was hardly any link. A cross-departmental view of the order process became more and more difficult. There was also a deep break with our commercial IT, which by and large consisted of an isolated solution for financial bookkeeping and accounting.

ITM: To find out how economical an order was, did you have to do the analysis on foot?
Ewald Schwing:
Correct. But even standard tasks, such as invoicing, meant that we always had to re-enter the order data on which the invoices were based. Given our continued growth, this is an untenable situation.

ITM: Why did you choose ams.erp as an integrated business software?
Thomas Schwing:
With contract cleaning, small series production, trade and project business, we have four business areas that place very different demands on an ERP. Especially when it comes to plant engineering, the air quickly becomes thin for many providers. In the end, we only came across three software houses that were worth taking a closer look at.

ITM: How did you go about it?
Ewald Schwing:
Among other things, we gave the remaining candidates the task of taking a closer look at three of our sub-processes and then demonstrating how they would map these processes in their software. We invited all colleagues to the presentation who would work particularly intensively with the new ERP. Afterwards they voted together. With one exception, all of them voted for ams.erp.

ITM: Not a bad move with regard to the acceptance of the new solution.
Thomas Schwing:
Absolutely. Instead of making decisions over the heads of the employees, we brought them on board right from the start. Apart from that, we had also come to the same conclusion on the part of the management. For me personally z. B. a very important plus point in the fact that we were able to get an audit-proof document management system integrated in ams.erp.

ITM: Why is integrated document management so important to you?
Thomas Schwing:
Mainly for two reasons. On the one hand, we have a considerable amount of documentation required for our customers, especially in contract cleaning. There we have to document precisely what has happened to the parts of the customers in our systems. On the other hand, we have decided to only keep all order-related documents electronically. This also applies to documents that are initially only available in paper form. All these things are scanned in at the end of the project and stored in the DMS with a clear order reference via ams.erp.

Theresa Helmus: There is also the process stipulation that old processes that we fetch from the basement archive may not be brought back down. Instead, we also digitize these documents and assign them to the relevant old systems in ams.erp and thus automatically save them in the DMS. The aim is to have the entire life cycle of all systems in the system.

ITM: If you look at the life cycle of industrial goods, the decisive course is already set in sales. How do you deal with this requirement?
Thomas Schwing:
Our lead process provides that every request is immediately recorded in the ERP system. No matter which communication channel it comes in through. The process is given a unique request number, which allows us to track it down clearly at any time.

ITM: How much effort does it take to standardize the recording process accordingly?
Theresa Helmus:
The effort is quite considerable. You can't fool yourself there. If you think you just have to learn the functionality of business software and everything is good, you won't get very far. Just knowing how to operate an ERP from a purely technical point of view clearly falls short. Because ERP systems in particular offer users a wealth of options for capturing and using information in a wide variety of ways. Anyone who does not set clear and binding guidelines from the start will open the door to the wilderness.

ITM: What is important with such a system?
Theresa Helmus:
In order to actually arrive at a uniform database, we have to define process step by process step which information is to be recorded where exactly in the ERP masks, when this has to be done in the course of the order, which nomenclature is permitted and who has which access and writing rights receives. This system must be understood and applied in the same way throughout the company. Only then does a data quality arise that leads to valid evaluations.

ITM: Was this basic work completed with the real start of the new business software?
Thomas Schwing:
No, not at all. Even after years, it is worthwhile to regularly check the current procedure. In day-to-day business, there is a great risk that conventions will be broken as soon as new requirements arise. To turn a blind eye to this would be extremely short-sighted.

ITM: An important point. But let's come back briefly to sales. How long does the offer phase last and how do you keep track of things?
Ewald Schwing:
A rather lengthy decision-making process precedes the purchase of a cleaning system. It almost always takes several months. Not infrequently, however, a year or more. We use ams' lead management and offer forecast to clarify which acquisition processes are currently in the pipeline. The analysis extends to the level of the individual product groups.

Thomas Schwing: In practice, we mainly use ams' sales dashboard. This gives us a graphic overview of all central sales information. If I want to take a closer look at certain information, I can switch directly from the dashboard to the corresponding ERP tables. As managing directors we have z. B. Great interest in finding out when we can expect which sales and how high the probability is that we will actually win these orders.

Ewald Schwing: These are evaluations that we used to only get through very complex calculations. And what would have been completely unthinkable until a few years ago: Today we can call up the information at any time of the day or night - whether here at the headquarters on the Lower Rhine or during a customer visit in Taiwan.

ITM: How do you access the data remotely?
Thomas Schwing:
Anyone who is on a business trip has access via VPN. That is completely sufficient in day-to-day business.

ITM: So cloud computing is not an issue for you?
Thomas Schwing:
Not yet. Our servers are here in the company. We operate two redundant systems that we have housed in different buildings. Compared to our on-premise solution, we don't see any real added value in going to the cloud. The possible financial benefit has so far not been able to convince us. We also have some doubts as to whether we can maintain the high performance that our servers offer us in the cloud. We only have to reassess the situation if, contrary to our previous experience, we are more closely involved in the customer's production processes. As of today, our cleaning systems are still largely running independently.

ITM: In many places, preventive maintenance is seen as the IoT scenario with the greatest development potential. If I understand you correctly, however, you do not have access to the customers' systems.
Thomas Schwing:
It is exactly like that. Only when we get this access can sensors be installed that show us how high the current degree of wear and tear of system-critical machine parts is and when they are due to be replaced. For the time being, we can only rely on our experience to answer this question. Regardless of this, we are in the process of optimizing the service process, creating condition monitoring solutions for customer systems and processing customer inquiries and the resulting orders as automatically as possible. The aim is to offer the customer shorter response times and to keep our administrative effort to a minimum.

ITM: How do you go about doing this?
Theresa Helmus:
Here, too, our ERP system is the IT backbone. We plan and control the operational processes associated with the service processes in ams.erp. The process chain ranges from personnel deployment planning to spare parts procurement to invoicing. In addition, our service technicians have direct access to the parts of the order documentation that are relevant for their current orders.

Thomas Schwing: Our technicians can get an exact picture of the system as it stands with the customer. Including the history of when service calls have already taken place and what has happened on the system. In addition, the information can also be evaluated across orders. In this way, we find out which types of problems occur in which systems and how often this is the case with which customers.

ITM: How do your technicians access this information?
Theresa Helmus:
Last year we rolled out the ams service portal, which can be accessed from any location. In the future we will also open the portal to customers. Our goal is that customers can then post their tickets directly there and follow the processing online. But before that happens, we have to further refine the processes and dialogues in the portal. In addition, we still have some homework to do with the old systems.Here, the service-relevant information is often still in data pools that we have to integrate with ams. The complexity should not be underestimated. We are currently dealing with a good 3,000 active plants in almost 70 countries.

ITM: There are significantly more countries than the EU member states have. How do you make sure that you only deliver where it is really allowed?
Ewald Schwing:
Export control is indeed a huge issue for us. And it's not even so much about the cleaning and post-treatment systems. Currently this is around 100 systems per year. The actual testing effort only arises in the usage phase. We're talking about several thousand spare and wear parts that are in constant use. Finding out for this portfolio when we need specific export permits or where we would violate dual-use requirements with a delivery is extremely time-consuming.
Thomas Schwing: Take the famous example of seals. Does a foreign customer use them in his vacuum system as agreed, or are they being used for other purposes in building rockets? As a medium-sized company without its own legal department, you run an unpredictable risk when assessing such a question with certainty. Especially since this is not just about European, but also US law. That is why we have decided to use the knowledge of specialists in this area as well.

ITM: What are they?
Theresa Helmus:
The format experts who offer software for foreign trade and customs clearance. You permanently fill the solution with the latest knowledge on the valid sanction lists. Real detail work. After all, the lists not only contain states, but also numerous companies and individuals. Thanks to a close cooperation between Format and ams, the customs solution is embedded directly in the ERP system. This means that the required compliance checks are largely automated. Our customer, supplier and sales partner base is checked in full every night. If there is an abnormality, we get a message the following morning and can investigate the matter immediately. Incidentally, we also activated the integrated customs solution last year.

This is an article from our print edition 3/2018. Order a free trial subscription.

ITM: Another expansion project. Is your ERP solution now complete?
Thomas Schwing:
Fortunately not. Even seven years after its inception, we're still discovering new ways ams can support us. And that's just as well. Since our business is constantly evolving, we need business software that grows with us. Incidentally, this is by no means limited to the functional expansion of the solution. A lot of added value also results from the more intelligent use of content.

Theresa Helmus: A good example is cost accounting. In the past, we did not always have the necessary transparency to be able to prove equally well for all product groups where in the added value which costs were incurred and how much we had ultimately earned with the products. Thanks to the integrated cost accounting, the situation has now improved significantly. But it doesn't just fall from the sky either. The ERP does provide the necessary analysis framework. But the extent to which we use it depends on the calculation system we use.

Ewald Schwing: Creating such a system is anything but trivial. Ms. Helmus did a very valuable job here over the past year. This type of controlling is extremely important to us. With the ERP, we now get more and more precise information about how economically we are actually working in the individual areas. With this knowledge, we can secure our business decisions much better than we were able to do in previous years.

Schwing-Technologies GmbH ...

... is a family company based in Neukirchen-Vluyn in the Lower Rhine region with currently 80 employees. It was founded in 1969. In the 2017 financial year, sales were EUR 12.5 million. The company achieved three quarters of this abroad.
Schwing is the world's leading designer, manufacturer and operator of high-temperature systems for
›The thermal cleaning of metal parts and tools
›Thermochemical gas-solid reactions in variable atmospheres up to 1,100 ° C
›The particularly efficient heat treatment of metals
›The calibration of temperature sensors and thermal instruments.

Image source: Behrendt and Rausch