If You Build It, They Will Come – Engineer to Order and Project Manufacturing | Part 4

In this blog series, John Walczak, CPIM, showcases the benefits of Engineer to Order and Project Manufacturing features in EnterpriseOne. Last week, John uncovered how poor system configuration created a barrier to a Client’s effective operations. This week, he discusses the JD Edwards functionality Corning Data deployed to streamline their processes. And, he explains the approach Corning Data used to lead the Client along their journey.

The Corning Data Vision Tourengineer to order and project manufacturing

Our comprehensive Vision Tour report provided a strategic road map of how JD Edwards could support the business, help them prioritize their efforts and break things down into smaller projects. This approach makes implementing rapid changes more manageable and affordable while creating a framework for continuous business improvement. The first step was foundational: transforming the JD Edwards configuration. The business was originally set up for Make to Order. They really needed a system to support their Engineer to Order business.

Corning Data led the Client through a Proof of Concept. This validated the Engineer to Order solution, built organizational support for change and fine tuned requirements. We began with a brief scoping and requirements documentation exercise. We identified the major business process and key use cases. These exercises helped prepare the team for what an implementation project would look like.

This process would have uncovered any “big rocks” or gaps that might drive significant process change or software customizations. But, because Engineer to Order functionality was designed to handle the Client’s project-based business, the Client’s system required no further customizations. Corning Data then configured the system to provide a live demonstration of what a day-in-the-life would look like for Engineer to Order users.

Project Based Orders

The Client’s larger project-based orders start with a general design, performance characteristics/specifications and a budget, but no detailed initial Bill of Materials or Routings. These details develop over an extended period of time. Multiple purchases, work orders and other deliverables are developed, scheduled and executed in an orderly manner. Time and materials are assigned to the project components so the complete project cost and profitability can be tracked and reported.

Engineer to Order, supported by the Manufacturing Management and the Project Costing (Job Cost) modules works in support of these requirements. While Engineer to Order can be implemented without Project Costing, the ability to track the project financials from budget through design to execution proved critical in maintaining the Client’s clear view of the profitability of each order.

Engineer to Order allows the Client to initiate a quote or order with a skeleton Work Breakdown Structure (WBS) to define the major components required to build an initial estimated cost that supports the quote. A previous project is usually copied to speed the task of project creation. Details for the WBS are filled in over time as they become known. As the WBS and cost components are further defined, the Planned Cost is established. Budgets are associated with the project components and rolled up to the overall project.

During project execution, task completion dates are compared to their planned dates to track schedule slippage. Actual costs are reported to the project through the process of execution of work orders, service orders (with Service Management) and purchase orders. Actual costs are compared to budgeted costs to provide online visibility to project performance and work in process at all times. The WBS helps identify components that can be shipped separately to support the separate delivery of the project components over time.

Partial Engineer to Order

Orders can vary significantly in size and complexity. For smaller orders—especially those based on stock items that require some engineering to meet the specifications of a particular order—the high level of control and visibility of the structured Engineer to Order process does not add enough value to offset the increased overhead and management of the true Engineer to Order process. Although small and large have different meanings to different organizations, typically the dollar value or lead time of the order is the measurement used to classify orders as “small” or “large.”

In EnterpriseOne 9.1, Oracle introduced new JD Edwards functionality to help support manufacturing and supply chain requirements that sit between Make to Order and Engineer to Order: Project Manufacturing. Project Manufacturing leverages Make to Order functionality but associates work orders, purchase orders and inventory with a Sales Order, tying them together using a unique identifier called a Production Number. The Production Number can be segmented to add intelligence to the identifier. Even though Project Manufacturing does not provide the detailed job-based financial planning, management and reporting that ETO provides, the Client decided that Project Manufacturing was the perfect out-of-the-box solution to keep overhead costs down by simplifying the process for smaller Engineer to Order orders.

Wrapping it Up

Actually seeing the JD Edwards native functionality during the Proof of Concept gave the Client the confidence to understand how the solution fits their needs. Corning Data worked with the Client to build the business justification for the project by developing an analysis for the Return on Investment (ROI) anticipated from implementing the changes in processes and software configuration. The ROI analysis documented major cost drivers of the existing processes and calculated the expected savings from the project, including hard cost reductions and areas of cost avoidance that could support growth plans.

Now that the solution was validated and cost justified, Corning Data completed the planning and design phases of the project by developing complete requirements documentation, configuration, training and deployment plans. With these in hand, the Client and Corning Data could begin the implementation of the process changes and software configuration confident they had the right solution, a project that would deliver results and a predictable timeline and budget.

This blog series described one example of how Corning Data helped build a stronger, more profitable business for one Client. Call Corning Data to find out how we can help lead your team along a journey to a better business.

John Walczak, CPIM is Vice President of Software Solutions. He assists clients in creating a vision for their technology footprints that facilitate business strategies and objectives. A member of the JD Edwards family for nearly 25 years, John has been an active participant in Quest International presentations and demonstrations. John was a long time certified member and instructor of APICS.