Intelligent Manufacturing € July € 1996 € Vol. 2 € No. 7

ERP System Helps Alcatel Restructure

Change is an ever-present force in manufacturing -- managed well, it can unlock productivity and lead to new opportunities; managed poorly, it can sap the strength of an organization. Implementing an enterprise resource planning (ERP) system helped Alcatel Network Systems (Richardson, Tex.), a manufacturer of communications systems, through potentially hazardous waters.

Alcatel Network Systems was formed through the merger of Rockwell International's Network Transmission Systems Division and Alcatel's existing Network Systems business, centered in Raleigh, N.C. The new organization inherited two separate production systems, management information systems and corporate cultures.

"After the merger, we were faced with integrating two unique business units," said Bob Wickersham, Alcatel's senior director, operations business management. "To form the new Alcatel Network Systems, we needed to operate with one set of integrated business systems that would run the total business. Our goal was to present a single face to the customer, move products between sites based on capacity, and present a single face to our suppliers."

There were numerous hurdles to overcome along the way. "At the time of the merger, we had two business units, each with its own culture and way of doing business, and each had been successful. We were replacing not only two MRP systems, but two of every business system that existed within the new Alcatel Network Systems, including order management, project tracking, personnel systems, financial systems and engineering support systems. We were literally starting from scratch and redesigning the entire business process during a period of business growth and integration."

Alcatel decided to implement an enterprise resource planning (ERP) system to unify its disparate facilities, and it chose the Control system from Cincom Systems Inc. (Cincinnati, Ohio). Control is an integrated business information system that supports manufacturing, distribution and financial management with a common base of information and management procedures.

"The business systems were in place to run the existing businesses, but not for the new company that resulted from the merger," Wickersham explained. Alcatel relies on a network of focused factories, each with particular expertise and manufacturing capabilities, to provide all the equipment, services and technology required for its comprehensive telecommunications system products. The information system needed for this manufacturing environment had to link all facilities in order to support effective interaction between plants, and that's what their new ERP system did.

"Today we have point-of-use replenishment, literally a Kanban type process," Wickersham said. "We are moving from engineer-to-order to assemble-to-order. We're using statistical forecasts for planning, whereas before we primarily used planning models. In addition, all of our reports are available online. We've been actively reducing our product lead times and component lead times, which we wouldn't have been able to do without a powerful and flexible information system tuned to the needs of our business.

"Everyone in each plant is operating on one integrated system," he continued. "We're operating as a multi-site environment, and there's a great deal of interaction between the different plants. The communication is greatly improved."

At the time of the merger, a group of senior directors were chartered to define the new organizational structure in terms of the functions and manufacturing plants and their relationship to each other. They created a responsibility matrix with nearly 100 major responsibilities, with each responsibility defined as either centralized or decentralized.

A number of individuals from across the corporation were chosen to become module owners, each responsible for a primary piece of the system, such as MRP, shop floor control, etc.

According to Wickersham, "The one piece of advice I would give anyone beginning the reengineering process is to recognize that change will be difficult. Defining an organizational model and responsibility matrix up front can provide you with the guidelines from which to operate."
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