Situation
Founded in 1984, Tiger Tool, Abbotsford, B.C., designs and manufactures precision tools used in the maintenance and repair of light- and heavy-duty trucks and commercial autos. Starting out with a universal joint puller as its first product, the company now has a diverse line of specialty tools that can be found in truck and auto repair facilities throughout North America and Australia.
Tiger Tool distributes its products through a catalogue, website, and a network of dealers in Canada, the U.S., and Australia. Standard products include drive shaft pullers, yoke pullers, wheel stud removers, and pin and bushing kits. The company also makes adapters for many of its tools, allowing them to service a variety of vehicles. It also can modify existing tools to meet the unique repair needs of individual customers.
Seeing rapid growth on the horizon, company managers recognized the need for a more integrated business management system. They were looking for a system that would fit with their manufacturing environment and integrate with existing applications.
After exploring several options, they chose Global Shop Solutions enterprise resource planning (ERP) software.
Resolution
“We wanted a system where data flowed seamlessly from one module to another,” explained Tiger Tool Controller James Blair. “The other ERP systems we looked at all required some manual transfer of data. Global Shop Solutions did not, making it an easy choice.”
Previously Tiger Tool struggled to effectively manage inventory for raw materials and finished parts. This resulted in high carrying costs and ongoing back-order problems. Since implementing the ERP software, the company has reduced inventory carrying costs by 27 per cent and back orders from 3 per cent to zero. Interestingly, they’ve done it without using the bar coding and mobile features so popular with many ERP users.
“Our inventory is concentrated in about 4,000 sq. ft. of shop space,” said Blair. “We don’t use the bar coding or mobile capabilities because most of our inventory is readily available and easy to count. As we continue to grow, we may need to explore those technologies at some point, but for now we use the basic inventory module, in particular the ABC counts.”
The company now has real-time access to its inventory data, which makes it easy to know what it has in inventory.
“We can pull up an inventory report at any time and see what we need, what we have too much of, or what we haven’t used in a year and need to get rid of,” he added.
R&D Tax Credits
The software’s ability to track costs by project has enabled Tiger Tool to take advantage of R&D tax incentives offered by the federal government.
Since implementing the ERP software, Tiger Tool has reduced inventory carrying costs by 27 per cent and back orders from 3 per cent to zero
“[Before] we couldn’t track those expenses, especially labour costs, with any degree of accuracy,” said Blair. “Now we can track employee labour on R&D projects down to the minute. When the government audits our claims, we simply pull up our records and show them our costs. Not once in five years have we been questioned about our documentation.
“We do the same thing with inventory and parts usage by setting up a separate R&D category. When people take something out of inventory or purchase raw materials for an R&D project, the cost goes into that general ledger code. Again, we’ve never had any issues at audit time.”
As controller, Blair oversees the financial side of the business. However, he spends much of his time using the ERP software’s non-financial modules to track key metrics on the production side as well.
First thing every morning, before people can make any changes, he checks the company’s inventory value to ensure it matches the general ledger. Throughout the day he looks at job costs to make sure they align with estimates. He performs daily balancing for the shop floor staff. He creates labour and overhead batches, then compares them to make sure the numbers match in terms of work-in-process and finished goods. If not, he launches an investigation to find out why.
On the financial side, he makes extensive use of the ERP software’s accounts payable, accounts receivable, and general ledger features to handle different accounting tasks.
“We can quickly and easily pull up a financial report,” he said. “We can sort by client, vendor, or any number of criteria to zero in on the specific data we want to see. Also, the reports allow a high degree of customization in terms of how we want to format the data for review.”
The software also helps close the books more quickly.
At closing time, Blair exports data from the month-end reports into an Excel spreadsheet. He then copies and pastes the spreadsheet into a special month-end form, which allows him to generate financial reports in a variety of formats.
“When I first started at Tiger Tool, it took me four days to close the books,” he said. “Now I can generate most of the month-end reports in one morning. The key is Global Shop Solutions’ ability to export the data. Crystal Reports is great for looking at the data. But when you can export the data into an Excel spreadsheet, it gives you great flexibility while speeding up the closing process.”
Real-time Costing
Precise job costing is essential for turning a profit in today’s highly competitive manufacturing markets. According to Blair, the software’s ability to track costs in real time plays a key role in maintaining Tiger Tool’s competitive standing.
Finished Tiger Tool products are inventoried and ready to ship.
“When we finish a job and close a work order, we can instantly see the cost per part,” he said. “We can also compare it with previous work orders to find out exactly where we gained or lost efficiencies on any project. Things we did better, we can apply to other jobs. Things we did worse, we can find a way to correct.”
Tiger Tool also uses the historical data in the software to analyze current projects. From time to time Blair pulls up an old work order and compares it to a recent one for the same part. If the old work order shows a significantly lower cost for the part, he can pull up more historical data to determine what caused the price increase.
“In today’s cost-conscious environment, you have to be able to see your costs and know what’s driving them,” he said. “We can monitor inventory levels, labour costs, and everything that contributes to the eventual cost of a part. And we can do it all in real time, giving us a powerful competitive tool.”
Growing Sales
Since 2008 Tiger Tool’s sales have grown by 345 per cent. Blair attributes most of the growth to having a solid management team, skilled workers, and quality products delivered at competitive prices. But he also credits the addition of the ERP software with helping to create the right environment to support that growth.
“Our old system used to crash a lot, causing us to rebuild data, re-enter work orders, and repeat work we had already done. [Now] that’s not an issue. Instead of focusing on what’s wrong with our IT system, we now invest our time and resources in developing new products, growing sales, and doing all the things you need to do to grow.”
