From system integrators to scheduling managers, respondents to a June Pulp & Paper article agree that ERP systems are no “slam dunk” for the paper industry

Responses to June Pulp & Paper Article Highlight ERP System Shortcomings

In general, respondents agreed that implementing ERP systems for order fulfillment and manufacturing processes in the paper industry is not a “slam dunk,” as one person described. Some respondents contrasted the difficulties in using ERP systems for order fulfillment with the success they have had in using these systems for other applications, such as purchasing, general ledger, and human resources.

Many respondents had questions about a particular vendor, or use of a particular vendor for a specific application —such as for environmental management. These kinds of questions are hard to answer without a detailed understanding of the situation. However, knowing that there are issues surrounding software fit in the order management and manufacturing areas should prompt paper companies to ensure that due diligence is done on ERP software capabilities before, not during, a project.

Response: The article in June’s Pulp & Paper magazine was the most honest and direct discussion I have seen in print about ERP in the pulp and paper business. Most of the ERP project disasters we have observed in pulp and paper result from one thing—when someone takes out a hammer and attempts to drive off-the-shelf ERP order services functions and production management functions into the paper company’s order-to-delivery environment. If ever there was a case of a square peg and round hole, this is it.

The largest manufacturing execution systems (MES) vendors serving the pulp and paper market—ABB, Honeywell, and Majiq—have all added extensive functionality to their products for order management, planning and scheduling, quality management, warehouse and inventory management, shipping, and invoicing—all of which are traditional ERP functions. The key MES vendors serving other manufacturing industries like the automotive, electronics, food and beverage, pharmaceutical, and chemicals industries have not. The pulp and paper MES vendors have expanded their products over the years to fill the gap for these functional needs that can’t be met by general purpose off-the-shelf ERP systems.

We believe that pulp and paper companies, the ERP vendors, and the pulp- and paper- specific MES vendors could work together to solve this problem by building supportable and sustainable solutions that meet all of the paper industry’s functional requirements through the integration of the MES and ERP products. Only when this happens will paper companies begin to realize the full benefits of their ERP systems and some of the promises made by the ERP proponents.

—Mark Cubine

Director, Manufacturing & Services Consulting Practice

Raytheon Consulting & Systems Integration

Comment: The majority of paper companies are still running customized order management systems tailored to their specific needs, or, in some cases, packages from one of the MES vendors. This is still the case, even though many have evaluated or tried to implement ERP software for order management. These projects seem to be most difficult when attempting to replace an existing system, since the existing functionality cannot be duplicated without major rework/additions to the ERP system (Figure 1).

FIGURE 1: The higher the level of existing system functionality and the less product standardization, the more difficult the ERP project is for a paper company order fulfillment process. Note that order fulfillment for many companies in the paper industry involves both make-to-order, make-to-stock, and, possibly, assemble-to-order processes.

I also agree that the MES vendors have come a long way over the past several years in their ability to deliver a full breadth of order fulfillment functionality. Maybe once there is a better understanding of paper industry requirements and software fit, this will lead to improved cooperation between some of the suppliers, and result in proposals to paper companies that lead to superior projects.

Response: Your article certainly helped me to get an understanding of where ERP vendors are coming from. I have talked with several ERP providers over the past few months, mostly just trying to learn about the products on the market. My impression has been that very few of them have a real understanding of our industry. At this point, I believe that an organization in the paper industry will benefit more from a system made up of “best of breed” systems with relational databases. Either way, successfully relating “best of breeds” or an ERP venture is going to take many resources in an atmosphere that is conducive and focused on changing management practices. As available tools change, so must the user of those tools.

—Jay Jordan

Scheduling Manager

Gilman Paper Co.

Comment: This topic of enterprise integration with an ERP system versus a “best of breed” strategy has certainly been hotly debated. Except for certain product areas, such as tissue or converted paper products, where ERP functionality is a better fit, there are no easy answers for paper companies wishing to pursue an “integration” strategy. Since no ERP system can cover all needs, it’s a matter of choosing where your integration points are, not a matter of whether you will have them or not.

Some paper companies who are pursuing an “integration” approach have found that using an ERP system in an area of poor fit actually increases integration needs. This is because third party packages are usually necessary to support the ERP system to obtain the necessary functionality. Other alternatives to the ERP functionality gaps include custom modifications to the ERP system, or supporting ERP functionality with manual processes — neither of which prove very palatable. I agree that these projects take large amounts of organizational support and energy, a fact that is often not recognized up front.

Response: I enjoyed reading your June 1999 article in Pulp & Paper magazine. I think you are right in pointing out that there are inherent differences between the paper industry and other manufacturing industries, which makes the use of ERP problematic in certain areas. Use of ERP in the finance, human resources, procurement, and plant maintenance areas tends to work well because there is nothing inherently unique in these areas between the paper industry and other manufacturing industries. But, as you pointed out, fitting ERP to the order fulfillment process can be difficult.

Many paper companies have tried a variety of approaches to try and fit ERP into the order fulfillment processes. These approaches include treating all products as standard stock keeping units (SKUs), using product configurators, building an order management front-end to the ERP software, or interfacing to mill systems to handle most of the order management functions. Each of these approaches has good and bad points and there is no one “right” answer for the paper industry. It depends on the specific product and manufacturing requirements for each paper company as to which approach works best for them.

The good news is that, on the horizon, several leading ERP vendors have plans to implement order attribute and roll inventory features into their packages. This should give paper companies some additional options as they decide how to best fit ERP. Unfortunately, these new features are still many months (or years) away. In the meantime, paper companies should probably focus on the high value areas where ERP fits well. For example, many paper companies are finding significant benefit opportunities by implementing new maintenance and procurement practices enabled by ERP software. Or, paper companies could begin building the foundation processes in finance and administration in anticipation of further development in order fulfillment.

—Brian Walker

Associate Partner, Global Forest Products Practice Andersen Consulting

Comment: This approach of putting in financial or administrative applications first seems to be the strategy most paper companies take, even though their initial plans may have been otherwise. There is no doubt that ERP packages have provided significant benefits to paper companies in this area, especially for companies that had multiple, separate financial systems in use prior to the ERP project. The initiatives pursued and rate of progress with which the ERP order management gaps are addressed will certainly be interesting to follow in the future.

Paul W. Lail is a business unit consultant with Champion International, Hamilton, Ohio. Mr. Lail can be reached by email atlailp@champint.com