Irwin's, the Northern Irish bakery, which supplies supermarkets including Tesco and Waitrose, is turning to enterprise resource planning (ERP) as it attempts to beat the economic downturn. Information collected by its ERP system will help the bakery manage its costs in the face of the rising price of flour, oil and other raw materials, and consumer's tightening purse strings.
Irwin's, based in Portadown, produces 1.2 million loaves of bread each week, across 250 product lines. The company had no visibility in its production process to allow managers to predict future demand until it completed the implementation of the ERP system from Lawson software in June.
The bakery spent nine months with Lawson, training staff and showing people how the software would be applied in the production process before it went live. Brian Irwin, executive chairman of Irwin's, says, "We have engaged people across the business, people who would not normally be involved in IT projects, to think about the benefits of a new IT system.
"We talked to our staff from a business point of view about problems they faced at work and made sure the software could overcome these issues" says, chief executive Bill Brown.
For instance, the company asked staff about how much time staff could be saved if they could see in advance that stock was in the right place at the right time.
Irwin installed Lawson Software's Quickstep Food and Beverage ERP system. It decided to change its own business processes rather than adapt the software to how the company worked, implementing Lawson's software "out of the box", with little modification.
Irwin used the Lawson Opportunity Analyzer performance management tool to help it identify seven key areas where the Lawson ERP could benefit the business, including supply planning, execution, sales returns, cost reduction and procurement.
The company took a big bang approach to the project. Once the software had been designed and configured, it ran two pilots before going live.
Irving's had to integrate data from the shop floor, generated by production equipment and staff who track bread made through the production process, the day the software went live. This has not gone as well as the company would have liked. The Lawson software has not yet delivered all the business benefits identified by the Opportunity Analyzer tool, says Brown. However, he adds, "We now have the tools to measure business improvements."
Bread making is a speciality business the end product has a short shelf-life. Forecasting provided by the Lawson software is essential to reducing waste and managing costs. "It is a demand-driven system," says Irwin, "which means that products will be made and delivered more efficiently, so we can reduce stock levels and ensure our customers receive the freshest products possible."
Irwin's bought the software before the UK economic downturn. But it believes Lawson will come into its own as trading conditions get tougher. The price of flour doubled and fuel prices have escalated, but Irwin's has not been able to pass on the cost increases to the supermarkets.
Irwin's says the £800,000 ERP system will allow it to forecast its raw materials requirements more accurately and reduce the amount of stock it has to hold. This will make the supply chain more efficient and lower its stock levels.
"Lawson is a platform for integrating processes across our departments, enabling us to reduce waste and tighten our supply chain," says Irwin.
The investment in Lawson software will also help the bakery improve customer service, by keeping track of orders to the leading supermarkets. Irwin says, "We intend to improve the profitability of the company by using the ERP software. This will be essential for future capital investment."
It is early days for the implementation, but Irwin's has managed to train shop floor staff to use Lawson within the baking processing. Staff scan bar codes to track orders through the production process. Batches are weighed delivery lorries loaded. The management team can use the IT system to plan and forecast.