Comtrex Case Study for Expandable ERP
About The company
Comtrex designs, develops and manufactures information systems, including point-of-sale (POS) terminals, peripheral equipment, and software. Its primary market is the food service industry. Customers for Comtrex Systems include full-service restaurants such as Ponderosa Steakhouse, quick service food establishments such as Wendy’s, cafeterias and institutional food service operations.
Comtrex was founded in 1981, and has installed more than 40,000 Comtrex POS terminals worldwide, representing approximately 10,000 installations. The company’s manufacturing, assembly, and
development activities are located at its headquarters in Moorestown, New Jersey.
A flexible, enterprise resource planning (ERP) system has aided Comtrex Systems Corporation in boosting the efficiency of its manufacturing and distribution operations. The software’s Material Management module ensures that necessary raw materials are in stock or ordered when they need to be. The Inventory Control and Purchasing modules allow just-in-time receipt of parts from vendors, while the Job Scheduling module permits a quick response to customer orders. The software includes the ability to “backflush” the inventory, allowing Comtrex to maintain a highly accurate inventory database with just a few keystrokes.
As Comtrex has evolved from manufacturing proprietary products to assembling off-the-shelf parts, its ERP system, Expandable ERP from Expandable Software, Santa Clara, California, has been flexible enough to accommodate the shift. It has also been extremely reliable. “We use it every day, and not once has it ever crashed,” says Rene Burckhardt, director of operations at Comtrex.
Results & Benefits
When Comtrex first started out, the company’s product line consisted exclusively of POS terminals. These devices contained integrated circuits, printed circuit boards, and numerous other parts, nearly all of which were produced in-house in a variety of different manufacturing processes. Comtrex management first considered using an ERP system in early 1990. They didn’t base the selection process strictly on a feature-by-feature comparison. “If you buy solely on functionality, you will look forever because every month someone comes out with a new feature,” says Jeffrey Rice, president and CEO of Comtrex. Instead the company focused on the quality of the support they could get from the ERP software vendor. In this respect, Expandable stood out. They send their own representatives to assist in the system implementation. This practice not only eliminates the need to find and hire a consultant, it also ensures the involvement of people who are highly trained in the ERP system. The people from Expandable are experts in every detail of their own software. Expandable also provides training for the ERP system. The ERP system included all the capabilities Comtrex needed such as materials management, financial applications, scheduling, and inventory.
The company required no customization to the system, with the exception of tailoring some of the canned reports to match a preferred format. Once the system was up and running, management began relying on it to support the growing business. Comtrex used the system’s financial modules, including the General Ledger, to manage business operations. They used many of the manufacturing modules to manage activities on the production floor.
The system’s Material Management module is particularly useful because it helps coordinate parts coming in from outside suppliers. For example, when Comtrex was selling mainly proprietary products, they worked with metal companies that built the metal cabinets, painting companies that put the finish on the cabinets, and plastics manufacturers. Each of these suppliers required a certain amount of lead time. Even today, for the 20 percent of the products that are manufactured in-house, they must coordinate suppliers and lead time. Comtrex has set up the Materials Management module to include all lead times so production managers always know how long it takes to obtain a particular part.
Over time, Comtrex switched to buying off-the-shelf components rather than manufacturing everything in-house. “Currently 80 percent of our business involves subassemblies from Taiwan that are put together and tested here in our facility,” explains Rice. The remaining 20 percent of the company’s product line involves equipment manufactured in-house. Even though their methods changed, management never considered replacing the ERP system. Their current system suited the new business model equally well. Also, the company was very pleased with the support they were continuing to receive from the vendor. “We stayed with them and will continue to stay with them because of the support,” says Rice. “They have knowledgeable people who understand the system and we can always reach a real human being in five minutes. We only call them two or three times a year, but if we have a question that takes several hours to solve, they stay with us on the phone until its done.”
Today Comtrex uses the same financial applications in the ERP system that it used originally. But in addition to the Materials Management module, they now rely on other modules such as Inventory Control, Purchasing, and Job Scheduling for managing production and distribution. When an order is received, an order entry clerk enters it into the Sales Order module. This module generates a pick ticket that is given to the production manager. He and Burckhardt, the director of operations, determine which parts are already in-house and which need to be ordered. They do this by running a “component availability report” using the Inventory Control module. This report, which is available immediately, automates what would otherwise be a time-consuming and potentially inaccurate process. Instead of manually comparing a list of items needed to process a certain order against an inventory list, they simply identify the job and run the component availability report. The ERP system compares the bill of materials for that job against the inventory and prints out a list of the items not in stock.
In the meantime, Burckhardt uses the Job Scheduling module to issue a “pull” for the product that is going to be built. The software automatically identifies all the necessary components for that pull and prepares a Kit Shortage report showing the quantities of the parts that are not in stock. The next step is to generate purchase orders for the short items using the ERP system’s Purchasing module. This module draws information from a master vendor list to automate the placement of POs. All the user needs to do is specify the desired quantity, which comes from the Kit Shortage report.
The system was set up this way, rather than having the ERP system enter quantities automatically, to allow Comtrex to take advantage of volume discounts. For example, even though they might need 10 of a certain part to complete a job, they may prefer to order 50 to get a discount. Often while preparing purchase orders, Burckhardt is also using the Inventory Control module to see what is on hand so he can adjust orders to get the best deals. The Purchasing module generates a Purchase Order status report, which Burckhardt reviews weekly to see what material should be coming in.
Once a shipment arrives from a vendor, someone in the Receiving Department enters that information into the ERP system. This entry increments the part’s inventory quantity. The entry also updates the Kit Shortage report, showing the part has been filled. Once all outstanding items have been received, the job commences. Printed circuit board assembly kits are sent to a contract manufacturer. After the build is finished, the ERP system is updated with a Work in Progress completion entry, which indicates the subassembly is now in stock and ready for final assembly. The final assembly and testing is performed to satisfy a specific sales order requirement. The production manager enters a final process known as back flushing. Back flushing relieves the sub-assemblies and other components from inventory and increases the on-hand quantity of the final product. Upon shipping, the Sales Order module decrements the finished goods inventory and transfers the costs to a cost-of-goods-sold account