Startup Jump Starts Manufacturing
Fiber-optic Startup Gets Up and Running Quickly with Expandable
Networking startup Aurora Networks, Santa Clara, California, was able to get its manufacturing and distribution operating at a high rate of efficiency in a short period of time by implementing a cost-effective and easy to use enterprise software package. Tom Paskert, chief financial officer for the firm, said the company originally looked at purchasing higher-end enterprise software packages but found they could obtain equal capabilities in all areas that mattered to the firm with a package that cost a fraction as much and required far fewer resources to implement and maintain, Expandable II from Expandable Software, Santa Clara, California. "Our team feels that Expandable met all our requirements, providing a fully integrated link between our major processes, including order entry, inventory, accounts receivable, etc.," Paskert said. "It has helped us substantially increase our manufacturing and distribution efficiency and should be able to easily grow with us through the midrange level."
Aurora Networks has just begun shipment of a hybrid fiber-coax cable system that provides a low cost way of delivering two-way broadband services to the home. The difference in Aurora's product is in where the fiber stops and the coax fans out to individual homes. In existing systems, each optical node serves about 500 homes. With Aurora's system, the fiber goes further, and each optical node only services 50 to 100 homes. According to Guy Sucharczuk, the startup's chief operating officer, this provides two major advantages. First, there's no need for radio frequency amplifiers to drive traffic over the shorter lengths of coax. This cuts costs and lifts limits on carrying upstream traffic. Second, there's a lot more bandwidth per customer. The fiber part of this system -- the equipment in the service provider's head-end and the optical nodes -- will cost between $20 and $50 per home passed.
A Hot Networking Startup
When Aurora network's was originally founded in 1999 it kept people guessing about what it was developing, saying merely that it was working on "optical transport systems for multiple systems operators." From the beginning, the company attracted a significant amount of buzz because it was founded by three alumni of successful startup Silicon Valley Communications, Inc. (SVCI), and has recently hired the former Chief Technology Officer for AT & T Broadband, Tony Werner, as its President and CEO. Aurora operated purely in a product development mode for the first year and made use of an inexpensive accounting system targeted at small businesses. As the development process reached fruition and Aurora began manufacturing its first products, it ran into the limitations of the original software.
"The lack of capabilities of our earlier system meant many of our accounting operations had to be performed manually in spreadsheets or calculators," Paskert said. "For example, when we received subassemblies from contract manufacturers we had to record the information on paper forms and then deliver them to the accounting department. There, one of our accountants had to manually enter the received product into inventory, match the receipt to the purchase order to make sure we received the correct materials and quantity, and finally check both of these items against the invoice. Another area that took a lot of time with the old system was making recurring entries in the general ledger. It didn't have a facility to automate these entries so an accountant had to type them in one-by-one every month. It was clear to me we had outgrown this system and I was pleased to discover the company had already begun looking for a replacement."
Carl Busch, director of operations, also felt limitations in the company's original software system. "Because there were no material planning capabilities, I had to take the engineer's bills of materials, manually calculate each component's requirement, and compare it against our inventory and purchase orders. This was very time-consuming and without the bills of materials located in a central database I had to continually verify that I possessed the most recent BOMs."
A Mid-Range vs. High-End System
"Our implementation team gave some thought to a high-end enterprise system such as SAP R/3 or Oracle because we were in the midst of developing fairly large manufacturing and distribution capabilities," Paskert continued. "But we were concerned about both the cost and the time required to implement such a system, as well as the drain on our internal resources involved in supporting such as system on an ongoing basis. At the time I joined Aurora, other people on the team had already investigated midrange enterprise alternatives and came to the conclusion there wasn't much out there. Expandable was a perfect fit for our needs because it was relatively inexpensive and could be implemented quite fast, yet provided all of the basic capabilities of the high-end systems."
"I have used SAP, Oracle, ManMan and Maxim at other points in my career," Paskert continued. "When I tried Expandable I immediately felt it was considerably more intuitive and easier to use than the other programs. Yet, it seemed to be capable of doing the heavy lifting that was required to get our manufacturing operations off the ground. In particular, it provided a complete manufacturing system fully integrated with financials. The system fit our needs without any customization, with the exception of tailoring a few reports to match our preferred format. We went about this process, not simply by converting our existing infrastructure over to the new system, but rather by rethinking our chart of accounts and workflow in order to more efficiently run our expanded operations. Moving our previous offline operations onto the system was the first step and that was easy because, like the high-end systems, Expandable handles every aspect of a manufacturing operation in a totally integrated environment. For example, our receiving department now enters incoming materials directly into the system where they flow through into inventory and are automatically matched against the corresponding purchase orders and invoices."
Configuring the Engineering Change Order Process
"Our change order process provides a good example of how we mapped out our procedures to fit our new operating environment," Paskert said. "When the product is released, the bill of materials is now frozen and a formal process is required to make any changes. An engineer creates an engineering change order and gets the necessary approvals. This means we are now assured that management approves every change. When a change is made, we immediately stop ordering parts that are no longer needed and make sure we have a sufficient supply of the new parts. Expandable provides the infrastructure to manage this entire process without overburdening us with frills that don't make sense for an organization of our size."
The integration between manufacturing resources planning (MRP), inventory, order entry, purchasing and financials has been another major factor in the success of this implementation. Expandable provides powerful tools to manage inventory, keeping it as low as possible without incurring stock-outs that reduce sales. The software's sophisticated MRP capabilities immediately explode every order into the components required for production. "I no longer spend a half day manually exploding material requirements," - said Busch. "Expandable's MRP program takes only five minutes to do the same job." The fact MRP is integrated with inventory and financials provides real-time reports on exactly where things are. The system's material management module is particularly useful in this regard because it helps coordinate parts coming in from outside suppliers. "Administrative time required to support a manufacturing activity has been reduced by more than 50%," Nancy Robinson, general accountant added. "During our first year of operation, we had three accountants in the company. Now, even though our manufacturing volume is much higher, one accountant can handle the work." The high degree of integration between the different modules in the software provide a complete repository of information on every aspect of the company's business that can easily be queried to assist in making more intelligent business decisions.
"Besides the initial savings in the purchase and implementation cost of the software," Paskert continued, "we have realized considerable additional savings because it is so easy to use and maintain. For example, all of our users were able to get up to speed very quickly with only a minimum level of outside support required. The net result is our software implementation took only a few weeks so we could quickly get back to the primary business at hand - ramping up production. We have already shipped some units and are expecting to begin full-scale shipments within a few months. We are calculating our requirements for longer lead-time items such as lasers through the material planning module. It provides the information we need to minimize our commitments while ensuring we have enough parts on hand to meet demand. This implementation was the most trouble-free I have ever been through in my career and has convinced me that Expandable represents an excellent tool for any manufacturing-focused startup operation."
For more information about Expandable, contact the sales department at 408-261-7880 or by email at email@example.com.