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Ilmor Engineering

In 1984 Mario Illien, Paul Morgan and Roger Penske founded Ilmor, designing and manufacturing engines for both racing and production. Ilmor quickly became successful in Indy racing before progressing to Formula One, where they won world championships with McLaren in 1998 and 1999.

The Client

During the late nineties a separate arm of the business was grown – the Special Projects Group (SPG). This group, in partnership with Honda Performance Racing in California, went on to develop an engine which dominated the 2004 and 2005 seasons of IRL racing, leading to the competition bowing out and the IRL becoming a one-make series in subsequent years. In late 2002 Mercedes-Benz began a phased buyout of Ilmor, but when this began to impact on the opportunities for Special Projects, Illien and Penske bought the SPG business. This signified the creation of Ilmor Engineering in 2005, with a new 56 employee strong workforce, and an impressive turnover of £15m. When Ilmor then needed to invest in a high performance business management system, EFACS E/8 from Exel Computer Systems was selected.

As with any company designing and supplying world class, high performance products, quality and reliability are non-negotiable standards. This applies to every process and component involved in the finished product, which in the case of an IRL engine, extends to over 3,000 parts. The failure of even the simplest part can have disastrous effects on the entire engine and, in the hyper competitive environment of Indy Car Racing, on a driver and team’s race and even championship. The other non-negotiable aspect is availability of product. Different components within an engine have different life expectancies and wear rates, which means that a readily available source of spares is essential. If a customer requires a component in order to race in 2 days time, they can’t wait 3 days for it to be made.

ilmor engineering logo


Ilmor Engineering’s Operations Manager, Rupert Russell, depicts some of the difficulties they face, so that the full scale of the challenge may be fully appreciated: “First you need to understand that we currently have over 85 IRL engines in existence, each of which requires a complete component lifecycle history unique to that engine. That’s 3,000 components in each engine. Then you need to appreciate that we have 2 distinct yet interconnected areas – engineering and design, and manufacturing. These domains bring their own challenges, not least because each utilises the Bill of Materials (BOM) in a different way.”

The key concerns of the engineering division can be summed up by the questions, “What part is it?” and “Is there one in stores?” Given the ongoing development that is an integral part of the business, the engineers are dealing with a continually changing BOM. To complicate matters further, all BOM information has historically been held on the company’s ageing textbased business information system. A typical scenario would be an engine builder disassembling an engine, identifying a part that needs replacing, and then requiring a replacement very quickly in order to reassemble the engine. To achieve this the engine builder needs to be able to accurately identify the part concerned, and then communicate this to the stores where someone in turn has to interrogate stock levels to check availability. As Russell comments, “Change is the nature of the beast – parts change rapidly which necessitates complete visibility of what it is you’re dealing with.”

External events, some of which by definition cannot be easily predicted, also present considerable challenges to Ilmor. An example of this was the change in regulations introduced in 2004 to reduce engine capacity from 3.5 litres to 3. This naturally meant the redesign of a considerable number of components and the creation of yet further part numbers. However as Russell explains, this wasn’t the complete picture: “To add to the complications the regulations came into force mid season to coincide with the Indy 500 race. Not only did that mean that all of our redesigned engines would have their first ‘real’ race scenario in a hugely public environment, we also had to gauge how many components would be required for the earlier part of the season for the old specification engines.”

A final engineering consideration is the element of retrospective component replacement which again demonstrates the need for complete component traceability. If a component unexpectedly fails it is imperative to discover if it is an isolated incident due to a particular combination of factors, or whether it’s a potential fault that could affect a particular batch, or in the worst case scenario, every other identical component. Depending on the outcome of what is discovered, all the affected components must then be identified and either replaced or modified accordingly.

The manufacturing division’s biggest challenge is supplying the demand from engineering. In order to do this, manufacturing needs to maintain rigorous stock control by keeping on top of suppliers and subcontractors alike, in addition to managing its own capacity requirements. This is compounded by the specialist nature of components, some of which can take 12-14 weeks to either order or manufacture, which presents what Russell describes as an extremely difficult balancing act: “On one hand it’s unacceptable not to be able to supply a part when a customer requires it. On the other hand, given the continual nature of change we cannot over order a particular item because we would then be left with unacceptable high levels of stock which would essentially be redundant and worthless to us.”

Ilmor also have a unique batching system in place, which is largely driven by the need to maintain complete product traceability. Ilmor require suppliers to physically incorporate a unique supplying batch number within the component, which is different to the actual final batch number used internally within the ERP system. What they have in common with other very high specification manufacturers is the need to maintain meticulous quality control through a rigorous goods inspection regime and continual supplier relationship management.

As Russell comments, “Taken in isolation it’s a challenging business. Because all of these issues are happening concurrently and interacting with one another, it’s vital to keep on top of the bigger picture and see exactly what’s going on. At any given time there will be ongoing design necessitating the manufacture of new components.”

Given the sheer complexity of business Ilmor have always relied on IT as an enabler to decision making – historically in the form of a text-based system called Command which sat on a VMS platform. Originally installed in the 1980’s this has been extensively customised to deal with the very particular demands made on it by Ilmor’s business processes. Russell is adamant however that one reason for the company’s success is what he describes as a ‘culture of information sharing.’ “Individuals are actively encouraged to take responsibility for their position in the information chain. They need to be aware of who they need to share information with and to then carry that out.”

Even with this culture in place, Ilmor were having increasing issues with their legacy system. While the engineering users liked the speed of the text-based platform, the fact that it was not Windows-based meant that it often required very specialist knowledge to get access to anything other than basic information. Management reports were especially difficult and needed to be programmed into the system and then exported into spreadsheets. The accounting functionality was also weak. Month end accounts took literally weeks to compile. There was no drill down facility or interrogation functionality so additional queries had to be continually re-entered into the system in order to get the precise information required – all of which was very time consuming.


The decision by Mercedes-Benz to buy Ilmor had initially looked to set Ilmor on an SAP implementation route. Mercedes-Benz and many of their subsidiary companies were already using SAP. However, at the inception of Ilmor Engineering in 2005 it was decided that SAP was too much of a heavyweight system, which didn’t actually do various elements of what Ilmor required.

Ilmor’s extensive customisation of the old Command system had already given them a very good insight into what they required from a business system. They quickly identified 3 solutions which claimed to handle both the complex manufacturing requirements as well as providing solid accounting functionality. However, as Russell explains, on closer inspection only EFACS E/8 measured up to what was required: “We looked at Sage but it simply couldn’t deal with our manufacturing needs. Another candidate had very strong manufacturing capabilities but required Sage to be bolted on in order to deliver any real accounting strength. Since we wanted a completely integrated system from one supplier, this wasn’t acceptable.”

It would be wrong to assume that EFACS E/8 was chosen by default. As Russell notes, “We’d already spoken to another high performance engine manufacturer using EFACS E/8 and they were very positive about the solution. From the moment I first saw EFACS E/8 in operation I liked the fact that the left hand column was full of terms and labels that actually meant something. It was immediately clear that the system was designed to be very meaningful and that you could do a lot with it without being a superhero. The fact that it was also customisable only helped what ultimately was a very straightforward decision to invest in EFACS E/8.”

While the decision to implement EFACS E/8 was taken in 2005, 2 factors significantly impacted the implementation timetable, pushing back the final go live until May 2007. The first of these was the major change in engine spares demand, due to the IRL becoming a one make series. This pushed things back to 2006. Having just become an independent company from Mercedes-Benz, Ilmor began the implementation only to find that they had to relocate to elsewhere on the Mercedes-Benz site. This did however give Ilmor Engineering the opportunity to establish a completely new IT infrastructure on which to install EFACS E/8.

We finally resumed implementation in October 2006,” explains Russell, “but we soon realised that our plans for a Christmas go live were very optimistic. Specifically, we needed to do some customisation on EFACS E/8 in order for it to be able to handle our unique batch numbering requirements. We also needed some work done in order to provide instant part ordering from within the BOM screens for our engine builders. While this was happening we were also modelling all of our existing processes onto EFACS E/8. However this was all done by personnel within the company who had their usual jobs to do as well.” As data transfer from Command neared completion, Exel consultants were on-site to assist with the final stages. Given the need to get it right first time, Ilmor had several dry runs before successfully going live in May 2007. As Russell reflects, “It was by and large very smooth. Most importantly we were able to continue doing business with no major interruptions. Our staff are generally PC literate and most people’s interaction with the system is very straightforward and is further aided by the intuitive nature of EFACS E/8.”


The first significant benefit of EFACS E/8 was felt within the first month of implementation, within the accounts division of the company. For the first time ever the accountant could set up a system with the codes that he actually wanted and that made sense to the company. The balance sheet was completely accurate and unlike the previous system with its 2 week wait for vital financial management information, this was now instantly available and showed real-time visibility of the financial position of the company. Perhaps more significant is that the new levels of data and insight were credible from the outset.

Ilmor Engineering have already implemented Shop Floor Data Capture (SFDC) via bar code readers that automatically update the system with each completed process step. Looking forward, the next main area of development is to activate the full power of EFACS E/8’s built-in planning and scheduling functionality. This will give much more accurate visibility and utilisation of Ilmor’s machining capacity. Russell is under no illusions that there is much, much more to come, which is why he concludes by saying, “We know that we’re only just beginning to scratch the surface of what EFACS E/8 can do for us.”

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