Nordson DAGE - EFACS E/8 a global solution

With roots stretching back to 1961, Nordson DAGE, a divison of Nordson Corporation (NASDAQ:NDSN), is a leading supplier in the semiconductor and PCBA electronics markets with its award winning portfolio of Bondtester and X-ray inspection systems for destructive and non-destructive mechanical testing and inspection of electronic components. Headquartered in Aylesbury, UK, the company has a wholly owned distribution and support network of seven offices covering Europe, Japan, China, Singapore, and the USA; with manufacturing/assembly facilities in China, and the UK. With customers including global brands, quality, consistency and timeliness are essential watchwords for Nordson DAGE. When the company needed to invest in an Enterprise Resource Planning (ERP) system that would link its UK and China facilities with a minimum of disruption to its business, it found the ideal partner in Exel Computer Systems.

Nordson DAGE exports over 90% of its product outside of Europe. Bondtester products have many hundreds of potential configuration possibilities. X-ray systems are predominantly standard with fewer custom configurations. New systems are typically shipped 2-4 weeks from receipt of order. Given the hundreds of individual components in each product, sub-assemblies are built to forecast with final systems being assembled to order. The Chinese facility also happens to be the company's biggest supplier, providing primarily low intellectual property components and sub-assemblies, with high intellectual property components being sourced in the UK, which is also where all final assembly and product testing takes place. In addition to manufacturing each product type, Nordson DAGE also services and supports its products in all geographic areas, with this representing a growing part of the business.

The electronics industry is renowned for its insistence on speed, be it developing and getting a product to market or the actual delivery of the finished product. As President of Nordson DAGE, Phil Vere understands this better than most and he explains the main challenges the company faces in this demanding sector. "Holding down inventory while managing our supply chain and keeping it tight has a direct bearing on the shortness of our delivery times." He continues, "Because of the fast moving nature of the industry, we must also be continually innovating both our hardware and software. And because we operate in every market with over half our regional staff being in front of customers, we have all the complexity of being a global company while being smaller than many typical global enterprises." As a significant proportion of business is done in emerging regions, another challenge is the need for forecast accuracy. While no single customer represents over 5% of total sales, this again emphasises the need to have tight processes throughout the entire company.

For the past 15 years, Nordson DAGE had been relying on an earlier version of the EFACS ERP system based in its UK facility. China had its own basic, spreadsheet-based system which could not link with the UK. During this time the company saw considerable growth and had to react to the increasing demands of the electronics sector. This was especially seen in the Chinese facility which had originally been supplying 100% to Nordson DAGE but now increasingly was supplying to other companies/divisions within the Nordson Corporation. This need, combined with the growing requirement to tighten up the supply chain by having the UK and Chinese facilities linked by a common ERP system put increasing pressure on the existing systems, as Satyam Sachania, ERP Systems Administrator explains, "In China, the existing system was simply unable to cope despite many spreadsheet-based workarounds. The UK EFACS system had also become so highly customised over the years that it was clear we had to move to a new system."

A decision was therefore taken in 2010 to look for a replacement system that would be hosted in Ohio, USA and implemented first in the UK and then in China, linking both facilities to each other via a true multilingual solution. In addition to this, any system chosen would also have to be able to link with SAP ERP used by the rest of the group for corporate accounting and reporting. Instead of treating this as an upgrade of EFACS, the company investigated a number of other systems which would meet its strict criteria, according to a cost benefit analysis. As Sachania notes, "We decided to go back to basics and use this exercise as a means to re-evaluate all of the relevant processes in the business and then invest in the most appropriate ERP system."

After a thorough consideration of a variety of systems, Nordson DAGE chose EFACS E/8. He goes on to explain what factors influenced the company's decision. "We liked the fact that Exel is a UK company and that it also has a number of installations in China with people that we know. Exel also has experience of multilingual implementations and of successfully linking UK and Chinese operations. From a user perspective, by investing in EFACS E/8 there is a degree of continuity in terms of familiarity and ease of use. At a business level, we also felt that we could do a faster, less disruptive implementation. Both of these were important in helping to get buy-in from key users in the company."

After initial help from Exel in terms of preparation and planning, Nordson DAGE undertook the implementation itself, going live in the UK in December 2011 after only 6-7 months. China went live in June 2012 utilising both Dage UK and Exel consultancy resource, after ensuring that everything and everyone was happy with the system in the UK. Commenting on the slickness and speed of the implementation, Vere notes, "We didn't lose a single business day during the entire implementation." Sachania adds, "And it only took one Saturday to migrate all live data – it went very smooth."

Nordson DAGE used the implementation period to re-evaluate its business processes to ensure a tight fit between the potential of EFACS E/8 and how the company needed to run. It also used this time to thoroughly clean and refine its data and this is where the first benefits were seen. "By cleaning our data and getting rid of obsolete parts," says Sachania, "we reduced our part count by 70%. This is a huge reduction and speeds up the use of the system." The new system also allowed Nordson DAGE to implement a number of new processes, for example concerning custom parts and returns. "EFACS E/8 also enabled us to improve individual company visibility as well as intercompany visibility and our supply chain is now much tighter" comments Vere.

EFACS E/8 has also brought a number of group wide benefits. First, it allows the Chinese facility to interact with other divisions within the group, something that is crucial given that it is increasingly supplying direct to other divisions and not just DAGE. The ability to interact with the group's SAP system has brought improvements in group wide management visibility as well as corporate accounting.

Vere and Sachania reflect on the impact that EFACS E/8 has had on the company so far and look to the future. "Because we started with fresh data and processes, and because we have increased control and visibility, we can easily keep pace with any business process changes that may happen over time" says Sachania. Vere concludes, "EFACS E/8 has given us the stability and a platform to build on for the future, including the improved interconnectivity and visibility that we need for our corporate requirements."