Epicor Making Operations More Cost-Efficient Amid Uncertain TimesBy Alejandro Enríquez | Fri, 09/11/2020 - 13:30
Q: What is EPICOR’s contribution to the Mexican automotive industry?
A: EPICOR is a software company that provides technological solutions such as ERP systems. Our best-selling product in Mexico is EPICOR 10, which is an ERP for discrete manufacturing companies, including those in the automotive industry. Our target in the Mexican market is not OEMs nor Tier 1s given that they have internal ERP systems. EPICOR is focused on Tier 2 and Tier 3 companies, including metal mechanic, plastic molding and injection or textiles suppliers. We do have other ERP alternatives, for instance CMS, that are used by Tier 1 companies, especially due to their adoption by companies based in the US and Canada.
Q: How are you planning to make the most out of the changes brought by COVID-19?
A: Between March and April, the automotive sector remained practically at a standstill. In the US, OEMs started slowly to reopen in May, which had a spillover effect in countries like Mexico. In June, Mexico labeled the automotive industry as essential, plants are starting to reopen and the entire chain is getting ready to resume operations. Naturally, the gap left by COVID-19 in the March-April period will not be filled immediately. Payments along the chain are made months after, which means companies continued to receive payments during lockdowns for the products previously delivered to them. However, the coming months will see a disruption in cash flows. Furthermore, companies are not restarting operations at full capacity since they are observing strict government guidelines.
During these times, we can help clients by providing technological solutions. We can help the industry to embrace digitalization, including Industry 4.0, Cloud and IoT solutions with specific features, as they adapt to the reduced number of people allowed in their plants. Delayed deliveries in the automotive industry are severely penalized. If companies fail to supply their customers on time it can cost them millions of dollars. We are also supporting their online interaction through collaboration tools within the ERP without the need to use other platforms.
Q: What are the main challenges that companies should focus on to adapt to different digitalization options?
A: There is no handbook on where to go first. There is no exact order to embrace digital transformation and there is no single package to do this. Depending on their individual needs, companies should select the best tools for them as they grow their operations. One of the most critical actions is storing all their data in the cloud to diminish risks in losing data. Technologies used in the different processes of the company can vary depending on the process. Some Tier 3 companies do not have electronic data interchange processes, for instance, due to their expensive costs. However, there is a trend where Tier 1 companies push and support their suppliers to adopt that technology. The same happens with Tier 2 supporting Tier 3 companies.
Q: What are the most common mistakes companies make when implementing these solutions?
A: The most common mistake is not having an ERP. Controlling production through an excel sheet or an e-mail is not possible and some companies that do not want to invest in technologies continue to work like this. Most OEMs use the material management logistics and evaluation (MMOG/LE) guidelines to assess their suppliers, these guidelines have critical points that companies must comply with. If they fail to do so, they have the risk of not being a supplier to certain OEMs. Some companies force their suppliers to keep their data within their central system, which is an ERP. Data cannot be outsourced since it compromises the supply chain. When companies see technology as an expense rather than an investment, they are committing a big mistake.
Q: To what extent can scrap be reduced using EPICOR’s ERP systems?
A: We performed a study with Forester regarding our customers’ production processes. To implement their ERP system, they either made an investment in an ERP system on--premises or in a SaaS deployment. ROI seen by these customers is around 264 percent over a three-year period and payback came after 13 months. Savings accounted for around US$1 million in demand, while in the production area savings totaled US$1.7 million. In terms of inventory, they reduced costs by US$4.4 million and in front-office tasks, they saved around US$400,000. These companies have an annual income between US$30 million and US$60 million and can be considered as Tier 2 or Tier 3 companies. Some of the companies included in the study were not necessarily part of the automotive sector but they worked in the metal mechanic and plastic segments.
Q: What other sectors are you focused on in Mexico and what solutions do you offer for them?
A: What lies at the core of EPICOR is our ERP E10 system. This is a complete solution for the entire supply chain, from sourcing, to planning and to the end-customer delivery, or a quote to cash process. We focus more on discrete manufacturing companies rather than process manufacturing. This also includes make to stock, make to order, engineering to order, and assembly to order manufacturing and other related projects mostly in the metal mechanic and carton or plastic packaging sectors.
Q: How did EPICOR adapt to the COVID-19 situation?
A: Fortunately, we are very flexible as a company. We also learned some important lessons, such as the versatility of a laptop rather than a CPU. But we did not face any major technological challenge since we use our own ERP system, which already makes us more efficient. In addition, most of our workforce performs on-site tasks due to our software, so our technical support team had all the technological equipment to provide support remotely, even before COVID-19.
Q: How did EPICOR support its customers during the pandemic?
A: The most important concern for our clients is Mexico’s economic scenario. Manufacturing companies remained closed unless they were an essential industry. Companies suffered after almost two months of halted operations.
The second major challenge for most of our customers was the lack of technological infrastructure to work outside their plant. In some cases, not even the company’s owner was used to the home office. In this regard, we supported our customers with new technological features, such as migrating data to the cloud to prevent IT staff from having to go to the plant, communication tools within the ERP system, e-commerce solutions, among others.
Q: What are the key drivers in the ERP segment?
A: Companies have realized that they cannot maintain their operations solely at their plants. From now on, the use of cloud and SaaS applications will grow. E-commerce also improved dramatically, some reports have mentioned that in Mexico its transformation was reduced from two years to two months based on the adoption rate we have seen. For manufacturing companies, automation will be a must. Digital transformation will begin to make processes leaner, with less manual labor, which will reduce risk. Communication tools also will remain really important. We offer these kinds of tools within our ERP systems.
Q: What are EPICOR’s strategies for 2020 and 2021?
A: Our core strategy is to be more customer-oriented, which is strongly related to the post-sales service we provide. EPICOR has two releases a year where we invest in our solutions to provide better technological solutions to our customers. Today, we are focusing on Big Data and analytics. In addition, as part of our Kinetic project, we are improving our user interface in HTML5 for an enriched visual experience and process streamlining.
EPICOR has different tools for different manufacturing industries that help them to control their process amid uncertain times. In the automotive sector, the biggest concern is each company’s contingency plan in times of catastrophes, which includes avoiding any supply chain disruptions. This was traditionally assigned to the production or quality areas, but today it has become a topic that directly involves the CEO.
Epicor Software Corporation drives business growth, providing flexible, industry-specific software designed to fit the precise needs of manufacturing, distribution, retail, and service industry customers.