Part 1 – Command and Control
Recommendations from a 42-year career CFO and COO on when, how and why to buy an ERP system.
By Exceptional Software Solutions LLC
Dan Engle definitely knows about financial discipline. He has served in the roles of general manager, COO and CFO over his amazing 42-year career. Dan is currently the CFO at American Torch Tip, a Florida manufacturer of metal cutting supplies for welding, laser cutting and plasma cutting. American Torch Tip is a third generation, 75-year-old company that supplies other companies like Fastenal, Grainger and Lincoln Electric. We at ESS are fortunate to work with Dan and American Torch Tip to provide consulting services for their new Macola 10 system implementation.
Meet Dan Engle
Dan has served as American Torch Tip’s CFO for the last 5 ½ years. Prior to that, he was the CFO for a mattress firm with 120 stores and prior to that, he was the CFO of a company that owned 300 convenience stores. He also spent 15 years in a consulting role, so he has been around the block and has seen companies with and without ERP systems. Dan has a heavy specialty in Macola software; in fact he was an early adopter of Macola products back in 1983 and became a fastidious systems integrator as a result.
He is a dyed-in-the-wool CFO. He even likes CFO-ish TV shows like Blacklist, Boston Legal and Suits, and his favorite movie is The Godfather (1 and 2). Dan says the key to being a CFO is to work smarter--not harder--by maximizing what your ERP system can do.
Dan has mastered the art of ERPs. He starts his day at 4 a.m. sitting on the porch with his dog and smoking a cigar—his favorite pastime. His ERP system allows him the quiet time, because while he’s takes a few minutes to enjoy the early morning air before heading to the office, Macola 10 is already there working hard for him.
In Dan’s view, many companies don’t truly know what an ERP system is and what it can do for their bottom line. What does it do? How does it work? Dan says most senior managers can’t answer these questions.
How Does Dan Define An ERP?
He has a really interesting definition—an ERP is not so much a system per se, but is really a set of business processes that control your important business functions:
- Inventory control—Macola 10 offers 98% inventory accuracy at any given time. It’s very attainable and very realistic.
- Shop floor control—know when things are coming in, and how much time and how many resources to allocate to it
- Purchasing control—creating purchase orders and managing that function, watching orders, delinquencies and price variances.
- Customer order system control—to ensure accurate deliveries
For Dan, control of all these functions is really important. That’s why any company looking for more control over their business should look at an ERP like Macola 10. The beauty of Macola 10 is that as you add the complexity of all of these controls, the system is fully integrated to handle that complexity. An ERP is fundamentally the control process, and Macola 10 is fundamentally geared towards processing customer orders, purchase orders, shop orders and even forecast orders if you want that feature for your manufacturing business.
Dan Says Gain Command: Questions you should ask
ERPs maintain control by managing and transacting all types of orders. Dan says that before buying an ERP system, ask yourself what you really want:
How precise am I in maintaining my customer records?
Do I have accurate customer orders?
How is my PO management?
Do my planners have reliable information to look at?
Most people buy an ERP because it is the thing to do right now, yet they never ask what they want to get from the system.” – Dan Engle, CFO American Torch Tip
The bottom line is that if you don’t ask, you might end up with an expensive ERP system that works more like Quickbooks. No one wants that. Dan has seen it. He once consulted for a company that spent $2 million on Oracle to replace a reasonably well-functioning system. But--they didn’t know what they wanted, and their ERP did nothing more than perform accounts payable and general ledger functions. Dan chalks it up to neglect from senior management—they should have been invested in the procurement process and asked many more questions like:
- Am I at 98% inventory?
- How come I have unstarted shop orders?
- Why do we have incomplete shop orders?
- Why are we short on parts?
They didn’t ask and the company is now bankrupt. Dan’s advice to any mid-level accountant aspiring to a CFO position is to learn everything you can about the ERP system and stick your nose into areas that are not working.
Dan Says Take Control - Functions Macola 10 can streamline for you
Dan explains that there are so many critical roles within a company that will benefit from Macola 10:
- Customer service: if you get a customer order for 100 pieces, and you promise that customer you can ship 100, you want your inventory to be accurate. You never want to call the customer back and say you can’t fulfill the order.
- Planning: the beginning point of company planning is an accurate inventory. You want accurate order dates so if you’re short on inventory you can make the best decision. Do you have an open order? If you think you have 300 parts coming in but you don’t, then you’ve lost control.
- Shop order production: your parts going to the shop floor need to be accurate. Dan has seen companies waste countless time and money when this step goes wrong.
Dan says it is also important to have an onsite “preacher” telling everyone how the system should wor k and making sure the business is maximizing the ERP’s potential.
Command and Control in Action - How American Torch Tip use Macola 10 with help from it's channel partner, Exceptional Software solutions.
American Torch didn’t have ERP functionality when Dan arrived at firm. The company had been using the Open Source Accounting System (OSAS) for 17 years, and it did not have control of their business. Dan was hired to bring it under control, and one of the first things he did was implement Macola 10 with the help of the #1 Macola Channel Partner in North America, Exceptional Software Solutions, LLC.
The company now has 170 employees, and has recently begun to brand their own products, and Macola 10 has been there to help every step of the journey. He particularly likes Macola 10’s Event Manager feature. “I think it’s dandy. We do auto-notifications throughout our facility and it works so well.” And guess who’s the onsite “preacher” at American Torch Tip? You guessed right, it’s Dan.
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