Best Practices

Emergency Response Unique Manufacturing Unified Companies (ER UMUC) Incorporated

Company Overview:

ER UMUC Incorporated: ER UMUC, Inc. is a light (value added) manufacturer in the Emergency Response Management market, and offers a variety of products to support domestic and international disaster relief efforts. Some of their products are: rapidly deployable structures, custom mobile command trailers, gas mask filter canisters, etc. ER UMUC has built its reputation on the personal relationships fostered by its regional sales representatives and has an extensive network of community contacts. The sales representatives are proud of the best-in-breed product offering and are frequently called for live product demonstrations.

ER UMUC Company Stats (Last Quarter Results):

Gross Annual Revenue: $30 Million/year

Outstanding Debt: $20 Million

Available Cash: $4 Million

Average Sales Margin: 15%

ER UMUC made significant profits during a recent hurricane impact on the gulf coast. The executive management and board of directors felt that the time was ideal to acquire two companies that differed noticeably from their current business, CarbonTech and MyRentals.

CarbonTech: A small activated carbon and filter manufacturer with NIOSH approval for their filter design. CarbonTech’s IT infrastructure is small (25 computers, 3 servers); the Operations Manager, Joe DeCline, has been servicing all IT needs. He takes great pride in the Epicor Vista® Software that he runs on a Progress® database. This has been a family business for years, and Joe’s father Jay manages the business very closely. Generally, CarbonTech is resistant to change.

MyRentals: This medium size event services company provides tent rentals for a variety of events; they have been a “big player,” renting tents, AC Units, portable professional kitchens, etc. to everything from the Super Bowl to personal weddings. No event is too large or too small. The company’s General Manager, Bobby Buddy is the quintessential nice guy. He has a great personal relationship with most of his 200 full time employees, and even some of the 300 seasonal workers. The IT administration has been completely outsourced, and MyRentals is unhappy with the current level of support. The cost to support IT in their 14 satellite offices and use the Microsoft Dynamics GP® ERP system is consuming their very valuable cash.

The Technology Environment: As the Director of Information Technology for the combined companies, you find three very different environments. The current CEO of ER UMUC, Rock Martin, is technology averse – historically IT capital equipment purchases have been limited to less than $5,000/year. This is in stark contrast to your direct supervisor the CFO, Neil Robber, who loves to be connected. CarbonTech’s General Manager, Jay DeCline, is willing to invest in technology, but only if his son, Joe approves the purchase. Joe believes that he has already provided CarbonTech with everything they need in the areas of Operations and IT Infrastructure. Joe is fond of saying “If it aint broke don’t fix it.” Bobby Buddy, GM for MyRentals, is inherently trusting of his advisors, and has purchased all recommended services and support from his telecommunications, IT, and ERP support providers.

Your IT staff consists of yourself as Director of IT, a senior database developer, and a ½ time PC technician.

Each company has its challenges: The parent company, ER UMUC is cash poor and unprofitable. CarbonTech is very profitable, but does not earn enough to support the other companies, and is very resistant to change. MyRentals has placed too much trust in the individual branch managers to run localized operations and is now only breaking even; they desperately need to get control of their financials, but each branch has different procedures for material acquisitions. Their “just get it done” attitude has resulted in poor margins and poor documentation on all purchases.

Now with many more assets, personnel, and business challenges, the executive management is turning to you to help alleviate some of their financial stress with sound IT solutions that will demonstrably improve ER UMUC’s ability to operate and the “bottom line.” With so many different stakeholders you know that your analysis and recommendations must be sound!

Challenges and Opportunities:

ER UMUC has many challenges and opportunities as it works to combine the three companies into one integrated enterprise. The company could benefit from any number of enterprise-wide implementations that would improve its sales support, its manufacturing and supply services, and its corporate financial management, as described below.

Sales Support

The historical root of ER UMUC’s success has been its regional sales representatives, and there is no reason to expect otherwise in the future. Each sales representative returns to the company’s headquarters periodically for product training and a PC upgrade. You have noticed, even in your short time at ER UMUC, that everyone stores their information in a different format.

ER UMUC has been warmly received by all their customers. Despite that fact, however, there is some fear that the market for new purchases in the rapidly deployable shelter product line may be evaporating. The shelter product line has been the leading revenue generator at 60% of all revenue. Lately, ER UMUC’s established customer base is more interested in shelter rental options than purchase options. Suffice it to say that ER UMUC’s sales team is working long hours trying to sell the products they have been trained on (i.e. ER UMUC’s historical product line).

ER UMUC wants to continue to manufacture the deployable shelters, but is willing to lease them through the MyRentals subsidiary. ER UMUC would like to reduce the total sales force, make them more efficient in their use of technology, and use the same sales force to sell and lease the shelters, depending on customer requirements.

Your task is to propose an efficient IT solution for the mobile sales force to support them as they sell and lease products of both ER UMUC and MyRentals.

Manufacturing and Supply Services

ER UMUC has been using the filters made by the newly acquired CarbonTech Company in its filter canister product and now wants to completely integrate the product line, manufacturing the correct number of filters and having them available at the canister plant just in time to be used in making the canisters. The sales of the canisters are increasing at a pace that ER UMUC will be able to use all the filters made by CarbonTech.

In addition, ER UMUC will be the sole provider of deployable shelters to the MyRentals subsidiary. Therefore, the requirements for sales and leases of the shelters will impact the manufacturing process; and the amount of shelters manufactured will determine how many can be sold or leased. Since deployable shelters are a primary product of ER UMUC, and are a significant portion of the leasing business of MyRentals, you have decided to focus on that product line as you propose improvements in the IT support.

Your task is to propose a solution to the just-in-time supply of filters to the canister manufacturing process and to ensure the manufacturing line for the deployable shelters is producing the right number of shelters to fulfill the sales and leasing requirements.

Corporate Financial and Inventory Management

ER UMUC is supporting three different financial systems for their business functions, which have been independent. For a publicly traded company, this presents an accounting nightmare. Each company reports independent financials and each company has different report formats. This makes the integration needed for combined reporting nearly impossible. Every quarter the accounting staff, IT Staff and executive management spend nearly 4 weeks producing end of quarter reports. Consequently, annual inventory is also challenging – once again, three systems, three inventory procedures. The annual inventory covers only the permanent assets of ER UMUC and its subsidiaries, not the products being manufactured, leased, or sold.

Financial systems currently in use are: