How cloud-based ERP can give your business a boost

Duplication of effort and a lack of integration led Unionwear to move to an ERP system. The company’s experience with – plus the appeal of avoiding upgrade costs and the benefits of a regularly updated system – made cloud-based ERP a natural choice.

cloud based erp

A couple of years ago, Unionwear, a clothing and accessaries manufacturer-based in Newark, N.J., employed a patchwork of systems to run its business.

Headquarters used Sage Pro accounting software to manage the books, while individual plants used Microsoft Access and Excel spreadsheets to track manufacturing activities. Unionwear, a 120-employee company, lacked a unified, enterprise-wide system.

“We were running a number of different systems -- and leaving a lot of gaps,” said Mitch Cahn, president of Unionwear.

Calculating Costs for Each Run

One such gap was the lack of a perpetual inventory system. Unionwear updated its inventory balance periodically rather than continuously. As a result, the company needed to conduct a cycle count every time it wanted to begin a production run, Cahn says. In addition, the manufacturer didn’t maintain a database of costing information, so cost calculations had to be done over and over again.

Duplication of effort was one issue. Integration, or the lack of it, was another. The absence of enterprise automation meant that shop floor scheduling didn’t take manufacturing capacity into account. And there was no integration with Unionwear’s CRM system.

Against this backdrop, Unionwear decided to deploy an ERP system. The company looked into an on-premises approach, but determined that such a move would require a significant hardware upgrade. Cloud-based ERP became the solution of choice. In addition to the upgrade cost avoidance, the idea of having a system that would be updated regularly instead of annually was another selling point, according to Cahn.

Unionwear’s experience with Salesforce -- the company went live on the cloud-based CRM in 2013 -- was another factor.

“One of the main things that sold us on cloud was the Salesforce Platform,” Cahn said.

The company’s next step was to look into ERP offerings built on that platform. Unionwear selected Rootstock Software’s manufacturing cloud ERP and went live on the software in January 2014.

Alan Pelz-Sharpe, research director, Social Business Applications, at 451 Research,   said Salesforce, and CRM, in general, has become a common route companies take to broader automation. CRM contains the names, addresses and order details of a company’s customers, creating a foundation for additional applications.

“Building your application infrastructure around those records makes logical sense for a lot of people,” Pelz-Sharpe said.

Made in The USA

Unionwear manufactures and embroiders caps, backpacks, workwear and other items in the U.S., bucking the general trend of off-shore textile manufacturing. The company launched in 1992, when Cahn purchased the assets of London Cap Co., a Jersey City, N.J.-based baseball cap contractor. Unionwear has since brought on board the machinery and personnel of other failed garment manufacturers, most recently acquiring the assets of a backpack and bag manufacturer in 2007.

Nate Herman, vice president of international trade at the American Apparel & Footwear Association, said Unionwear isn’t alone in its domestic focus, noting that a few apparel companies now concentrate all their manufacturing operations in the U.S.

“There has been, in the last three years, a small resurgence in domestic manufacturing in apparel after many years of decline,” Herman said. “We see the trend continuing.”

Unionwear, for its part, has adopted a regimen of continuous improvement and lean manufacturing to make a go of domestic manufacturing, cultivating a niche in small-batch customization. The ERP system helps enable this strategy.

“The automation is critical,” Cahn said. “Every dollar of indirect labor that automation replaces is savings that goes right to the bottom line.”

Small-batch customization provides a favorable outlet for domestic manufacturers, since overseas manufacturers typically focus on churning out larger lots of items.

Herman said companies such as Unionwear that specialize in short-run production can be much more responsive to customers if they make their products in the U.S. as opposed to Asia or other offshore locations.

But cost efficiency in this line of business can be hard to achieve.

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