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April 2012
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As more and more service centers move beyond basic value-added processing into actual part production and even manufacturing, software vendors are adapting their programs to handle the specific IT demands of fabrication.

“We are trying to move more into the fabrication side of the business for folks that do at a minimum first-stage processing, and a lot of times second-stage processing. That is where we are finding a little more activity,” says Brian David, national sales manager for Compusource Corp., La Palma, Calif., vendor of the Metal Center Management System.

The more forward-thinking service centers are focusing on value-added services and even light manufacturing, “and to do that efficiently takes software,” says David Morgenstern, vice president of marketing and sales at Verticent, Tampa, Fla. Thus the trend toward value-added processing and fabrication is driving the demand for systems upgrades.

Tim Wilson, sales manager for the Metalware division of Paragon Consulting Services Inc., York, Pa., sees two groups of software buyers in the service center sector. At the low end, some small service centers that have been using general purpose accounting software and spreadsheets are finally moving up to entry level ERP systems. At the high end, more are inquiring about functionality for fabrication. “Once a metal service center moves from processing into fabrication, that presents a whole host of opportunities and challenges related to job costing and process control,” Wilson says.

This interest in ERP systems at both the low and high ends of the market is good news for software vendors, who experienced some lean years during the economic downturn. “Business is booming right now, almost everywhere we go. Our sales activity is very strong, which means the service center model is working very well. They typically put off purchases until the money is there,” says John Bilek, president of Enmark Systems Inc., Ann Arbor, Mich., echoing the sentiments of most vendors.
“We were extremely busy in 2011. What most people are looking for is an ERP system that can capture all the costs of their inside and outside processing at the quote level” says Paul Parsons, vice president of sales and marketing at 4GL Solutions in Markham, Ontario, makers of the Steel Manager III system,

Among their recent technical innovations, software makers are developing tools that allow customers to access their companies’ data on popular handheld devices like Apple’s iPad. The new generation of tablet computer is migrating toward industrial applications, says Gary Marzec, director of supply chain management at Northrop Grumman Information Systems, Canonsburg, Pa. “These devices are permeating society. If you don’t have a system that keeps up with them, you will go by the wayside sooner or later.”

Not everyone is a fan, however. Such consumer devices are not really designed for industrial environments, says David at Compusource. “That is kind of customer-driven for us. We would rather see folks use an industrial handheld device than a tablet that could easily break. But for a salesman sitting in a Starbucks checking his customers’ orders, that works fine.”

A growing number of software vendors have begun offering their products on a subscription or fee basis, sometimes called software as a service, on-demand software or cloud computing. Rather than purchasing and installing the software on their own computers, service centers access the applications via the Internet and store their data on remote servers maintained by their ERP provider or a third party. This approach offers a number of advantages, say some vendors: Users no longer need large IT staffs to maintain their hardware and software. They have round-the-clock access to their data, which is stored on redundant servers so it is highly secure. As the software is upgraded, it is immediately accessible and does not have to be deployed on multiple users’ desktops.

Peter Doucet, vice president of consulting at Houston-based Invera, maker of STRATIX enterprise software, says acceptance of cloud computing is growing rapidly. More than 50 percent of Invera’s new customers now choose STRATIX On-Demand, the cloud version of the ERP system. “Our on-demand customers no longer have to worry about upgrading their hardware or backing up their software. They can focus 100 percent of their attention on their business,” Doucet says.

The cloud computing concept still faces some resistance from companies reluctant to relinquish control of their vital information, however. Compusource is not a proponent of software as a service. “We still think there are a lot of issues. The applications typically are not as robust,” David says. “People who go that way often end up going back. They don’t have as much control.”

Verticent also favors on-premise systems over software as a service, at least for now. “Once you get into large operations, there is complexity that does not work well in a one-size-fits-all environment. Lots of companies are still concerned about the security of their data,” Morgenstern says.

Northrop Grumman Information Systems, makers of Open Trac software, want service center executives to think of their businesses in a virtual sense and help optimize the entire supply chain. Web applications administered in the cloud and offered as software as a service provide the basis of this virtualization idea, Marzec explains. For example, rather than service centers investing in more brick and mortar, or increasing their inventory levels, they can now share product and processing capacity by establishing a virtual network with suppliers and customers. “Virtual supply chain partner relationships are popping up all over the country, with customers generally leading the way toward a paperless relationship with suppliers,” Marzec says. “More importantly, the network is expanding to include raw material producers, service centers, toll processors, freight companies, foreign ports and warehouses. All connected, disconnected and connected again as business opportunities arise.
“It is time steel suppliers get with what is happening among the more sophisticated customers. When it comes to supply chain IT capability, some service centers get it, others don’t,” Marzec adds.

Also surprising is the large number of legacy systems that remain in use in the market, some decades old, adds Morgenstern. “At the risk of being insulting, the service center industry is not just a little bit behind, but tremendously behind, other industries. Many still have not seen technology as a differentiator for their business.”
 
Recent product enhancements:
  • Compusource—Compusource offers the Metal Center Management System, a fully integrated metal distribution and accounting management system designed to meet the specific demands of metal service centers. Recent enhancements include web integration and fabrication-oriented features.
  • Enmark—Enmark Systems Inc. offers Eniteo, a Windows-based ERP solution designed for metals service centers. It is offered in a cloud version that allows customers to bypass the high cost of purchasing and maintaining their own hardware. A web-access module gives customers access to their data 24/7. Recent enhancements include an integrated shop floor module that is touch-screen enabled. Barcode scanning in Eniteo is a real-time, wi-fi solution designed to eliminate the need for paperwork throughout the operation. Eniteo Scanning can be used to develop and schedule loads, prioritize picking for processing and shipments, load trailers, manage inventory transactions between locations and count physical inventory, the company says.
  • 4GL Solutions—The Steel Manager III system from 4GL Solutions is an integrated ERP system with a host of features designed to simplify procedures for service centers. Most recently, the company has been working on a nesting module for long products that automatically selects the right pieces from inventory to ensure the least amount of waste; integration with the major plate nesting programs on the market; and an EDI interface that can capture information from various business documents and input it directly into the ERP system. Steel Manager III is not offered in a cloud version.
  • Invera—STRATIX, the enterprise system from Invera, now includes a bidirectional interface with SigmaNEST nesting software. The interface enables plate inventory and cut plate orders to be automatically uploaded into the SigmaNEST system as the material is received and orders entered. Then once the planner, using SigmaNEST, figures out what plate to use and how to nest the various orders, the job is electronically sent back into STRATIX without any user intervention. Invera also has developed a comprehensive multi-company, multi-currency system that enables a large enterprise to view the inventory across all its divisions and automates inter-company sales by eliminating all duplicate entries. STRATIX also now includes a whole suite of features specifically for processors of OCTG and specialty metals, who often change the dimensions of products through turning, grinding, boring and trepanning, which poses challenges for inventory control. Invera is also working on new web self-service enhancements, such as more e-commerce options.
  • Northrop Grumman—Northrop Grumman Information Systems offers the OpenTrac suite of supply chain management solutions for the metal industries. The company was an early proponent of software as a service and only offers its products on a cloud computing basis. Most recently its focus has been on supply chain communication and “virtualization.” It also has added functionality for the latest handheld tablets and touchpads.
  • Paragon Consulting—Vendor of Metalware, MetalNet and Metalware Express, Paragon Consulting Services Inc. offers systems that handle purchasing, order entry tracking, stock transfers for multi-site companies, sales analysis, material processing and scheduling, as well as basic accounting functions. Recent enhancements are designed to support fabrication services. The software is available in a traditional or software-as-a-service form.
  • Verticent—Verticent Inc. offers ERP software specially adapted for four industry verticals: metal service centers, flat-roll processors, tube mills and metal fabricators. Designed as a complete solution, it handles purchasing, sales quoting and order management, material optimization, capacity planning, production planning and scheduling, barcoding and wireless scanning, shipping, finance and other functions. Verticent is planning a major new release of its software later this year aimed at mid- to large-size service centers that need to handle complex multisite and international businesses.

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