The pandemic-induced push to remote work has highlighted the importance of a reliable ERP system to the metals distribution industry.
The past year was devastating for a number of industries. But for software providers to metal distribution companies, 2020 was anything but a catastrophe.
The sudden change in working conditions in March displaced thousands of employees, primarily in sales and other front-office positions. In many cases, working from home was no longer an occasional option or a Friday perk, but standard operating procedure for more than half the staff. And even as service centers were rightfully determined to be essential businesses, the desire to keep employees out of the path of the virus as much as possible has kept many of those employees away from the office.
This dramatic change in working conditions only highlighted the importance of a quality, full-service ERP system and all it can deliver to users, executives with the leading providers of service center software claim.
York, Pa.-based Paragon Consulting Services, makers of Metalware, implemented a Reports Portal at the end of 2019, which coincided nicely with the onset of the pandemic. Files and reports and other data were “available to anyone in the organization. It really became of interest to a customer when they had to go remote and they’re not next to a printer,” says Director Shawne O’Connor.
“The ability to access software from anywhere and carry out working has enabled a lot of our clients to still be successful,” says Leigh Harrison, CEO and director, La Palma, Calif.-based Jonas Metals Software, producers of iMetal.
Paul Parsons, vice president of sales and marketing for 4GL Solutions, Stouffville, Ontario, agrees. “Obviously, with COVID, the ability to work remotely is a real plus for service centers. Having the ability to connect to the ERP and be able to go about their day-to-day business from home was a huge advantage, and I think it will continue to be an advantage for the foreseeable future. I don’t think anyone thinks COVID is going away anytime soon.”
That ability is consistent across all modern ERP systems designed specifically for the service center industry, and underscores the needs for such a system. “For the most part, with our core competitors, their applications are also well-suited for remote use as well. But there are people who are using junk who probably had a difficult time with COVID-19,” says Greg Bayer, president of Bayern Software, Carmel, Ind.
Or, as Paragon’s O’Connor says, “This was the year everybody embraced technology.”
That hasn’t always been the case. The metals distribution space was never among the early-adopters of digital technology in any of its forms, sometimes only heading that way kicking and screaming. “Traditionally, the metals industry has undervalued ERP systems. The only people who have driven that have been finance departments, because they want the data and information. But it’s not normally them who make the decisions,” Harrison says.
The pandemic changed that in a number of ways. The limitations placed on the workforce and the work environment had many operators rethinking their views on the implementation of new methods. The idea of allowing software, which is not a virus vector, to handle some tasks previously performed by humans gained appeal. Removing paper from the process, and the way that physical copies must “change hands,” was likewise appealing.
It also includes the installation process. Many companies had the ability to do most or all of the installation remotely, though operators typically balked at that. But with COVID, that mindset changed. “During the pandemic, we have continued our implementations and are now all being performed virtually on video conference for the entire implementation process. There was a bit of a learning curve initially, but now the process is excellent and I think has benefited the customer greatly,” says Ray Vasson, president of Invera, Dallas.
Jonas Metals has seen a similar result. The company had been pitching virtual installations as a way of saving money, but some customers were still hesitant. “With COVID, that was out the window,” Harrison says. “‘Suddenly, people were saying, ‘Oh, you’re doing it virtually?’”
While the software was well-suited to serve the needs of the remote workforce, that wasn’t the only question in the equation. Poor internet connections or security concerns are two of the issues that arise in the home environment that may not be a problem on site.
Jonas Metals’ Harrison notes that many workers from home have “skinny connections,” whether on laptops or under other less suitable conditions. His company has tried to address that issue through the creation of modules that “will enable them to use the ERP on any device on very thin data connections.”
Taking software out of the equation, “if you’re trying to get by on an old IBM System 36, you might really struggle. The old hardware doesn’t lend itself to remote use like the new stuff does,” says Bayer.
Likewise, the home network, often shared by others in the family, has some security vulnerabilities that are less present in the office environment. Other family members could inadvertently bring malware or other viruses into the home network, that could conceivably be worked backward into the network.
“We’ve tried to avoid that by creating a secure link from our software to the software in the cloud. Even if the laptop gets hacked, they can’t get into the business network,” Harrison says.
In some cases, the shift allowed customers to fully utilize the software capabilities that were there all along. “Some customers were trying to figure out ways to use more of the software, whether it was EDI or wireless devices in the warehouse. There’s probably a bit of an uptick there,” says Vasson of Invera, makers of STRATIX. However, he adds, companies such as Invera engage in continuous training with their customers, to keep them up to date and up to speed on all of the software’s features.
While existing customers of ERP programs designed specifically for the metals service center sector were able to manage the crisis rather comfortably, that wasn’t necessarily the case for those operations without such technology. Whether small shops getting by on little to nothing or even large operations using systems not designed for metals distribution businesses, the pandemic has changed some attitudes.
The ERP providers were quite busy in 2020, getting inquiries from businesses of all sizes that recognized their existing set-ups were not sufficient under the new normal.
“We’ve seen both ends,” says Harrison. “We’ve seen some larger clients who have been spending an enormous amount of money on SAP and Oracle and not necessarily getting the return at the beginning of the year. Toward the back end, it’s been very much the 10-user system. We even took a startup in Texas.”
Parsons of 4GL says his company also received a number of new inquiries in 2020. “Over the past six months, it’s really ramped up. And the size of the companies ran the gamut from small to large.”
Moreover, for companies that may think they can’t afford a full system since they only have a handful of employees, the ERP providers have the ability to tailor systems that are affordable for even the smallest of enterprises.
Mike Voran, a regional sales manager for Ann Arbor, Mich.-based Enmark, says 2020 ultimately gave companies the opportunity to self-evaluate. “What the pandemic did, it gave you time to reassess your business. We did quite a few demonstrations because people had that ability.” And, he adds, those demos turned into healthy sales, with the company adding a possible-record number of accounts.
His colleague agrees. “This allowed people to tackle the issues they didn’t have time for. ‘We have a massive inventory issue we’ve never had time to fix. Now we have time,’” relates BJ Upell, also an Esmark regional sales manager. That led to an increasing interest in barcoding and other options. “Having the right inventory can only be accomplished with quality ERP.”
The strong market of 2020 is likely to continue into this year, observers say.
“When we speak to our customers, there’s a lot of pent-up demand. Obviously things slowed in the early spring, but with vaccines coming out, we think there could be a huge surge in business activity. We’re very positive coming into the year,” says Vasson.
“I would say the majority of our customers have weathered the storm pretty well. And there are potential customers out there looking to upgrade their software because they see things picking up as well, which is encouraging as we head into 2021,” says Parsons.
Throughout the pandemic, the programmers continued to develop their ERP systems with new features and capabilities. Those features cover a range of areas, highlighting the many ways technological advances can benefit the service center industry.
Invera sees increased interest in two areas – mobilization and implementation of Electronic Data Interchange. Mobile options are “what everybody wants right now, irrespective of industry. So we’ve found the entire mobile area, not just for the shop floor but also salespeople, is very popular,” says Vasson.
EDI, which allows systems to exchange information with outside organizations such as mills, is also growing in appeal, with Invera customers seeking out more features. “If you don’t have the right tools to implement EDI in an easy manner, it could be a multiple-year project. Our system can talk to EDI much faster to make it easier to implement,” he adds.
Enmark is working on a similar effort to make communication easier between service center companies, who are frequent customers of one another. “Someone using ENITEO orders from another metal service center using ENITEO, and the data flows seamlessly between the two systems. It reduces the chances for error,” says Upell.
One focus of all ERP providers is to take the mindless tasks out of the process. Enmark’s Steel XML, for instance, automates the receiving process, “reducing a lot of that clerical work,” Voran says.
“One of our tenets when we’re creating software is to automate as many tasks as possible,” says Parsons, whose company 4GL offers the Steel Manager ERP system. “That eliminates manual entries that take up time and attention away from selling and servicing their customers.”
Bayern Software’s big push is by expanding its offering to meet where it sees the service center industry going – further downstream. “Here’s what I’m getting from my customers: They’re really continuing to move into more fabrication,” Bayer says, noting the margins in pure distribution are simply too minimal.
Bayern has invested a significant amount of money on expanding its Capstone ERP system to include a complete fabrication order system. “Our systems for saw cutting and plate cutting and shearing and slitting and cut-to-length are pretty simple. But fabrication orders can require many different processing steps,” Bayer says.
Of course, there’s the next step in the process, which is using artificial intelligence in various ways in the business. “It’s not going to make the system totally automatic, but it’s going to take an awful lot of work out of the way,” Harrison of some ways his company is using AI.
All of these steps point to the continued march of technology into the service center space, and a customer base increasingly willing to implement it.
“With these companies, it’s not that they didn’t want to move forward with technology; they were fearful of it,” says O’Connor. “But the confidence has grown for them. I think it’s good for all ERP vendors, because I think customers will be coming for them.”