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opentaps and ToolEast Create ERP Solution for Tool and Die Makers

As a group of specialized European manufacturers came under competitive pressure, the European Commission created the Tool East Initiative to improve their competitiveness with open source software. The result is a partnership which leveraged opentaps to create a low cost and flexible open source ERP solution designed specifically to meet the needs of this unique industry.

Globalization has created many challenges to European manufacturing, one of which was the threat to the tool and die making industry in Europe. Tool and die makers are a small but critical part of the manufacturing value added chain. Usually small and engineering-driven, they make the machine tools and parts used by larger industrial manufacturers in industries such as aerospace, automotive, consumer electronics, and pharmaceuticals. There is a strong symbiotic partnership with between tool and die makers and large industrial manufacturers: When a new product is designed, specialized tools must be designed and manufactured for it. Therefore, as Asian competitors entered the European tool and die market, they posed a competitive threat not just to the European tool and die makers themselves, but to the European manufacturing economy as a whole.

Faced with this dilemma, the European Commission, the executive branch of the European Union, approved and funded a proposal by Forschungsinstitut für Rationalisierung (FIR, or “Research Institute for Operations Management”), one of Europe's leading research institutions on manufacturing and systems technology, to bring Eastern European tool and die makers up to Western European standards. The goal was to allow Western European industrial manufacturers to partner with Eastern European tool and die makers and benefit from their proximity, low costs, and traditional engineering expertise. A core part of this initiative was to improve the business processes and information technology infrastructure of the Eastern European tool and die makers, so that they could integrate more effectively with their Western industrial manufacturing customers.

The ToolEast consortium was born from this initiative and included three European research institutions, five IT organizations that specialized in business application software, and seven manufacturers who signed on to be the initial users of the system to be developed by a consortium. European Commission provided initial development funding for the research institutions and IT organizations involved in the project.

The ToolEast consortium decided to adopt an open source software platform to create the IT infrastructure for the Eastern European tool and die making industry. Unlike commercial software, "open source" software is freely available for all users to use, modify, and re-distribute. The decision to use open source software was driven by the following business, technical, and policy considerations:

  • From a business perspective, an open source ERP system would be available free of charge, promising a much lower cost than commercial alternatives.
  • From a technical perspective, open source meant that the source code of the base system would be available to both the IT organizations and users of ToolEast, so that it could be readily modified to meet their requirements.
  • The availability of a sophisticated open source ERP system meant that the project could start with a significant feature set already in place, thus reducing the time required to develop the system.
  • Finally, from a policy perspective, ToolEast felt that the process of implementing an open source ERP solution would help transfer both software development and business process engineering expertise to local IT organizations in Eastern Europe. This was consistent with long-term goals of Tool East and the European Commission to foster economic development in Eastern Europe.

After a detailed comparison of all the major open source ERP systems, the ToolEast consortium decided to adopt opentaps Open Source ERP + CRM as the base system on the basis of its strong feature set and technical framework. It then partnered with Open Source Strategies, Inc., the lead developer of opentaps, which became an associate member of the ToolEast project and its only US-based participant. The software development effort began in mid-2007. Using opentaps as the starting point, the IT organizations of ToolEast began to create a specialized solution for tool and die manufacturers based on the processes of the industry partners in the consortium. Existing screens were grouped into new modules, and new forms and screens were added to accommodate the special needs of this unique industry. The end result was a system designed to support close web based collaboration between all the internal departments of the tool and die makers and their customers.

One user of this opentaps-based Tool East ERP + CRM system is Herti JSC of Bulgaria. Founded in the late 1990s, this rapidly growing manufacturer of aluminum and plastic caps and related products has over 700 employees and is publicly traded on the Bulgarian Stock Exchange. Its products are used in the food and pharmaceuticals industries and exported throughout the world. As part of its effort to embrace advanced manufacturing processes, Herti has received an ISO 9001:2000 certification.

Prior to implementing the Tool East ERP + CRM system, Herti considered several commercial ERP systems from the United States and Western Europe, but it rejected all these options as both too costly and, more importantly, inflexible. The management of Herti wanted to bring in best practices from its ERP system, but it also wanted the ERP system to support the business processes that were essential to its success. Unfortunately, the commercial ERP systems it looked at could not do that.

Thus, the Tool East ERP + CRM promised the best of both worlds: a unique and low cost solution that offered comparable functionality to commercial alternatives, but that could also be tailored to meet Herti's special needs. Herti applied and joined the Tool East consortium as an industry partner and worked with Bulgaria-based IT Partners to implement the system. Ivan Popov from IT Partners began by reviewing the business processes at Herti, comparing them with best practices built into opentaps. He analyzed these practices and separated them into those which are critical to the success of Herti and those which could be streamlined or adapted to the standard opentaps practices.

IT Partners then incorporated many of Herti's requirements into its software development work for the Tool East ERP + CRM system, just as the other Tool East IT organizations did with feedback from their industry partners. On top of the standard opentaps modules and specialized Tool East modules, IT partners also implemented customizations for Herti. Because both opentaps and Tool East were open source, IT Partners could work directly with the source code to implement these key processes in a consistent manner, rather than complicated workarounds that are often require for customizing commercial ERP systems where the source code was not available. Finally, IT Partners trained Herti employees to the new system. It then configured and deployed it to run on Linux servers and the MySQL database, creating an ERP solution which fully leveraged open source technology.

At Herti, the sales teams could now use Tool East ERP + CRM to manage a long sales cycle that includes specifications from customers, contracts, and other engineering and business documents. Once the sale is finalized and the customer has approved a quote with its specifications, an order with a project plan for producing the required parts is automatically created. This order can then be reviewed by the Finance, Design, and Manufacturing departments, who must all sign off before production can begin. After production, a Testing module helps guide the finished products through the Quality Assurance process before it is sent out for shipping. The entire system is web-based, so that customers and internal departments could work together.

With the Tool East ERP + CRM system now rolled out to several European tool and die manufacturers, the first phase of the Tool East initiative has been completed. The Tool East consortium is already planning ahead. Because the tool making industry is highly fragmented, with many small companies possessing specialize skills, collaboration is crucial to the long-term success of these manufacturers. Therefore, Tool East is now planning for an online exchange for all the European tool and die manufacturers and their industrial customers. Such an exchange will allow the tool makers to connect into online communities, share knowledge, and pool their manufacturing resources. With this online community, Tool East hopes to create even faster product development cycles, thus improving the productivity of both the tool makers and the European manufacturing sector in general. As the gateway to this online collaboration, opentaps and Tool East ERP + CRM have laid the important foundations to this future.

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