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opentaps Delivers as Supply Chain Solution for Honeywell International
People often think about open source software based on their commercial counterparts, and open source ERP is no exception. In fact, however, because an open-source ERP system like opentaps is both less costly and more flexible, it can also serve as a toolkit to solve a wide range of business problems. An open source ERP does not have hefty licensing fees and can be modified to meet the user's particular requirements, so it could be cost effective solution for complex business problems, as the following project for Honeywell international illustrates:
As a global defense contractor, Honeywell International (NYSE: HON) is responsible for providing spare parts, repair, and maintenance services to both commercial airlines and governments. In one project for the United States government, Honeywell provides complete repair and maintenance services for the engine of a major vehicle system for the United States Department of Defense. This includes maintaining an adequate supply of the engine and its spare parts both in the field and at four maintenance depots around the world over the entire multi-year contracted time period.
To fulfill its obligations, Honeywell needed to plan the manufacturing of the engine and its associated parts over the contract period. This meant it had to project demand for both the engine and the parts over several years and take into account field demand for the engine, the bill of materials which specified its parts, and the existing stock of the engine and parts in the various maintenance depots. The particular engine has over 1600 parts in a nine-level bill of material. The analysis also had to account for the ability of the depots to refurbish some of the spare parts so that they could be used again for future maintenance. Finally, Honeywell needed to examine multiple demand scenarios to determine the adequate level of stock.
Traditionally, this complex analysis was done by 25 Excel spreadsheets with custom models that used pivot tables and lookups. Running the analysis was then both slow and time-consuming, and updating the analysis with new scenarios could take several weeks or longer. In 2007, a team from Honeywell International approached Logistics Modeling Center, Inc., (LMCI) of Hampton, VA to discuss a better solution. Their original goals were to create a centralized database for all the demand forecast data, and then develop a custom model to analyze the data and project inventory levels and production requirements.
LMCI, however, suggested a novel approach: They recommended that Honeywell use the opentaps Open Source ERP + CRM system and leverage its existing supply chain management features for inventory planning, instead of rebuilding its custom models from scratch.
"When we first mentioned 'ERP' to the Honeywell team, they were reluctant," notes Jim Carrillo, President of LMCI. "To them, 'ERP' was a four letter word that meant big, expensive, and time-consuming. However, we pointed out that using opentaps had some important advantages. First, because opentaps is an open source ERP system, it was free. More importantly, it was much easier to implement compared to the large commercial ERP systems that the Honeywell team was used to. Finally, opentaps came with out-of-the-box features for inventory planning which already followed best practices, so that gave us a lead coming out of the starting gate versus developing a custom solution from scratch."
Working with Open Source Strategies, Inc. the lead developer of opentaps, LMCI then proceeded to implement a specialized solution which integrated inventory data and projected demand from Honeywell into the opentaps system. This data was created in opentaps as sales orders and warehouse inventory. opentaps then ran through its Material Resources Planning (MRP) system which was part of its purchasing and supply chain management application, projected for demand for both the engine and all 1600 parts, level by level down the bill of materials. It then created requests to transfer inventory and parts between the maintenance depots as needed and finally created a multi-year master production schedule.
The LMCI solution then used JasperReports to create reports and dashboards of the projected demand and production schedules. Honeywell analysts were able to access the entire system using specialized user interfaces designed by LMCI to accommodate their business requirements, so that they could use opentaps as if it were a web-based planning system rather than a traditional ERP system with purchasing, accounting, order entry, and warehouse and inventory management.
"What was really interesting here is that we were able to tap into the power of an ERP system without having to implement a full ERP system," says Si Chen, Principal of Open Source Strategies, Inc. "People are too used to thinking of ERP as a big black box to run an entire enterprise. opentaps can do that, but it can also be a toolbox of best practices for solving problems like inventory planning."
The entire project took less than three months for the combined Logistics Modeling Center and Open Source Strategies team to complete, including customizations, reports, and documentation. "Open source definitely made a difference: leveraging the existing features from opentaps allowed us to complete the project much faster than originally planned," notes Jim Carrillo of LMCI.