How Fourth Shift helped the first name in photography

Fourth Shift helped Kodak reduce high inventory levels, improve accounts payable, and fine-tune its overall supply chain and manufacturing processes, says AKHTAR PASHA

ESTABLISHED in India in 1913, Kodak India is a subsidiary of Kodak Limited, UK. The company is well known for its cameras, both analogue and digital. In India, Kodak is a leader in the digital camera market with a 47 percent share. Headquartered in Mumbai, the company has three manufacturing plants, of which the Bangalore plant manufactures 35 mm film-based cameras, the Goa plant is a film-finishing unit, and the Malanpur plant (in Madhya Pradesh) makes photochemicals. The company has four regional sales offices in the metros.

Early days

SUNDHARA RAJAN says that many of the parameters to get the MRP II Class A certification are built into Fourth Shift

Kodak started manufacturing its commercial film-based cameras in Bangalore in 1988. In the early days the company was using several FoxPro-based legacy application systems to support its manufacturing activities by keeping track of inventory, Goods Receipt Note (GRN) and Accounts Payable (AP). The Fourth Shift Enterprise Application Software (ERP) package was already being used at Kodak’s manufacturing locations worldwide, so Kodak India started using Fourth Shift in 1989. It was SoftBrands Manufacturing’s first customer in India. D Sundhara Rajan, senior manager, Accounting & Systems, Kodak India Manufacturing, recalls, “Though we had the privilege of using Fourth Shift from day one, we were not able to derive business benefits from it. All the FoxPro-based legacy applications (manufacturing modules) did not talk to the core financials running on Fourth Shift.” Kodak’s objective was to deploy Fourth Shift across its plants and have a single system for the company’s manufacturing operations in India. It also wanted to create a unified database for all manufacturing activities.

Problems

On one side, Kodak’s product volumes were rising rapidly; they went from 100,000 products per year in 1997 to 2.18 million per year by 2003. The increase in production volumes put pressure on Kodak’s factory inventories, MRP (Material Resource Planning) and GRN. During the early days, Kodak used to despatch some 150 bills per month. This went up to 1,500 bills per month in 2003. Rajan says, “Since all the support manufacturing modules (inventory, AP and GRN) were not integrated with Fourth Shift, our entire supply chain was getting affected.” Material procurement—invoicing, purchase order (PO)—was done manually. Kodak was not able to generate correct POs and give the same to its suppliers. (A PO should show the materials procured, quantity, and all tax deductions with excise duty and cess.) There was another problem too—the GRN contains information such as supplier information, quantities supplied and quantity accepted/rejected; it also provides information such as a vendor performance report, which is critical for a manufacturing outfit. Support-manufacturing tasks (legacy applications) were performed outside Fourth Shift, and at the end of the day data was exported to the CSV format (Comma Separated Value) and imported into Fourth Shift.

Rajan elaborates, “The process was time-consuming and used to take an hour and a half for updates. It resulted in several inefficiencies since a number of systems were running independently and in parallel, and an effort had to be made to consolidate data from these systems into Fourth Shift at the end of each day. It also led to a high degree of redundancy of data and duplication of work.”

The lack of Fourth Shift consultants in India in 1989 meant that Kodak did not have any onsite support for implementation. It took the help of a consultant at SoftBrands USA to deploy the system.

SoftBrands Manufacturing signed on in 1997 to solve the problems of the support manufacturing modules. Binu Mathews, director, SAARC, SoftBrands Manufacturing says, “We used CIM (Customiser Module) for bolt on (customising) of GRN, inventory and AP without touching the source code of Fourth Shift. Clipper was used to write the above package and it was then integrated with Fourth Shift.”

Roll-out

In 1990, the Bangalore manufacturing plant was the first go to live with Fourth Shift along with the legacy applications (inventory, accounts payable and GRN). Kodak used the general ledger, purchase, MRP, repetitive manufacturing module and product costing modules in Fourth Shift. Subsequently, the Malanpur plant went live with Fourth Shift in 1993 followed by Goa in 1995.

Additional modules

Kodak realised that it needed a system to improve its inventory management, and that using a bar-coding system was one option. It decided to use VisiBar for its Goa plant. VisiBar helps scan bar-codes into an ERP system as products are received or shipped out. VisiWatch was another module that Kodak used for real-time monitoring of the stock ledger for all product movement from opening to closing balance. It was implemented at all three manufacturing units.

IT infrastructure

An IBM xSeries 340 dual processor server (with 512 MB RAM and RAID 5 storage) is used to run Fourth Shift on Windows NT and SQL Server. Kodak is using a 20-user licence of Fourth Shift. Two additional IBM Netfinity 5000 servers with dual processors and 256 MB RAM and RAID 4 are used as a Lotus Notes and a file & print server respectively. The company is also using a Sun Enterprise 250 server for electronic software distribution of anti-virus updates.

Benefits

Implementing all the major modules of Fourth Shift simplified communication between departments. It also helped save a considerable amount of time that was earlier spent on documenting inter-departmental communications. Apart from these, Kodak reaped several measurable benefits from using Fourth Shift along with other internal control measures:

• Improved inventory turns: Kodak’s inventory turns have gone up 12 times. The system has eliminated procurement of excess inventory, which was locking working capital. This has helped the company achieve a just-in-time model.
• Bringing legacy applications into one system: Data entry into legacy systems and subsequent entry into the ERP system used to take 1.5 hours every month. It has now translated into savings in terms of not having to update the legacy system or not having to hire extra staff for the legacy system.
• Supplier performance report: Bringing material procurement online has reduced rejection rates by reducing the number of defective parts per million, thereby increasing the quality of the yield. It has also helped Kodak keep a tab on supplier performance.
• Improved accounts payable: Accounts payable handling has increased from 150 invoices to over 1,000 invoices per month without a corresponding increase in manpower.
• Online production planning and procurement: There was a marked improvement in production cycle time, eliminating manual operations. “Fourth Shift helped us align ourselves for MRP II Class A certification. Many of Kodak’s manufacturing sites worldwide are already certified. Many of the parameters to get this certification are built into Fourth Shift,” says Rajan.

Now and later

Kodak has recently upgraded to the latest version of Fourth Shift. The new version (7.30) offers enhancements to the browser-based portal user interface called My Fourth Shift Workplace, a new connectivity toolkit, a faster EDI module, and tools to make upgradation easier for existing users. Version 7.20 used a proprietary database called Titanium; the new version uses Microsoft SQL Server.

The company is considering deploying SoftBrands’ Business Intelligence suite by Q4 2004 to help its managers make informed decisions by providing pertinent data to them. The BI tool will be used for product cost (in product lifecycle) and inventory analysis.

Snapshot of the implementation
Industry	Kodak India manufactures 35-mm film-based cameras, film rolls and photochemicals
Hardware	A dual processor IBM x-Series 340 server with 512 MB RAM and RAID 5 storage
Software	Fourth Shift 7.20, which was later upgraded to version 7.30
Operating systems	Microsoft Windows NT
Database	Microsoft SQL Server

akhtar@expresscomputeronline.com