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HVAC Manufacturer Reduces Inventory Expenses by 50% with ERP Software

HVAC Manufacturer improves inventory with ERP software

A leader in the HVAC industry, Mestex provides innovative solutions for buildings of all types and sizes. Mestex’s extensive product line includes air turnover systems, direct and indirect fired systems, and packaged systems, as well as portable air conditioning, unit heaters, air curtains, evaporative cooling systems, and specialty heating and cooling units.

Mestex purchased and implemented Global Shop Solutions ERP software in early 2006. According to Steven Hodgson, Division Controller for Mestex, the decision was based on the ERP software’s robust functionality, the extensive training and support available, and the affordable price.

“One thing I immediately liked about Global Shop Solutions was the ease of exporting data into Excel or Access,” says Hodgson. “The ability to quickly drill down from each screen to get detailed information – whether for inventory control, product costing, or any other process – was exactly what we were looking for. And the other ERP systems we reviewed didn’t seem as capable of handling our build-to-order manufacturing environment.”

Understanding Costs

According to Hodgson, the ERP software biggest contribution has come in three distinct areas lowering inventory, reducing head count, and controlling costs.

“Perhaps more than anything, Global Shop Solutions helps us understand our costs,” he says. “When we get a quote for a specific type of unit, we can quickly look back in our history and see where we built something similar
or possibly identical, and whether we built it three months or three years ago. Then we can recost it at today’s labor and material rates and put together an estimate very quickly.”

Reducing Inventory and General & Administrative (G&A) Expenses

Mestex also benefits from the high visibility of data throughout the system. Hodgson credits the company’s 50% reduction in inventory to this powerful feature, particularly in the raw materials area.

“The visibility of data within Global Shop Solutions definitely helped reduce our inventory. We can look at inventory data – such as turns, age, or any other metric – from any view we want, and then make appropriate decisions about that material. The system notifies us when we get price increases on materials. And any time something changes in purchasing, it automatically tells us.”

Steven Hodgson, Division Controller for Mestex

The ERP software makes it easy to trace and track raw materials once they leave inventory and are issued to a job. The Auto Purchasing feature within the Inventory application greatly simplifies the purchasing process. All the Mestex’s two buyers have to do is verify the accuracy of the information they receive through the system and their ERP software automatically does the rest. The Shop Floor Data Collection stations and barcode scanners can save time by allowing shop floor personnel to electronically clock on and off all work orders.

As a result of these efficiencies, Mestex has been able to reduce headcount for significant G&A savings.

A Versatile Business Management Tool

Perhaps the best way to understand all that the ERP software can do is to see how people use it in different areas of the business.

Operations Manager Ben McCarty spends most of his time in the Supply & Demand screen – easily one of the most popular features for its ability to drill down to any area of the business from one simple screen.

Scott Stallings, Head of Engineering, makes extensive use of the BOM and inventory modules. He appreciates the ERP software flexibility, especially with custom reporting.

Because every Mestex job is unique, Hodgson focuses much of his time on costing work orders. Every time a unit ships, he looks at the margin to determine how the company did on that job. With ERP software, he can easily view the labor and material costs at any level of detail.

Managing Thousands of Product Options

ERP software offers many great features right out of the box. But it also has the ability to adapt to the unique needs of each company’s operating environment. With Mestex, this involved creating a
custom configurator to dramatically simplify the company’s complex order entry process.

The Product Configurator comes standard in Global Shop Solutions ERP software. It assists companies that have a lot of features and options in manufacturing all the different versions of their products. In this case, however, the standard Configurator did not integrate well with the “Specifier” system used by Mestex’s outside sales reps.

“We asked Global Shop Solutions, and they wrote a custom configurator program for us that allows it to work seamlessly with our Specifier tool,” he says. “Moreover, they wrote it so that we can now make our own changes to the Configurator without hiring a programmer.”

To learn more about how ERP software improved Mestex’s business, download the full case study.

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