EJ USA Case Study
Having encountered challenges with spreadsheets, EJ USA, a leading manufacturer of construction castings, fire hydrants, tree grates, and more, used Prophix to revamp their financial processes. Over the years, EJ further developed their Prophix solution and began to mathematically model their company's production, distribution, and sales, constantly evaluating the health of their growing operations.
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Background
Operating since the late 1800s, EJ USA is a leading manufacturer of construction castings, fire hydrants, tree grates, and more. In addition to their headquarters in Michigan and over two dozen locations in the USA and Canada, the organization oversees business units in France, Ireland, Australia, and China. The company's revitalized brand, EJ, is the result of a comprehensive process that the organization undertook to unite their divisions–East Jordan Iron Works, Cavanagh, Norinco, McCoy, and Havestock–under a single name.
Recognizing the Problem
Like many companies, EJ used spreadsheets for budgeting and encountered challenges as their organization grew. Joe Spyhalski, EJ's Cost Accounting Manager, noticed that the company experienced setbacks when attempting to consolidate multiple spreadsheets. Spyhalski relates, "We had 5-10 managers with their own spreadsheets for their areas, so it was a mess trying to aggregate the data. Making changes became a clerical nightmare." In his estimation, the company would have needed two full-time clerks just to keep track of the changes. "The budget processes soaked up a significant amount of time, so we resolved to purchase a budgeting and forecasting solution."
Implementing a Solution
EJ investigated several different software vendors. According to Spyhalski, "Prophix met our requirements for automated imports, email report distribution, and drillthrough to source data in our AS/400 legacy system. More importantly, Prophix offered the most benefits and an all-in-one solution that could expand to further uses."
The initial implementation took three weeks. At the beginning of each month, EJ's Infinium G/L package would send Spyhalski the company's data in a flat file, which he would then import into Prophix. After a short time, EJ began to employ a more sophisticated process, using an ODBC connection to automatically transfer information from the G/L to Prophix. The company also created processes for their income statements, balance sheets, cash flow, and forecasts.
Spyhalski explains that the time savings that results from automating financial processes is impressive. "At this point, we use Prophix's Workflow Manager tool for more than 30 different initiatives, automatically distributing reports without any manual work like cutting and pasting data. It's a huge time saver for us. When we forecast, for instance, the system sends the people a form to fill out. They think that it's Excel, but it's not. They update the information and send it back. The data gets sucked back into the system and it updates our numbers across the board."
Benefits
Adopting Prophix has offered EJ significant benefits, including data integrity and the opportunity to perform effortless change requests. The company can also leverage their legacy data because of Prophix's integration capabilities. As EJ expands globally, their ability to add new sales yards or manufacturing centers by simply dragging and dropping branches in the system has provided a tremendous advantage. Spyhalski describes, "Prophix offers a huge time savings, especially because rollup structures automatically update without requiring us to change any formulas. We are still in a growth mode and this makes it a lot easier for all of us."
EJ initially implemented Prophix for the development of the company's financial processes. Spyhalski explains that he attended the Prophix User Conference one year and realized that he could use the solution to model and evaluate multiple aspects of the organization's operations. Spyhalski did exactly that. Some of these applications include:
- A sales model that incorporates a multitude of elements, beginning with sales by month and location, product code and type (e.g., street casting, grate, or access hatch), sales yard, vendor, pounds of materials sold, and more. "All of these variables within the sales cube allow us to forecast demand. Additionally, data from the sales cube rolls up into the income statement."
- A raw materials model that enables EJ to calculate the average weighted costs of their metals. "This information also interacts with our inventory model and transfers into our manufacturing system."
- A production model that automatically receives numbers from the company's time clock system in order to crossreference how many hours the employees work with the number of molds and other products that the plants produce. When the plant managers receive their numbers at the end of each month, they already know their rates of efficiency in terms of molds per hour, pieces per hour, etc.
- A financial consolidation model that EJ uses to marry the company's North American financials with those of their overseas subsidiaries. Using PROPHIX 10's consolidation tools, EJ creates journal entries and intercompany eliminations for the production of income statements and balance sheets.
In the near future, EJ's financial planning team will develop more advanced visualization tools, flexible budgets, and monthly variance reports. As Spyhalski says, "We could never do what we're doing now without Prophix. Can other software tools accomplish these things? Possibly, but the ones that I know of cost ten times as much and they don't do anything that Prophix won't allow."