Friends of mine that work close to Ferro tell me
that SAP is moving ahead. As an investor I am again
wondering what is the corporate communication on SAP? What
is upper management stating about the
Research tells us that SAP is a major
change from most older business systems.
be interested in hearing from the employees on this
board what is being communicated in writing or verbally
at company meetings.
I am sure there will be
a public message at the stock meeting.
that the year end figures are in what is being said
about the sales growth?
I appreciate what
someone said about Ferro being a company that makes
tangible goods. If the market takes a downturn this should
help Ferro versus companies like Yahoo that make
nothing but paper money.
I continue to rate Ferro
a strong buy.
Currently in the US, only powder coatings
(Nashville and Brecksville) are live on SAP. Off shore,
Holland, Italy and Australia are live. Much of the
background structure to Ferro's SAP has already been put in
place but much of real work with each new business/site
is loading current data bases (for customers,
products, pricing) into SAP and making sure it's all
correct. There's also the issue of training employees at
each site on how to run SAP since it pulls in many
more functions (i.e.-shipping/receiving, production,
Yes, there are TIGER members outside
US but many of current US TIGER members were used
off shore to start up Holland (this is basically
where they got their on the job training), so as you
said, there's not a lot of extra bodies.
brings up another issue:
The current method is
with each new business/site to be added to SAP, the
TIGER team "borrows" employees from that business to
work with the implementation. If there are multiple
plants, each plant contributes people. This is done for
two reasons: 1) hopefully they have a good
understanding of how their business operates and what must be
taken into account when switching to SAP and 2) these
people will serve as SAP "experts" when they go back to
their businesses. As you stated, Ferro most recently
has not tended to keep a lot of extra bodies around
due in part to the mandate to run lean and mean.
Borrowing people from the current businesses could possibly
be a real hardship as there are few if any people
available to pick up the slack. I predict in the short
term, these businesses will have a downturn in
profitability. This is due in part to the fact that members
loaned to the TIGER team still have their salaries drawn
from their respective businesses. So these business
managers have the pleasure of paying for employees who are
not providing any short term benefit to their
Now having said that, I still think SAP is a great
idea for Ferro. But the real benefits will only be
realized if re-engineering takes place. Obvious area of
consolidation: 1) customer service 2)raw material purchasing 3)
sales support and management come to mind right away. I
also think several businesses could be combined under
one general/business manager, allowing Ferro to
reduce the number of business managers who, by virtue of
seniority, have inherited businesses and continue to run
them the same way they did 15 years ago.
My understanding is that there is more than just
an American team in place.
I can't comment
on how many sites are live with SAP and how many are
left to implement outside of the U.S.
points about burnout and getting other people up to
speed are well placed, but Ferro isn't the type of
company too have "excess" head count about.
comments regarding re engineering certainly sound good,
but I am not sure what specifically you think needs
to be reengineered. Why do you think Ferro selected
SAP? What is management hoping to accomplish? I don't
think SAP will help increase sales. What are the
obvious areas of consolidation or elimination?
I will admit my dates were off but let me put my
argument another way:
Ferro is currently
implementing SAP in its "domestic" specialty color group
(which actually does not formally exist as a group).
Timetable plans to have this completed by 3rd Q 2000.
Though Ferro is moving up the learning curve on these
implementations, I find it unlikely they will improve beyond 6
months per implementation.
The stated goal of Sr
Mgt is to install SAP in Ferro globally. And they've
got a lot of businesses/locations left to do. At my
last count, there are roughly six domestic businesses
left to do (including Cleveland Frit and all
Chemicals). I suspect these two will take more than 6 months
each. Some of these businesses involve multiple sites.
Internationally, there are at least 9 different sites which need
to be brought on line. Due to language differences
(remember most of the current TIGER members speak
American), these will probably take more than 6 months each,
though some could probably be combined (England & France
for instance). My point is, at 6 months per
implementation, Ferro could be facing at least 5.5 more years of
SAP installation. Do you think the current TIGER
members (almost half of which do not live in Cleveland)
will be wanting to live out of their suitcases for the
next 5 years? Team member burnout will be a concern
and should be addressed sooner rather than later. My
suggestion would be to add to the current TIGER team. Rookie
members could get up to speed over the next year or so
and if you add enough people, you could cover both
attrition and possibly develop leap frogging teams to speed
up global implementation.
The other point I
want to repeat is that so far there have been few if
any efforts to re-engineer these businesses prior to
or during SAP implementation. If Ferro doesn't
reinvent or refine its businesses, all SAP will provide to
Sr Mgt is real time reporting that Ferro's sales are
One stumbling block to
re-engineering is the current structure of implementation. Each
implementation is overseen by a steering committee typically
made up of general /business managers from the plants
involved. They have a very vested (and selfish) interest in
NOT re-engineering their businesses. What appear to
be obvious areas of consolidation or elimination
will probably be squashed by the powers that be.
From what I've read on here, SAP is stalled all
over, not just here. It did start out as a massive
implementation that was supposed to take only 2 or so years to
put into place worldwide, once the pilot plant was
set up and running. From what I've heard, besides all
the hype about "centralization of data, etc...", it
was also due in no small part so that corporate
management could have something in writing to show
stockholders that they were "on top of the problem and doing
something about it" regarding the Y2K scare of last year.
It also seems to have been a lot of doubletalk from
people who didn't know what "Y2K" meant, except that it
was another "buzz word" for them to memorize and get
used to using.
However, SAP does have a lot of
merit if implemented correctly. I've heard several
horror stories, just like all of you... but I've also
heard of some well thought out installations that
worked out great! You just don't hear about that in our
"modern" society, where the greater the shock-value or
catastrophy, the better the story for the news crews. SAP is
supposed to allow corporate management to have a readily
available, accurate, and precise report on how the
corporation as a whole, as well as each division, is doing
right now. It's also supposed to give each division the
same kind of handle on their own information.
Unfortunately it involves a lot of planning and cooperation
between EVERYONE! (Something that seems to be a major
problem here, unless corporate sees an oportunity to take
control of something else)
Some of Ferro's problems
on implementing SAP have been self-created, not just
by corporate, but by the pilot plants themselves.
One of them involved one plant doing an inventory,
just like it was supposed to perform, but they didn't
start using the SAP program for over two weeks AFTER
the inventory was performed! During which time the
plant was in full operation and using the inventory
that was then entered into SAP as still on the
shelves! Everyone there started griping and moaning about
SAP, when the majority (but not all) of the problems
stemmed from their own lack of planning and
I am not directly involved in the SAP
installation here, but I have listened a lot over the last
year plus. Some of the complaints point out, correctly
I assume, that the SAP implementation at Ferro is
being micro-managed to death! At the sites that have
SAP, much information that was previously available
for the local managers, controllers, etc to do their
jobs are now controlled and doled out by corporate -
sparingly. This may have been fixed, or have been a training
oversight, but as of last summer became a real problem when
quarterly reports were sent to corporate. After all, how
can you put together a report if you are not allowed
to have access to your own information? run two
systems? Guess? Maybe this is oversimplifying what
happened, but this is the gist of some of the information
being passed around last spring/summer. Not too much
has been said since then. Maybe the problems have
been worked out or people just got scared of being
pegged for complaining.
Maybe this is more
information than you really wanted or not what you were
interested in at all. But some of this hasn't been brought
up until now and since you were interested in what
was going on with SAP here... now you have some
background, both good and bad.
As a closing note,
addressed to your comment about the end-of-year figures.
Yes, corporate has the figures, but what several of us
have been told is that they are "still playing with
the numbers". What exactly does that mean? "Playing
with the numbers"? Are they finding more ways to screw
the employees out of any kind of "profit sharing"?
Word has it that few, if any, of the divisions met the
goals that corporate set for them last year.
It didn't go as initally planned, no. A lot of
variables, it's a real learning curve. Especially when
you're using a lot of and relying on outside resources.
As you probably know, that has changed. I believe
they are beginning to "beef up" the team and / or
rotate some people out. It will be interesting to see
how it proceeds now under new direction. Our new CIO
is quite different than his predecessor who was
always 3 deep in consultants who were all on their cell
I've heard that it's not really that information is
being "controlled" at corporate but that all of the
information that they're used to seeing is may no longer be
available - at least not yet - or in the formats they are
used to seeing it. I've also heard that previously it
was more a lack of good communication which caused
problems such as the inventory snaffu you mentioned. Too
On your last comment about playing
with the numbers, well honestly, what do you think our
/ any financial people do? Nothing new
I haven't heard anything yet regarding the
division's goals. But if you get a chance, please explain
"mine". How do I know if I've met "the overall Corporate
goals"? There has been lots of discussion on this and
nobody I've talked to seems to understand.
Ferro has a long way to go to complete
installation of SAP system in all plants globally.
Domestically, they're working with the Color group right now:
pigments, glass deco and forehearth color. Two of the
Ferro's biggest businesses, domestic frit and chemicals
are still down the road. Added to this, the current
installation team (TIGER) has been at it for over 3 years.
Common sense dictates some of those people are going to
want out pretty soon to go back to their respective
businesses and have a normal life. As far as I know, no one
has even identified their replacements, let along
started training them. That will certainly add time to
the whole process as well as frustration and
skepticism on the plant level.
No official word that I've heard Wob Beaver.
We're moving beyond the pilot progam now and starting
the next site implementation. I think it may have
been stalled due to all of the preparation for Y2K. I
don't know much about it compared to our previous
system. I'm glad to hear you're an investor and that
you're rating us a "strong buy". Look forward to meeting
you at the shareholders meeting!