For any fast growing business, getting the balance between investing in the right technology at the right time to support the demands of a larger organisation and avoiding the upheaval associated with IT implementation that may delay expansion can be a challenge. For market leading spacer manufacturer Edgetech UK, the ability to migrate through the Sage ERP product stack to Sage 200 has been a key factor in its seamless business growth.
Sage has proven its scalability and extensibility – from the ability to support customer specific pricing and credit limits for an ever expanding customer base, to managing the supply chain complexities associated with adding bought-in product to the manufactured product base and extending the product range from just one to over one hundred. Throughout this time, including the company’s acquisition by US parent company, Quanex, Sage, in tandem with local supplier CPiO, has been a constant.
Having grown well in excess of 10% year on year for the past 12 years – including during the recession – Edgetech is now building on its strong finance and distribution foundation with Sage 200 by integrating trusted third party applications, including Purchase Order Processing, Warehouse Management and Document Management, whilst also planning to work with CPiO to further exploit the depth of Sage 200 functionality with the use of Business Intelligence.
There are very few UK companies, especially in the manufacturing sector, that have been as successful at bucking the recessionary trend of the past decade as Coventry based Edgetech. The manufacturer, which specialises in spacers for insulating glass units, has not only increased its turnover from £450,000 12 years ago to around £17 million today, but also achieved year on year double digit growth throughout the downturn. The company, which is now part of the US Quanex Building Products group, sells the market leading, energy saving foam spacer system Super Spacer, with customers ranging from the largest sealed unit manufacturers to sole traders.
Much of the company’s success can be attributed to Managing Director Andy Jones, a man prone to launching ‘idea grenades’ according to his management team, that underpin the company’s continual innovation. For example Edgetech UK has brought four new products to the market in the last year alone. As John Stark, Works Manager, says, “Andy is a visionary Managing Director. He knows our customers well and can identify new opportunities quickly – and he knows the strengths and weaknesses of the competition.”
As a result, the business has expanded its activities significantly over the past decade – evolving from one, in-house designed and manufactured spacer to the current range of over 100 products, including both manufactured and third party products, and the creation of a secondary distribution centre in Burnley.
Throughout that evolution and expansion, Edgetech has used Sage ERP software, migrating through the product set to the current deployment of Sage 200, supplied by CPiO. As Andy Jones explains, “Edgetech has always wanted to align itself with market leaders – we do that with our customers but also with suppliers and both Sage and CPiO are very valued supply partners. The fact that Sage enables us to bolt onto our existing operation as we continue to grow has been very advantageous to the business over the last 12 years.”
Today, Edgetech globally manufactures around 1 billion feet of spacer a year – essentially that means around 12,000 windows every day are manufactured in the UK using Edgetech product. With a 30% market share, Edgetech’s five year plan is based upon gaining a 50% share, with year on year growth of 15-20%. Andy says, “As the market becomes more aggressive and price oriented, we need to make sure we streamline our operations as much as possible – and Sage 200 allows us to do that.”
The company has recently embarked upon a number of projects to build upon that core Sage 200 foundation, including Purchase Order Processing (POP), Warehouse Management System (WMS) with barcoding and Document Management System (DMS). Andy continues, “The business was fairly simple when we sold one product, in one colour. That has changed dramatically over the years and Sage has grown with us. Looking ahead, the plan is to integrate further beyond finance and warehousing to also incorporate manufacturing which will provide a fully integrated, end to end system.”
Improving Financial Control
For Financial Controller, Dominic Moules, Sage 200 is a constant source of reference. In addition to the essential month end close using Accounts Payable, Accounts Receivable and Stock Control, he is constantly reviewing both the Purchase Ledger and Accounts Receivable throughout the month to maintain close financial control.
Sage 200 also enables Edgetech to support a highly flexible business model, with customer specific pricing, rebates based on sales levels, and free deliveries for orders over a certain size. Dominic confirms, “Every customer is different – and Sage allows Edgetech to create that customer specific pricing model and credit level. Credit control is a key requirement for any business – especially one with such a diversity of customer. Using Sage it is easy to put an account on stop and introduce flexible payment plans – and I can quickly identify and work with those customers continually falling behind on payment.”
Supply Chain Management
The company’s recent evolution to include bought in products in the overall customer offer, as well as the creation of the distribution hub in Burnley, has reinforced the value of Sage 200 within the end to end supply chain process. The ERP software holds essential information about stocks of purchased and manufactured products as well as customer sales, which Edgetech is increasingly using to track customer purchase patterns in order to continually refine the supply chain management process.
Product lead times vary significantly – from a minimum six weeks for products manufactured by parent company in the US and weekly deliveries from sister company in Germany, to three weeks for the TruShield product and daily deliveries of the raw materials required to manufacture spacers on site. This is a complicated process to manage and the accuracy of customer demand information within Sage 200 is key to supporting the management of the supply chain. Furthermore, the company has recently moved around 20% of its stock holdings into the new distribution centre – and the ability to split that stock position across two locations in Sage is enabling Edgetech to maintain clear visibility of stock across the business.
The recent integration of POP and the planned integration of the WMS with Sage 200 using Sage Live Link will provide Edgetech with greater operational control and efficiency – by reducing manual interaction the company is transforming the quality of data and drastically reducing the time currently spent checking and correcting stock figures.
For Works Manager, John Stark, Sage 200 is used by his team on a daily basis to record customer orders which are placed via telephone and email. Orders range from a single box of products for just £300 to £100,000s a month; some customers have a delivery once a month, others once a week and some have weekly timed delivery slots – creating a hugely diverse customer service requirement. In addition, with order turnaround the same day for in stock items, information accuracy is essential.
Production information feeds directly into Sage 200 from the manufacturing system – with information from Sage 200 feeding back into manufacturing to drive the production schedule. John is also looking forward to the introduction of the WMS to further improve the quality of service he can offer customers. He says, “Edgetech has always looked to invest heavily in the customer service side of the business. From marketing support and our new Dealership Plus scheme to timely delivery, a great customer experience is paramount to our success.”
Throughout Edgetech’s evolution, including its acquisition by the Quanex Building Products group, the Sage and CPiO relationship has been a key constant. While Sage has provided a clear upgrade path, from Sage 50 to Sage 200, which has supported the company’s growth, the management team relies on CPiO to ensure ongoing technology innovation. This is particularly important since the company’s IT support is actually delivered from Head Office in Texas – making the ability to interact with local experts who understand the market and changes to UK legislation incredibly valuable.
Dominic confirms, “The way VAT is applied to discounts has changed recently, for example, and it was CPiO that brought this to our attention and showed us how Sage 200 supports the change. This type of proactive relationship is really important and will help Edgetech to continually move forward and further exploit the value of Sage 200, such as with the use of Business Intelligence in the future.”
Edgetech UK is, without doubt, a world class manufacturing organisation – but it is also one in transition and the next six to 12 months will see a significant change in the way the company streamlines operations and builds on its strong Sage 200 foundation to gain greater insight into business performance. As Andy concludes, “As we grow as a company we have to make sure the processes are in place to ensure we give our customers good quality in both product and service. The continued investment in technology, distribution and marketing is about ensuring we can service our customers at a quality rate as we continue to expand.”