Executive Briefings

WMS Throws Yoke Off Czech Manufacturer

In the new Czech Republic, free of Soviet repression and bureaucracy, an agricultural equipment manufacturer found that an antiquated warehouse was the only thing holding it back from capitalizing on burgeoning business opportunities.

As the fortunes of what now is called the Czech Republic waxed and (mostly) waned over the last hundred years or more, so did those of most of its domestic companies. To no one's surprise, many of those founded during Hapsburg rule did not weather the empire's collapse after World War I or the subsequent political storms that blew in years later from Germany and Russia.

One that did is Agrostroj Pelhrimov A.S., which has made farm machinery and equipment since 1886. The country's only such manufacturer, Agrostroj as an enterprise likely prospered during the interim between the world wars when the new Czechoslovakia reportedly was among the world's 10 richest nations. Nazi and Soviet domination would have hindered operations, but the latter's oppression ended in 1989. If anything, in the last few years, Agrostroj (pronounced agro-stroy) has been its own worst enemy. Its products are distributed all over Europe, North and South America and Asia Pacific. But continued production growth was halted by inadequate warehousing management.

A private company, Agrostroj Pelhrimov's product line includes rotary mowers, mulchers, forage harvesters, milking machinery and manure spreaders. It estimates that 20 percent of its production comprises machinery under its own name, with another 13 percent comprising tool engineering. The vast majority of its output, 67 percent, consists of cooperative projects with the agricultural divisions of some of the biggest companies in the field: Claas, Krone, Pottinger, DAF, Volvo, Jungheinrich, Mitsubishi and Caterpillar.

With its sales opportunities continuing to expand, not the least of which with buyers in the emerging Central and Eastern European nations, in 2004 Agrostroj built a 25,000-square-meter warehousing and manufacturing facility. Located in Pelhrimov, about 120 kilometers east of Prague, the warehouse by itself is 3,000 square meters. It didn't take outside consultants, however, for company management to realize that it had simply maxed out on its ability to feed its production lines. Its slow and error-ridden warehousing operation not only couldn't meet orders from the production floor timely and accurately, it was an anchor on any attempts to meet growing customer demands.

"The operations created problems not only with existing production lines, they halted the development of any new production lines."
- Alex Pavul of Radio Beacon

To some extent Agrostroj faced the same situation of many mid-sized companies in more developed countries: with little if any automation, often such companies are caught between traditional ways of operating and the promise of tremendous sales growth. In fact, Agrostroj was already semi-automated; it had an Orfert enterprise resource planning system, developed locally by OR-CZ. It was the warehouse, totally without automation, that was the drag.

Agrostroj officials knew they needed a WMS, but they began soliciting tenders only after they had put up the new facility. Ultimately, the bidding process led Agrostroj to Kodys, a supply chain solutions provider with offices in Prague, and in Bratislava, Slovakia, for help. The manufacturer was interested in barcoding and initially consulted Kodys on that alone, says Filip Sramek, head of the project department at Kodys and the eventual director of the WMS project.

Kodys, active in logistics solutions projects throughout Czech Republic, Slovakia, Poland, Hungary and Bulgaria through its membership in IBCS Group, is also a partner of SAP, Symbol Technologies and Zebra printers.
Sramek says the warehousing problem was glaringly evident. Kodys is a reseller for Toronto-based Radio Beacon, and it recommended its warehouse management system.

Alex Pavul, director of European operations for Radio Beacon, says unequivocally that the antiquated warehouse operations stunted the company's growth. "The operations were holding their growth as a manufacturer back," he says. "They created problems not only with existing production lines, they halted the development of any new production lines."

He says he had firsthand experience with the old system. "I saw these operations in their old spare parts warehouse. It was totally manual and paper-based and, I would say, memory-based. They had a couple of experienced operators who basically remembered where items were. And whenever it was time to feed production lines with parts, they manually found them, prepared them and then moved them into production."

The time-consuming process often required a full day to prepare orders for the next day's production, according to Pavul, and of course sometimes orders were not fulfilled because parts simply couldn't be located, especially if less experienced hands were at work.

The disorganization that reigned meant that the same type of items weren't always stocked in designated places. As a result, mistakes were rampant.

Pavul says the substandard warehousing system shouldn't reflect on the quality of the product line. If anything, he says, Agrostroj enjoys an excellent reputation for making technologically sophisticated and durable parts and equipment. That in large measure is what led to an expansion of production lines, he says, but the operations had clearly reached their capacity.

"Practically, Agrostroj as a whole didn't have space to grow because of these warehouse operations and processes. They were unable to pick more to feed additional production lines. And the high rate of errors halted them from launching more lines."

Local Expertise
The WMS installation began in December 2005 and was concluded in February, according to Sramek, who estimates that's quicker by half than most other such implementations.

Pavul says the way Radio Beacon makes certain code available to users also results in quicker implementations. First of all, the Toronto company, which targets all verticals but only for mid-sized firms like Agrostroj, works solely through local channel partners. In Europe, it has such alliances now not only in Czech Republic but in Latvia, Russia, the United Kingdom and in the Netherlands. To capitalize on opportunities in Europe, it's just opened a European headquarters in the Netherlands, in Zundert. "Our strategic approach is that local partners can know local needs better than we ever could," Pavul says.

Those local partners have access to operational source code kept in external xml files, Pavul says. "We do that for our partners in order for them to be able to do some external programming, to configure products even more to meet exact customer needs. This helped greatly with the Agrostroj implementation." Of course, part of the local customizing included an interface in Czech for the operators, few of whom would feel comfortable in another language.

Here's an overview of Agrostroj's logistics operations, including the new WMS, provided by Sramek:

The manufacturer makes specialty parts, of course, both for its own finished products and on a contract basis, but it sources many items as well, including tires. Procured in the Czech Republic and elsewhere in Europe for the most part, about 90 percent of these items are trucked to the warehouse in Pelhrimov, he says. Trains are used for outbound transportation of finished goods.

The traditional paper-based receiving operation at the warehouse has been replaced by a barcoding system. Items not sent directly to the production hall are sorted in areas designated either for palletizing of large parts or racking of the smaller ones.

Previously there were fewer than 2,000 pallet positions in the warehouse. Now there are 3,800.

Additionally, Kodys provided the interface between the Radio Beacon product and the Orfert ERP system.

"The result of the implementation is that Agrostroj now has full control of its warehouse," Sramek says. "That means control of all warehouse positions--all bins and all movements of goods, beginning with receiving, and during movements and replenishment, and ending with picking and packing for production. All operations are now fully controlled by the WMS."

Jaroslav Kudyn, the IT director at the manufacturer, says the company is delighted with its new ability to manage the warehouse, and of course, with the improvements it's seen in accuracy and transparency. "Even though we've only been using [the WMS] since February 2006, we have already seen efficiency improvements, a reduction in the number of shipping errors, and our picking speed has more than doubled."

Sramek puts that in better-and much more impressive-perspective. He says overall accuracy is now 98 percent, but it's the leap in improvement that is what's truly astounding: Accuracy is up by 50 percent!

"They were terribly inaccurate before," he says, "because in the past every second order for production was wrong. Now, two orders in every hundred are wrong."

Picking time for an average order has also been reduced by half. The company is processing between 100 and 300 orders a day.

"Now they can feed more 15 production lines whereas before they had only five production lines," Sramek says. "Without a WMS it would have been impossible to feed 15 production lines in time."

Sramek's nutshell assessment of the old vs. the new way of doing things: "The manual system was holding the company back from realizing its full potential."

Agrostroj Pelhrimov at a Glance
The company: The only producer of agricultural machinery in the Czech Republic, Agrostroj is a joint-stock company with no state-owned shares or foreign capital.

It manufactures agricultural equipment under its own name and parts for agricultural divisions of major manufacturers, such as Caterpillar, Mitsubishi, Volvo, DAF and Jungheinrich.

Headquarters: Pelhrimov, Czech Republic

Number of employees: about 900, 89 percent of whom are engaged in manufacturing.

Financial results: Agrostroj reports an annual turnover of 37m euros (about US$47m) with an average annual growth of 5 percent.

Supply chain challenge: Its manually-operated warehouse was slow, had an extremely high error rate and could not meet the production floor's orders much less accommodate expanding production lines to meet customer demand.

As the fortunes of what now is called the Czech Republic waxed and (mostly) waned over the last hundred years or more, so did those of most of its domestic companies. To no one's surprise, many of those founded during Hapsburg rule did not weather the empire's collapse after World War I or the subsequent political storms that blew in years later from Germany and Russia.

One that did is Agrostroj Pelhrimov A.S., which has made farm machinery and equipment since 1886. The country's only such manufacturer, Agrostroj as an enterprise likely prospered during the interim between the world wars when the new Czechoslovakia reportedly was among the world's 10 richest nations. Nazi and Soviet domination would have hindered operations, but the latter's oppression ended in 1989. If anything, in the last few years, Agrostroj (pronounced agro-stroy) has been its own worst enemy. Its products are distributed all over Europe, North and South America and Asia Pacific. But continued production growth was halted by inadequate warehousing management.

A private company, Agrostroj Pelhrimov's product line includes rotary mowers, mulchers, forage harvesters, milking machinery and manure spreaders. It estimates that 20 percent of its production comprises machinery under its own name, with another 13 percent comprising tool engineering. The vast majority of its output, 67 percent, consists of cooperative projects with the agricultural divisions of some of the biggest companies in the field: Claas, Krone, Pottinger, DAF, Volvo, Jungheinrich, Mitsubishi and Caterpillar.

With its sales opportunities continuing to expand, not the least of which with buyers in the emerging Central and Eastern European nations, in 2004 Agrostroj built a 25,000-square-meter warehousing and manufacturing facility. Located in Pelhrimov, about 120 kilometers east of Prague, the warehouse by itself is 3,000 square meters. It didn't take outside consultants, however, for company management to realize that it had simply maxed out on its ability to feed its production lines. Its slow and error-ridden warehousing operation not only couldn't meet orders from the production floor timely and accurately, it was an anchor on any attempts to meet growing customer demands.

"The operations created problems not only with existing production lines, they halted the development of any new production lines."
- Alex Pavul of Radio Beacon

To some extent Agrostroj faced the same situation of many mid-sized companies in more developed countries: with little if any automation, often such companies are caught between traditional ways of operating and the promise of tremendous sales growth. In fact, Agrostroj was already semi-automated; it had an Orfert enterprise resource planning system, developed locally by OR-CZ. It was the warehouse, totally without automation, that was the drag.

Agrostroj officials knew they needed a WMS, but they began soliciting tenders only after they had put up the new facility. Ultimately, the bidding process led Agrostroj to Kodys, a supply chain solutions provider with offices in Prague, and in Bratislava, Slovakia, for help. The manufacturer was interested in barcoding and initially consulted Kodys on that alone, says Filip Sramek, head of the project department at Kodys and the eventual director of the WMS project.

Kodys, active in logistics solutions projects throughout Czech Republic, Slovakia, Poland, Hungary and Bulgaria through its membership in IBCS Group, is also a partner of SAP, Symbol Technologies and Zebra printers.
Sramek says the warehousing problem was glaringly evident. Kodys is a reseller for Toronto-based Radio Beacon, and it recommended its warehouse management system.

Alex Pavul, director of European operations for Radio Beacon, says unequivocally that the antiquated warehouse operations stunted the company's growth. "The operations were holding their growth as a manufacturer back," he says. "They created problems not only with existing production lines, they halted the development of any new production lines."

He says he had firsthand experience with the old system. "I saw these operations in their old spare parts warehouse. It was totally manual and paper-based and, I would say, memory-based. They had a couple of experienced operators who basically remembered where items were. And whenever it was time to feed production lines with parts, they manually found them, prepared them and then moved them into production."

The time-consuming process often required a full day to prepare orders for the next day's production, according to Pavul, and of course sometimes orders were not fulfilled because parts simply couldn't be located, especially if less experienced hands were at work.

The disorganization that reigned meant that the same type of items weren't always stocked in designated places. As a result, mistakes were rampant.

Pavul says the substandard warehousing system shouldn't reflect on the quality of the product line. If anything, he says, Agrostroj enjoys an excellent reputation for making technologically sophisticated and durable parts and equipment. That in large measure is what led to an expansion of production lines, he says, but the operations had clearly reached their capacity.

"Practically, Agrostroj as a whole didn't have space to grow because of these warehouse operations and processes. They were unable to pick more to feed additional production lines. And the high rate of errors halted them from launching more lines."

Local Expertise
The WMS installation began in December 2005 and was concluded in February, according to Sramek, who estimates that's quicker by half than most other such implementations.

Pavul says the way Radio Beacon makes certain code available to users also results in quicker implementations. First of all, the Toronto company, which targets all verticals but only for mid-sized firms like Agrostroj, works solely through local channel partners. In Europe, it has such alliances now not only in Czech Republic but in Latvia, Russia, the United Kingdom and in the Netherlands. To capitalize on opportunities in Europe, it's just opened a European headquarters in the Netherlands, in Zundert. "Our strategic approach is that local partners can know local needs better than we ever could," Pavul says.

Those local partners have access to operational source code kept in external xml files, Pavul says. "We do that for our partners in order for them to be able to do some external programming, to configure products even more to meet exact customer needs. This helped greatly with the Agrostroj implementation." Of course, part of the local customizing included an interface in Czech for the operators, few of whom would feel comfortable in another language.

Here's an overview of Agrostroj's logistics operations, including the new WMS, provided by Sramek:

The manufacturer makes specialty parts, of course, both for its own finished products and on a contract basis, but it sources many items as well, including tires. Procured in the Czech Republic and elsewhere in Europe for the most part, about 90 percent of these items are trucked to the warehouse in Pelhrimov, he says. Trains are used for outbound transportation of finished goods.

The traditional paper-based receiving operation at the warehouse has been replaced by a barcoding system. Items not sent directly to the production hall are sorted in areas designated either for palletizing of large parts or racking of the smaller ones.

Previously there were fewer than 2,000 pallet positions in the warehouse. Now there are 3,800.

Additionally, Kodys provided the interface between the Radio Beacon product and the Orfert ERP system.

"The result of the implementation is that Agrostroj now has full control of its warehouse," Sramek says. "That means control of all warehouse positions--all bins and all movements of goods, beginning with receiving, and during movements and replenishment, and ending with picking and packing for production. All operations are now fully controlled by the WMS."

Jaroslav Kudyn, the IT director at the manufacturer, says the company is delighted with its new ability to manage the warehouse, and of course, with the improvements it's seen in accuracy and transparency. "Even though we've only been using [the WMS] since February 2006, we have already seen efficiency improvements, a reduction in the number of shipping errors, and our picking speed has more than doubled."

Sramek puts that in better-and much more impressive-perspective. He says overall accuracy is now 98 percent, but it's the leap in improvement that is what's truly astounding: Accuracy is up by 50 percent!

"They were terribly inaccurate before," he says, "because in the past every second order for production was wrong. Now, two orders in every hundred are wrong."

Picking time for an average order has also been reduced by half. The company is processing between 100 and 300 orders a day.

"Now they can feed more 15 production lines whereas before they had only five production lines," Sramek says. "Without a WMS it would have been impossible to feed 15 production lines in time."

Sramek's nutshell assessment of the old vs. the new way of doing things: "The manual system was holding the company back from realizing its full potential."

Agrostroj Pelhrimov at a Glance
The company: The only producer of agricultural machinery in the Czech Republic, Agrostroj is a joint-stock company with no state-owned shares or foreign capital.

It manufactures agricultural equipment under its own name and parts for agricultural divisions of major manufacturers, such as Caterpillar, Mitsubishi, Volvo, DAF and Jungheinrich.

Headquarters: Pelhrimov, Czech Republic

Number of employees: about 900, 89 percent of whom are engaged in manufacturing.

Financial results: Agrostroj reports an annual turnover of 37m euros (about US$47m) with an average annual growth of 5 percent.

Supply chain challenge: Its manually-operated warehouse was slow, had an extremely high error rate and could not meet the production floor's orders much less accommodate expanding production lines to meet customer demand.