Does your billing program work effectively with your accounting program? Does your routing program interface with your forecasting and budgeting software? Does the software running your truck's computers talk to your customers' computers?
Someday they could - if your company invests in something called Enterprise Resource Planning (ERP), which businesses and governments are expected to spend nearly $15 billion on next year.
ERP has received a lot of bad press this year, especially in the waste management industry. Yet it is an important technological concept. These software systems enable a company to integrate the automation of many different jobs: accounting, billing, payroll, budgeting, sales, marketing, personnel, inventory, operations, you name it.
Unlike traditional software application programs, ERP systems allow specific applications to share data. For example, when someone in the human resources department signs on a new employee, appropriate information flows to or is accessible by various departments. Payroll receives the information it needs to pay the employee. Operations receives data necessary to making work assignments. Budgeting people receive data that will incorporate the new salary into forecasts. But only one person entered the data, and it only needed to be entered into the system once. In effect, ERP automates automated systems.
Sound easy? Maybe not.
In two widely publicized cases involving the waste industry this year, efforts to install company-wide ERP systems failed. Last June, Allied Waste Industries Inc., Scottsdale, Ariz., trashed a planned ERP system carrying a $130 million price tag.
Similarly, Houston-based. (WMI) threw out an ERP effort that would have cost $250 million.
Both companies decided that the ERP system they had selected would be too expensive and complicated to effectively implement. Nevertheless, ERP is the wave of the future.
"Today, there are many software vendors only offering part of the administrative solution," says William Brown, president of TMS Solutions, Rochester, N.Y. "Yet many administrative functions need to be connected properly to manage a waste company."
Brown says that billing has been the primary focus of most applications, "while the cost of fleet management, labor and administrative overhead are left as separately tracked functions and applications." In the end, he says, "there is no clear link between the revenue, expense and profit tracking."
"Typically, companies have side-managed automated areas in a company," agrees Patrick Sweeney, vice president, sales and marketing for Transcomp Systems Inc., Irvine, Calif. "The accounting people have their system. Operations people have their system. Project managers have their system. Someone else has a bar-coding system. Each system stands alone and cannot talk to the others. As a result, there is a lot of redundant data entry.
"ERP takes these islands of automation and weaves them together so you input data once," he continues. "It spreads throughout the whole system, saving labor, software and equipment costs."
While that may be the goal, the problem is that solid waste operations must track hundreds of different types of details, and no single software company makes a single product that does everything. Still, solid waste operations can put together ERP systems that serve their needs.
Integrating Automation For example, Andrew Taylor, a systems analyst with the Delaware Solid Waste Authority (DSWA), Dover, Del., recently guided his organization through setting up and implementing ERP.
DSWA operates three landfills, a transfer station and a recycling facility. Over the years, the authority automated parts of its business, with no particular emphasis on overall operations. The result was a central accounting system that couldn't talk to the scale houses, which couldn't talk to video cameras set up to record transactions.
The scale-house software lay at the center of the operation and of the problem. It required an operator to punch in data about the trucks, download that information onto floppy disks at the end of the day, and then the disks had to be delivered to the accounting department.
Scale-house video cameras recorded every transaction, but reviewing particular transactions meant surveying hours of videotape.
Additionally, the old system was generating eight different reports. So, to analyze operations beyond what those reports provided, DSWA officials had to build their own spreadsheets and manually enter data.
Faced with having to continue working with this piece-meal system and nagging questions about the year 2000 (Y2K) bug, Taylor put together a team to study the DSWA's operations, with the goal of creating an integrated system.
The team devised a request for proposals (RFP) calling for a system that could work with existing bright spots, such as the DSWA's Novell Operating System and accounting software, which was supplied by Solomon Software. The RFP also asked for a system that would allow for video system integration.
The RFP went out in 1998, and DSWA chose Baltimore, Md.-based Paradigm Software LLC's CompuWeigh software, an open Windows application.
At each facility, traffic lights now direct trucks through in-bound lanes to the scales. The weigh master enters an account number, which appears on the sticker that is placed on the side of the truck, along with the waste type and its destination. The system automatically records the truck's weight, then all the data flows into the records kept for that account number. After the truck dumps its load, it returns to the outbound scales. The weigh master calls up a holding file, which was generated when the truck first entered the scalehouse, and the system records the truck's outgoing weight.
The program determines how much weight was disposed of and charges a fee according to the material type. As the driver proceeds off the scale, he receives a signed ticket. At the end of the day, the system sends the data to the accounting software at the DSWA's main office where invoices are generated.
According to Taylor, the new system can handle the billing, too. And because it can interface with the existing accounting software there was no need to revamp the DSWA's entire system.
The key to sharing data between different software applications is a result of Open Data Base Compliance (ODBC), when one data entry and storage program matches the structure of another program. This allows data to move from one program or system module to another for use in another application, without complications.
But the open system architecture allows it to be used in other ways as well. For example, it transmits data to the microprocessors managing the video cameras and video cassette recorders at DSWA's scalehouses.
"In conjunction with the basic weighing operation, the video cameras record the transaction," Taylor says. "The computer sends a signal to a video cassette recorder that tags the image with the data and the account number."
This feature has proven particularly useful. Last summer, for example, a pick-up arrived with a 500-pound load. The scale weighed the load at 570 pounds, and a bill went out to the customer, who contested the amount.
"We went back to the video and found that the truck couldn't have weighed as much as the scale recorded," Taylor says. When DSWA discovered its scale was inaccurate, "We refunded the over-charge to the customer," Taylor says.
The system also has made it easier for DSWA to monitor and manage overall operations. Because the software package integrates with Microsoft software such as Access and Excel, the DSWA has flexible reporting capabilities making it easy to move data from one system to another.
"The system allows us to build any kind of report," Taylor says. "Right now, we're compiling weekly and monthly totals for certain kinds of waste. We use these reports to pay contractors operating the landfills. We also track tonnages of materials such as asbestos and tires. We do long-term statistical analyses of incoming materials to help us think about equipment purchases."
The new system also allows the DSWA to install a bar-coding system to speed trucks through the weighing process. Drivers will carry bar-coded cards, which they will swipe through readers as they enter the scalehouse. This reduces the amount of data that must be keyed into the system.
Improving Customer Service The solid waste division of Wake County, N.C., has taken a similar tack at its scalehouse, using ERP to improve its operations.
In December 1997, Carolina Software Inc., Wilmington, N.C., installed its WasteWorks scalehouse and billing package at Wake County's North Landfill, a facility that accepts 1,700 tons per day (tpd) to 2,000 tpd from 400 to 500 trucks.
In this system, residential collection vehicles, front end loaders and contractor dump trucks carry radio frequency (RF) identification tags, which transmit identification numbers to the scalehouse's ERP system. When the number is received, WasteWorks automatically generates a ticket based on information previously keyed into the system. This information includes a description of the material typically carried by a truck, the customer's name and address, and the geographical origin of the load. Data in the system also may include a vehicle identification number, vehicle type, estimated tare weight and permit expiration date.
Customers appreciate the automated service, says Billy Thornton of Santek Environmental Inc., Cleveland, Tenn., which operates the landfill for Wake County. "It's a service that some customers want," he says.
In fact, the RF tag system has enabled Santek to set up an express lane for tagged trucks. At the Wake County landfill, the express lane uses Wizard, a device supplied by Carolina Software. When a truck approaches the express lane, the scalehouse system reads the RF tag and sends data to the unit, which prints the ticket for the truck after it crosses the in-bound scales.
This is especially useful for customers that carry the same waste type trip after trip, says Jeff Johnson, a support technician with Carolina Software. The RF tag number is linked to certain data, so the system probably would not be useful for trucks that carry more than one type of waste.
The real benefit of the system stems from how the application uses the data it collects. Assuming that landfill personnel, drivers or the RF tags enter the correct data, the facility can bill customers and report on operations to enhance efficiency and customer service capabilities.
"The more data you collect when you create a ticket, the more detailed reports you can generate later," says Carolina Software's Johnson. "Obviously you can create invoices and statements because you are collecting billing information with the system. But by collecting other information, you can create different kinds of reports to help manage a facility."
Some of the more popular reports Wake County landfill managers produce include: * Material tracking reports, which enable coalitions that share landfills to track who is dumping the most material;
* Material reports, which allow managers to evaluate the kinds and amounts of material flowing into the facility;
* Year-end reports, which help to fulfill state and local regulatory reporting requirements;
* Financial activity reports, which track charge sales and cash sales over periods of weeks, months, quarters and years; and
* Customer reports, which enable landfill users to analyze their businesses.
In fact, the Wake County landfill acquired one of its major customers, the city of Raleigh, because the software can deliver daily activity reports on the city's refuse collection.
"One of our requirements was that the landfill allow us to download data every day about our operations," says Linda Leighton, contracts and recycling coordinator for Raleigh's Solid Waste Services. So Raleigh purchased WasteWorks and has been using it to generate management reports based on data supplied online from the landfill.
Site Specific The size and business plan of a solid waste operation will determine how simple or complex it is to develop an ERP system.
Small operations with business plans that do not foresee much growth through acquisitions probably can use off-the-shelf software applications already designed to interface with each other. On the other hand, companies with major acquisition plans must lay out relatively detailed plans to allow a company-wide ERP system to grow along with it. Waiting until after the acquisitions have been made can create the kinds of problems Waste Management and Allied encountered in their ERP efforts. Each of these companies, however, have been in an acquisition mode for many years, long before ODBC standards smoothed the path of ERP.
Medical waste disposal specialist., Lake Forest, Ill., laid out an ERP plan several years ago, with an eye on growing large through acquisitions. Raising revenues to $40 million from internal sales and acquisitions, company officials saw great opportunities in medical waste disposal services. They also saw large roadblocks to the efficiency of large operations that could not integrate the technologies important in day-to-day operations.
Relying on Transcomp's Tower 2000 system, Solomon's accounting, Paradigm's weigh station management and Capps Logistics' route optimization software, Stericycle assembled its basic system in the mid 1990s.
Today, the system integrates general accounting, billing, collection, transportation and routing, route optimization, sales and marketing, general data warehousing, bar-coding, and other automation needs. Eventually, the company also plans to integrate Internet communications into the system.
"The fact that we are continuing to grow on the technical platforms we picked back when we were a $40 million company shows you how important it is to plan ahead and make sure that you don't paint yourself into a technical corner," says Patrick Cott, vice president of information systems.
Despite building an ERP system by combining applications, Cott says there has been little, if any, redundant data entry because each of the other systems can use the available data.
"No one vendor has all the capabilities [we needed], but [our supplier] developed strategic alliances with other companies that can provide other functionalities," Cott says. "Most importantly, all of these companies use open technology, which has allowed us to put the pieces together ourselves."
Last year, Stericycle reported revenues in the $70 million range. This year, if the company's recent offer to buy Houston-based Browning-Ferris Industries' medical waste management businesses goes through, revenues could reach $300 million and bring dozens of new locations into the Stericycle fold.
Through it all, Cott will continue to manage the growth of Stericycle's ERP system that was planned, designed and implemented years ago.
Similar to a LEGO building kit, "The idea is to find a system that allows you to snap on other components from other sources," Cott says of ERP. "In a closed or proprietary system, you can only get a few LEGO components, and they all come from the same company."
Cott recommends that companies looking for ERP-style software ask vendors two basic questions:
* Will the system allow the openness and flexibility required if the company changes its strategic direction?
* Can you extend the system?
An inflexible system may lock a company into a certain way of doing business and essentially dictate strategic alternatives. "That's unacceptable," Cott says. "The way you do business must tell the system what to do."
You also want to be able to add a new layer of capability to the software as you grow, he says. For example, if you are using a route management software, you will want to have the capabilities to add route optimization to the program in the future.
"It's no good if you have to go out and buy an entirely new package and convert everyone in your organization," Cott says. "You need to be able to add new LEGO pieces and functions without spending a lot of money."
In other words, the point of a management information system is gaining competitive advantages. The more open a system is to other "LEGO" components, the greater the competitive advantage will be. That's the promise of ERP.
So while issues still may need to be resolved, it probably would be unwise not to consider ERP because of highly publicized implementation failures in the past. Businesses must assemble information management systems specific to their needs. And most waste company needs will be far smaller than the needs of WMI and Allied. For most companies, the ERP process of automating your automation is not only possible, but essential.