Think The Plex Manufacturing Cloud is Just for Small Companies? Think Again

Plex Enterprise Edition Makes its Debut at PowerPlex 2014

Recently at its annual PowerPlex conference, Plex Systems announced Plex Enterprise Edition, a suite of applications built to support complex, global, multiplant manufacturing organizations with multi-entity financial and supply chain management requirements. As always, Plex worked closely with its customers to define those requirements and has the first component of Plex Enterprise Edition — Financials — for centralized accounting and cash management ready to deliver the end of this month. Many of its competitors (and even some industry analysts) write Plex off as a non-threat except perhaps in small companies. Big mistake! Even without the multi-entity capabilities announced this week, Plex has been providing continuous innovation and steadily expanding the range in size of companies that are attracted to its Plex Manufacturing Cloud solution.

Clearing Up Some Misperceptions

Why do competitors assume Plex is just for small companies? One reason is the fact that Plex has exclusively offered its solution as Software as a Service (SaaS) since 2001, long before the cloud became popular. And many also wrongly assume SaaS ERP is only for small companies. Yet the Mint Jutras ERP Solution Study found the willingness to consider SaaS as a deployment option for ERP only grows with company size (Figure 1).

Figure 1: Willingness to Consider SaaS Grows with Company Size

Plex Fig 1Source: Mint Jutras 2014 ERP Solution Study

NOTE: Mint Jutras believes these percentages may be understated. We ask participants to select all deployment options they would consider if they were to purchase a solution today. “Hosted by your ERP vendor” is often confused with SaaS. Percentages of participants considering that option were similar to those shown in Figure 1 above.

Why Might That Be?

As companies grow, they become more distributed. Most companies, both large and small trade internationally and our ERP Study found 66% of manufacturers operate across multiple locations and the number of sites grows along with annual revenues (Figure 2).

Figure 2: Distributed Environments

Plex Fig 2Source: Mint Jutras 2014 ERP Solution Study

Defining Corporate Standards

In the past it was very likely that these different operating locations would have been left on their own to find and select a solution to meet their local needs for manufacturing. However, more and more companies are defining standards for enterprise applications. Companies have been talking about this kind of consolidation of solutions for years, but now it is really happening and World Class ERP implementations are most likely to have defined and executed a strategy that includes a standard ERP solution (Figure 3). What better way to control and enforce these standards than implementing a SaaS-based solution throughout the enterprise?

Figure 3: Have you defined corporate standards?

Plex Fig 3Source: Mint Jutras 2014 ERP Solution Study

Of course not all standards involve just a single ERP. In some cases we see two (or more) tier standards where one ERP solution is implemented at corporate headquarters and a different standard (or standards) is defined for the operating locations. This is most evident in manufacturing companies where the corporate solution is strong in financials, consolidation and reporting, but perhaps lacks the features and functions required to manage manufacturing processes. The operating locations require these manufacturing functions and also balk at the complexity often imposed by these corporate financials.

With a two-tier approach, a single ERP is also selected for the manufacturing facilities, in addition to an ERP for consolidated financials at corporate headquarters. In a multi-tier environment, often we see different types of operating locations (for example, distribution versus manufacturing, or significantly different styles and methods of manufacturing) requiring multiple standards (Figure 4).

Figure 4: Single, Two or Multi-tier Standard?

Plex Fig 4Source: Mint Jutras 2014 ERP Solution Study

While almost half of others with multiple operating locations choose this multi-tier approach, not so with Plex customers. A full 93% have decided on Plex and expect the solution to be their only solution. So it is not surprising that customers have collaborated with Plex to fulfill this need.

Of course, if a company has grown through acquisition, or the enterprise is extremely diversified or simply a holding company, there is an increased likelihood of multiple ERP solutions. But many view a single standard almost as a no-brainer when it comes to expansion in pursuit of green field opportunities. Many Plex customers have grown like this, leading Plex into parts of the world where it might not have previously ventured.

Case in Point: Shape Corporation

One such Plex customer is Shape Corporation, North America’s top manufacturer of automotive bumpers. Shape also manufactures impact energy management systems and performs advanced custom roll-forming for furniture, agricultural, recreation and health care industries.

While based in Michigan, Shape also has locations around the world, including China, Japan, the Czech Republic, Mexico, Germany, Korea and other locations within the United States. “All are running the same Plex system. Our users in China run on the same system as our users in Mexico, our subcontractors in Alabama, and everyone on the shop floor in our Michigan facilities. All our expansion is into new green field territory. We can have the Plex system up and running in a new location in a matter of weeks,” said Molly Hunting, Director of Information Technology

As Shape grew back in the 1980s and 1990s, it had acquired and implemented separate stand-alone systems, upgrading and linking them as needed. Maintenance became cumbersome and resource-intensive, inspiring the company to seek a single solution: the Plex Manufacturing Cloud.

The Plex solution replaced several separate systems for preventive maintenance, production, gages, problem controls, reporting, and more. While the solutions it replaced were not able to communicate with each other, all Plex functions are completely integrated.

The Plex Manufacturing Cloud now manages all core shop-floor functions for Shape, including bills of material, purchasing, receiving, inventory, manufacturing, basic quality, planning and scheduling, shipping, key measures, EDI, engineering change tracking, subcontracting, financials, and document control. Shape also implemented Plex’s advanced human resources, quoting, maintenance, advanced quality, and program management functions. “We probably use as much, if not more of the Plex solution than any other customer today,” according to Ms. Hunting.

The Desire for a Complete and Comprehensive Solution

This also is indicative of another consistency across the Plex customer base: the preference for and the implementation of a broad and comprehensive solution. While the majority of all manufacturers surveyed (92%) prefer an end-to-end integrated solution, the larger portion of that majority is cautious about sacrificing functional requirements for ease of integration or the luxury of dealing with a single vendor (Figure 5).

Figure 5: Preferences for a Suite?

Plex Fig 5Source: Mint Jutras 2014 ERP Solution Study

Only 26% have an overriding preference for a complete, fully integrated end-to-end solution supported by a single vendor. But that percentage more than doubles (to 53%) across the Plex customers we surveyed. Clearly these customers are drawn to the Plex Manufacturing Cloud, at least in part, by the breadth of the solution, shattering another misperception that customers only run shop floor-centric processes or an otherwise incomplete solution from Plex Systems.

Ms. Hunting acknowledged only one weakness in the past: support for multi-entity finance and supply chain operations. Tax and regulatory compliance requirements force companies like Shape into a multi-entity environment as soon as they set up shop in a foreign land. So while Shape’s preference is to have a single solution and solution provider, for now, it is using a solution from an independent software provider to manage the consolidation and financial reporting requirements.

But this type of solution has its drawbacks when it comes to managing the supply chain issues. Any movement of goods between multiple entities and any joint sales opportunities between these locations create not only financial requirements, but also supply chain issues. While operationally movement of inventory is a simple transfer, in fact behind the scenes it must be treated as a purchase of one entity and a sale to another. And that’s the easy part. What happens when multiple operating locations sell to a common customer, who of course, wants to take advantage of corporate discounts based on total volume? And what about your own purchasing? Do you have master purchase agreements that need to be managed across sites and across legal entities?

And all the while each of these separate legal entities needs to be managed as its own business, probably with its own language, localizations, tax and regulatory reporting, global labeling and printing. It doesn’t take long before you realize just how complicated your business has become. The typical Plex customer does not want to add to the burden of that complexity by adding new “add-on” software products or, even worse, different ERP solutions.

This is exactly why Plex worked closely with several of its customers that are large manufacturing organizations, to design and develop applications to support the complexities of multisite, global manufacturing operations. Inteva Products was one of these customers actively engaged in the design and development of the new Enterprise Edition.

Customers Help Define the Problem: Inteva Products

Inteva is a global tier-one automotive supplier with 14 manufacturing locations and two joint ventures covering three continents, six countries and four U.S. states. While many of Plex’s customers grew into larger multisite manufacturing organizations over time, as a former division of Delphi Corp., Inteva was an instant multisite, global enterprise with multiple entities and all the associated challenges. Needing to get off its former parent’s systems within 12 months and being tasked to reduce IT costs from 2% of revenue to less than 1%, Inteva chose the Plex Manufacturing Cloud and never looked back.

Plex met Inteva’s tight time frame for implementation and migrated all sites from Delphi’s systems to Plex in less than 12 months. Germany was first, followed by one in Mexico, then two manufacturing facilities in Alabama three months later. The remaining launches were completed three months afterwards at all of Inteva’s remaining locations in Mexico, Europe, and the United States. As a result, it certainly had the experience to bring to the design table to help Plex.

“Plex enables us to run more than 30 manufacturing facilities around the world, all on a single cloud platform,” said Dennis Hodges, chief information officer of Inteva. “Just as important, the Plex Manufacturing Cloud gives Inteva access to continuous innovation, so my team can take advantage of new opportunities to drive our business forward, whether that means deploying Plex in a new facility or enabling new functionality. Plex makes enterprise software a business decision rather than an IT decision, and that’s transformed how we run our operation.”

Sharp Corporation will be looking more closely at the phased delivery of Plex Enterprise Edition, but will continue to operate with its third party solution until more of the required pieces are in place.

 A Phased Delivery Planned

The first phase of delivery is Plex Enterprise Financials, available now. It includes centralized accounting and corporate cash management.

Centralized accounting includes

  • Entity relationship management, which may be hierarchical across a group and may include due to and due from accounts
  • General ledger chart of account management, with full chart segment replication
  • General ledger journals with inter-entity journal accounting
  • Transaction level drill down from consolidated financial statements

Corporate cash management delivers:

  • Consolidated cash disbursements, including accounts payable invoices for multiple entities
  • Consolidated cash collections, including invoices for multiple entities
  • Consolidated bank reconciliation with the option of a single bank account representing multiple entities

Plex Enterprise Supply Chain, scheduled for the second half of 2014, includes:

  • Sales Order Management, which enables central administration of customer sales orders and billing, allowing any facility in the organization to fulfill orders
  • Purchasing, which similarly provides for a single, central operating unit to order goods and services on behalf of any business entity and manage purchase orders executed by any unit across the group.

Both centralized sales order management and purchasing also support automated inter-entity billing as part of the distributed order fulfillment process.

Plex Enterprise Edition also enable provides consolidated visibility and insight across the entire business, as well as deep-dive analysis of specific plants and products — all through Plex’s embedded business intelligence.

Summary and Key Takeaways

This is a massive undertaking by Plex. It is not short-circuiting the process or shrinking from the complexities of this global world by any means. It “gets’ multi-entity financial and supply chain issues. It is working directly with customers to define real needs for real manufacturers. Those needs are complex, and impact multiple facets of a manufacturer’s business.

Those unfamiliar with Plex’s rapid application development capabilities might think the company is getting out of the gate too late to make a big impact in the world of complex, global, multi-plant manufacturing organizations with multi-entity financial and supply chain management requirements. But Plex has already carried many of its customers through growth phases. Its engaged customers and its aspirations to play on a bigger stage will help them continue that momentum.

In addition, Plex Systems is not your average software developer. It has mastered the art and science of delivering continuous innovation. Not only does it “do” rapid application development, and do it well, but also Plex has a distinct advantage over those that do not deliver a multi-tenant solution deployed exclusively as SaaS. Plex only needs to maintain one single set of code. It is not juggling multiple versions, running on different operating systems, different platforms, or even different databases. So it only has to develop innovations once and it is done. This too is a huge advantage.

Plex Systems also knows how to make money in a SaaS-based business. This is important for customers and prospects alike. Nobody wants to do business with a company that is living hand to mouth, nor does talent want to work there. Plex has been one of only a few SaaS-only companies that can claim this. While it has been self-funded in the past, investment firms Francisco Partners and Accel Partners have infused it with new capital and it has made more progress. Now more recently T. Rowe Price and another round from Accel Partners has resulted in a new infusion of $50 million.

Competitors say they don’t see Plex in deals. Look for this new round of funding to allow them to put far more feet on the street, both direct sales as well as channels. When that happens, look out! When they get invited to the party, they are typically a big hit. Look for that to happen more and more. Competitors that might be tempted to write them off: Be warned. Do so at your own risk.

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