In 2007, NACCO Materials Handling Group (NMHG)—a manufacturer of warehouse trucks and forklifts—was using a manual system of spreadsheets and signatures to track design changes in its production line. Yet the company soon learned that its lack of an automated process was allowing for missed signatures, leading to some defective designs. Additional costs incurred from product recalls forced NMHG to explore a new option: a product lifecycle management (PLM) implementation.
When the team of IT and business managers presented the PLM plan to the CEO, however, he was immediately wary, recalls Bob Shallow, director of global product development processes, systems and operations. “This was right on the heels of a very painful and expensive SAP implementation, and our CEO was a little gun shy to spend a lot of money on PLM,” Shallow notes. “So—almost by accident—we started talking about leveraging a [business process management (BPM)] tool.”
That move that would save them millions.
Shallow, a 15-year veteran of Ford Motor Company, learned about a similar, successful BPM operation there using a product from Lombardi Software called Teamworks. So he and his NMHG team discussed using the same Lombardi tool. They estimated they could meet about 80 percent of their requirements at about 15 percent of the investment level, resulting in a 200 percent ROI. With the PLM tool, the ROI estimate was in the 30 percent range. Their CEO gave Shallow’s team the green light.
Shallow next met with Gidu Sriram, NMHG’s IT director, to discuss logistics for the implementation. Instant opposition was the reaction Shallow and his business-side team received from Sriram’s IT department. “There was quite a bit of friction between myself and IT going into the project,” Shallow recalls, as Sriram’s team members felt that an alternative tool should be considered. “All we wanted was an opportunity to take a look at other alternatives in order to make an objective decision, rather than just having someone tell us that this was the way to go,” Sriram explains.
Sriram and Shallow agreed to hear presentations from Lombardi and the PLM vendor and to discuss their products. After the meetings, everyone was asked for feedback, and Lombardi emerged as the overwhelming winner. IT Director Sriram says that while their initial meetings were tense, they ultimately learned to trust the business more. “And hopefully we gave the business confidence that they can rely on us to look at projects objectively,” he adds.
Since they needed to demonstrate the business value quickly, the IT and business teams agreed on an aggressive schedule, completing the project in two weeks rather than the more-typical two months. “My team was tremendously stretched, but we managed to pull through and maintained a very positive attitude to support the business,” Sriram says.
Most importantly, the business benefits were significant, with a savings of $2.5 million by choosing the BPM tool over the more complex PLM system. NMHG is now able to bring products to market faster and eliminated recall costs. More BPM rollouts also followed the first wave, with one completed in May and another scheduled for completion by December.