Central New York Electronic Manufacturer Grows High-Value Jobs Locally, Gains Competitive Edge Globally
- Who We Were
- Why We Needed Change
- What We Wanted
EXECUTIVE SUMMARY
How does a company overcome the challenge of maintaining American jobs while also updating inefficient, disjointed business systems — and remain globally competitive at the same time?
Beside dealing with multinational production facilities and a pending ISO certification, mid-sized manufacturer Pelco Component Technologies needed to consolidate data from three different systems, each with its own database, into one business software solution.
Pelco sought flexibility, usability, and cost-effectiveness to fit their specific industry. They wanted a solution without hidden fees, both upfront and year over year; a solution that would not cause business disruptions; a solution not too time-consuming, too difficult or too overwhelming and inflexible to use; a solution to enable growth and to recoup their investment as quickly as possible.
Pelco found and implemented xTuple which delivered:
- Better visibility into the entire business, especially in the ability to forecast just-in-time, build-to-order inventory needs
- Modernized outdated technology and met Total Cost of Ownership (TCO) requirements
- Piece work through-put improved nearly 15% (fixed worker “piece rate” for each unit produced)
- Inventory availability on the production floor inventory improved by 15%, without adding man-hours
- Employee productivity improved company-wide by 75% with elimination of repetitive data entry
- ISO 9001-2015 certification process was completed quickly with zero deficiencies or non-conformance issues
WHAT WE DO
Pelco Component Technologies is a leading designer and manufacturer of commercial and industrial electronic components, delivering specialized timing and control solutions to a diverse worldwide OEM (original equipment manufacturer) customers.
Pelco is “Putting Power to Work.”
Industries served include aviation and telecommunications, HVAC, food service, transportation, gas and oil, even neon lighting. If a piece of equipment requires a control timer to turn-on, turn-off or power any other automated operation, it’s a good bet that Pelco products are the technology solution used.
Specialty divisions include:
- Airotronics which manufactures Electronic Timers and Controls such as relay and solid-state timers, sensors and controls, complex microprocessors and custom designs
- STK Electronics which manufactures Film Capacitors such as polypropylene, polyester and motor run film capacitors in various capacitance ranges and case types
- Trimax which is a distributor of Thermal Circuit Protectors, including breakers, fuse holders and sockets
- Flexcon which manufactures Flexible Test Connectors such as single-contact flexible connectors for tight locations and repeated use
- Peltec which manufactures DIN Rail Timers & Controls, including timers, voltage and phase monitors, current sensors and relays with DIN rail mountings
- SchleicherUSA which manufactures Automation and Safety Solutions, including safety relays, timer relays, measurement devices, CNC machine controls, and input/output (I/O) systems
- Pelco Electronic Manufacturing Services which provides contract manufacturing and engineering services, including PCB population and wire harness assembly
Pelco is an active member of The Manufacturers Association of Central New York (MACNY).
Peter M. Kip, Jr., President & CEO:
“xTuple ERP was a real “find” – Pelco delivers customer-focused solutions, and xTuple does, too.”
PROBLEMS
Who We Were
In 1975, Pelco was founded in the village of Cazenovia in Madison County, New York*, by Peter M. Kip, Sr. With the long-term goal of continued innovation and growth while “doing good” by maintaining production locally, Kip, Sr., wanted to provide good, sustainable jobs for his neighbors.
Madison County is located in the geographic center of New York State, nestled between Syracuse and Utica-Rome. With a regional population of one million, its location offers ready access to Interstates, Class I rail, airports, and barge access to the St. Lawrence Seaway and the Great Lakes. Madison County itself is largely rural, with lots of wide-open spaces and agriculture. Cost of living is 10% lower than the U.S. average.
Why We Needed Change
Today’s president and CEO, Peter M. Kip, Jr., wanted to carry on his father’s legacy, building on the business mission to improve the local community’s economic development. Eventually, though, business realities made some overseas production inevitable.
And there were other constraints.
Pelco’s future business growth and efficiency was hampered by technology. The major driver for adopting a fully integrated enterprise resource planning (ERP) solution was the company’s historical use of three (3) different and separate systems: a standalone customer relationship management (CRM) software, an accounting package, and a locally designed “MRP-ish” (materials requirement planning) solution.
“It was inefficient. It was a nightmare,” said Kip.
What We Wanted
A key requirement for new business management software was the challenge of consolidating data from three different systems, each with its own database, into one easily managed solution.
“We needed better visibility into the entire business, what I call ‘cradle to grave,’ and we also wanted to do an extreme data clean-up first before importing into any new system – to limit garbage data going in,” said Kip.
Other requirements included:
- Ability to better forecast build-to-order inventory needs
- Ability to better scale staffing and inventory to support customers’ needs
- Better ‘cradle to grave’ visibility into the business from prospecting to invoicing to paying people
- Eliminate manual processes, spreadsheets and outdated technology
- Increase value-add to customers with better reporting and communication
- Implement quickly with little to no downtime and critical data clean-up
- Sought more functionality than available with current disjointed system
SOLUTIONS
How xTuple met Pelco’s Requirements
Open platform technologies were not on Pelco’s radar as a requirement or even a ‘nice-to-have’ feature when exploring new business management software. However, upon learning about xTuple’s software and business model, Pelco’s CEO was intrigued.
It became eminently apparent that a top prerequisite for new software selection should be the flexibility to make changes in the system specific to their company's workflow processes, i.e., the ability to make their own modifications, as needed.
While initial costs of acquiring xTuple ERP seemed promising, a due diligence evaluation of lifetime costs for its operation at Pelco was conducted – including non-obvious ownership expenses. In comparing to other options, xTuple software came out on top.
“xTuple is our first real ERP solution – we like having all of our systems talking to each other. We looked at other solutions, but they were ridiculously expensive and complicated, like SAP. xTuple was the first one we found to fit a small to mid-sized manufacturer like us,” said Kip.
Controller Keri Rutherford used SAP previously and was part of Pelco’s transition team; she found xTuple software “fun,” intuitive to learn and quick to use for her accounting and financial workflow needs.
BENEFITS
- Improved ability to better scale staffing and inventory to support our growth, e.g., Pelco doubled throughput when running a second shift, often necessary to meet customer demand
- Improved ability to forecast build-to-order inventory needs for the first time
- Gained the ability to modify or customize the software without in-house programming expertise
- Enhanced visibility into the entire business from quote to cash, ‘cradle to grave’
- Increased productivity with cost-effective overall improvement in operations
- Eliminated manual processes and spreadsheets which improved functionality of the entire company
- Saved time and financial resources with on-boarding throughout every department, due to using xTuple’s established project management methodology
- Improved employee shop-floor productivity, a piece-rate work improvement of 15%
- Improved production floor inventory availability and planning accuracy by 15%, without adding man-hours
- Increased value-add to customers with better reporting and communication
- Modernized outdated technology and met Total Cost of Ownership (TCO) expectations
- Processed orders more quickly and improved delivery time of product
- Reduced inventory costs with less time spent on-the-shelf, minimal finished product stock on hand and faster inventory turns of raw materials (faster stock turns)
- Reduced time-to-decision for better, faster decision-making, especially in terms of sales orders and inventory planning/production schedules
- Saved time and improved employee productivity company-wide; every purchase order required repetitive data entry – as much as four (4) times – less data input improved employee productivity by 75%
- Completed ISO-certification with zero deficiencies or non-conformance issues and completion in less than one (1) year, due to newly documented workflows
WHO WE ARE NOW
The multi-generational, privately held and family-owned manufacturing business has grown exponentially under Peter Kip, Jr.’s leadership. Adding new product lines, creating or acquiring new divisions, and adapting new technologies has fueled the growth of the business. With physical expansion to include a production and warehouse facility on the California border of Mexico in Mexicali, the new jobs created in the Cazenovia, N.Y., community have become more specialized and less manual, vastly improving the lives and economic situations of Pelco employees and their families.
Since implementing xTuple, Pelco has retained the full complement of employees in their Central New York headquarters, while also bringing on laborers in Mexicali to meet the additional customer demand driven by the company’s New York-based professionals.
Pelco has used xTuple software since 2014, host locally on-site, with a Support Contract to ensure dedicated assistance as needed and provide for additional training of staff. Pelco also uses the xTuple Connect add-on to speed day-to-day processes by automating all business software connections between the system of record and corporate email.
As CEO, Kip focuses on defined sales reporting and financials, while production and accounting departments are daily power users of the full suite of xTuple features.
Kip said, “xTuple was ready to go for us off-the-shelf; we had little need for too much customization of the software other than modifications on reports to match our desired formatting, such as invoices and packing lists, and some modified fields for sales reporting.”
“We’re a build-to-order company with a just-in-time inventory model. We don’t build one product 100% in one location; production locations alternate between our Central NY headquarters and Mexicali. Schedules are based on wherever we can best serve our end customer. The ability to plan production across multiple locations was a big plus for us.”
The vast majority of Pelco sales are made via purchase orders from contracted sales representatives across the country, managed by Pelco-employed regional sales directors.
Today, Pelco is proud to be ISO 9001-2015 certified which specifies requirements for quality management within the organization. The ISO certification demonstrates that Pelco consistently provides products and services that meet customer and applicable statutory and regulatory requirements. It assures conformity and consistency in all that they do.
Additionally, Pelco holds several industry-specific certifications:
- UL (formerly known as Underwriters Laboratories) which helps Pelco demonstrate its corporate reputation for safety, compliance and sustainability and certifies that the company delivers reliable, quality products and technologies, especially important for electrical devices and components
- CE marking (the European equivalent of UL) is a legally required marking in the European Union (EU) to signify that products traded on the extended Single Market in the European Economic Area (EEA) have been assessed to meet high safety, health, and environmental protection requirements
Doug Wozniak, Quality Processes Manager at PELCO Component Technologies
PELCO QUALITY POLICY
“We are committed to operational excellence and continual improvement by maintaining a sense of urgency to achieve superior quality, product reliability and complete customer satisfaction.”
WHAT WE LEARNED
“ISO is all about repeatability of processes, and by the way we planned to use xTuple – and actually do use it on a daily basis – those processes were already in place. Without xTuple, we’d still be writing procedures, testing and figuring it all out [in order] to get our ISO certification,” said Kip.
“Implementing xTuple forced us to evaluate our procedures and test, test, test; since we were already doing what ISO requires, it made the certification process that much easier – and quicker. Taking less than a year was amazing; I didn’t have that luxury at other companies where I helped institute ISO,” said materials manager Kathleen Mulgrew-Smith.
Pelco worked with several xTuple implementation specialists. They followed xTuple’s recommended methodology and piloted first. Pelco’s piloting process lasted approximately five (5) months – time well spent teaching new users – before going live.
“We were running both xTuple and our old systems side-by-side for 2 to 3 months to ensure we were all really comfortable,” Kip added.
After implementing and reflecting on their ISO certification, Kip pronounced the key features or functionality of xTuple that are crucial for Pelco’s business are, in order of importance:
- Inventory Management & Manufacturing – engineering and production managers are heavy users – floor scheduling, following jobs
- CRM & Sales
- Accounting (AR/AP/GL)
Kathleen Mulgrew-Smith – Materials Manager
“xTuple is very interactive and user-friendly, especially the various workbench displays with all the information we need in one place. With our previous system(s), we had to go into umpteen different screens. Now our staff gets a lot of information they didn’t have access to before, speeding up processes and making us all the more efficient.”
Standing: Kathleen Mulgrew-Smith – Pelco Component Technologies Materials Manager
WHERE WE ARE
Pelco Component Technologies is located in Cazenovia in Madison County, New York – the geographic center of New York State, nestled between Syracuse and Utica-Rome. Madison County has a regional population of one million people and a regional workforce of over 433,000, with strengths in agriculture, alternative energy, back office & call centers, logistics & distribution, and manufacturing. Its location offers businesses exceptional transportation options, including ready access to Interstates, Class I rail, airports, and barge access to the St. Lawrence Seaway and the Great Lakes. There are numerous industrial parks, as well as a deep inventory of available sites and buildings, many of them shovel-ready, to speed your time to market. Madison County itself is largely rural, with lots of wide-open spaces and a cost of living that is 10% lower than the U.S. average. A vibrant Community Supported Agriculture (CAS) program brings locally grown food to residents nearly year-round. And the big-city amenities of Syracuse, Utica and Rome, New York, are less than an hour away. Seventeen area colleges and universities provide workforce training and education, and also enhance the region’s high quality of life. Madison County’s energetic college-age population that is 45% larger, on a percentage basis, than the U.S. average. Statistics courtesy of Madison County Industrial Development Agency.
![Cazenovia Lake, photo courtesy of Greater Cazenovia Area Chamber of Commerce]](https://xtuple.com/sites/default/files/cazenovia-lake.jpg "Cazenovia Lake, photo courtesy of Greater Cazenovia Area Chamber of Commerce]")
Cazenovia Lake, photo courtesy of Greater Cazenovia Area Chamber of Commerce