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The Connected Enterprise

PODCAST

Process Automation, e-commerce, & MRP: A Look Under the Hood of Detroit Speed's Enterprise Technology Success

Posted by Vision33 on Feb 19, 2020 12:00:00 PM

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Full Transcript

Carl:

Welcome to the Connected Enterprise Podcast, where our guests share how they stay connected in their business lives. I'm your host, Carl Lewis, from Vision 33, and my guest is Kyle Tucker of Detroit Speed. Kyle, thanks for joining us today. Please tell us about yourself and Detroit Speed.

Kyle:

Hi, Carl. Thanks for having me. Detroit Speed went from a hobby to a business about 20 years ago. I was an engineer at General Motors (GM), doing suspension development engineering at proving ground. I grew up racing, and my dad was a car guy, so I grew up in love with cars. I’ll ride anything with four wheels, and I built a car, just as a hobby. If I didn't find the parts I wanted, I designed and made them. The car received a few awards and was in magazines, and people started calling me.

Kyle:

So, a business was born. Soon, my day job at GM hindered my secondary business, so I took a leave of absence and went full time with the business in my two-car garage. It's grown over 19 years. We've been in Mooresville, North Carolina for 16 years. We needed to be where we could attract more employees and access more technology. Also, Detroit was too expensive for commercial real estate. The racing community in Mooresville allowed us to buy a building and some land in an industrial park so we can keep growing. We’re an automotive-centric hub of technology for racing especially but really anything car-related.

Kyle:

We still do manufacturing in Detroit. Our main part of business is a product line we continue to design, engineer, and develop for the automotive aftermarket. Our core products are chassis and suspension parts for older muscle cars. We modernize the way older muscle cars drive, feel, stop, veer, etc. We like the looks of the old cars but forget how badly they drove. So that's what we do: we make modern-day drivers out of old muscle cars.

Carl:

That's a wonderful American story about entrepreneurship and taking your hobby and turning it into a business. I love it. I’ve always known about you guys because I'm a big fan of old El Caminos. When I retire, I’m going to get one.

Kyle:

I didn't know that, Carl – I'm an El Camino fan, too. I grew up in Missouri with an El Camino; it was perfect because it was easy to drive. And when I was in college, between engineering school and GM, everything I owned could fit in that El Camino, and I could move back and forth easily. The El Camino is still near and dear.

Carl:

I have a pickup truck now, and I don't know what I'd do without one. Then I have an automobile because I'm also a sports car guy. I see the El Camino as crossing both fields of play without too much trouble. I love that you can change the suspension and make them handle well because that's always a thing with an older car. You get used to how new cars feel. But the stuff you do fixes that problem.

Kyle:

It sure does.

Carl:

Well, Kyle, unfortunately we're here to talk about technology, not old cars. You said you've been doing this for about 20 years, and computer systems became essential early in that journey. What have you been automating in the last few years? It could be related to software, artificial intelligence, robotics – anything that’s made a difference in your business and helped you stay in touch with your customers and vendors.

Kyle:

Probably the biggest is software. Like so many companies, we started with QuickBooks. It was affordable and made it easy to make sales and purchase orders. We innocently grew from there, getting to where QuickBooks told us our file was too large and getting corrupt. We had to go to an ERP. We took about a year to review, research, and interview ERP companies, and we chose SAP because we believe it’s the best fit for the future.

Kyle:

SAP fit the bill for us for our size, what we were generating in manufacturing, sales orders, building materials, and keeping track of customer quotes and conversations. It was a big step. And expensive. But it's an asset because we won’t outgrow it. It's made us a better, more sensitive company to our manufacturing and financial needs.

Kyle:

It was scary. And it's created positions I didn't know we’d need as we turned on the ERP. It’s automated our needs in so many ways – from our MRP to the mins and maxes we schedule. We know when to order raw materials. We know how long it takes to get through the schedule.

Kyle:

It's helped us on the manufacturing side because in aftermarket automotive, we're dealing with people's fun-money budget. We compete with vacations and back-to-school clothes. It's essential to have the product on a shelf when someone wants to buy it. We have a grace period, but we try to keep it in stock. We can't have an inventory that's too tough on our cashflow. It's increasingly hard to keep the right parts at the right time on the shelf as we continue to grow the volume and add new product lines to the inventory.

Carl:

I understand it was a big step for your business, and scary. Many others have said the same. From my vantage point, you have two lines of business. You have manufacturing stuff where you're doing the heavy work underneath the cars to make them handle well and be sturdy on the road. Then you have the side where you’re rebuilding and doing finish work on older cars. Is that right?

Kyle:

Yes. That's another reason we needed software like SAP – to bridge the gaps of so many things going on in one company. It's really two companies in one, and in one of the buildings, we have a separate crew, fabrication area, body shop, and assembly area for rebuilding older cars. We're fortunate to have great customers from all over the world to build cars for.

Kyle:

We typically do older muscle cars, whether that’s Chevrolet Camaros, Chevelles, Dodge Mopar Chargers, or Mustangs. Trucks are hot items recently. In that shop, after we take a customer on, we learn their needs and the vision they have for the car or truck. They allow Detroit Speed to fill in the gaps. Many people just want a Detroit Speed-built car. By that I mean, professional builders have a style, whether it's a genre of vehicle they stay in, the ‘30s and ‘40s hot rods, or, like us, the ‘60s and ‘70s muscle cars.

Kyle:

We’re fortunate to have a waiting list of customers. We do everything but the interior work, which we sub out. But otherwise, in our fabrication area, we disassemble a car, repair rust, do sheet metal modifications and custom work, and build that car up. Just short of installing the wiring, exhaust, and plumbing, everything is done. Then it goes to our body shop for body and paint, then to assembly. It's a turnkey project, minus the interior.

Kyle:

We have 10 to 11 projects in that shop most of the time. So from how to financially take care of that and communicate with the customer, our fab and shop guys log in and write down labor notes at the end of every shift. What we pass on to the customer when we invoice each month – not only the labor hours but the detail of what each person did on the project every day – and then associated shop supplies and parts purchased from us or outside vendors flows through SAP. And we've got one person that sees the coming and going of that and logs and invoices it every month. And SAP is a vital part of integrating the labor notes in the invoices.

Carl:

We politely refer to that as ‘project management.’ When you started this project, what were your goals when putting in a new ERP?

Kyle:

It's hard to find one ERP system that checks all the boxes, but SAP checks most of them. We had to do a few add-ons to customize it, but SAP was the biggest package for us that did everything from the project-build side to inventory, manufacturing, sales, and the financial side.

Kyle:

Our bill of materials was originally an Excel-based worksheet. It grew to thousands of lines, so making updates and looking for similar/duplicate parts became too difficult. One big goal was to bring that into SAP to standardize pricing, do distributor, dealer, and retail pricing, and understand our standard costs. There was a lot to do to bring the bill of materials and pricing structure into an ERP. SAP simplified it – after we uploaded it, it was ready to go.

Kyle:

Another part of going to SAP was connecting inventory online from our B2B side to our B2C side through an eCommerce site. We've always had a website to promote parts and educate customers, but it was clunky compared to the online shopping we expect today. From an eCommerce side, that's our best profit margin – if we don't need salespeople on the phone because our website educates customers, they're comfortable with that. We wanted to grow our eCommerce, and we’ve been able to do that with SAP.

Carl:

You have an excellent website, which is perfect for a car guy. I spent time there when I was checking you out. How long ago did you implement your ERP system?

Kyle:

Almost four years ago. And we're getting better with it every day! Speaking of automating things, we've implemented Avalara because we sell across the country, which triggers nexus tax. Avalara is a nice plugin we turned on within the last few weeks to track our sales tax by state.

Carl:

Yes. As you mentioned, because of eCommerce, more people are stretching out their geography. More companies are looking at a tax management system like Avalara. It reduces a lot of administrative financial overhead in getting reports done to various states and whatnot. Looking back at those four years, how has SAP worked out against the goals you had?

Kyle:

I think it checked all the boxes. There are always surprises when you tackle a project like that. We had a rough implementation with our original provider; now that we've switched to Vision33, the support and troubleshooting are much better. It also created positions I didn't know we needed, like a scheduler in manufacturing. That's been great because we can forecast and see when our parts go through the work in progress and see where we will be. Because we handle from raw material, we do a lot of the manufacturing in-house after it comes through the door, but on the backside, we may powder coat, anodize, or do electroplating finishes to some parts that go to outside vendors.

Kyle:

As we use the MRP system, it refines our lead times and indicates any delays with vendors. That way, if we’re out of stock, our sales guys can give customers a more realistic ship date for their product. We continue to refine and look for upgrades and add-ons, and it continues to make us a more sensitive, stronger company.

Carl:

You mentioned something counterintuitive for some folks. Everyone thinks implementing an ERP system will eliminate jobs, but it’s the opposite. It creates jobs because there's more detail to manage in a business because ERP systems produce a lot of data. So, it's worked out against the goals; I love to hear that. Thank you for mentioning Vision33 – the implementation team will enjoy that. What were your biggest surprises? Both good and bad.

Kyle:

It was a more significant project than what I was sold by the original provider. I didn't know how big of an implementation it would be. I think it's like anything – you get positioned with the right provider, and they’ll sell you the system because that's their job. But, like with Vision33, the right provider will also hold your hand all the way through it. When we started, it was hard. Maybe we weren't as organized as we needed to be with our bill of materials or everything we had going on from vendors to customers. Some customers were vendors and vice versa. Looking back, we didn't do all the housekeeping we needed, but we didn’t know we needed cleanup before we implemented.

Kyle:

It became a rough and expensive implementation. I would tell anyone looking to move to ERP to organize and get their data correct before they do any crossover. That was the biggest surprise. Then the time it took. It's never going to be perfect. You do your testing, but there are always bugs to work out. But it's hard being an engineer; I always tell our engineering department we can't wait until it's perfect. We have to make it as good as we can, make it affordable, and hit the market at the right time. You can't overthink it. Cut the reins and let it go. That's a work in progress for us.

Kyle:

SAP was like that. I finally picked a date and said, “This is when we're going live.” It was tough for a couple of weeks, but the sales guys picked it up right away. Now we're a better company from a new hire-friendly point. We don't have so many systems to learn. We have SAP, and everything is in it, from our customer conversations to quotes to previous orders to bills of materials. That makes everyone's jobs much easier.

Carl:

That's great. The shock of how much time it will take is normal – you’re putting in a new ERP on top of your normal jobs. Everybody works hard, however long it lasts.

Carl:

What about the future as you look at bringing technology into your business? Are there things you're considering? You said you did Avalara, which was a big step and, hopefully, a big upside. But as you work with customers, partners, and suppliers, what's on the horizon from a technology standpoint?

Kyle:

It's always a work in progress, but two things come to mind. One is a shipping module that lets us compare shipping rates based on the customer’s location to find the best shipping options – not only to make our shipping center an income center but also to be fair to the customer. Some parts are large, some are overweight, some have to go freight, and we ship a lot of box packages.

Kyle:

Being competitive with a shipping module that compares our costs and quotes and working with the customer to get them the best shipping rate while making as much money as we can on the shipping and packaging is one thing we're doing right away. We're about to turn on a new module in our warehouse and shipping department. When you get a quote, you tell the customer, and away it goes. We're confident it's the best way for the customer and for us. I’m looking forward to it.

Carl:

That's very good.

Kyle:

We're excited about that. Another thing about working with SAP is refining our schedule, manufacturing, mins and maxes, and parts. Some parts are 15, 16 years old, and new parts are just coming out, and there's always a curve of popularity of the parts. If you hit the market at the right time, there’s usually a spike in demand for new parts, and then it's an upward slope for many years. That eventually slows down; MRP helps us understand if it’s the product line or the car line that slows down.

Kyle:

It’s critical to manage both the items and timing of our inventory. As we understand our manufacturing processes and bottlenecks better, we can buy equipment on the manufacturing floor to remove those bottlenecks and make us more efficient and profitable. Having insight from MRP into how long our parts take to build on the shop floor, doing times studies, and keeping track in SAP has made us aware of the bottlenecks. Now we're automating buying more automated equipment to eliminate them.

Carl:

Crossing over into the shop floor and the tools your employees use – that’s great. Well, Kyle, I don't want to take up your whole day. It was nice to spend time with you. What's your favorite muscle car to drive these days?

Kyle:

I love all cars, but my go-to right now is a '65 Mustang. I don't leave it at the airport when I travel, but otherwise I put a lot of miles on it. It’s a plain and simple car with good air conditioning, good heat, fuel injection. It’s easy and fun to drive.

Carl:

My dad had a '64 Mustang convertible; it was the first car I ever drove. We lived on the edge of town, and when he would leave for a trip, it would be mysteriously dusty when he returned. I remember Mustangs fondly.

Carl:

Kyle, thanks for being here on the Connected Enterprise Podcast. I think others will identify with your journey and appreciate your thoughts. It's easy to make these podcasts so long that nobody wants to listen, so I try to keep them short so they fit into people's drive time. Until next time, everyone please stay connected.

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