System Label

2 . Background

2.1 Company Infomation

Roscommon based System Label (www.systemlabel.com/start.html) is a specialist printer of industrial labels for multinational manufacturers in the electronics, automotive and medical sectors. A wholly owned subsidiary of German company Bischoff GmbH, System Label has been in Ireland since 1992 and has grown to a staff of 45.

Although a seemingly insignificant product (i.e. the label underneath a keyboard), the systems required to produce it needed to be as rigorous as for those companies producing circuit boards, batteries, processors for that same PC. Often, the label would carry health warnings, safety warnings or simply general information about a specific product.

The business for System Label in Ireland was generated from two sources. A large proportion of business was related to clients of the parent company in Germany - Daimler Chrysler, Siemens, and Bosch to name a few. These orders were processed through the German plant but production happened in Roscommon. The balance was generated through sales and marketing activity originating in Ireland. Primarily, these clients would be large indigenous multinationals and manufacturers of electrical and medical equipment based in Ireland and the UK.

System Label had been building up its internal IT system for a number of years prior to the implementation of the two new modules – raw materials management and Data Integration – the focus of this case. Development of the system in Ireland started in 1992 and, from a simple manual list, grew to an Excel spreadsheet and finally to a Microsoft Access database, the platform on which today’s system is built. By 1999, various modules had been added allowing the system to handle:

• Orders
  
• Stock Control of raw materials (in each plant)
  
• Delivery notes
  
• Invoicing
  
• Stock control of Finished goods
  
• Quotations
  

In 1999 a decision was made that the system developed in Roscommon should be introduced to the plant in Germany. Both plants ran the systems in parallel and data transfer was handled manually with information being faxed between the sites on a weekly basis.

2.2 Market Information

System Label‘s main customers were large-scale manufacturers of durable consumer and industrial goods. In Ireland, the company dealt with around 100-200 clients on an ongoing basis. When combined with the German plant, the total number of customers rose to around 400-500. Although the number of clients wasn’t particularly high, the number of products per client could run into many thousands:

• The same label may be produced in small numbers for multiple countries with different text.
  
• When dealing with safety labels and name plates, the number of variations could be huge.
  

Although it may seem strange a significant portion of the Roscommon plant’s business was generated from its German parent, there were a number of very good reasons for this:

• Security of supply – Clients in Germany liked to have the security of knowing that their product could be produced in one of two plants and that both could supply exactly the same part.
• Efficiency – With two plants there was a potential issue with capacity balance. The production process within System Label was mass ‘job shop’ production but with very small runs. This made it increasingly hard to realise a high level of capacity utilisation – the two plants were always running at 60-70%
  capacity. By sharing work between the two plants, a much higher utilisation could be achieved.
• Cost Effectiveness – The lower cost of production meant that it was often cheaper to produce in Ireland. A readily available pool of labour, easier expansion capabilities (in case of equipment and premises etc.) and lower rent costs also offered significant cost reductions.
  

The Roscommon plant could produce a part for an Irish customer in a matter of hours where previously, this may have taken 2-3 days if it was produced in Germany and couriered to the client. Through relationships with multinational companies in Ireland, System Label’s business had started to extend into
other parts of the world including the United States and Eastern Europe. Although the benefits of having plants in Ireland and Germany (in addition to them both running the same s system) were clear, there was scope for technology to introduce even greater benefits.