How to Reduce Lead Times? (FBI Sept 2006)
In the ever-competitive fashion arena, the best are always pushing for an edge over the rest. With the dramatic success of the 'fast-fashion' brands such as Zara and H & M, buyers are focusing heavily on lead times and speed to market.
HOW TO REDUCE LEAD TIMES FROM 90 TO 60 DAYS AND BEYOND?
(Taken from Fashion Business International - Sept 2006)
By Andrew Brown, MD of Fast React Systems
In the ever-competitive fashion arena, the best are always pushing for an edge over the rest. With the dramatic success of the “fast fashion” brands such as Zara and H&M, buyers are focusing heavily on lead times and speed to market.
‘Order to delivery’ lead times have reduced from 120 days to 90 days in recent years and are now under enormous pressure to reduce to 75, 60 or even 45 days.
Not only are lead times reducing, but in many cases, product complexity has increased dramatically i.e. as order quantities have reduced, the number of styles per season and their complexity (printing, embellishment, complex washing processes etc) has increased.
As the global supply chain responds to the need for shorter lead times, undoubtedly there is a move to local sourcing of raw materials and an increase in the vertical nature of manufacturing. This is evident in many countries and offers the opportunity to address one of the key constraints on lead times, availability of raw materials.
This in turn puts increased pressure on all other parts of the supply chain, at the manufacturer, buying office and the customer to ensure that they fulfil their part of the supply process, such as specifications, approvals etc quickly and effectively.
So how will your business successfully achieve the new standard of lead times being demanded by the market?
Step 1: The Right Tools for The Job
For many, current working practices present a major barrier to speed and flexibility. Conventional Business systems, whilst excellent for controlling transactional processes, such as purchase orders and inventory, do not typically provide flexible, industry specific tools for scheduling and critical path management.
Most companies therefore still use spreadsheet-based systems, where numerous individuals each retain control of their own separate environment. This invariably results in poor coordination, a high risk of errors and in time consuming, manual intervention to accommodate changes or extract information.
Until now, spreadsheet systems have typically been seen as ‘not ideal, but adequate’. In the face of huge pressure from reducing lead times, together with customer demands for much faster response to enquiries, these systems are simply unable to respond.
The stark reality of the situation is that until this area is addressed, most companies have little real chance of achieving the huge performance improvements now demanded of them. Yet specialist, industry specific solutions do exist and can be networked to provide a central point of reference and the foundation for improved control.
Step 2: Recognising the Key Requirements of the Solution
So what are the key aspects of the solution?
a) If you are a Sourcing company, your planning solution should:
• provide a central point of reference, which is equally informative and accessible to both customer facing and supplier facing staff.
• allow order allocation and tracking, including total visibility of the latest status of all orders and effective Critical Path Management
• adopt a proactive ‘on line’ approach with the latest priorities clearly and quickly communicated to all staff, in an environment, where priorities change constantly.
• maximise ease of use and require minimal maintenance
• provide proactive supplier schedules, electronically, with supporting documents, as required.
• allow simple, interactive updates by suppliers (email/web), thereby avoiding updates in different formats from different suppliers.
• provide clear warnings of problems, such as a likely overload in pattern making in 2 weeks time, overdue events, potential late deliveries, likely air shipment costs etc
• facilitate constant analysis and review of performance, including a full audit trail for all styles/ordes.
• have the option to link to existing systems to avoid duplication of data entry
The following are also be important factors to consider:
• Calculation of requirements and management of stock levels for Branded businesses
• Request for quotation (from multiple suppliers) and costing
• Transport planning (methods, destinations, costs)
• Visibility of raw materials to meet the latest plan (where raw materials are purchased), with immediate warnings where availability changes.
• Scheduling against capacity agreements with suppliers (where appropriate)
Only if you have excellent internal controls and the ability to communicate requirements quickly and clearly, can suppliers have the best opportunity to respond.
b) if you are a Manufacturer, your planning solution should:
• incorporate many of the the above features and provide the same central point of reference, which is equally informative and accessible to both customer facing and factory/supplier facing staff.
• Absolutely bring all of the essential elements together (available capacity, raw materials and critical path) into a single system
• provide an easy to use, ‘drag and drop’ interface to allow flexible, ‘what if’ planning and quick response to new order enquiries and changing requirements
• allow the detailed planning of line level efficiencies, learning curves at style changeover, machinery requirements and of supporting processes such as printing and embellishment, whether in house or at subcontractors
• allow multi-level and multi-site planning (central, factory or supplier level planning, plus local, line level planning, even in different geographical locations).
• immediately communicate raw material requirements to fabric suppliers in line with the latest plan, either directly or through an existing business system
• show ‘cause and effect’, i.e. when raw materials availability changes or a sample submission fails, or a subcontractor fails to meet your requirements, the effect on likely delivery performance for all orders should be highlighted immediately.
• be able to link in to existing systems to avoid duplication of data entry.
Step 3: A Determined and Systematic Approach to Change
The approach to change can make the difference between success and failure.
Explain in a clear, but supportive manner to all staff, why the company NEEDS to make changes; also that success is not optional, where reducing lead times is concerned. Full ‘buy in’ by the entire team is essential.
Ensure that you have, determined ‘champions’ at operational level and that these are backed up by with a visible, active commitment to the project by senior management.
Hold review meetings around the system to underline its use as a central point of reference.
Make a ‘hit list’ of manual systems and spreadsheets to eliminate (put it up on the wall). Review regularly and strike off those documents, which have successfully been removed from the business.
By using the right system to eliminate time consuming, manual work, concentrate staff efforts on the constant cycle of:
a) PLAN, using all information required to make the necessary decisions, identify issues and act on these to ensure maximum chance of success at the outset
b) COMMUNICATE the plan, with clear priorities to internal staff and suppliers
c) MEASURE and TAKE ACTION based on achieved performance and changing customer requirements.
The overall solution then is clearly a combination of the right tools and the right approach. But by following the right formula, the end game can most definitely be achieved. For most businesses, the scope to meet the ‘Lead Time Challenge’ undoubtedly exists.
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For more information on the specialist services provided by Fast React Systems please contact info@fastreactsystems.com
