The Planning Process...Spreadsheets and ERP do not always provide effective control (World Footwear - September 2004)

The dynamics of the footwear industry are ever changing. Five years ago the stable demand environment (relatively small numbers of large volume orders), a high degree of product stability (long life-time products) and lead times of up to one hundred and twenty days, placed little real demand on the planning and pre-production process.

In today's highly competetive environment, footwear suppliers face an increasing number of challenges.

A need to respond to ever changing customer requirements
The ability to swiftly quote reliable delivery dates
Maintaining consistent product quality
Intense price pressures

In recent years, businesses have increasingly recognised the need to invest in technology to enable them to compete i this tough environment.

Many have acknowledged that to do this effectively, such investment must extend beyond capital equipment to include a reliable IT infrastructure. Enterprise Resource Planning (ERP) solutions, which manage and co-ordinate many transactional activities in a single business-wide application, provide an essential backbone for managing key functional areas.

Sales order processing
Inventory management
Purchase order management
Finance

A majority of ERP systems offer some planning functionality but do not support the planning process with the required visibility or flexibility that is of crucial importance in today's footwear supply chain. As a result, the vast majority of organisations - both large and small - still maintain spreadsheets either to manage their planning and scheduling activities entirely, or to supplemnet a business system. They do so by necessity, whilst at the same time acknowledging they may also fail to provide the desired level of visibility and co-ordination.

Contemporary ERP systems support numerous business processes and administrative functions. However, the majority - if not all - transaction based ERP systems are either very weak or complex to the point of being all but unusable in the planning function. The inherent design and architecture of these systems means they are not able to perform fast, visual and effective planning. Although many ERP solutions promise fully integrated planning, they simply fail to deliver.

This is made evident by the huge number of companies forced to continue the management of these tasks 'off-system' in the absence of adequate functionality. When using a typical ERP system, the planner is not able to visualise all the information pertinent to the planning process. For effective and efficient planning, the planner needs to co-ordinate five key factors.

Total demand
Necessary critical path activities
Supplier capacity
Lead-time to produce required materials and/or their availability
Total order position (effect of new orders/changes on the existing order book)

Whilst usually considered preferable to the available ERP options, spreadsheets are ultimately single user documents resulting in 'islands' of activity, which are incapable of delivering the level of co-ordination and business wide visibility required in a global footwear supply chain. As the pressures facing the industry continue to increase, many companies realise they need to improve performance by addressing their manual spreadsheet methods. But where can they turn?

Fast React Systems saw the absence of efective systems in this area and developed a range of highly visual, flexible planning solutions to specifically meet the needs of today's footwear and fashion industry.

Visualising the plan: buying

Example: due to a combination of intense price pressure and continued delivery problems with two former suppliers, we already have three new suppliers this season - two in China and one in Vietnam. We also have three new customers each with demanding new ranges. Order fragmentation has increased, lead times are again under pressure, and this season's styling shows a heavy swing towards specialist stitching requirments.

In addition, several more customers are demanding faster and more accurate status reporting than last season. This is in line with an increasing trend in this direction. Furthermore, the intial buy and intial season projections have come in and business volume is around thirty per cent higher than last year. Consider just some of the planning requirements:

We need to monitor new suppliers closely and in a proactive manner to ensure they manufacture according to plan and on time.
We need to identify the impact of the increased oder intake on our full supplier base, identify opportunities for additional capacity and co-ordinate the uptake of this capacity. A systematic approach is required.
Seasonal styling trends require specialist machinery, so availability and needs must be considered for all suppliers.
We alsoneed to improve supplier reporting. Even at previous business volumes, we struggled to obtain accurate production figures from suppliers. These often contain errors, or arive by fax and are illegible, causing extra administration time and great frustration.
Increased styling and order fragmentation - plus the new customers - will put additional pressure on the merchandising team and our critical path activities. These all need to be carefully co-ordinated.
Whilst some products are purchased fully finished, two out of the three new customers require us to purchase raw materials. This will involve several new raw materials suppliers that will also need co-ordinating.

A flexible and highly visual planning tool is needed to co-ordinate all these areas of activity, access information quickly, increase supplier interaction and provide more accurate and faster reporting to our customers. Fastreact Evolution Sourcing does this through a highly graphical and easy to use interface.

Operating stand alone or linked to a business system, Evolution Sourcing offers total visibility of the status of all orders, plus remote supplier updates, proactive critical path management and full control of raw materials where appropriate. Powerful 'sort and fliter' reporting allows users to access both supplier and customer facing information quickly and easily. Advanced features offer Net Requirements Planning for brand businesses, true 'capable to promise' plannng functionality - including availability of capacity and raw materials, plus critical path constraints.

Visualising the plan: manufacturing

Example: a change in market trends has been identified after the initial order for a particular shoe has been placed and planned. The buyer now requires a styling modification to the product. Consider just some of the changes to the plan:

Cutting and sewing times are affected by the styling change and require more capacity, so planned delivery dates also need to change.
A sample needs to be resubmitted for approval, so pre-production lead-time is also changed.
Material consumption is increased, so material requirments need to be recalculated.
The altered styling calls for specialist machinery, so machine requirements will also need to be recalculated.
Following on from this order there are a further ten for a different style in the plan. Because this order will now take longer to make, these other ten all have to move back in the plan and their delivery dates recalculated.

What is required is a visual tool that allows 'what-if' planning, and which can co-ordinate these changes and identify potential problems casued, including the effect on all other orders. Fastreact Detailed Planning can do this for both single and multi-site operations in a simple and highly visual manner.

Powerful, drag and drop planning offers flexibility and speed when customer requirements change. Current production performance and the impact of new orders on all others in the plan can be seen immediately. Specialist machinery requirements, loading on external subcontractors, potential bottlenecks, raw materials availability and critical path can all be controlled in a single graphical format. Colour is used extensively to warn of potential problems in sufficient time to take corrective action.

Interfacing with existing ERP

A common problem is the upheaval associated with the implementation of ERP. This can take from twelve to eighteen months and require significant project management. Fast React Systems say their system can be operational in only a few weeks. Ease of use and low IT requirements (a desktop PC or a PC server is all that is required) make the system easy to adopt for both large and small companies. It can operate on a stand-alone basis and is low maintenance.

For companies already using ERP, it can be interfaced to the system using existing data to gain powerful additional benefits from the existing investment. For anyone considering ERP, Fastreact can be implemented at the start of the process. It can provide control and benefits in the essential areas of planning and critical path management throughout ERP implementation and then be interfaced to the system at an appropriate time during the project.

All Fastreact systems can be translated into local languages, including double-byte character sets such as Chinese. Specialist on-site training is provided for straightforward implementation and support desks in Europe, Africa and Asia - plus local representatives in many countries - provide full electronic user support, regardless of location. A full upgrade path is available to more advanced versions and additional functionality as business needs grow and change.

Comment

Fast React Systems has been associated with the garment industry for some years and has tailored the experience gained to this range of software aimed specifically at the footwear industry. It appears to be very well thought out and could offer companies a valuable spread of operational benefits.

Improved visibility, co-ordination and control
Improved communication
Better availability of information
Improved awareness of potential problems in time to take corrective action
More time spent solving problems, rather than manipulating spreadsheets

Above all, it appears to be easy both to install and operate whatever the size of company. The visual imagery is clear, easy to follow and the system is a very interesting approach to a very real problem. While actual cost will vary according to the final package, Fast React claims the system should pay for itself within twelve months. And that is also interesting.

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