PracticeConsultingIT at work: manufacturing systems

IT at work: manufacturing systems

In today's competitive market, manufacturing and supply chain systems must be flexible and responsive to customer demand, yet tightly control stock inventory. For British American Tobacco, increasing globalisation and market volatility meant that it must rationalise its manufacturing and supply chain processes. And, as customer demand forced down prices on textile products, industrial textile manufacturer Don & Low found itself under pressure to improve manufacturing efficiency and shorten lead times

British American Tobacco

British American Tobacco (BAT) has markets in almost every country around the globe, and manufacturing plants in over 50. Its brands include market leaders like Benson & Hedges, John Player, State Express 555 and Kent.

With its main manufacturing centre in Southampton, BAT manages a complex international supply chain, and the markets it addresses vary a great deal in terms of volatility of demand and the range of product required.

Its traditional manufacturing and supply chain systems have tended to operate with a high, and therefore highly expensive, inventory to ensure 100 percent product availability.

As the company continues to globalise, and expand into ever more markets, it has felt a need to rationalise these manufacturing and supply chain processes, and decided last year to move beyond its basic spreadsheet-based planning system.

BAT wanted a new system that would enable it to determine optimal courses of action against set business objectives, for example whether to hold excess inventory or run overtime to meet unexpected demand. Doing both was proving too costly in a competitive market.

The system would also need to service a more flexible and responsive supply chain that could accommodate market volatility and complexity.

There was also the matter of ensuring that the new solution supported the business process changes happening within the company, with a new organisation model geared towards “global good” rather than localised decision making. Finally, it was essential that the project was self financing, each phase demonstrating a rapid return on investment before the next was begun.

Andersen Consulting was chosen to carry out the business process reengineering and to do the overall implementation and integration work, which it managed in conjunction with supply chain consultancy and software developer i2.

The latter was chosen principally because of its Supply Chain Planner (SCP) software suite, which now runs in parallel with SAP’s R/3 system at the Southampton plant, assisting with creating efficiencies within the manufacturing and supply chain process.

i2’s director of marketing Steve Weller explains “The company had been using disparate systems all over the world, so we knew they would be able to achieve a lot with one ERP platform. The company had been growing by acquisition, and so had become inefficient from a supply chain perspective.

Although the business value from changing systems was limited, the real value lay in a co-ordinated, optimised international supply chain, integrated across Europe.”

SCP is allowing BAT to model changing market characteristics and deal with customer complexity and unforeseen constraints. The planning of manufacture is optimised to meet customers’ needs in a cost effective manner, while still taking into account opportunities offered by individual markets.

SCP also enables “what if” scenario analysis, so that questions like “Is it better to hold stock or run overtime?” can be answered.

The new system both unites BAT’s European operations with the Southampton centre, and enables better links with customers in the Asia Pacific region.

With much less needing to be held in the form of inventory, manufacturing operations are now much less wasteful and expensive. Weller says: “Although much inventory has been managed out of the chain, there is still some way to go before full benefits are felt, but BAT is well on the way. As well as manufacturing and supply chain benefits, customer service levels have improved. Confidence in dates being met in itself leads to less inventory.”

Barry Rinaldi, BAT’s resources planning manager, says: “i2 offered the solution we needed to build a sophisticated planning system that would reflect real supply chain conditions in detail while providing a view of the bigger picture. The new system not only supports the delivery of flexible and responsive customer service, but it also lays the foundations for e-business at BAT.”

Don & Low

Don & Low is a manufacturer of industrial textiles, based in Forfar in Scotland, employing some 600 people at four manufacturing sites and with an annual turnover of around £45m.

With customer demand forcing down prices on textile products like geotextiles, agrotextiles, furniture, bedding and packaging materials, the company has found itself under pressure in recent years to improve manufacturing efficiency and shorten lead times.

In 1999, the company decided to modernise its business processes and production monitoring systems. It set aside a budget of £1.9m for the entire reeengineering project, with £900,000 earmarked for the manufacturing systems element.

Don & Low called on PA Consulting to help to develop an IT strategy that would make this possible. PA carried out a review of the company’s existing systems, and helped to develop a shortlist of suppliers to carry out the work.

Strategic Systems International was chosen. The SSI contract included software and services from its Tropos ERP suite, plus integrated products including Coda Financials, Cognos business intelligence tools and Formscape and Greycon scheduling and sequencing optimisers. The full project has been linked to a barcode-based Dextralog process monitoring management and control system being installed by textile specialist Barco.

Phase one of the project went live in August 1999 in a “big bang” switchover, when the company’s entire production of woven and non-woven industrial textiles began to be planned and managed by Tropos.

Don & Low’s project manager for the work is Karen Souter. She says: “We’d struggled for a few years with the old system in place. Most of it was not Y2K compliant and we thought it was best to bite the bullet, throw the whole lot out and get in a new package.”

Souter says the project took 13 months to implement. “It might sound like a long time, but we were replacing everything all in one go. Now, a few months down the line, it’s all starting to pull together and work in the way we want it to. There were just a few minor glitches, but you would expect that in any new system.”

The system looks to be well on its way to enhancing Don & Low’s competitive edge by streamlining planning processes and shortening production cycles, improving process and throughput, and enabling the planning of production to manage work in progress and finished goods stock levels. In common with most manufacturing operations, the issue of stock inventory has become key to competitiveness, and the new system is on course to solve the headache of highly expensive over stocking.

Souter says: “We are now thinking about how to move forward with the next stage of our manufacturing process modernisation. We want to continue to push down stocks. I am glad that we set firm targets for the project up front, rather than bumble along later with no firm metrics of its success.”

Stewart Baxter, Don & Low’s corporate services director, also stresses the benefit of future planning. “Our business environment is constantly changing, so the solution we selected needed to have good levels of adaptability.

Tropos is extremely adept in this respect. Because of this constant need to adapt, we had to impose very tight timescales on the project.” Related websites making sense… US Commerce Department’s manufacturing systems division homepage Academic Coalition for Intelligent Manufacturing Systems Homepage for Manufacturing Systems Europe magazine Homepage for Manufacturing Systems Europe magazine msnewsline_subscribe.asp Weekly newswire service.

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