Case Studies
United Colours of Benetton
Benetton is a world leader in
designing, manufacturing and marketing of different casual clothing for men,
women and children. The Benetton enterprise is considered as agile and is
based on various characteristics like external production, indirect retail
network, indirect sales and centralized management. Agility was achieved by a
combination of fast information feedback between customer and producer, by
keeping inventory to a minimum level, organisation of cut and sew and dye
departments to work in a rapid manner, and small lot cycles to reduce cycle
time. This means that shops are always full of items that are currently selling
and in fashion.
Manufacturing is characterised by a made to order production plan where a single job usually contains only one style of clothing with varying colours and sizes to meet different orders from many customers. The use of IT and other technologies also gives a major boost to the agility needed in this type of production. It helps in creating an integration between design and production departments, and between the manufacture and marketplace. IT also helps in production to provide control on all external manufacturing units and a close look can be given on the distribution of the finished products around the world.
To achieve the right customer service level, store managers have to commit 80% of orders 7 months in advance of the season stock. These are produced and delivered on a 20 day order cycle time. By doing a monthly stock rotation and having a daily entry of orders and feedback inline with market demands, helps in adjusting production immediately and so have the right item collections in shops every month.
Manufacturing is characterised by a made to order production plan where a single job usually contains only one style of clothing with varying colours and sizes to meet different orders from many customers. The use of IT and other technologies also gives a major boost to the agility needed in this type of production. It helps in creating an integration between design and production departments, and between the manufacture and marketplace. IT also helps in production to provide control on all external manufacturing units and a close look can be given on the distribution of the finished products around the world.
To achieve the right customer service level, store managers have to commit 80% of orders 7 months in advance of the season stock. These are produced and delivered on a 20 day order cycle time. By doing a monthly stock rotation and having a daily entry of orders and feedback inline with market demands, helps in adjusting production immediately and so have the right item collections in shops every month.
CARPETNET Virtual Supply Chain
Carpet manufacture and supply using traditional methods has a cumulative total lead-time of sixteen weeks. This involves the five processes of making the fibre, pinning yarn, tufting the carpet, dyeing the product, and finally back shear. All of this takes place in separate processes before warehouse stock piling. A total of five truck movements are also required to make fibre process to the retail store. However, end-customers were expecting delivery and installation right after a style and colour were selected. In practice, this may be interpreted as laying the product ordered within seven days of placing the order itself. Thus, the problem was to shorten this long process supply chain to fit within the one week time window.
The fibre manufacturer decided to re-engineer the total value stream to create a Demand Driven Logistics System (DDLS). This required that manufacture and production be tightly linked, so that the discrete businesses become virtually one entity. Within the new DDLS, information is immediately shared and the manufacturer and the mill start works at the same time. The key enablers here are minimal lot sizes and minimal cycle times, and fully integrated communications all the way both ends of the supply chain.
All in all, a technical breakthrough on the manufacturing process was required. The present process was broken with the sole intention of putting everything back together in a better way with the required results. In this case, the technological breakthrough which was needed and achieved, required the fibre to be dyed uniformly before it was woven as a rug. In order to set up the Virtual Supply Chain (VSC), the “product champion” selected a few carpet mills as potential strategic partners, keeping in mind certain criteria such as trust, attitude and philosophy, competitive position, investment record and improvement potential. Joint Task Forces were then set up between the fibre manufacturer and selected mills. In business terms, the VSC goals were divided according to the fibre manufacturer/mill market share, and geographical penetration. It was determined that some product rationalization was essential. The one-week total cycle time service value stream should be concentrated on just the 10% of the product lines that yielded 52% of the mill’s volume. Downtime was reduced by half, and average changeover times reduced from 4 hours to 15 minutes, quality costs reduced, and streamlined material flow engineered throughout the chain. The VSC created an integrated computer networking system, spanning the entire supply chain, making communications all the more efficient. This is known as CARPETNET, from which the VSC takes its name.
The CARPETNET VSC is an agile system which purpose is covering top selling items and their delivery and installation in the customer’s residence within the total allowable time window of one week. In addition to engineering lean deliver processes, synchronizing material and information flows, and providing fast and transparent communications, the whole project was a success due to a huge technological breakthrough. The development of Solution Dyed Nylon production process greatly reduces the total cycle time from a number of days to mere hours. Predicted benefits of the CARPETNET VSC includes reduction in inventory to about half, customer service level may rise from 65% to 99%, quality costs will be reduced to about 30%, and waste is eliminated by making to order with pre-dyed yarn.
The fibre manufacturer decided to re-engineer the total value stream to create a Demand Driven Logistics System (DDLS). This required that manufacture and production be tightly linked, so that the discrete businesses become virtually one entity. Within the new DDLS, information is immediately shared and the manufacturer and the mill start works at the same time. The key enablers here are minimal lot sizes and minimal cycle times, and fully integrated communications all the way both ends of the supply chain.
All in all, a technical breakthrough on the manufacturing process was required. The present process was broken with the sole intention of putting everything back together in a better way with the required results. In this case, the technological breakthrough which was needed and achieved, required the fibre to be dyed uniformly before it was woven as a rug. In order to set up the Virtual Supply Chain (VSC), the “product champion” selected a few carpet mills as potential strategic partners, keeping in mind certain criteria such as trust, attitude and philosophy, competitive position, investment record and improvement potential. Joint Task Forces were then set up between the fibre manufacturer and selected mills. In business terms, the VSC goals were divided according to the fibre manufacturer/mill market share, and geographical penetration. It was determined that some product rationalization was essential. The one-week total cycle time service value stream should be concentrated on just the 10% of the product lines that yielded 52% of the mill’s volume. Downtime was reduced by half, and average changeover times reduced from 4 hours to 15 minutes, quality costs reduced, and streamlined material flow engineered throughout the chain. The VSC created an integrated computer networking system, spanning the entire supply chain, making communications all the more efficient. This is known as CARPETNET, from which the VSC takes its name.
The CARPETNET VSC is an agile system which purpose is covering top selling items and their delivery and installation in the customer’s residence within the total allowable time window of one week. In addition to engineering lean deliver processes, synchronizing material and information flows, and providing fast and transparent communications, the whole project was a success due to a huge technological breakthrough. The development of Solution Dyed Nylon production process greatly reduces the total cycle time from a number of days to mere hours. Predicted benefits of the CARPETNET VSC includes reduction in inventory to about half, customer service level may rise from 65% to 99%, quality costs will be reduced to about 30%, and waste is eliminated by making to order with pre-dyed yarn.
Dell
Dell Computer Corporation’s recent success is due to its innovative and finely tuned distribution channel for direct sales to customers. This competitiveness is built around the concept of customized agile response. Customers can receive product information, place
orders, or get quotes directly and immediately through direct contact, – face-to-face – through carious
telephone numbers – ear-to-ear – and over the internet – keyboard-to-server.
The customer contacts the company directly through the methods mentioned earlier, and the sales process is initiated instantly and easily. Usually, Dell representatives promise that the product will arrive within five business days, although the customer often receives the product sooner. The manufacturing factory receives a printout of the order, and manufacturing processes begin within hours. Each computer is customer-built, and all necessary software and hardware testing is carried out in less than a day. Dell also boxes the computer after final inspection and it is sent to a distribution center that ships it in time to arrive with a monitor. The monitor is built ahead of time by a separate supplier.
For these reasons, customer’s orders are satisfied by an agile execution-based, direct model driven business operation without any finished inventory. Dell also keeps component inventories to a minimum, and vertical integration helps the company further reduce the costs. Fast feedback from customers enables Dell suppliers to quickly update product mix, and maintain their inventory velocity. This breakthrough on supply strategy was made as Dell shared their goals with suppliers. By shipping as required, hourly or daily, Dell bought more constituents and assemblies from the suppliers faster and paid quicker, so everyone benefited.
The customer contacts the company directly through the methods mentioned earlier, and the sales process is initiated instantly and easily. Usually, Dell representatives promise that the product will arrive within five business days, although the customer often receives the product sooner. The manufacturing factory receives a printout of the order, and manufacturing processes begin within hours. Each computer is customer-built, and all necessary software and hardware testing is carried out in less than a day. Dell also boxes the computer after final inspection and it is sent to a distribution center that ships it in time to arrive with a monitor. The monitor is built ahead of time by a separate supplier.
For these reasons, customer’s orders are satisfied by an agile execution-based, direct model driven business operation without any finished inventory. Dell also keeps component inventories to a minimum, and vertical integration helps the company further reduce the costs. Fast feedback from customers enables Dell suppliers to quickly update product mix, and maintain their inventory velocity. This breakthrough on supply strategy was made as Dell shared their goals with suppliers. By shipping as required, hourly or daily, Dell bought more constituents and assemblies from the suppliers faster and paid quicker, so everyone benefited.