Coats goes for global SAP planning and scheduling

Coats, the global industrial and consumer thread manufacturer, reckons it’s already seeing 30% inventory and cost savings, following its implementation of SAP’s mySAP SCM (supply chain management) system, the first phase of which went live last September. “We used APO [SAP’s advanced planning and scheduling engine] to underpin new processes for our internal supply chain,” says Hizmy Hassen, European Coats’ supply chain manager. “We’re rolling out APO and Demand Planning as we bring markets on. It’s in eight countries so far. “We have manufacturing sites around the world, and we’re using APO to manage producing the more predictable lines to forecast in Romania, while the unpredictable items are made-to-order locally.” Later this year, the system will also be rolled out to Coats’ manufacturing plants in Asia to manage low cost bulk production of the most predictable items. It’s a big change: prior to the implementation, each of the sites manufactured the full product portfolio locally, and traded independently. And the result: “We’ve brought stock value down by around 30%, and we’re aiming to get availability of stock items to 90—95%,” he says. And he adds that costs are also being cut through better forecasts, via APO, for the bulk plant in Romania. “That means we need less ad-hoc make-to-order local production locally,” he observes. APO runs as a single instance on Coats’ server in Vienna, Austria. In action, it gets real-time updates from apparel manufacturers around the world about customer demand. Eventually, the system will handle demand planning for more than 30,000 products representing around 900,000 sales order lines per year. Medium-term planning currently runs twice weekly across all European markets and plants and helps to determine the optimum plan for 3,000 products – variants of colours, thread types, lengths and so on. Detailed scheduling runs nightly, looking after some 500 production orders for the bulk supply plant, using a matrix of penalty costs, including machine set-up times, stock carrying costs, good and bad sequences and failure to produce on time for customer requirements. “That optimiser runs in one hour and we run it every night. It just wouldn’t be humanly possible to do that with a conventional planning board: it would be the size of an entire wall,” says Hassen. The implementation cost Coats around £400,000 – less than it was quoted even for blueprinting by some of the big consultants. Hassen says it was relatively inexpensive, particularly given the savings so far, because of the way Coats went about the project. “We spent time and effort up-front specifying the processes we needed so we blueprinting was very quick. Also, we spent money on the proof of concept. We said to SAP, here are the top 25 core processes: please model these with our data. We took that risk to save money later.”