Article Abstract:
This article is the first in a series, which will look in depth at how companies within the sewn products industry can maximize profits and customer satisfaction by applying the latest Advanced Planning and Scheduling systems and techniques to their manufacturing and distribution processes. Written by Vicky Hyde, a leading industry consultant, the articles take into account the varying issues faced by businesses across the sewn products spectrum. This first article provides an overview to the series, explaining why, given particular industry characteristics and trends, effective planning and scheduling are of critical importance to fashion companies. It also identifies some of the key business benefits effective planning delivers.

The ability to meet increasingly stringent delivery commitments while also maximizing profits is critical to any company's success in today's global business environment. For companies in the sewn products industry, it is particularly challenging because the fashion business is intrinsically complex and constantly changing, spurred by increased globalization, fierce competition and the impact of e-business.

Fashion is a multi-billion dollar business that exists to create interest and desire for products, whether or not they are truly "needed" This concept applies to companies that manufacture and/or distribute textiles, fashion apparel, consumer packaged goods (CPG) apparel, fashion accessories, sportswear, footwear, bed linen and tableware, and spans enterprises that buy and resell products from various manufacturers, design houses that outsource manufacturing, companies that own their manufacturing base, and those that design and use a mixture of in-house and sub-contract manufacturing.

Every season, fashion/apparel companies must continually design and develop new lines and collections to keep retailers interested and spur consumer sales. Being able to meet delivery dates and quickly respond to market trends is critical, increasing the need for more accurate forecasting, planning and scheduling.

Not all fashion companies are alike. Consumer Packaged Goods companies, supplying for example, underwear, intimate apparel and hosiery, are predominantly retailer driven and can, to some degree, forecast demand on the basis of historical information. Product lead times are long and lifecycles short. They work with high volumes and low margins and have a constant need to manage cash flow constraints.

In comparison, high fashion companies are design-driven, premium brand providers whose primary challenge is to launch multiple collections each year. They too have long lead times, but product lifecycles are even shorter. They also must cope with much larger numbers of Stock Keeping Units (SKUs) because of greater product variety. Demand is based on a combination of forecasts and pre-season orders taken at trade shows.

They also need to make complicated decisions with regard to sourcing. For example, a company can purchase goods directly. It can also use sub-contract manufacture, its own manufacture, or a combination of all three. Some sub-contractors may source all or some of their own raw material locally, or companies may choose to source raw materials centrally to ensure quality.

The already complicated sourcing process is exacerbated when one considers the impact of globalization and competition. For example, sourcing issues and strategies must be considered on a global basis because the sources of supply constantly change, depending upon cost of labor and transport, the supply lead times, and the quality of provision. Deciding who supplies whom, with what, how and when is a major challenge. Getting it wrong will have major repercussions, operationally and financially.

Add to these complexities increased competition from virtually every corner of the planet, and it is no wonder that small to midsize manufacturers are struggling to eke out a profit in the face of escalating material and operational costs. Global competition imposes levels of efficiency and economy never before demanded of fashion firms. Success requires supply chain collaboration, improved resource management, forward visibility of supply requirements and the agility to react quickly to changing customer demands.

Accurate Planning and Scheduling Can Help

These goals can only be achieved if a company recognizes the critical role played by planning and scheduling in the manufacturing and distribution processes. Poor planning costs money - orders are delayed, priority orders are overlooked, sales and customers are lost, and the level of obsolescent inventory increases.

It is an unfortunate reality in the apparel, footwear and home textiles industries that too many companies still rely on the spreadsheet as their main planning tool. Companies may make significant investments in state-of-the-art knitting machines or a sophisticated plant to optimize cutting and minimize fabric wastage, but they remain resolutely short-sighted when it comes to the planning process.

Effective planning relies on rapid, accurate and up-to-date information, efficient communications and the ability to make fast and informed decisions, as well as to realistically predict the outcome of those decisions. Given these factors, it is clear that technology can be a critical enabler of the planning process, which has led to the development of the latest generation of Advanced Planning and Scheduling (APS) systems.

APS Technology Solutions

Technology, and particularly the Internet, is facilitating communication and collaboration not only within a company's own business environment but also throughout the extended supply chain. For example, today it is easy to get feedback from sub-contractors and suppliers, and for retailers to communicate electronically what is being sold, so that the inventory of repetitive products can be replenished. Yet, how can a company react quickly to such critical information if it still has to manually feed the data into spreadsheets or other non-integrated planning tools?

The answer is, it can't. Planning cannot and must not be isolated from other key business systems. Successful companies have recognized that what is required is a complete enterprise-wide planning solution - one that has Enterprise Resource Planning (ERP) as a backbone into which Advanced Planning and Scheduling (APS) is seamlessly integrated. E-business can be used for communication with all partners across the extended enterprise.

What is APS and why is it so important? In short, APS offers techniques to do the complex number crunching needed to support and automate decision-making. APS supports the planner in the decision-making process to help resolve complicated planning problems. The overriding goal is to deliver customer orders on time, which of course has a direct impact on customer satisfaction and the bottom line.

Today's sophisticated APS systems allow users to handle the different planning issues on the different planning horizons (strategic, tactical, operational, executional). The systems encompass all areas, from demand planning and supply chain planning through to production scheduling. The goal when using an APS system is to develop a plan that balances supply and demand at maximum profit and then to follow up and execute that plan effectively.

Throughout the supply chain and at every planning level, constraints are found - in production and distribution, in how much capacity a sub-contractor has available, or in the amount of materials a supplier can deliver on time. In seeking to balance supply and demand for maximum profit, planners must take account of these constraints.

APS and the Theory of Constraints

Most APS systems use memory resident technology and the best systems offer simulation and optimization. However, the application of technology alone is not enough. The adoption of a stepwise approach to guide planners through the decision-making process is also necessary. Some APS Systems support a Theory of Constraints-based (Goldratt) approach to the planning process to identify and resolve both material and capacity constraints. In the simulation environment, planners can run detailed "what if" simulations before deciding on an appropriate course of action within the transactional environment. The planning loop is closed so long as feedback from the plant floor regarding the status of work in progress is included. Therefore, realistic plans can be developed.

For example, when a piece of fabric is going to be two weeks late, planners need to be able to see what impact such a potential constraint has on the ability to deliver to the customer, and what options might be available to make changes in order to improve the situation. With the pressure to shorten lead times and guarantee delivery, being able to control and plan increasing numbers of SKUs for continually broadening product ranges with short life cycles is also critical.

At every horizon, therefore, planners need to be able to identify two things: where the problems and constraints are located within the process, and what the consequences of these problems will be at the end item and customer order level.

The adoption of a constraints-based planning approach is critical and can lead directly to improved delivery performance. By identifying and relieving the constraints within a system, it is possible to control manufacturing lead times to ensure on-time delivery.

Stepwise Approach to Identifying Supply Chain Bottlenecks

Critical materials shortages and bottleneck resources restrict material flow. It is only the critical materials or bottlenecks that count at each decisional stage. This is why it is vital to take stepwise decisions as in the TOC approach. For example, it may become apparent that the resources initially identified as bottlenecks based on the apparent loadings are not in fact bottlenecks when the external supply dates for materials are taken into consideration. The real constraint is, in fact, the material supplies, which are not going to be delivered on time.

If constraints are not taken stepwise, as well as wasting time, manufacturers may also be wasting valuable resources such as paying operatives overtime to resolve "non-critical" bottlenecks, both of which have a direct impact on the bottom line.

Stepwise decision-making identifies and focuses on resolving the most critical constraints first. This applies to both materials and capacity and leads to faster, easier and more systematic planning, and ultimately, better quality plans. In adopting a stepwise approach, it is important to identify external supply constraints prior to resource bottlenecks because capacity is not an issue if the material is not going to be available.

Many of the latest APS systems incorporate a scoreboard which enables manufacturers to visibly monitor and measure the performance of a plan in relation to delivery, material shortages and resource utilization. In the scoreboard, current plan results can be compared with previous ones or a selected, saved plan. Scoreboard performance criteria can be user-defined and, each time changes are made or re-planning takes place, the scoreboard shows whether the company is now better or worse at meeting goals with respect to the last or any previously saved plan.

What to Look For in an APS System

For companies seeking to invest in Advanced Planning and Scheduling capability, there are key factors to look for to ensure that the maximum return on investment will be achieved.

• Choose the Right Technology. Make sure that the system utilizes memory resident technology to ensure fast simulations for "what if" scenarios. The best systems will offer some level of optimization and synchronization of production and distribution with material availability. Also be sure that the APS system is an integrated part of a complete planning solution so that information in the simulation environment is shared with the transactional ERP backbone and that decisions made in each are fully respected by the other. Without the ability to "talk" to the other key components in the company's overall planning solution, the potential system may have limited value.
• Look for Fashion-Specific Functionality. Be sure that the solution has been specifically developed with the unique needs of the fashion industry in mind. As well as providing the necessary visibility and ability to act quickly, the software needs to be extremely agile in order to deal with both increasing volume and constantly varying combinations of SKUs. Any business that is bound to an SKU-based matrix is inherently complex. However, in the fashion industry, the number of variables increases that complexity exponentially. Many apparel companies, for example, are dealing with tens of thousands of SKUs incorporating multidimensional variables that may include size, color, pattern, fabric, customized logos, packaging, labeling, etc. An APS solution must be capable of managing this fashion-specific complexity.

Reaping the Benefits

Selecting an appropriate APS system and adopting a stepwise approach to planning helps deliver optimum plans. Optimum plans that have been bought into by all parties within the extended supply chain ensure everyone is working towards the same goals and assist manufacturers in balancing their own needs with those of their increasingly demanding customers. In other words, they allow manufacturers to improve delivery performance, avoid obsolete inventory, streamline administration and, most importantly, improve the bottom line result, which will be reflected in the all important shareholder value.

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About the Author:
Vicky Hyde is a highly experienced fashion industry consultant who focuses on the business issues faced by companies and the ramifications of change. Formerly with IBM, she has worked with a range of fashion and related companies, from yarn spinning and textiles to apparel. She has been engaged in the industry as a project management leader, developer and presenter of educational programs. As Movex Fashion Industry Application Center Director for Intentia, Vicky Hyde has conducted numerous seminars and given presentations extensively throughout Europe and around the globe.