18 Dec APS and Syspro Provides the Visibility to Reduce Inventory
Samuel Strapping Systems is a leading manufacturer and supplier of a broad range of steel and plastic strapping, hand tools, edge protection, stretch film equipment and consumables, as well as standard and custom engineered unitizing equipment. A wholly-owned subsidiary of Samuel, Son & Co., the US Packaging company supplies products to virtually every industry from its 3 manufacturing facilities and 6 distribution centers.
When its spreadsheet driven production planning and scheduling became overly stretched by the economic events of 2008, Samuel Strapping turned to Preactor from Lean Scheduling International to contain its planning and scheduling issues.
Samuel Strapping‟s manufacturing facility at Heath, Ohio operates on a 90% Make to Stock basis and supplies hundreds of products at an SKU level including a small amount of custom work. Products range from very lightweight strapping used in hand tools all the way up to 3,000 lb. coils of steel strapping used in heavy industry and in logging. Customers can be as diverse as small manufacturers that order perhaps 5,000 lbs. per month through to assorted state and national distributors and up to large scale operations such as Nucor Steel. Lead times vary from 3 days if a product is in stock to 3 weeks for custom work, through to 6 months and over for custom strapping equipment that the company can supply.
In terms of scale, the 90 strong workforce at the Heath facility currently processes 85,000 tons of steel. From a business process perspective, the actual manufacturing is relatively straightforward with the appropriate grade of steel being bought and stored before being cut, treated and then wound into coils ranging from 50 lbs. upwards of finished product. This all takes place over 6 production lines/work centers – 3 of which are dedicated finishing lines -that operate on varied shift patterns of between 5 – 7 days a week.
However, as Patrick Hoffmann, Director of Inventory and Operational Analysis explains, the company‟s planning and scheduling challenges are anything but straightforward. “Inventory management and smoothness of production flow lie at the heart of what we do.”
He continues, “The plant is not necessarily focused on individual orders – it is more concerned with whether peak demand exceeds our capacity, whether we run out of inventory or whether we are left with surplus inventory. Our planning and scheduling therefore targets inventory levels, modulates production and seeks to achieve a smoothness of flow to optimize our physical and human resources.”
Preactor and Syspro Provides the Visibility to Reduce Inventory
Given the company‟s Make to Stock business model, this necessitates a heavy reliance on accurate, medium to long term forecasting and these are done at an SKU and warehouse level. As and when orders are received, these are picked up by the forecasting tool which then assesses whether sales orders are exceeding the forecast or not. If this is the case, then the production plan has to be changed and if 10% of orders are outside the forecast in terms of anticipated product, then this also impacts the medium term plan.
It also has a direct impact on the scheduling of product through the facility as Production Scheduler Mike Shirilla explains. “The demands of the plan in terms of inventory management may be at variance with the demands of the schedule in terms of actually achieving the plan – especially when it comes to managing capacity. For example, each of the finishing lines can have set up times of approximately one hour, plus or minus 30 minutes. It is therefore clearly advantageous to have a degree of product batching to minimize changeover times and optimize plant and human resource but this may not be ideal from a smooth planning perspective.”
Hoffmann adds, “It‟s a matter of balance because a lot of our processes are interdependent. So, if demand for one SKU slows down, this can affect others so we need to be able to tweak the rules that determine the sequencing balance of maintaining production and inventory efficiency.” This tension also exists at a general business level as Shirilla explains. “A good example would be the scenario where we have lots of smaller orders coming through while also having a lot of long term larger production required from our forecast. We can either manufacture these smaller orders and potentially disrupt the smoothness of flow, or we could even outsource some of the smaller orders and maintain this flow.”
Prior to the company‟s investment in Preactor APS in 2010, these challenges were handled by 2 separate spreadsheets and not the company‟s existing Enterprise Resource Planning (ERP) system. The first was a weekly report which would show what was available on the shop floor as well as the current demand forecast. From this, data would then be entered by hand into another spreadsheet which essentially looked to set out demand by product grouping by mix. The company had a dedicated model for each month and, working in monthly time buckets, tried to keep a 3-4 month planning sequence horizon with a longer 1 year plus long term plan. Hoffmann again, “It was important to keep the data as accurate as possible because you can‟t work on averages as you never know what the actual possible scheduling mix will be.”
Unsurprisingly this approach was very manual and therefore very time consuming and prone to error. “It was cumbersome” says Hoffmann. “There was a lack of responsiveness and agility and not just in collating and changing the data, but also in communicating it in a timely manner because again, all this was done manually, in person, across the plant.” Perhaps an even greater problem lay in the huge over reliance this approach placed on one key resource – Mike Shirilla. “All the expert knowledge relating to the ideal sequencing of products, optimizing of times etc. was all tied up in Mike‟s head” continues Hoffmann. “This always left the permanent worry of „what happens if Mike goes away?‟ which was compounded because the only person with any visibility of the schedule also happened to be Mike. Schedule visibility consisted of everybody asking Mike all the time what was happening and when.”
The company was aware that there must be a more efficient way of balancing the company‟s planning and scheduling needs but as everyone was always busy dealing with the current approach, nothing was done. Until that is, 2008 when the financial upheaval caused what Hoffmann describes as “all hell breaking loose” in terms of accuracy of future demand planning. The company quickly took the decision to move towards a data driven, quicker, more visible, decision making system that would allow it to react in a more agile and responsive manner. The problem was that both Hoffmann and Shirilla realized that this would involve much more than simply putting in an IT system. “Nothing was going to be able to do what I was currently doing in my head” explains Shirilla. This included the company‟s existing ERP system and added to the concerns Hoffmann had that the wrong system could easily become a constraint on the way the company already worked.
Hoffmann therefore spent a considerable amount of time working with Shirilla to understand everything he did from a scheduling perspective, what his needs and the company‟s needs were in this area, and added this knowledge to his own understanding of the company‟s planning and inventory management requirements. Armed with this, Hoffmann quickly found Preactor and met with Mike Liddell from Lean Scheduling International (LSI), a long established North American Preactor partner. Shirilla was shown Preactor, how it worked, was allowed to test it with test data and quickly concluded that he thought Preactor could do the job required.
Implementation therefore began in 2010 with LSI working in conjunction with a handpicked team from Samuel Strapping and a number of Syspro consultants in order to integrate Preactor with the existing Syspro ERP solution. From a system flow perspective, the aim was to use Preactor GMPS to handle the company‟s planning requirements, Syspro to drive MRP, and Preactor to do the localized scheduling. The schedule would be fed back into the plan which would give Samuel Strapping a synchronized, closed loop system that ties together the company‟s capacity and material constrains. Mike Liddell from LSI comments on the implementation. “We were the first company to use the Preactor Link developed with Missing Link Technologies to quickly and seamlessly integrate with Syspro ERP. We subsequently built a Preactor test environment within Syspro which allowed us to see what data from Syspro needed cleaning before pushing to Preactor and also allowed us to fine tune some of the specific scheduling rules Samuel Strapping required.”
A successful go-live was achieved in late 2010 and aside from the immediate increase in visibility across both medium and long term plans as well as the short term schedule, the system didn‟t have to wait long to comprehensively prove its value. As Hoffmann explains, “In the first 2 months of 2011, demand outstripped capacity by two thousand tons but we were still able to meet demand while running on much leaner inventory levels than we ever have had in the past.” He continues, “In the past, our approach was one of necessity which said „If in doubt, buy‟ but now because of the visibility and control Preactor brings us, we can be much leaner and more responsive which helps us meet both our inventory management objectives while maintaining smoothness of flow.”
Hoffmann recalls another time early in the company‟s use of Preactor where once again, it proved invaluable. “Mike had finally been able to take a vacation and we had a situation where demand spiked. Normally this would require Mike‟s expertise to advise how best to deal with this but even though I am not as skilled as he is I was able to use Preactor to make the right decision.” This decentralization of expert knowledge from one person to a system that can be used by others has also massively helped not just in generating plant wide visibility but also in enabling accurate, timely information to be communicated effectively and efficiently, something previously impossible. There have also been considerable time savings with Hoffmann estimating this to be the equivalent of removing 1.5 people‟s roles purely in terms of collating and entering information. This resource has been deployed elsewhere within the company which adds extra value for the same level of staffing. And it‟s not just in the day to day time savings where Preactor has proven itself of value. Based on the accuracy of, and trust placed in, the information from Preactor, strategic business decisions are also being taken. Hoffmann again, “We took the decision in June to not buy any more finished goods for the rest of the year because we could accurately see our future capacity commitments, thanks to Preactor.”
While still early days, Samuel Strapping has considerable future plans for Preactor beginning with rolling out the system to the other 2 manufacturing facilities in North America. Strategic planning will be handled centrally in Chicago with scheduling being handled on a local level at each plant with a continual exchange of data across the entire system. In terms of what Preactor currently means to Samuel Strapping, the last word however belongs to both Hoffmann and Shirilla. “We like it” says Shirilla, “every day we discover something new about Preactor that helps us.” “Without a tool like Preactor” adds Hoffmann, “I simply wouldn‟t be able to function in my role as Director of Inventory. And inventory is the single biggest investment our company makes – it really is that invaluable.”