Predicting Demand Levels Down the Road
No business wants to face a drop in demand for its products, but many companies have experienced just that during the global economic downturn. One such company, Wichita, Kansas-based polymers and fibers manufacturer INVISTA, seized the opportunity to get better visibility into, and control over, its demand and inventory planning.
As one of the world’s largest integrated fibers and polymers manufacturers, INVISTA operates five major businesses: apparel, interiors, intermediates, performance materials, and polymers and resins. INVISTA serves customers from its worldwide facility network in the United States, Canada, Mexico, Europe, South America, and Asia, and is a leading supplier of nylon fibers, intermediates, and polymers. INVISTA holds more than 1,000 patents and owns some of the most recognizable brands in its respective markets, including Lycra, Coolmax, Cordura, Tactel, Antron, and Stainmaster.
INVISTA’s Performance Materials division operates three sites in North America, one in England, and one in China. This division provides fabrics and fibers used in a variety of applications including residential and commercial flooring, home textiles, airbags, seat belts, automobile carpet, and outdoor equipment.
Checking The Forecast
With such a wide array of products being manufactured in facilities around the world, INVISTA’s complex supply chain depends on reliable forecasting. INVISTA found that as the company continued growing, the home-grown forecasting tool it developed in-house 10 years ago was no longer meeting the needs of planners and the sales force. The old tool could not scale or adapt to changes in INVISTA’s product portfolio.
INVISTA needed a demand planning solution that would use reporting and analysis to create a detailed and reliable demand plan for both day-to-day and extended-horizon business decision-making.
After considering its options, the company implemented the Zemeter software suite from Wilmington, Del.-based business solutions firm Supply Chain Consultants. The suite offers modules for demand and supply planning, inventory management, and scheduling. These tools help evaluate planned changes to markets, including sourcing patterns, capacity, transportation, and distribution.
Seeing Multiple Perspectives
“When we started using Zemeter in the third quarter of 2007, we discovered that we could create a forward-looking view that had not been possible before,” says Carl Landerl, global supply chain manager for INVISTA Performance Materials. “While we did have a process for sales and demand planners to develop a forecast and bring multiple forecasts together, our old tool only provided a one-dimensional view. We had a forecast, but the power to view and enhance it was limited to one opportunity per month.
“When our business started feeling the effects of a changing economic environment in November 2008, we began to discover and appreciate the full potential of Zemeter,” Landerl continues. “We found our automotive customers, for example, were rapidly building up unsold inventory. The situation reached the point in January 2009 where there was not a single passenger car made in the United States.”
With cars sitting in inventory and fabric weavers having little work to do, INVISTA needed to be able to rapidly respond to safeguard its business. Accurate and reliable data became all the more important. By the end of February 2009, there were three million cars in inventory, which translated into more than 90 days supply — about three times the norm. INVISTA was able to adjust its output accordingly.
“Zemeter has helped us reduce inventory by 30 percent, which equates to more than $30 million in savings,” says Landerl. “We believe it will be possible to shave 25 percent off the remaining inventory and bring our stock into line with demand.”
Another important manufacturing reality for INVISTA is that it does not operate an assembly line that can be either sped up or slowed down. It is more a case of turning production either on or off. There are considerable costs involved in such an all-or-nothing environment.
Given the variety of different products being scheduled by INVISTA Performance Materials, the division built the financial justification for implementing Zemeter from improved operations of its assets. Substantial costs result each time a product change needs to be made on a machine. Zemeter allows the company to generate a more detailed, accurate forecast, reducing the number of product changes.
Using Zemeter, INVISTA is now able to create multiple forecasts that are viewed by salespeople and segment leaders. Planners can identify areas that require more focus, allowing them to direct sales leaders to those items that need the most attention. This saves a significant amount of time because planners can concentrate on specific areas instead of having to forecast everything, as they did with the old tools.
Another important benefit to INVISTA is Zemeter’s off-line capabilities. With approximately 15 global salespeople in Asia, Europe, and North and South America, it is important that INVISTA’s entire sales team is able to access the system. They can obtain data, update forecasts off-line, and upload new data the next time they connect to the system. With the old tools, regional demand managers collected data from the salespeople and entered it into the program.
“All salespeople can interface with the tool, giving them the power to analyze variability, see the accuracy of their forecasts, and view the collaborative history of open orders,” says Landerl.
“Our business has changed radically in 100 days,” he adds. “It was always important for us to have an accurate forecast, but now it has become more crucial than ever.”