A 200 year old Irish linen manufacturer has turned itself around to become the first textile company in the world to receive world class manufacturing status as a result of performance improvements realised following the successful deployment of a Geac MRP II (Manufacturing Resource Planning) system.
Ulster Weavers Apparel Ltd is the largest dedicated Irish linen manufacturer and has been in business for over 200 years. Owned by the John Hogg Group, brands include Ulster Weavers, Spence Bryson, Linen Essentials, Moygashel and Wm Clarks. Ulster Weavers employs around 150 people across two manufacturing plants and offices in Northern Ireland, as well as sales offices in North America and France.
The Northern Irish linen industry has been diminishing for some time and is only a fraction of the size it was during its heyday in the 1960s. In 2000, Ulster Weavers was facing very difficult times with not only a declining industry but increased competition from abroad. It faced competition from low cost suppliers in China, Eastern Europe and from Italian companies who compete on both design and creativity.
Kenneth Webb, Director of IT & Business Systems at Ulster Weavers Apparel Ltd, comments:
Because of the high price of Irish linen and flax we could not compete on price, so we had to win customers based on our quality, delivery and lead-time. This is vital as we ship to garment manufacturers who operate on very specific timings to supply retailers such as Marks & Spencer. They have slots they have to hit, and in turn, we have to hit our slots with them.
In order to survive and then grow the challenges facing Ulster Weavers were to restore profitability; achieve consistent growth over the next five years; set new benchmarks of performance across all areas and develop and exploit the potential of the Irish linen brand. Most importantly was to put in place the people, plants and systems to become a key player in the world linen market. Crucially, everything had to be measured, monitored and reported in order to improve performance.
To meet these goals Ulster Weavers decided to take on the daunting challenge of achieving Class A Planning and Control accreditation from Oliver Wight, a global management consultancy and education firm. No other textile manufacturer held this accreditation so it was to be an unprecedented task.
Oliver Wight sets out nine Critical Business Performance Measures involved in attaining the award, which are:
Customer Delivery Performance
Production Plan Performance
Master Schedule Performance
Supplier Delivery Performance
Item Master & Supporting Data Accuracy
Inventory Record Accuracy
Bill of Material Structure and Accuracy
Routing Structure and Accuracy
Work Location Record and Accuracy
Before undertaking the Oliver Wight challenge, Ulster Weavers recognised that its IT infrastructure would be a major hindrance to achieving the accreditation, as Kenneth Webb explains:
Our main aim was profitable growth but without proper planning, manufacturing and control this was never going to be achieved. Although we had been using Geac's System21 enterprise resource planning solution for over five years we had not embraced or used the solution to its full potential. For example we were still very much a paper-based organisation and relied on spreadsheets for everything. No planning or forecasting existed and when orders went into production there was no way of telling when the customer would get the goods.
Ulster Weavers also had no formal planning and review processes in place. The budget management process was also very weak. There was no integration of business functions, no long term visibility and too many ad-hoc decisions were being made without the correct information present.
Other obstacles facing the business during the project included a lack of commitment from the senior management team and a general resistance to change. Ulster Weavers realised that it needed new people in its management team. So the company found people who were already proven in running a business much bigger than Ulster Weavers and then recruited them to accelerate the change process.
To confuse things further, during this period Ulster Weavers also acquired one of its competitors - to provide extra manufacturing capacity to fuel its aggressive growth plans. Also it faced the loss of key staff members.
Another hurdle was persuading the sales team that they needed to share customer information to enable the Oliver Wight Sales and Operations Planning process (S&OP) to work properly.
'The ABCD of Operational Excellence' is a book by Oliver Wight which describes all of the checklists, measurements and activities which Class A companies use to run their businesses. It is broken down into five chapters. Initially Ulster Weavers wanted to achieve the Class A accreditation for Planning and Control and to do this had to concentrate on the following key five checklist items from the book: On time and in full (OTIF) delivery performance; supplier delivery performance; schedule adherence, inventory accuracy and adherence to the production plan.
But, back in 2000 Ulster Weavers performance measures varied between, at best, 42% adherence to production plan, 31% OTIF delivery performance, 20% supplier delivery performance, 12% inventory accuracy and zero schedule adherence.
The first step in the process was to appoint a full time Project Manager and identify task team leaders for each checklist point. A steering group of senior management was also formed. Ulster Weavers then set about restructuring the whole business, investing in and using System21 with the aid of Geac to form the basis of the turnaround.
Kenneth Webb continued:
Geacs involvement in the project was invaluable and the team offered total commitment to our accreditation goal. Geac provided us with excellent guidance on difficult issues, ensured rapid development response and was a source of crucial business knowledge.
In July 2002 Oliver Wights informal audit assessed Ulster Weavers at Class B status. But, Ulster Weavers wanted to go all the way towards achieving Class A and so concentrated on the areas that needed the most attention.
To achieve Class A accreditation the company had to address the issue of production planning. Essentially it had to weigh up the cost benefit of overhead recoveries against schedule adherence.
On the one hand, the company could gain cost advantages by having longer production runs and fewer line changes hence more plant output per unit of overhead. But on the other hand, a more flexible approach to manufacturing with shorter runs and many line changeovers (adhering closely to pre-planned schedules) would provide ultimate flexibility to meeting customer orders.
In order to embrace the need for greater flexibility Ulster Weavers deployed a materials requirements planning (MRP) methodology, whereby customer demand leads to a master production schedule (MPS) which in turn leads to a stock requirements/purchasing plan.
At this time Ulster Weavers was already using Geac System21 financials and distribution modules alongside Geacs bill of materials (BoM) and production control software. It was logical then for Ulster Weavers to implement Geacs MRP module, which generates the MPS based on customer demand, entered as either sales orders, or forecasts, in order to comply with the Class A requirement.
A major part of the Class A requirement is the measurement of results - the measurements of customer orders delivered on time and in full and the measurement of production adherence to plan are fundamental - Geac System21 provided the data to perform these measurements. Therefore once live in mid-2003, the Geac MRPII solution provided closed loop material requirements planning, which enabled Ulster Weavers to plan and fine tune production accurately based on actual performance data taken from its production systems, stock systems and customer orders.
One aspect of Ulster Weavers performance improvements has been more accurate forecasting. This has been vital because fashion trends are very hard to predict, and previously Ulster Weavers had great difficulty in planning, and therefore incurred a lot of waste.
To combat this Ulster Weavers implemented a rolling sales and operational planning process led by a senior team with a monthly review of performance. This has meant that Ulster Weavers now has a clearer picture of sales for the next 18 months, with all assumptions fully documented, and not based purely on historical sales. It has also taken a more rational approach to forecasting. While managers cannot predict next seasons colours, they can predict the type and finish of the cloth, which has eliminated much of the guess work which was previously used in the process.
Ulster Weavers also recognised that its own responsiveness was hugely dependent on its supplier performance too. Therefore it set up supplier appraisals and monitoring systems for key suppliers, education and awareness sessions. The company used root cause analysis to establish the reasons for late orders and identify areas for improvement and now has a much more collaborative relationship with its suppliers.
As a result, by July 2003, supplier delivery performance had climbed to 96 per cent and customer delivery performance to 98 per cent. Ulster Weavers now has a 95 per cent minimum achievement on nine critical business performance measures - a prerequisite, along with best practice business processes, for Class A accreditation.
Performance Change 2000 - 2003
Return on Investment
At the end of 2004, Ulster Weavers upgraded its ERP software to System21 Aurora running on an IBM iSeries Model 720 because it wanted to take advantage of the new functionality, the enhanced user interface and the business process management capabilities of process.connect to drive key business activities.
Ulster Weavers estimates that the overall investment in its business transformation from 2000 to 2004 has been 6 million. This included a new management team; the acquisition of a new plant and facilities as well as new IT systems, processes and infrastructure.
But this level of investment was worth it, as Kenneth Webb explains: Sales in 2000 were 9 million and the company was quite openly old-fashioned. However, with no significant increase in staff numbers, we have realised compound annual growth of 37 per cent in the period up to 2003. Growth has since slowed in the last two years and the removal of quota in January 2005 has increased global competitive pressures which certainly have made trading difficult, but the efficiency improvements made have diluted some of the external impact.
Future plans include the development of further System21 Aurora links to third party systems; the introduction of a forecasting module; bar coding and a CRM system.
Ulster Weavers also plans to achieve Class A accreditation in all five chapters, as Kenneth Webb concludes: We are now Class A accredited in Planning and Control and Strategic Business Direction and are planning to achieve full accreditation in the other areas. We will be working on People in Teams, New Product Introduction and Continuous Improvement accreditation as part of our strategic goals.
With the award of Class A status by Oliver Wight, Ulster Weavers has now joined the likes of Coca-Cola and Procter & Gamble in the world class pantheon. It is the only textile manufacturer to hold this accolade.