Last February, Werner Co. stopped shipping its ladders to The Home Depot Inc. The home improvement retailer was Werner’s biggest customer, but the Greenville, Pa.-based ladder-maker was able to cushion the blow thanks to its production planning and reporting system. It used the system to quickly ramp down production on its assembly lines and avoid purchases of excess stock while it phased out deliveries to Home Depot, a process that began last November, says David Conn, Werner’s director of corporate logistics.
The production and distribution planning system “helped immensely when Werner made the difficult decision to exit the Home Depot business,” says Conn. He adds that the move came after Home Depot increased its sourcing of ladders from overseas manufacturers. Werner initially bid on the remaining business but then decided that it “did not support our corporate goals,” he says.
Werner’s system is based on demand-forecasting and distribution-planning applications developed by BT Smith and Associates in Butler, Pa. Production and demand data is extracted from the applications and imported into Microsoft Access and Excel spreadsheets for end users.
The system helps Werner create what-if scenarios as well as production schedules, Conn says. The production plans are then fed into its manufacturing execution system, which currently includes a mix of applications developed by Mapics Inc. and J.D. Edwards & Co. During the Home Depot phaseout, production planners and business managers at Werner were also able to use the system to prevent any service disruptions to Werner’s other customers.
Werner is a privately held company that had revenue of US$538 million last year. Conn doesn’t say how much Werner reduced its costs because of the technology while phasing out shipments to Home Depot. But, he says that without it, Werner wouldn’t have been able to do things such as decide which production lines to take off-line or how to shift manufacturing and distribution responsibilities among facilities.
“We thought ladders were safe from (competition coming from) over the ocean,” adds Bill Rippin, vice-president of supply chain at Werner. “If we didn’t have this stuff, it would have been a more difficult time.”
Various iterations of the production planning system have been in place for the past six years. It was originally built without a corporate mandate as the skunk works brainchild of an informal group consisting of Conn and two other employees from different parts of the company.
The technology cost for the system only amounted to five figures, he says, declining to be more specific. When work on the system began, each of Werner’s business units “had its own agenda,” Conn recalls. “Early in this project, we bridged the silos.” But, because there was no formal structure for the supply chain work, the most significant progress didn’t occur until 2001. That year, Werner saw business improvements such as a doubling of its annual finished-goods inventory turns.