In February, Werner Co. stopped shipping its ladders to The Home Depot Inc., the home improvement retailer that had been its biggest customer. But the company was able to cushion the blow thanks to its production planning and reporting system.
Werner used the system to quickly ramp down production on its assembly lines and avoid purchases of excess stock as it phased out deliveries to Home Depot, a process that began last November, said David Conn, Werner’s director of corporate logistics. Conn and another executive from the Greenville, Pa.-based ladder maker spoke at last week’s Supply-Chain World North America 2004 conference in Chicago.
The production and distribution planning system “helped immensely when Werner made the difficult decision to exit the Home Depot business,” Conn said. He added that the move came after Home Depot increased its sourcing of ladders from overseas manufacturers. Werner initially bid on the remaining business but decided that it “did not support our corporate goals,” Conn said.
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 said. 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, Conn said.
“We thought ladders were safe from (competition coming from) over the ocean,” said Bill Rippin, vice-president of supply chain at Werner. “If we didn’t have this stuff, it would have been a more difficult time.”
Werner is a privately held company that had revenue of US$538 million last year. Conn didn’t say how much Werner was able to cut costs by using the technology. But he said 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.
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 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, Conn said, declining to be more specific. When work on it began, each of Werner’s business units “had its own agenda,” he said. “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, Conn said. That year, Werner saw business improvements such as a doubling of its annual finished-goods inventory turns. “While we did achieve good things, we could have done it a lot quicker,” he noted.