challenges & opportunities in the manufacturing supply chain
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© 2014 Quintiq Holding B.V. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.
Arvind – Suhas Bhise
QUINTIQ WORLD TOUR 2015People. Planning. Profit.
© 2015 Quintiq Holding B.V. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.
www.arvind.com
Challenges & Opportunities in the Manufacturing Supply Chain
Speaker introduction
Suhas Bhise is the head of PPC, logistics and sourcing at Arvind Limited, a leading textile manufacturer in India. The company is the largest producer of denim in India, and fourth largest in the world. Suhas is a results-oriented professional with over 20 years’ experience in the industry. His specialties include production planning and control, logistics, warehousing, and inventory management. He holds a master’s degree in textile technology from the University of Mumbai.
Suhas BhiseHead of PPC and LogisticsArvind Limited
AGENDA
• Arvind Limited – Overview
• Major business units• Denim• Brands and retail• Wovens
• Planning at Arvind
• Key takeaways
AGENDA
• Arvind Limited – Overview
• Major business units• Denim• Brands and retail• Wovens
• Planning at Arvind
• Key takeaways
About Arvind• The Lalbhai Group was founded in 1897.
• The Group operates in diversified businesses such as Textiles, Garments, Branded Apparel, Retail, Engineering, Dyes, Chemicals and Real Estate.
• Arvind Limited, a part of The Lalbhai Group, was incorporated in 1931 and is in the businesses of Textiles, Brands & Retail, Engineering and Real Estate.
• The company is listed in leading National Stock Exchanges and the Luxembourg Exchange.
• The company operates across the entire value chain – Organic Cotton, Yarn, Fabric, Apparel and Brands & Retail.
• The Lalbhai Group is a $2Bn enterprise today.
• Arvind is expecting a revenue growth of about 22-24% for the year 2015-16.
• Textiles Business may achieve growth of around 15% and the Brands & Retail business may clock growth in excess of 30%.
Our Vision
We will enable people to experience a better quality of life by providing enriching and
inspiring lifestyle solutions
“ “
Major Milestones
Laid the foundation of Arvind Mills with a share capital of Rs. 25.25 lakhs
Profits of Rs. 2.82 lakhs in 2 years
ForemostTextile Manufacturer
Sanjay Lalbhai led Reno-Vision
World’s 3rd Largest Denim Producer
Garment Exports Division
Launch of Mega Mart
Launch of The Arvind Store
Launch of E-Commerce
Business
1931
1934
1935-19801980
1997
2000
2007
2010
2014
1998
Established Santej Unit on 450 acres of land - shirting facility
2008
Launch of Advanced Material Division
Strengths of Arvind Limited
• Dedicated Design Development Centres• Partnership with raw material/chemical manufacturers
Product Product differentiationdifferentiation
• State-of-the-art technology for manufacturing processes• Quality accreditation by all global brands for finished fabric
testing
Quality Quality consistencyconsistency
• Vertically integrated supply chain from fibre to garmentOne-stop One-stop solutionsolution
• 320 MM annual capacity across 4 different product categories• 24 MM pieces annual capacity for garmenting; plans to reach
36MM pieces by 2017
Volume Volume leadershipleadership
Jeans Shirts Suits Knits Workwear
GarmentsGarments
Denim Wovens & Knits Voiles AMD
FabricsFabrics
Business (1)
Arvind Brands Megamart The Arvind
StoreArvind
Denim Lab Tresca
Brands & Retail
Anup Engineering Telecom Water
Management Real Estate
Engineering
Business (2)
Revenue
19% top line growth over the last 7 years
27453280
4090
49255621
6862
8000
NOTE: FY15 revenues would amount to $1.3 Billion (assuming an exchange rate of 60 INR/USD)
UnitINR Crores
Strong topline & bottomline growth …and shift towards more B2C portfolio
Emphasis on three imperatives: Robust growth, margin expansion and asset efficiency with strong RoCE focus
Future Growth plan
Built on two growth drivers, with a strong value creation logic
• Textiles: Build an asset-light textiles & garments play across denim, woven, knits
• Vertical garmenting with dormitories model
• Consistently growing wovens business • Stable and differentiated denim business • Profitable knits business • Differentiation and de-risked model • High asset efficiency
• Brands & Retail: Build a breakthrough growth portfolio of Power Brands &
• Specialty Retail • Build strong power brands • Clear portfolio logic of growth brands • Develop fast fashion specialty retail • High operating leverage • Strong retail discipline
Opportunity
• Pivoting domestic consumption in apparel brands & retail
• Large global opportunity in textiles & clothing world trade
Arvind Growth Model Value Creation Logic
• Portfolio of high growth and moderate growth businesses
• Expanding margins
• Capital balance, reducing leverage over a period
• High growth in asset- light B&R • Asset-balanced growth in textiles and garmenting
• Strong focus on target RoCE 20%+
AGENDA
• Arvind Limited – Overview
• Major business units• Denim• Brands and retail• Wovens
• Planning at Arvind
• Key takeaways
Denim
Denim
• One of the largest producer of Denim fabric across the globe
• Leading in latest machinery in India
• Value for stakeholders – Design, Innovation and Sustainability
• The denim facility at Arvind is accredited with ISO 9001, ISO 14001, OEKOTEX 100, GOTS, and Organic exchange standard
• Our labs are certified by NABL (ISO 17025 certification)
• Capacity of 9 million metres per month
• Indian Clients: Levi’s India, Pepe Jeans, VF India, Spykar Jeans, Mufti, Future Grp, ITC
• International Clients: GAP Inc, VF Inc, Levi’s, H & M, Best Seller, TCP, M & S, Inditex
Arvind Brands
Unmatched Portfolio of Owned and Licensed Brands and Retail formats
Product Brands (Licensed) Retail Brands
Product Brands (Owned)
JV Brands
Strategy to create many ‘Power Brands’, with strong topline growth and healthy bottom line
Note: Tommy Hilfiger numbers reflect 100% of top line of the JV company
• Among the top Indian apparel brands
• Very strong growth over a sustained period
• Operating at double digit store contributions
• Strong growth in Like-to-Like (LTL) store sales, new stores viable in a short span
• Significant sourcing leverage and channel bargaining power
B R
A N
D S
& R
E T
A I
L
AND
Woven & Knits
Woven & Knits
Woven:
• Division started in 2001 to service the garment export requirements
• 11 Million Meters/Month capacity
• YOY growth of 16.20%
• FY2014-15 projected growth of 8.9%
• 6 manufacturing units
• Producing Woven tops for men & women for Domestic as well as global brands and retailers
• Our product range is certified by Oekotex, our processes are certified by GOTS for producing Organic products
• We are certified producers of Lycra and Teflon based varieties, while our laboratory is accredited by Marks and Spencer’s, Next, Gap Inc., Levi’s, DuPont and INVISTA
Knits:
• Ultra Modern vertically integrated Facility - Designed on the Principle of Straight Line Material Flow
• Knits Capacity: Solid Dyed Fabrics- 650 Tons Per Month | Yarn Dyed / Mélange Fabrics- 150 Tons Per Month
• Knits Products : Stretch/Single Jersey, Rib Fabrics, Interlocks Fabrics
• 50% of the production is Exports
Woven & Knits
AGENDA
• Arvind Limited – Overview
• Major business units• Denim• Brands and retail• Wovens
• Planning at Arvind
• Key takeaways
Textiles Manufacturing Supply Chain
Chemical industry
Man-made fibers (eg.
nylon)
Natural fibers (eg. Cotton)
Farming
Spinning Yarn
Dyeing Knitting/Weaving
Greige fabric Finishing
Knitting/Weaving
Greige fabric
Dyeing +Finishing
Garmenting
Garments
xxxxxx Process Intermediate product
Focus
Final Fabric
Evolution of the planning process
Frequency Monthly Weekly Daily
Business modelMake-to-stock; only utilization considered for planning
Make-to-order; capacity availability considered for planning
Make-to-order; capacity and material availability checked for planning
Markets served Domestic Domestic + Exports Domestic + Exports
Customer commitment
Weekly volume commitment
Date commitment for important customers
Date commitment for all customer orders
Business goals Planned vs Actual Volume delivery to customers
On Time In Full (OTIF) metric only for Important customers
On Time In Full (OTIF) metric for all customer orders
Manual planning on paper Excel based planning ERP-assisted excel
planning
Quantum of Challenges has increased over a period of timeChallenges Earlier Now
Changes in Fashion industry
• Buying decisions were bi-annual (summer/winter)
• Volume purchase per customer order ranged from 20k – 30k metres
• Buying decisions are made every quarter/month • Volume purchase per customer product ranges
from 5k – 15k metres
Customer tolerance•Inventory•Quantity
• Flexible on carrying inventory at their end to meet surprise requirements
• Tolerance was +/- 10%
• Reduced inventory at their end; rush requirements passed on to fabric supplier
• Tolerance is +/- 3-5%
Changes in customer service level•Response time•OTIF•Lead time
• 2-3 day tolerance on response time• Not all customers were sensitive to OTIF;
tolerance was up to 7 days• 45-60 days
• Customers insist on instant response within 24 hours
• Every customer asks for OTIF performance; tolerance is ZERO days now
• 30-45 days
Threat from regional textile manufacturers No immediate threat from regional textile manufacturers
Chinese textile manufacturers perform better on all critical performance parameters like response time, OTIF, lead time and cost
Regulation No perceived impact on business costs
• Exports: International trade agreements like TPA (Vietnam duty free exports to US), Bangladesh/Pakistan duty free exports to EU
• Domestic: GST
ADDITIONALLY, THERE ARE INTERNAL CHALLENGES TO REDUCE WORKING CAPITAL, SURPLUS, WASTE AND INCREASE RESOURCE UTILIZATION
Multiple Trade-offs and increasing Product Complexity is resulting in lot of planning challenges
OTIF
Machine Utilization
Inventory(Raw mtl,
WIP and FG)
Production surplus
Production surplus
• 1000 + Raw Material Types
• 2000 + Finished Products
• 3000 + Dyes / Chemicals
• 1000 + Designs
• 500 + Finishes
Lead time
a
d b
c
Realistic commitment
Prio
ritiza
tion
mat
rix
Optimize bottleneckcapacities
Dynamic m
onitoring and feedback
OTIF monitoring • Manual to system-based• Monthly to Daily
New KRAs for production heads• % of lots taking more time than
committed lead time
Identify the bottleneck and optimize bottleneck capacities within OTIF constraints
• Minimize # of change-overs through better clubbing of orders
Product-wise lead time signed offwith production team
• Order commitment and section-wise OT monitoring linked to the signed-off lead times
List to priority orders given to shop floor on a daily basis
delay
Customer importance
High priority
OTIF: We took four initiatives to improve % OTIF during last year
Load Synchronizer: To forecast section-wise load to give realistic commitment date
Input Load synchronizer Output
Estimated capacity
Order details/ Product
attributes
Commitment/ greige issue date
Forecasted load in each section
Arrive at right commitment date iteratively
Target days in each section
Machine
a
Commitment is provided based on realistic lead time signed off with production team
Draft—for discussion only
Section-wise product-wise lead time signed off
Lead time dynamically linked to product attributes
Signed-off lead time becomes the base for all planning
processes
7
6
5
5
4
4
4
3
0 2 4 6 8
Lead time (# of days)
Lycra - Peach - LA
Product attribute
Normal - Peach - LA
Lycra - LA
Lycra - Peach
Normal - LA
Normal - Peach
Lycra
Normal
Illustration - Bleaching
Similarly lead time linked to product attributes signed off for all sections
• PPC commits delivery based on the signed-off lead time and buffer
• Load scenario forecasted based on the lead time at the time of greige issue
• Aged WIP defined as any lot that has spent more than target lead time
• Section-wise OT not achieved when an order spends more than target lead time
Delivery commi-tment
Load synchr-onizing
WIP monito-ring
Measuring section-wise OT
a
Section heads to target to achieve 100% OT at the signed-off lead times (excl.
delays due to technical issues)
A simple customer prioritization matrix aligned across functions implemented
Customer priority
Current delay
• Customer priority – Defined by marketing department based on business importance of the customer
• Current delay – Defined as the prorated target date by which the order line should have exited the existing section – actual date (indicated probability of OT miss for the order)
High priority
Low priority
• Stringent commitment times signed-off
• High overall buffers planned• Production team expected to
rush these orders through system
• Commitment times are more relaxed
• Buffers are relatively less• Production team expected to
hold these orders in case of clash with high priority orders
Have become integral part of daily planning by section-
heads
• Section-heads provided with 2 separate lists of WIP
– High priority– Others
• WIP aging and OTIF captured separately for priority customers
b
More frequent review cadence set-up and new KRAs introduced to instill OTIF culture
Manual OTIF reporting involving upto 2 man-days of effort from PPC team
Monthly OTIF reporting with 10-15 days lag; very difficult to act on the same
Final OTIF is the key KRA for both planning/ production team
Before initiative After initiative
Manual
Monthly
Final OTIF
System generated OTIF report with <1 man-hour effort
Daily OTIF reporting; more dynamic monitoring and feedback
New KRAs like section-wise OT for section-heads; instilling accountability down the line
Excel generated
Daily
Section-wise OT
Drives accountability down the line Results in dynamic monitoring & feedback
Illustrative mail snap shot
Illustrative mail snap shot
Mail from production head requesting daily analysis of process OT losses
Mail from PPC team citing high WIP aging in bleaching section
d
What do we expect from SCP&O Based Planning Process ?• Improved Planning OTIF %
• Currently we don’t measure planning OTIF .• This will enable us to match customer’s required dates as close as possible considering all constraints.
• Production OTIF %• Accurate planning will result into reduction in queue at various work centers • Better scheduling will result into lesser set up times , improved efficiency.
• Ability to Commit• Improved response time lines to customer queries on lead time.• Correct & feasible date commitment possible based on actual dynamic situation on the shop floor• In case of delays , right prediction of revised dates
• Improved Resource utilization & Improved loading factor
• Reduction in WIP• Reduction in queueing will help to reduce WIP • Improved lead times
Action steps to overcome planning challengesCURRENT STEPS• External partnerships
• Partnership with Consulting firm (EY, PwC, BCG) to identify areas of improvement particularly in planning, cost reduction, manpower and processes
• IT-based planning tool• Partnership with TLF/Quintiq for implementing Quintiq SCP&O at Denim and Wovens business units• Additional business goals defined to improve visibility in supply chain and customer service
NEXT STEPS• Expand horizon of IT-based planning tool to include other business units• Integrate developments into bulk planning tool to improve visibility on future orders• Develop Online Business Intelligence tool so that
• Customers punch order enquiry into online portal and get possible delivery date• They can interact real time with production progress• Suppliers get real-time information of expected supplies (raw materials/chemicals) and improve their
planning based on our demand
AGENDA
• Arvind Limited – Overview
• Major business units• Denim• Brands and retail• Wovens
• Planning at Arvind
• Key takeaways
Key takeaways
• Scenario Building Capacity• Planning process should have capability of generating multiple scenarios
that help make trade-off decisions
• End-to-end visibility• End-to-end visibility is critical to understand impact of changes of any
parameter through the entire supply-chain
• Awareness of external market threats• Awareness of regional/global competitors and trade agreements is
important to identify improvements areas/KPIs in planning
• Customer interaction• Planning process should quickly respond to changing customer
requirements
THANK YOU!
QUESTIONS?
© 2014 Quintiq Holding B.V. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.
Thank you
QUINTIQ WORLD TOUR 2015People. Planning. Profit.
© 2015 Quintiq Holding B.V. All rights reserved. Quintiq is a registered mark of Quintiq Holding B.V.
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