Shoe Manufacturer Steps Up to Improve S&OP Stephanie Grothe, CPIM, CSCP Process Improvement Manager Red Wing Shoe Company, Inc. Karin Bursa Vice President Logility, Inc. Stephanie Grothe Stephanie Grothe has been in her current roll as process improvement manager at Red Wing Shoe Company for just over a year and previously spent four years as forecast analyst for the footwear and apparel leader. This new position allows the opportunity to utilize her human relationship management skills along-side the technical expertise she has development in managing Red Wing s inventory and supply chain productivity. She has made huge strides as process improvement manager helping Red Wing slash its sales and operations planning efforts by 50% (from six weeks to three weeks). Prior to joining the team at Red Wing Shoe Company, Stephanie was an Operational Planning Analyst, and held other material management roles in her 8 years at Hearth & Home Technologies, Inc. Grothe is APICS certified in Productions and Inventory Management (CPIM) and is a certified Supply Chain Professional (CSCP). She also holds a Bachelor of Arts in Materials/Operations Management from the University of Wisconsin-Eau Claire. Stephanie has been an active member in APICS since 2001. 1
Karin Bursa Karin L. Bursa, vice president of marketing at Logility, oversees the company's market positioning, strategy development and marketing programs for Logility Voyager Solutions, the company's full suite of collaborative supply chain optimization solutions. Ms. Bursa is known for her strategic vision and market knowledge and is experienced in the development, support and marketing of software solutions to improve and automate enterprise-wide operations including supply chain management, manufacturing, financial, field service and asset management. She began her career as a consultant for Andersen Consulting (now Accenture) where she focused on the manufacturing and telecommunications industries. Ms. Bursa has been at the forefront of innovative demand-driven manufacturing, supply chain management and B2B collaboration initiatives such as the Voluntary Interindustry Commerce Standard (VICS) Collaborative Planning, Forecasting and Replenishment (CPFR) committee and Flow Manufacturing. Ms. Bursa is often quoted in industry publications, speaks frequently at industry forums and is an active member of the Council of Supply Chain Management Professionals (CSCMP), Voluntary Interindustry Commerce Standards (VICS) Association, APICS, Women in Technology (WIT), and the Technology Association of Georgia. Who is Red Wing Shoe Company? We design shoes for the demanding work of industries such as mining, logging and farming Founded in 1905 in Red Wing, MN 6 Brands make up RWSC (Red Wing Work, RW Heritage, Vasque, Irish Setter Hunt & Work and WORX PPE Workwear / Fire Retardant protection launched in 2010 Our culture is based on a commitment to producing the highest grade footwear 2
Who is Red Wing Shoe Company? Red Wing Shoes Display Manufacturing facilities: Two domestic footwear facilities Internationally (Footwear & PPE) China (4), Mexico (2), Pakistan (1), Dominican Republic (2), Vietnam (1), Poland (1) Retail locations: Sold in 150+ countries world-wide 450-500 domestic 4Heritage stores in Europe and 2 in Asia with more planned by end of 2013 50 industrial trucks 47 B2B showrooms internationally Distribution warehouses: Red Wing, Salt Lake, Houston, Japan, Dubai, Netherlands, direct shipments Our First Steps Old Sales and Operations Planning (S&OP) process took 6 weeks Reactive and manual Nobody owned the results/process Labor intensive forecasting with 450+ pages of spreadsheets Limited forward visibility Error prone manual process Unreliable information to make decisions No tracking of changes or why we made them No collaboration with our sourcing and manufacturing teams Inside-out S&OP process relied on product development input 3
Manual Monthly Process One Style by Production Largest Brands were More Complicated 4
Supplier Summaries A Step in the Right Direction 5
A Giant Leap Forward Better forecast and inventory positions Collaboration with suppliers Increased visibility More credibility and confidence People, process and technology Leverage APICS training and certifications Established dedicated demand planners Selected Logility Voyager Solutions Streamlined S&OP process Outside-in thinking Brands took ownership of demand planning Demand Planning Made Easy From clunky spreadsheets to dynamic views Significantly decreased effort to produce our forecasts Gained global visibility by brand and company Suppliers trust our information Style level order based forecast Forecasting for 8 manufacturing locations around the world Forward-looking 18 month rolling plan 6
Voyager Demand Planning View Logo Here Voyager Supply Planning View Logo Here 7
S&OP Redefined Closed loop S&OP process 50% reduction in effort, down to 3 weeks from 6 weeks Plans are owned by brands Collaboration between executives, finance, brands, supply chain, distribution, product design Better forecast=better information=trusted partner S&OP Process 8
S&OP Calendar Supplier Collaboration Suppliers say Red Wing provides the best information we ve ever had Visibility of 12 months demand True partnership with suppliers Style level, order based forecast Weekly call with suppliers, shared views 9
Quick Steps Forward Logility Voyager Solutions Demand, Inventory, Replenishment, Supply Planning and Collaboration Inventory stratification ABC by service level to refine safety stock policies Leverage more product specific information Exception-based processing helps our planners focus on what s important Results Logility is a Game Changer Red Wing Executive Slashed S&OP effort by 50% Tripled our forward visibility, with better data Reduced inventory by 5-10% Increased fill rates 8-10%, continues to rise Realigned safety stocks to match service policies Smarter integrated business planning and more value added analysis 10
Successes Reduced Forecast Error based on WMAPE Decreased from 34.6% to 28% (last month 24.6%) Decreased from 17% to 12.5% for higher volume brands Dramatically Decreased Reporting Time What took 6-8 Hours now is just 2-3 Minutes!! Decreased Chassis Rental/Demurrage charges by over 50% What s Next @ Red Wing Shoes? Growth on core work, outdoor, hunt and heritage products Continued growth into the garments IT infrastructure Web sales International growth 11
Logility Overview Global provider of collaborative supply chain software solutions Over 1,250 customers in more than 75 countries Comprehensive Best of Breed SCM solution suite Sample customers Sales & Operations Planning Logility 12
S&OP Maturity Path to Success Key Element Developing Performing Leading Objective Createa feasible plan Optimize revenue, customer service, inventory, profit S&OP System Excel spreadsheets AdvancedPlanning System heuristic S&OPExecution Manuallyexecuted plans Manually keyed into tactical planning and execution systems Achieve corporate strategy Comprehensive supply chain planningand optimization Automatically integrated into tactical planning and execution systems Demand Consensus None Manual consensus Online collaboration Source: Logility and Deloitte, 2013 What are the Top Obstacles to Achieving Your Goals? 13
Tangible ROI from S&OP A successful S&OP initiative can Improve Revenue 2-5% Reduce Inventories by 7-15% Improve new product launch commercialization by 20% Source: Gartner / AMR Research, S&OP Transformation from Tradition S&OP Success Factors Make S&OP meetings a high priority and disciplined process Identify an executive sponsor Tie corporate goals to operational activities Have a structured meeting agenda Boost consensus and accountability Establish TRUST in the numbers and people Get to a forward-looking horizon of 12 to 36 months Leverage shared metrics across key business areas Keep the number of metrics small & manageable Require an unbiased baseline forecast to start the process Adopt customer-level forecasting for top customers Move beyond simple rules of thumb inventory policies to inventory optimization 14
Questions Contact Information Stephanie Grothe Stephanie.Grothe@redwingshoes.com Karin Bursa Kbursa@Logility.com 15
Survey www.tinyurl.com/kmd5lrs 16