Suite Keeps the Inbound Flow in Harmony
Optimization and visibility software keeps materials and parts moving quickly from crossdock to Steelcase production lines.
When the dot-com boom went bust in 2000, companies that supplied cubicle walls and computer desks to all those hopeful technology startups saw a significant drop in orders.
At Grand Rapids, Mich-based office furniture manufacturer Steelcase, one strategy for climbing out of the economic slump was to build a leaner operation. As part of that effort, the company started looking for ways to control costs and improve service in the inbound supply chain.
Steelcase asked Supply Chain Solutions (SCS), also based in Grand Rapids, to develop and operate a crossdocking operation at the furniture maker's Grand Rapids headquarters. Employees there would receive materials and parts from suppliers and quickly route them to Steelcase production lines at five plants in the Grand Rapids area. Eventually, SCS and Steelcase expanded the program to include subsidiary plants in the southeastern United States, Ontario, and Mexico.
To support the crossdock, SCS developed software that optimizes the flow of goods and gives supply chain partners a better view of products enroute from supplier to factory. As SCS added new functions, that software evolved into a full solution—the Supply Harmony Suite.
SCS still uses the suite on behalf of Steelcase and other logistics clients. But it's also getting ready to become an application service provider (ASP), offering the web-based Supply Harmony Suite as a hosted service that manufacturers can use to manage their supply chains on their own.
"Initially, we wanted to improve the flow of goods to our plants," says Joe Verbraska, director of logistics integration at Steelcase, describing the challenge his company posed to SCS.
Steelcase uses a private fleet to bring materials and parts from vendors to a central location, then uses common carriers to deliver those goods to its plants. In the past, it took as long as 19 hours to unload the incoming trailers, and plant operators never knew how long they would wait while drivers shuttled their loads from location to location.
"Depending on how we made that pickup, the material in the nose of the trailer might be the most critical product," Verbraska says. "But that plant was at the mercy of how soon the rest of the product was unloaded."
SCS cut unloading time from 19 hours to about 10 minutes. And by assigning certain trucks to certain lanes, and loading trailers accordingly, the service provider reduced the average time required to move a shipment from crossdock to final destination to two and a half hours.
What's Coming and When
That was a huge improvement, but it didn't solve another problem: visibility.
"As product came in, we had to acknowledge it and put it into a system," says Ben Gott, who is in charge of information architecture at SCS. "That way it was tracked, so the plants would know when they would receive it."
Steelcase placed orders with its vendors each Thursday and Friday, with shipments due on Friday of the following week. "Depending on their schedule, vendors could send orders any time that week, Monday through Friday. And the plants did not have any visibility whatsoever to what was coming," Verbraska says.
To gain better information, SCS developed a middleware module that extracts a flat file from Steelcase's SAP enterprise resource planning (ERP) system. The file contains the purchase order number and detailed information for each pending order.
Once an hour, the system transmits an updated version of this file to a Microsoft Enterprise SQL database. Other modules of the Supply Harmony Suite then draw upon this database.
As each order arrives from a supplier, an employee working at a desktop computer enters the PO number from the packing slip into SCS's crossdock tracking module, called Checkpoint. Matching that number to a record in the SQL database, the system displays details about the shipment.
"We simply select a checkbox to confirm that we received that product," Gott says. "So Steelcase knows the product is in our facility, and which run it's scheduled to go on."
Shipments bound for local plants generally head out the same day they arrive. Shipments to subsidiary plants must be scheduled more carefully.
"We need to be more cognizant of what we send, making sure we don't send products too early, so the plant doesn't carry inventory before it's used," Gott says. "We also don't want to over-pack or send more trucks than we need, to conserve costs."
Because the Supply Harmony database includes a due date for each order, SCS knows which goods to ship right away and which to hold until they're really needed.
Planners at each plant access the system through an Internet browser to get information about shipments headed their way. "Planners know as soon as that truck leaves our dock exactly what product is on there, by PO," Gott says.
"SCS creates daily load plans, particularly critical to our subsidiaries," says Verbraska. "Before, the planners didn't have visibility to all the different purchase orders that were created."
SCS also uses the system to monitor orders that are due from suppliers and receive alerts if an order doesn't arrive on time or no one has scheduled a pickup. This allows SCS to clear up problems before they interrupt work on the production lines.
In the past, Steelcase spent too much money on expedited transportation for orders that had been delayed. "Now we don't have to do that," Verbraska says.
Another Supply Harmony module helps SCS manage forward-positioned inventory for Steelcase. When a particular stockkeeping unit (SKU) in the SCS facility reaches a pre-determined minimum volume, the system automatically sends the supplier an e-mail asking for more.
Supply Harmony also helps monitor vendor performance. "If we receive product from a supplier after its due date, we flag it in an exception reporting system we use," Gott says.
Besides creating a steadier inbound flow and telling plant operators when goods will arrive, Supply Harmony has helped Steelcase eliminate waste.
In the past, many shipments were misplaced, Verbraska says. Sometimes no one logged in the fact that a shipment had arrived at a plant. If a delivery arrived after business hours, the person who found in on the dock the next morning might put it away without telling anyone. When the production line needed this material, it was nowhere to be found.
"In the past, we would reorder the materials, and expedite delivery, because we didn't realize we had the product," Verbraska says. "Now, we have a simple system where everything is tracked. We know what time shipments were received in the inbound service center and in the plant."
Along with loads, Steelcase now keeps better track of its trailers, thanks to a yard tracking module SCS developed. The system tells Steelcase's private and contract fleet operators "what time and where they dropped a trailer," Verbraska says. "Having visibility has saved us a lot of hassle in trying to find trailers."
Taken together, the new processes SCS developed for Steelcase, and the software it created to support the operation, have saved Steelcase "multi-million dollars," Verbraska says. The company needs less manpower to move product into its factories, it has been able to cut the number of trailers in its fleet, and it no longer loses product.
"We saved close to $3 million the first year," he says.
Steelcase was SCS's first customer, but the service provider has since used the Supply Harmony Suite on behalf of other furniture manufacturers and is pursuing other vertical markets.
"We wanted to stay away from automotive, but we're being pulled into it very quickly," says Les Brand, CEO of SCS. "There's a lot of interest in these techniques." Some of the companies that supply materials and parts to the furniture manufacturers have also signed on as customers, he says.
SCS is also working on some new modules, including an e-kanban function it's developing initially for another furniture manufacturer. When someone on a production line pulls a kanban card or scans its bar code, the system will automatically e-mail the supplier that the manufacturer needs more product. The supplier can then accept, reject, or revise the order.
Several other service providers offer an e-kanban platform, but "ours will be unique because it can be used as an ASP, and it's 100-percent web-based," Gott says.
For Steelcase, the Supply Harmony Suite has proven to be an important tool in its efforts to develop a more efficient operation.
"We've been working hard, trying to get our manufacturing lean," Verbraska says. "The SCS solution has been a good facilitator."