Intelligent Manufacturing € January € 1997 € Vol. 3 € No. 1

First Brands Wraps Up Demand Planning

First Brands Corp. (Danbury, Conn.; www.firstbrands.com), a consumer goods manufacturer, is using an integrated supply chain management system to improve its customer service while lowering inventories and reducing trans-shipments. The company has a variety of customers in the retail and food service industries and is the producer of brands such as Glad plastic wrap and bag products and Prestone antifreeze.

As a consumer products manufacturer, First Brands has to deal with a number of customer service issues, such as how to manage the production and distribution of individual customer orders, how to fulfill the needs of quick response partners, and how to manage the demands of handling an ever-increasing number of products. The company decided to implement the Manugistics supply chain management software solution from Manugistics Group Inc. (Rockville, Md.; www.manugistics.com) to increase fill rates &emdash; the number of cases shipped versus the number ordered &emdash; while reducing inventories.

To achieve its customer service goals, First Brands will rely heavily on the solution's "one-number" philosophy, in which an accurate demand forecast drives distribution and manufacturing plans. In the past, product managers, production planners and accounting each developed separate forecasts, which were summed at the national level.

The problem, according to Chris Browning, manager of production planning for First Brands' Home Products Division, was that "inventory would be correct at the national level, but we would have to make trans-shipments or inter-warehouse trades throughout the country to maintain our high customer service levels."

Using the statistical demand planning tools in the Manugistics software, technical forecasters now develop a monthly forecast and work with product managers to incorporate market intelligence (upcoming events that will have an impact on demand) as well as overrides based on promotional activities.

In addition, the system doesn't just forecast demand at the national level. Demand is instead forecast by stock-keeping unit (SKU), defined by the system as an item at a location. That extra level of information is what enables planners to distribute the right products to the right place when they're needed.

Because First Brands now knows how much inventory is needed to satisfy customer service requirements at each distribution point, the company has reduced the number of inter-warehouse transfers as well as the transportation costs that accompany them. "We've also been able to maintain or improve service in some areas with much less inventory on hand," said Jim Hennessy, manager of distribution services. "Our goal is to maintain the lowest inventory levels we can while still satisfying our customers' needs."

And some of First Brands' customers are more demanding than others. The company's major retail clients, for example, are currently emphasizing the importance of quick response relationships. "One of our important retail customers transmits point-of-sale information to us every morning aggregated by distribution center), along with our inventory totals in their distribution centers," Hennessy explained. "When we receive that information, we go through our regular forecasting, distribution planning, and shipment planning processes. Once shipments or replenishment needs are cut, an automatic feed from the supply chain system is transmitted to the order entry system, which books an order. The order shows up on a screen at our customer service office, and a representative edits the order and releases it for shipment to complete the cycle."

The streamlined process has paid off in First Brands' relationship with this retail client. Service levels (at the store level) have jumped from the high 80% range to the high 90s. Requirements for inventory levels and turns have not been a problem either. As evidence of its satisfaction with First Brands' service, this retailer recently selected the company to participate in its selective vendor-managed inventory program.

The company next plans to extend its supply chain management activities into its manufacturing operations. Output from the demand and distribution planning process will be used to schedule production with Manugistics' finite capacity scheduling module. The goal will be to improve planners' ability to analyze the production schedule against inventory projections to find the balance between manufacturing efficiency and customer service.