Instant Customer Response Through "Able-To-Promise"

Increasingly, customers demand instant response. "I'll get back to you" is no longer an adequate reply to a request for delivery commitment. In today's fiercely competitive markets, this delay is irritating, expensive and unacceptable to many customers. Their next phone call may be to a competitive supplier.

Houston-based Shell Chemical Company is using planning and scheduling software to enable quick response. The company has included Able-To-Promise (ATP) functionality as part of its MIMI advanced planning and scheduling software systems from Chesapeake Decision Sciences. ATP allows a Shell Chemical account service representative (ASR) to respond to a customer delivery request on the spot, in about a minute.

The $5 billion, multi-plant, global chemicals company is a producer of base chemicals and polymers used in downstream manufacture of both industrial and consumer products. Shell Chemical has installed the MIMI software throughout the company as part of a supply chain reengineering initiative. One of the most recent installations, a plant in Argo, Ill., has included the ATP capability in addition to the core MIMI planning and scheduling tool. MIMI/ATP allows a Houston account service representative to electronically query the Argo MIMI system and quickly determine product availability from the current manufacturing schedule.

The MIMI and Able-To-Promise software at Shell Chemical was installed and implemented by the Shell Services Company, a software and consulting organization that assists process companies worldwide in optimizing their supply chains through the use of the MIMI Planning and Scheduling tools. Shell Services is a business partner of Chesapeake Decision Sciences.

For years, the plant schedulers at the Argo plant had managed the production process using in-depth plant knowledge and intuition, assisted by electronic spreadsheets. "This simply didn't make information readily available to the account service representatives," notes Mike Becker, senior Shell Services' consultant. Numerous phone calls between ASRs and schedulers were needed to make customer delivery commitments. "Our primary objective for developing these able-to-promise applications has been to help the ASR provide better customer service," adds Becker.

The Argo plant makes over 100 resin products, virtually all on a make-to-order basis. ASRs must commit deliveries against future production as defined by the plant's production schedule.

Shell Chemical uses the SAP R/2 as its enterprisewide transactional software system. Order entry is done on SAP; scheduling is done on MIMI. The ASR must use both systems, almost simultaneously, in promising deliveries and booking orders. To facilitate ASR usage, Becker configured a "Capacity Reservation Interface" (CRI) screen that allows the ASR to query the plant MIMI system, electronically acquire availability data, and quickly book the order into SAP. SAP updates all other accounts related to the transaction (e.g., inventory, billing, financial reporting).

The benefits are apparent. "We've sharply improved customer service with on-the-spot delivery commitments," says Becker. In addition, both plant people and ASRs work more efficiently. The plant schedule has also become more reliable since MIMI's system checks many more variables than formerly considered. "Previously, we just scheduled the reactors," says Becker. "Now we schedule virtually all production elements - run-down tanks, weigh vessels, hot-storage boxes and rail car spots."

The Argo plant demonstrates how today's advanced planning and scheduling software, including ATP, can benefit both supplier and customer. For that reason, Shell Chemical continues to roll out new planning and scheduling installations in plants throughout the company, worldwide.

Heineken Harnesses Internet For Integrated Planning

Heineken USA, a subsidiary of Heineken NV, the world's second largest brewer and largest exporter of beer to the U.S., has harnessed the communications power of the Internet for integrated business planning on a global basis with the use of the HOPS (Heineken Operational Planning System) program. Developed in conjunction with American Software Inc. of Atlanta, HOPS offers applications for companies of all sizes operating from geographically dispersed locations, including such benefits as:

• companywide, instantaneous access to inventory and sales data, facilitating "one-number" planning
• dramatic reductions in lead time for orders
• enhanced manufacturing planning, scheduling and inventory management
• more responsive and cost-effective local/regional marketing
• increased efficiency of field personnel
• simplification of, and cost savings for, communications

HOPS operates on American Software's Resource Chain Voyager product, which marries forecasting and real-time replenishment with secure collaborative communications via the Internet. Simultaneous collaboration among manufacturing, warehousing, finance, logistics, sales and marketing enable a company to synchronize production and distribution to customer demand without the incompatible platform and time-lag difficulties that previously have hampered collaborative planning.

Greg Girard, senior analyst, supply chain, at Advanced Manufacturing Research, a Boston-based market analysis and consultancy specializing in supply chain and manufacturing information issues, says of the HOPS system, "Heineken has implemented an innovative solution that provides a model for other companies who want to speed products to market, improve real-time communications with supply chain partners and be more responsive to customers and local conditions."

At Heineken USA, the HOPS process begins with its distribution partners, who input actual depletion figures (sales) and replenishment orders into their own sub-pages on the HOPS site. Access is encrypted to ensure security of the data, which is available for review by Heineken management on both sides of the Atlantic. HOPS then generates time-phased orders for each distributor based on current inventory, sales forecasts and target inventory positions.

Distributors are able to revise any element of the HOPS-generated plan based on changing local conditions, seasons and/or marketing plans. Changes are available in real time to the Heineken brewery in Europe, which in turn adjusts its brewing and shipment schedules.

In beta-testing with distributors, HOPS has slashed order lead time to four to six weeks from 10 to12 weeks - an advantage that helps Heineken ensure the arrival of fresh beer to its American consumers.

Another important benefit of HOPS is the increased efficiency of Heineken's field sales representatives. "Prior to HOPS, our field sales force worked more closely with distributors on orders and deliveries," says Eric Morham, Heineken USA vice president of sales. "Now, they have significantly more time to devote to sales because distributors handle the administrative work directly with our headquarters in White Plains (N.Y.) and the brewery in Europe."

While HOPS holds obvious benefits in the forecasting and logistics field, data collected by the system will also radically change Heineken's brand management and regional marketing efforts. According to Steve Hauser, director of field marketing for Heineken USA, "Brand managers will have significantly more information available on a timely basis to help them understand such key issues as volume trends, promotional effectiveness and package and brand profitability on a street-level basis. Regional marketing managers can now analyze business trends in each of their markets before determining investment levels, target markets, channels and accounts. As an integrated planning tool, HOPS will add real value at all levels of the marketing process."

HOPS is also user-friendly in many ways. Significantly, it does not require same-system technology or software because all users are interfaced through the Internet. "There is virtually no investment required by our distribution partners" says Andrew Thomas, director of operations planning for Heineken USA. "This alone is a major cost savings for our more than 400 distributors across the country."

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