The sweet smell of success
by Steve Slesinger
FOR CALVIN KLEIN Cosmetics Company (CKCC), the sweet smell of success comes in several verisions: Obsession, Eternity, cK one and cK be—some of the company's fragrances that enjoy tremendous popularity with consumers around the world. As a result, the company has experienced unprecedented growth, along with two challenges typical of rapid growth: using manufacturing capacity most efficiently to meet high demand, and fulfilling orders quickly enough to satisfy customers.
After reaching capacity in its manufacturing facility in Wayne, N.J., and its distribution facility in Mt. Olive, N.J., CKCC recognized a new approach was needed. The company brought in CTG (Computer Task Group), an international information technology services company, to consult on a business reengineering plan. Working closely with CTG‘s Melbourne, Fla., office, which specializes in warehouse and manufacturing automation, CKCC identified two key goals and, together with CTG, expressed each as a clear, concise mission statement.
The reengineering of Calvin Klein Cosmetics Company's manufacturing and distribution facilities in New Jersey began in the design phase with new thinking about how orders were processed and shipped.
For distribution, the mission was defined as “Order Today, Ship Tomorrow.” The manufacturing mission was summed up in “Supply the Demand.” To accomplish both tasks, the company decided on a total reengineering of both its manufacturing and distribution facilities.
From Specifications to Execution. Appropriately named “Trendsetter,” the reengineering project was divided into a two-stage, three-year project to integrate manufacturing and distribution. Specifications included a nearly paperless system combining real-time inventory control with high-speed automation, including conveyors, sortation systems, bar code scanners, radio frequency data communications terminals and a weigh-in-motion scale.
Other factors that had to be considered during the design stage included the need for a significant amount of human interaction with the system. Similarly, there was a need for “macro-flexibility” to accommodate seasonal throughput swings. CTG‘s experience in designing manufacturing and distribution systems also correctly identified a need for “micro-flexibility” to accommodate the slight differences in system operation occurring naturally throughout the day; for example, the subtle differences between workers on the first and second shifts.
Because of the high degree of automation proposed, designing backup procedures was critical—procedures for manual execution of processes, for example. Permitting manual, off-line processes also necessitated fast, simple procedures for updating the information system after those manual processes were completed to ensure that all records remained accurate.
The most important factor in integrating manufacturing and distribution—and consequently, in structuring the project—was the separate locations of these facilities. A key recommendation was to move the manufacturing facility to a site adjacent to the existing distribution facility to achieve “through-the-wall” integration.
The project was divided into two phases, to allow time for siting, design and construction of the new manufacturing facility: Phase 1 devoted to reengineering the distribution facility, and Phase 2 to integrating the newly constructed manufacturing facility into the distribution system. Beginning the project with the distribution facility also brought the results of the project—improved customer service and order fulfillment—to CKCC‘s customers sooner, and ensured that the distribution facility could handle the new manufacturing facility's improved capabilities when it came online.
Phase 1. Order Today, Ship Tomorrow. Phase 1 required approximately two years from the initial consultation to bringing the new system online. After the consultation, CTG was named the primary contractor for the project. A subcontractor, Rapistan-Demag of Atlanta, Ga., a firm specializing in automated conveyors and sorters, was retained by CTG to install the conveyors and bar code scanners.
Critical to the new system is its integration of the right information technology tools with plant equipment, a challenge that CTG‘s extensive experience in business reengineering qualified them to meet. They integrated CKCC‘s existing information technology system with the new manufacturing and distribution equipment to produce a seamless productivity system.
The information system now uses a three-tiered client/server architecture. An IBM AS/400 host runs the J.D. Edwards accounting program. An IBM RS/6000 runs the Oracle database (Version 7) under the AIX operating system. The system is linked by a local area network with approximately 50 IBM PS/2s running IBM‘s OS/2 operating system and using distributed client/server applications with peer-to-peer cooperative processing.
For ease of use, a graphical user interface was implemented by CTG programmers using Smalltalk with object-oriented technology and the ENFIN tool. All other application software for manufacturing and distribution was written in C.
Some data communications are performed using wireless radio frequency technology supplied by Teklogix. Radio frequency allows mobility and real-time feedback as inventory operations are performed. For this project, radio frequency technology also made integrating the system simpler during Phase 2, when the new manufacturing building was brought online. Other system interfaces include a weigh-in-motion scale and a pick-to-light system from King-way CAPS. Rapistan-Demag supplied conveyor controls.
Off-Site Testing for Operability and Performance. To avoid false starts and unnecessary downtime, CTG worked closely with subcontractor Rapistan-Demag to assure that all components of the system worked together as planned before installation. Off-site testing in Rapistan-Demag's Atlanta facility allowed both CTG and Rapistan to integrate the hardware and software elements of the system and reduce the chances of malfunctions or loss of productivity due to incompatibilities or unanticipated problems.
Building in Speed and Flexibility. CTG introduced high-speed sorters and wave sorting, where many orders are picked and sorted simultaneously, to replace the previous process where individual orders were picked serially. To add extra capacity and to provide for the possibility of a sorter breakdown, a procedure called an “Off-Sorter Wave with a One-Shot” was added. In this procedure, a batch or group of orders consisting largely of the same Stock Keeping Units can be done manually off-line while the automated sorter continues to process other orders. After the off-sorter wave is packed for shipment, all the information is updated into the computer system “in one shot.” In one instance, CKCC actually performed the off-sorter wave off-site in another distribution facility, then entered the information into the system, keeping it current and further speeding deliveries to its customers.
CTG provided system capabilities for extensive logging of error conditions and daily automated system health checks to identify data or inventory problems, user errors and other errors so that errors can be corrected before they disrupt the system. CTG also provided formal documentation of the new system, including interfaces with CKCC‘s existing host systems.
Measuring Success. In every area, results from Phase 1 met or exceeded expectations. Productivity increases included:
In the first week of operation using the new system, CKCC eliminated its entire shipping backlog—for the first time in more than a year.
The facility realized a 65 percent improvement in zero-to-three-day order fulfillment.
During the peak shipping week, throughput doubled the previous high throughput attained under the old system.
CKCC experienced a significant reduction in overtime, despite large increases in sales, orders and number of cartons shipped.
Keys to a Successful Consulting Relationship
Continuity—Involvement from initial consultation to project completion allowed CTG to leverage its knowledge of CKCC‘s business.
Relevant experience—Having performed many business process reengineering projects in manufacturing and distribution enabled CTG to integrate ideas from many sources.
Don't impose a solution—Don't let your experience in one industry limit you, either. CTG works to understand each customer's business, vision and values before proposing a solution.
People make projects succeed—From the executive level to workers on the plant floor, people make projects and systems work. The best-planned project will fail without buy-in, cooperation and teamwork.
Shared objectives—While meeting clearly defined specifications is critical to every project, understanding and meeting the customer's expectations is the key to CTG's project management methodology.
Other improvements included true realtime inventory control throughout the entire facility, another first. CTG was also able to move information to other systems within CKCC. For the first time, sales and customer service personnel could confirm for customers when orders left the building simply by looking up the information electronically.
The new system also provides advance ship notices to customers. The notices include an inventory of contents of each carton, so customers know where each item is packed when they receive their orders.
Another customer service improvement is the automation of all paperwork for international orders. Previously requiring up to a week to prepare manually, all paperwork for customs and shipping compliance can now be printed out as soon as the order is packed. This faster turnaround produces an additional benefit for CKCC: orders that had been sitting on the dock waiting for complete documentation are now shipped immediately, freeing warehouse space for other shipments.
Phase 2. Supply the Demand. While Phase 1 proceeded, CKCC was able to move ahead with siting, designing and constructing the new manufacturing facility next to the existing distribution center. After being awarded Phase 2 of the project, CTG leveraged its experience and knowledge of CKCC‘s business from Phase 1 to help CKCC realize synergies of operational procedures, inventory, processing and flexibility in the fully integrated system.
Designed as an automated engine to feed production, the completed system allows tasks to overflow into adjacent buildings as needed and permits flexible staff movements from one building to another. The system also allows CKCC to maintain lower inventories and avoid double handling of goods because products flow directly from the manufacturing floor to sorting, packing and shipping to customers.
Maintenance and Service. On completion of the two major project phases, CTG provided maintenance and system refinements. For example, a series of input error checks were added to avoid operator errors such as erroneous inputs. When a typographic error can turn 100 labels into 10,000, a “reasonability” test added to the system software eliminates potential wasted time and materials by double-checking inputs.
Built to accommodate future growth, the system permits the host computer to off-load processing demands to other computers so that the information system doesn't slow the entire process during intensive processor operations. Software codes added to areas such as the database allowed the database to “catch up” when the system would have otherwise been forced to slow down when accessing the database directly.
FROM A PROJECT MANAGEMENT perspective, the overall goal is a satisfied customer. Meeting the customer's expectations is just as important as merely fulfilling project specifications. Close cooperation and teamwork between the customer and the project manager are essential, as is learning the customer's business until you know it as well or even better than the customer does. Throughout the project with CKCC, CTG identified needs that were not originally specified and moved to meet those needs. The overall result proved that sharing the customer's vision and values is the key element in bringing a project to a successful conclusion.
Steve Slesinger is a program manager in the CTG Logistics Practice with 20 years of experience in software engineering and program management. He has managed multimillion-dollar projects for Whirlpool, General Motors, General Electric and the Defense Mapping Agency.
PM Network • April 1997
PMI research shows project teams that draw from an array of perspectives and skillsets deliver powerful outcomes.