Over the past 100 years, Contech Engineered Solutions of West Chester, Ohio, has grown into a diversified civil engineering company that provides bridge, drainage, erosion control, retaining wall, sanitary, soil stabilization and storm water solutions on a national scale. These solutions power national infrastructure systems like interstate highways and bridges, but for the past few years, a slow economy and the unpredictable price of raw materials such as steel and aluminum have placed pressure on Contech's bottom line.
"Volatility is part of doing business," says Randy Ramsey, director of supply chain at Contech. "But we needed to improve our planning processes so that we could better react to anything that came our way, from good news - like an unexpected, large order - to challenges, like materials shortages."
The S&OP journey
That's when Contech moved to improve its supply chain management processes. Upon close inspection of these processes, officials there realized that a successful history of acquisitions had resulted in escalated growth and a world-class team but also extended complexity with multiple processes and systems. Without a centralized team approach and consistency throughout the organization, the business was not optimizing to its full potential and was getting by without a tight view on the critical raw materials needed to run an efficient business.
"Five years ago, we had a world with no spreadsheets, but a whole lot of demand plans," says Ramsey. "Product management had a forecast and demand plan; the operations team did their own demand plan on orders; and the sales team had their own demand plan. In addition we had a fragmented set of systems supporting each function."
In order to continue to go after market share opportunities while optimizing working capital, Contech created a supply chain organization to cross over all of its functional areas and optimize its core assets. The company pulled its functional areas together to ensure early collaboration and put a strong emphasis on people, process and technology while focusing on sales and operations planning (S&OP).
The century-old business planned for growth by shrinking the time between manufacture and delivery to customers.
"We couldn't have picked a better time to have developed our supply chain team and sales and operations planning process. Both are key to our agility, helping us keep a finger on the pulse of the market," Ramsey says. "We stay ahead by focusing on our network, strategic inventory and demand patterns. These all feed into good S&OP and ensure we're never behind the eight ball."
"When we first began working with Contech, it was clear that they had a sophisticated understanding of their ideal S&OP process," says E.J. Tavella, Steelwedge vice president of strategic sales and solutions. "They were looking at the business holistically, and had decided to leverage the supply chain for the best business outcome not just to optimize a single section of the supply chain. They didn't just want to manage the pain points, they wanted a structure that allowed them to react quickly when opportunities raised their head ... whether they were predicted or not."
For Contech and Ramsey, the driving goal of supply chain and S&OP was year-over-year improvement, beating the market and achieving strategies to drive customer satisfaction. By implementing the Steelwedge platform, the company got a centralized view of the demand plan powered by a mix of management forecast, statistical forecast, historical data and future quotes. All of this information is collected and rationalized in the Steelwedge system. The reports are then distributed across the company to power improved planning:
The product management group provides direction driven throughout the organization. They can in turn be more strategic, and give better direction to the sales team. With Steelwedge, they have visibility and reports, but more importantly, Contech has a process driven through the technology that ensures communication and collaboration takes place.
Contech's supply chain group is able to merge multiple data sources, create supply chain pulls and continuously maximize benefits. They have the data they need and an 18-month future forecast to help them ensure the right, limited amount of critical raw materials - not finished goods.
The Contech executive team taps Steelwedge as a foundation for business plan decision making, leveraging the robust 'what if" modeling to explore a myriad of business scenarios. This exploratory modeling includes how to power a 40-plant supply chain network and centralized material sourcing for a quicker turn on its stock strategy.
For the finance team, Steelwedge helps better predict inventory projections and impact on financial model.
Since implementing S&OP and Steelwedge, Contech's tight demand plan has improved its customer service levels 5 to10 points. And it has taken 30 percent to 40 percent out of its working capital requirements, according to Ramsey.
"There's no doubt we've got payback. And it isn't just about discrete financial metrics," he says.
"There are numerous opportunities we wouldn't have been able to go after; we wouldn't have been fast enough, integrated enough, agile enough to capitalize on. Today, we power more strategic initiatives, and grab more market share from our competitors.
"For example, green energy opportunities are growing and shifting quickly. We had to be in the right place at the right time. Through S&OP, we know all of our leverage points - and can do significant 'what if' scenario modeling - to determine the best outcome."
Making the Demand Plan Irrelevant
While a huge benefit of Contech's supply chain strategy has been a central, reliable demand plan, Ramsey says he's not driving to a certain percentage of accuracy in his demand plan. He's focused on the upside the demand plan gives him in agility.
When an unexpected curve pops up, good or bad, Contech has an agile, lean supply chain to respond and recalibrate for the best opportunities and growth. For example, a recent spike in business beat the company's plan by more than 30 percent. "We responded and met the needs of our customers," Ramsey says. "We made the demand plan irrelevant in that case.
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