When textile giant Unifi Inc. set out to integrate its global network of manufacturing and processing plants, the company initially focused on enterprise resource planning (ERP). But in the course of re-engineering its software infrastructure, Unifi found it needed to reach deep into its manufacturing processes, supplier relationships and supply-chain practices to construct the fully integrated system it was seeking.
That monumental effort paid off handsomely. Not only did the company achieve significant performance benefits, it also developed a new business, Unifi Technology Group (UTG), which already is realizing profits for the company. Capitalizing on the considerable bank of knowledge and expertise accumulated in the process of meshing a flexible manufacturing execution system with an ERP operating environment, UTG helps guide other manufacturing-intensive, information-oriented companies through the technology minefields.
Unifi also gained a robust platform to support its future growth. "Unifi now has a global systems infrastructure that enables it to continue to expand its business around the world without increasing systems overhead," says Ralph Mayes, former chief information officer for Unifi and now president of Unifi Technology Group. "They don't have to replicate support structures, and they don't have to try to use fragmented data to manage their business on a worldwide basis."
Headquartered in Greensboro, N.C., Unifi manufactures and processes a product called partially oriented yarn (POY), an initial-stage polyester fiber similar in texture and appearance to six-pound nylon monofilament fishing line. The company dominates this specialized market with a 70 percent share, far outpacing its competition, which primarily is based in India and Indonesia. Major markets for POY include manufacturers of clothing, furniture and automotive upholstery.
The company generated $1.4bn in revenue during its most recent fiscal year from operations at more than 20 plants, most of which are in the U.S. At the U.S. sites, manufacturing begins with plastic pellets from such suppliers as Du Pont and Indonesian-based Nanya, which maintains a plant in South Carolina. The pellets are melted and the liquid plastic is put through a process that stretches, spins and twists together multiple threads to form individual strands of POY. Unifi then either sells this initial-stage product or sends it to its own processing plants to be texturized and dyed.
A manufacturing facility in Letterkenny, Ireland, near Dublin, produces POY directly from petrochemicals and serves markets in more than 30 countries in Europe and the Middle East, while a manufacturing plant in Brazil serves that local market, much of it automotive-related. The Brazilian operation is a recent start-up designed to eventually supply growing markets throughout South America.
As a result of the company's increasing globalization, Unifi's management initiated an in-depth planning process in 1994 to chart the company's future growth. Every corporate executive was involved, and Ernst & Young was enlisted to help guide their efforts. A "vision" document was agreed on by all executive layers within Unifi.
"This was a business document that addressed what was happening in our markets, identified the state of our current operations, and discussed what this company wanted to be in five years," recalls Mayes. "During its formulation, we really firmed up our global vision for operations and the need to build back-office and customer-based systems, inventory systems, and multi-plant and multinational kinds of infrastructures, which led us directly to ERP."
Armed with the vision document, and with Mayes spearheading the effort, Unifi addressed its systems architecture strategy, again involving Ernst & Young. Together they examined the market of ERP offerings.
"By the time we developed a global business strategy, we knew we needed an enterprise-wide systems model that could support global operations and would be highly integrated, because our global business strategy was heavily focused on the supply chain," says Mayes. That focus is because Unifi's second-stage manufacturing process has to meet highly customized requirements for coloring and finishing the POY fiber. The company saw tremendous opportunities in being better able to coordinate production with global customer demand.
"While some companies were primarily looking at ERP as a solution to Y2K concerns, our ERP strategies were driven by a sensitivity to building the next model for doing business in a real global economy," says Mayes. "We wanted to be a globally-integrated, global-customer focused kind of company, but when we looked at Unifi's software infrastructure, we clearly did not have the systems to support that vision."
To begin the process of identifying which company had the best ERP product and which would be the best partner, Unifi issued a request for proposal essentially from anyone willing to make the effort. Responses came from a wide variety of vendors. Evaluations thinned the ranks to Oracle, Baan and SAP. Unifi then intensified its investigations, performing site visits, reviewing system demonstrations and exploring customer references, again with the help of Ernst & Young.
The Unifi team selected Oracle. "We weren't looking for just an application or the best software. We were looking for the best technology company, and we thought Oracle fit that bill," explains Mayes. At the time, Unifi was using a fairly fragmented assortment of legacy-based systems designed to run on IBM's workhorse AS/400. Unifi had eight different product-line businesses, and each was a standalone unit with systems that had been designed in-house. "We had to bring all of those together under ERP, and it was a wild process," says Mayes. "That's why it took about three and a half years." Ultimately, all systems for financials, customer care and manufacturing were implemented within the
Oracle framework, as were a number of other third-party systems.
In the midst of this process, the Unifi team recognized the need to extend the ERP footprint beyond traditional ERP territory and down to the manufacturing floor, which is highly automated with processing machines that have a lot of electronics and "intelligent" features. "We began to extend the Oracle solutions - though these really weren't Oracle applications," says Mayes. "We were actually doing the integration work and developing bolt-ons and middleware that integrated to Oracle all of the manufacturing control systems Unifi had implemented over the years."
This did not completely solve the problem, however. "We still had a lot of islands of automation on the plant floor, and we knew that one of the opportunities for world-class manufacturing was to further extend and tightly integrate those islands of automation into the ERP layer," says Mayes.
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The company also recognized that it was not alone in this need. "We realized that other best-in-class manufacturers in the near future are going to be faced with the same challenge: how to take plant operations and really integrate them into the ERP layers," says Mayes. "We came up with the idea that what we really ought to do is build a service company that not only would have a relationship with Unifi Inc., but also could provide services to similarly situated global companies involved in high-tech manufacturing operations where supply-chain integration was critical and information was highly valuable."
For example, although certain transactional activities occurred within the ERP system that optimally should have immediately driven plant manufacturing operations, poor integration resulted in time lags. Another shortcoming stemmed from delays in the cycle between the time corporate decisions were made and changes actually occurred on the plant floor. Mayes says the company also began to identify poor processes: "data collection and management reports on the plant floors that were redundant and sometimes inconsistent to those reports being generated by the ERP financial systems."
As the company got further into the Oracle implementation, he adds, "we knew we would need a new generation MES [manufacturing execution system] product."
Unifi's prior MES solution, various versions of Camstar's MESA, clearly was not going to cut it in the new ERP environment, Mesa says. "But we had a good working relationship with Camstar, so when we heard that they were considering developing a Microsoft NT-based product, we got together and basically forged a partnership to develop that product." Unifi served not only as corporate guinea pig in developing the object-oriented MES, but also participated in the design, pre-alpha development, alpha testing and beta testing. It also was the first production customer.
"We really were intimately involved with them in the creation of this product and the positioning of it in the ERP environment," says Mayes. By the time Camstar released the product, called InSite, to the general market late in 1998, it had been operational at select Unifi facilities since January of that year.
InSite allowed Unifi to more tightly integrate ERP all the way down through plant floor operations, which gave it a better planning model, reduced overhead costs, and dramatically reduced cycle times, says Mayes.
It also supported Unifi's shift to higher-velocity, agile manufacturing, allowing the company to better respond to changes in production and demand planning. "We saw that whole process improve dramatically," says Mayes.
Meanwhile, Unifi continued with the Oracle implementation and the reengineering of the supply chain throughout the company's 20-plus plants. As different sites moved into the Oracle environment, the reliable but old-generation AS/400s were replaced with IBM/AIX operating systems and a combination of Novell LAN servers, which were state-of-the-art at that time, according to Mayes. They have since been replaced with Windows NT.
Here's how it now works at Unifi. Instead of individual copies of Oracle at each of the 20-plus facilities, a single massive ERP program is installed at corporate headquarters in Greensboro. Each individual plant maintains or will maintain its own copy of InSite or, if plant floor operations don't require the complexity of InSite, the MES system that had been used for tracking materials through the manufacturing process. All of these systems are tied into the Oracle ERP. The individual plants are online in real time to Greensboro.
With help from UTG, Unifi has built in certain levels of redundancy at each plant location, says Ben Holder, managing director for UTG.
"We basically have created miniature ERP databases at each of the sites that have just enough information in them that the plant can operate even if a disaster strikes Greensboro," Holder says. Both Oracle and the individual manufacturing execution systems regularly store data to minimize recovery time in the event of a system failure. Once a day Greensboro downloads specific ERP information to the individual plants, which becomes the short-term backup system in the event of an ERP service interruption. After such an interruption, all transactions stored in plant-site MES systems automatically are forwarded to Greensboro.
InSite now is fully installed at several Unifi plants, and the Oracle rollout is more than 90 percent complete.
The benefits of the MES were immediate and encouraging, says Rob Rudder, UTG director of corporate marketing. "We've been able to move more of the dye operations to a whole build-to-order model as opposed to build-to-forecast, and in dyeing that's pretty critical."
The dyeing operations are the last group to undergo the Oracle conversion due to their complexity, says Holder. "There's a great deal of batch tracking in the dye operations as customers, particularly in the automotive industry, have very precise color characteristics. This type of an operation is a ready-made fit for MES, which facilitates the collection and tracking of that granularity of detail."
"When you think of all the different dye combinations you have - literally thousands of them - you end up with a staggering number of SKUs," adds Rudder. "And in reality, you almost have a SKU for each batch that moves through the plant. There are 10,000 different dyeing colors alone, and then you have a variety of fabric combinations to consider as well as properties of finish."
Given those factors, it's difficult to cost-effectively build inventory in dyeing operations, says Rudder. This places a tremendous premium on a flexible MES, which enables Unifi to introduce new dye lot colors quickly using an automatic setup function within the manufacturing process. This results in a quicker turn to market as well as the ability to do more build-by-order.
"With this agility in manufacturing, we're setting ourselves up for more build-to-order and tighter custom response to specific client customer demands," he explains. "We are capable of much faster changeovers, and because of the high visibility we get from InSite, we can promise delivery with far greater accuracy."
As a result, Rudder sees the opportunity for Unifi to become a much more valuable trading partner to its customers. "Of the downstream textile customers Unifi ships yarn to, Unifi may represent 70 percent of their supply chain. Our product is the primary raw goods inventory coming in, which they take and weave and make fabric," says Rudder. "With the flexibility of our MES coupled with the ERP environment, we see a tremendous opportunity to help coordinate downstream with our customer base through the whole supply chain and work with their systems as well as, hopefully in the future, their customers' systems."
For example, Du Pont ships truckloads of plastic pellets from its two eastern North Carolina plants to Unifi's primary manufacturing site in Yadkinville, N.C., less than two hours away.
"Since Unifi is sharing this information on a real-time basis with Du Pont, they know when we issue a want-to-use for their product, and they will track that material in their own system," says Rudder. "They also will track inventory levels on a real-time basis."
This information sharing enables Du Pont to take preventative action to keep Unifi from using a particular batch of pellets if they notice or suspect a quality problem. "After they release their inventory to us, they may do some off-line testing and discover that they have a quality issue with a certain lot number. We expect to see more of this as manufacturers capitalize on managing their supply chains," says Rudder. "And since real-time information eventually will be made available to all trading partners, finished goods and work-in-process inventory levels can be reduced."
The bottom line, he says, is that quality information is being shared and used across the supply chain. "And we see that expanding in the future as we are able to coordinate with other suppliers, particularly downstream suppliers, as they make investments and come along with technology."
The operation is moving closer to a just-in-time scenario, says Holder, and ultimately that's what Unifi wants, particularly with premier vendors like Du Pont. "We would like to give them better and more real-time information about our needs for POY, but already the process has tremendous value for Unifi. Right now, we only own the work-in-process for a couple hours before it becomes finished goods for us and is ready to move out the door."
It's a process not unlike the Dell model, says Rudder: Dell sends customers' orders to suppliers, who immediately send out trucks. Dell doesn't take ownership of the material until it enters its facility.
"We already have that model working pretty well on the raw inventory side," he says. "We'll see an even greater value to the supply chain when we can work more tightly with our end customers to help them build their business models so they don't have to accumulate a raw goods inventory. We want our customers - particularly the textile companies - to be healthy and continue to thrive here in the U.S. Part of what they are going to have to do is implement responsive manufacturing techniques and limit the amount of working capital that goes into raw goods and finished goods inventory."
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