Mohawk Paper Mills acquired the Fine Papers division of International Paper, significantly increasing the size and complexity of their business. After a best practices gap analysis, Mohawk was determined to create a strong central Sales, Inventory, and Operations Planning (SI&OP) process to manage the business.
The resulting process included a weekly executive review driven by the COO to monitor trends and progress against the plan. Senior management participated, including the CFO, Sales VP, Marketing VP, Manufacturing VP, and IT VP.
This SI&OP process enabled Mohawk to focus on decisions that immediately impacted performance. Some of the main benefits included:
The anchor of the SI&OP process was an inventory optimization system, powered by ToolsGroup's SO99+. It defined inventory targets for each stock item at each location across the network and performed forecasting, service level planning, and inventory mix optimization. It also handled requirements planning, resupply of regional (level two) DCs and passed manufacturing replenishment requirements to their production scheduling system.
With the help of consulting partner SCPI, Mohawk started by defining inventory targets quarterly. But they efficiently transitioned to a monthly planning process and the resulting system was up and running within one month of purchase.
Over the course of project, Mohawk’s customer service level metric was changed from “order lines shipped complete within 5 days” to “order lines complete and available at time of order”.
Despite the more demanding metric, within about 6 months customer service levels were increased from 85% to 93%. This service level increase was achieved despite significantly reduced expediting.
Meanwhile, global inventory has been reduced 25%, while supporting an 8% increase in sales, resulting in a 40+% improvement in inventory turns.
Both the improved service levels and the optimised stock inventory mix have led to improved profitability to the company.