Sporting goods manufacturer Acushnet took a swing at a demand-driven replenishment process for finished goods and met peak season demand to a tee.
Acushnet, maker of Titleist and Pinnacle golf balls, sought an ultra-lean product flow to bring its game to the next level. In the highly competitive world of manufacturing and marketing golf balls, bags, and shoes, the company needed an aggressive play to drive down costs and boost supply chain efficiency.
In 2016, the company teamed up with a solutions provider partner to scrutinize its total product flow, examining fill rates and inventory obsolescence. It took direct aim at supply chain complexity.
Fairhaven, Massachusetts-based Acushnet (named after neighboring community Acushnet, Massachusetts, where it was founded) manufactures and sells golf balls, clubs, and bags under the Titleist and Pinnacle brands, and golf footwear and apparel under the FootJoy name.
In 2015, the company had sales of approximately $1.5 billion. Operating most of its production facilities out of the greater New Bedford area, the company employs about 3,000 people.
"For several years we've been looking at the ongoing challenge of supplying product—our model is SKU intensive," explains Jay Traficante, director of supply chain and procurement at Acushnet.
The company sought a partner that could help improve fill rates, reduce inventory obsolescence, and dial back overall supply chain complexity. "We considered adding forecasting models or advanced planning systems to more accurately model demand," says Traficante. "But many of these options were so expensive, we looked for an alternative."
Traficante had previously taken classes in supply chain management at the Georgia Institute of Technology, where his instructors included LeanCor CEO Robert Martichenko and Vice President Brad Bossence. Traficante quickly came to appreciate their approach.
LeanCor, founded in 2005 and based in Florence, Kentucky, is an end-to-end supply chain solutions provider that aims to "advance the world's supply chains," says Bossence. The company operates facilities in three states and Ontario.
ADAPTABLE TEAM PLAYER
LeanCor's approach involves a high level of customization. "It might include working with customers in training, consulting, or third-party logistics operations," notes Bossence. "We manage transportation; we manage warehouse operations. We implement high-impact engineering designs that are practical and that operators can easily understand."
LeanCor's technical savvy and reputation made it an easy choice for Acushnet. "They know how to implement Lean principles in a practical way," says Traficante.
LeanCor undertook an exhaustive study and analysis of Acushnet's operations before devising a solution.
The LeanCor team visited all the company's production and warehouse locations, as well as its supplier facilities. They then assembled an eight-person team composed of representatives from each stage of the supply chain to come up with a strategy.
The research directed the team to concentrate efforts in particular product lines. The team selected a subset of SKUs accounting for about 40 percent of Acushnet's total inventory. It consisted entirely of the company's golf ball lines.
After considerable study, LeanCor and the Acushnet team developed a plug-and-play tool that utilized the Kanban-inspired model of pull or demand-driven logistics aligning the degree of end use or customer demand with the level of resupply.
A key feature of flexible pull is the maintenance of "risk pooling," which starts by keeping manufactured golf balls stored but unpackaged. Product is packaged to demand, at the last possible moment, reducing its likelihood of becoming obsolete, or being in the wrong packaging configuration.
"One specific ball type might go in any number of packaging configurations," says Traficante. "We minimize risk by postponing that final step as late as possible."
TAKING AIM AT OVERPRODUCTION
Manufacturing, in turn, is governed by the "pull" at the other end of the supply chain (allowing for a reasonable margin or buffer in case of unforeseen events) to avoid overproduction.
Acushnet used a simulation system to keep tabs on inventory levels in real time. Called the Plug-and-Play E-Kanban tool, the solution monitors piece counts segregated by SKU family at each stage of the supply chain pipeline production, transportation, storage, and fulfillment. Dedicated screens reflect the constant fluctuations of manufacturing and shipping cycles.
Each screen includes guide markers, which provide alerts to the buffer and safety stock levels, providing context to the data. The goal is to operate so that inventory counts remain constant within these carefully designated parameters.
During its initial two-month pilot period, Acushnet achieved a fill rate of 100 percent, yet did so with a 30-percent reduction in finished goods inventory. It decreased rework costs (time spent reconfiguring incorrectly processed stock) by $65,000 annually.
The SKUs covered by the program during its pilot phase represented 22 percent of Acushnet's total demand. Applying the same process improvements to 70 percent of demand, net cost savings are projected to reach $250,000 per year. These metrics exceed the partners' initial goals.
OUT OF THE ROUGH
The LeanCor approach relied on simple tools, weekly status meetings, and team training. "Over time, LeanCor has become an invaluable partner from a strategy, training, and execution standpoint," notes Traficante.
Process improvement also hinged on Acushnet's own team commitment. "Acushnet team members were engaged across the various supply chain functions and ready to advance supply chain processes," notes Vimal Patel, project manager for LeanCor. "The team consistently displayed a desire for sustained improvement."
Traficante sees the new culture, techniques, and tools that LeanCor introduced as setting a precedent that will help the company tackle other SKU-intensive product lines.
"We want to instill this new training and tools in the entire staff," says Traficante. "This will allow us to take a dry subject and make it resonate with everyone on the team."
For its follow-through, the company is looking at rolling out this approach across other SKU-heavy product lines. For example, shoes come in myriad styles, colors, and sizes; golf clubs are available in both right- and left-handed versions.
In short, Acushnet has a great shot at supply chain efficiency across all its product lines.