Shearing merino from the backs of sheep high up in the Southern Alps isn’t an easy job. For a merino clothing manufacturer, however, the biggest hurdle occurs well before the shearing shed.

First they must accurately forecast demand for their garments, before buying the correct quantity and grade of merino for production. Not getting this right can jeopardise the entire business.

From low-key beginnings in 1995, Icebreaker is today recognised as the leading worldwide manufacturer of high-performance merino clothing. But such rapid growth is double-edged when it outpaces critical systems, like forecasting. The mismatch tends to obscure a clear view of the global supply chain.

Icebreaker CFO Marshall Maine knew the critical first step was upgrading his company’s Dynamics NAV platform. The refresh paved the way for a customised master production scheduling (MPS) system and supply chain clarity the company required.

Working with Fujitsu, Icebreaker now has a mountaintop view of its global business.

The challenge
Icebreaker pioneered and now dominates the merino outdoor clothing category, using a layered clothing system to create high quality merino garments. It was an industry revolution, which in five years propelled the company from an idea to the largest outdoor clothing brand in Australasia.

From there, Icebreaker pursued a global vision and in 1999 first exported to Europe. Today, Icebreaker offices in the US, Australia, Europe and Canada support sales in over 1500 stores across 22 countries.

For most companies, such rampant growth tends to squeeze systems and processes, particularly underlying technology. Icebreaker was concerned about its forecasting ability and dreamed of an uninterrupted view of its global sales.

Sales forecasting is critical to every manufacturer, but especially for Icebreaker, whose raw material – merino – takes an entire season to grow. Oversupply and carrying the cost of extra inventory is one thing, but underestimating demand would leave customers high and dry for an entire season. Speeding up merino production to minimise the effects of poor forecasting is not an option.

Icebreaker wanted a unified forecasting system that accelerated its planning process and introduced more confidence. Though spreadsheets had proved sufficiently accurate, combining regional forecasting data and populating a Jet reporting system was slow and required double handling and extra checking.

Further complicating matters was intercontinental access to Icebreaker’s Wellington head office reporting system; without thin-client access sales offices struggled to run reports of their own.

The solution
Icebreaker’s incumbent system – an earlier version of Microsoft Dynamics NAV (formerly called Navision) – was heavily modified and didn’t offer the flexibility or scalability the company knew would be required to support its growth.

Upgrading to Dynamics 4.0 immediately solved this problem and paved the way for the MPS module and downstream reporting. The refresh also introduced FIFO (first in, first out) costing, replacing historic costing, to reflect more recent offshore manufacturing and procurement.

Procurement planning is dominated by quarterly buying rounds, where Icebreaker works with customers to forecast seasonal indent orders, rather than accepting more sporadic purchase order amounts to satisfy safety stock levels.

Icebreaker sales offices now directly input forecast data to the MPS system, doing away with spreadsheets. Thin client architecture has overcome the tyranny of distance and rich reporting using Dynamics NAV Business Analytics – an SQL-based three-dimensional cube modelling sales, inventory and forecasting data – will equip the company with the intelligence it needs.

Benefits and outcomes
“When you’re growing at such a phenomenal rate accurate forecasting is absolutely critical to the success of the company,” says Maine.

“Material Requirements Planning (MRP) lets us do that.”

Icebreaker’s new MRP system effectively consolidates once separate regional sales forecasts and provides a reliable head office view of its global sales operation.

Maine is confident that his now improved forecasting is making a positive bottom line impact, though continued growth complicates a firm dollar figure assessment.

“It’s hard to say, but gut feel says, yes, it must be,” says Maine.

In making this appraisal, he points to better inventory management, in terms of both lowering stock holdings and getting the right stock, in the right place, at the right time.

“To grow our business, we can’t have money tied up in stock,” says Maine. “But you can only do that with a clear view of consolidated sales forecasts.”

With so much at stake, trusting data is another factor. Double handling data, as Icebreaker did using spreadsheets and standalone reporting, is fraught with the potential for error.

Using an integrated system to capture data at each regional source eliminates these risks. What’s more, the entire process required to produce an MRP schedule is much faster – down from four hours to just four minutes, says Maine.

“This is the main problem it solved. With Dynamics NAV you can take the answer as read. We have much more faith in the numbers it generates.”

In choosing Dynamics NAV, Maine has positioned Icebreaker to capitalise on a Microsoft environment, simplifying the integration of future add-ons and third-party operations, such as warehousing.

“We’re confident we now have the platform to keep growing the business, enter new markets and expand our product range.”

Looking back Maine admits the outcome might have been different had it not been for Fujitsu. While reviewing his incumbent IT supplier’s ability to manage the Dynamic NAV upgrade, Maine took a call from Fujitsu.

“I was working with another company and initially treated Fujitsu proposal as academic,” he says.

“But they blew us away – even if they did just half of what they said they could. Their entire approach has been way better than we anticipated. They very quickly understood the business, which is complex. They just picked it up.”

For more information
Fujitsu
+64 9 921 8093
www.fujitsu.co.nz

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