Supply Chain implements SAP applications at two textile firms

By Adam Gifford

Auckland-based implementer Supply Chain has demonstrated it can bring SAP's enterprise-strength business applications down to mid-range New Zealand companies with implementations in two linked South Island textile companies.

It is the first time SAP's Apparel and Footware Solution (AFS) module has been implemented in the Southern Hemisphere. Both companies, Alliance Textiles and Coats Spencer Craft, are subsidiaries of the Armbro Group, an investment and management group owned by the Spencer family.

Alliance Textiles, which has annual revenues of about $30 million and mills in Timaru and Milton, near Dunedin, manufactures bedding and clothing, including the Swanndri and Protek brands.

Coats Spencer Craft, a joint venture between Armbro and Coats Viyella, has annual revenues of around $40 million. Its core business is weaving industrial woollen yarn for export and for supply to Alliance Textiles. The company also manufactures embroidery kits.

The cost of the project across the two companies was $2.5 million: $500,000 for SAP licences, $1.2 million for implementation and training, and the balance on a Compaq NT server, 120 Compaq PCs and related LANs and WANs to network five manufacturing and distribution sites across New Zealand and Australia.

Supply Chain managing director Lindsay Rewcastle claimed at just over four months it was the fastest and most economical ASAP (Accelerated SAP) implementation completed in New Zealand to date.

"As far as we know there have been no other with complete working solutions implemented. There have been others with one or two modules, but this has the financials, management accounting, materials management, sales and distribution, production planning and asset management, the whole end to end solution."

Mr Rewcastle said the AFS module "allows you to run a business around size, colour and style. Instead of having to load a product code for every shirt, I can say 'size 36, blue, long sleeves'. From a practical point of view it's a very fast way of taking orders."

Supply Chain consulting manager Robert Horner said both companies face aggressive new global competitors. At one end are low-cost, high-volume manufacturers substituting wool with cheaper synthetic fibres.

At the other are manufacturers, mainly from Europe and the United States, who are targeting the high-quality, high value segment of the international woollen yarn, garment and textile markets.

"Coats and Alliance have the best raw material and have the manufacturing know how. But to be competitive they realised they had to completely re-invent their systems and processes to implement a modern supply chain," Mr Horner said.

The aim of the SAP system and other management initiatives is to enable the companies to manufacture and deliver to order small production runs of high quality products faster and with higher quality and lower cost than global competitors - a classic niche market strategy.

Mr Rewcastle said the Armbro implementations were the pilot for SAP Compact, the first fixed-price, fixed-time SAP implementation package available in New Zealand through an alliance of Supply Chain, Compaq, Microsoft and SAP.