Supply Chain Operation & Logistics Collaboration of COATS BD.

Executive Summary
Supply chain is an important thing for any organization. A supply chain is the sequence of organization-their facilities, functions and activities that are involved in producing and delivering a product or service. An organizations performance depends on better implementations of the supply chain. So we conduct our project on the supply chain operation and logistics collaboration of COATS BD. COATS BD is one of the most renowned sewing thread manufacturers. Its a subsidiary of COATS UK. They are mainly producer of sewing thread but they also produces zipper. They got huge variety of product line to serve the whole world. COATS BD have a huge supply chain department under which there are procurement, production, warehousing, information flow, logistics and all the operation are coordinated. The department is monitored by supply chain director and head of supply chain. Among their huge line of product they export of the product to their parent company and only two of the products are used for local garments. For better quality they import most of the raw materials like yarn, dye from different countries. The machineries are also imported from different countries. For production they use customized process technology. They also use ERP system for better management of supply chain and production quality. Their main issue regarding supply chain is the demand forecasting. Often they faces problem in color management according to demand. And that cause a huge problem to them as it slow down the production process. Another problem they face is the logistics collaboration. As they got two plants one in Gazipur and one in Chittagong so often they face problem in time management in logistics collaboration. Thats why we conduct our report on supply chain operation and logistics collaboration. For the better production we suggested COATS BD to implement some strategy. One is for better forecasting we suggest them to follow the simulation technique. Doing this they can forecasting the demand for color and can improve their production. And for better logistics collaboration we suggest them to follow repositioning technique by using liner programming technique.

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

Company Overview
Coats Bangladesh Ltd, a subsidiary of Coats Ltd UK, is recognized as the most trusted and recommended thread manufacturer and market leader in supplying of Industrial Sewing Thread. Perhaps, that is why many of the high street brands prefer as well as recommend to use Coats Thread. JourneyofCoats In its journey of more than 200 years, Coats has established its manufacturing plants in more than 70 countries and expanded its business operations in over 150 countries, worldwide. Merger with Tootal In 1990, Coats expanded its business horizons in Bangladesh and started its operations as Tootal Thread Bangladesh Ltd. In 1997, a global merger with Coats and Tootal Thread formed which is presently recognized as Coats Bangladesh Ltd. At present, Coats Bangladesh Ltd has 2 state-of-the-art Dyeing plants established in Chittagong and Gazipur. With over 800 dedicated employees, Coats Bangladesh is one of finest examples of enriched human resources. ISO & Oeko-Tex Certified Coats Bangladesh was the pioneer in achieving the ISO 9002 Certificate in the Textile Sector. In its continual strive for excellence, Coats Bangladesh has recently achieved the ISO 9001:2000 Certificate. Not only that, Coats has been 'Oeko -Tex' Certified for having Eco Friendly products. Even the 'Best' can be 'Better' -the drive for Coats continues with the focus of strengthening relationship with the customers ensuring enhanced product quality and valued services with every upcoming year.

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

THE PEOPLE At Coats Bangladesh, people do not stand on their position. Thought, contribution and teamwork are valued over job titles and status. We operate on informal basis with one another. We see ourselves as members of a global team, all with something important to contribute. THE WORKPLACE The atmosphere at Coats Bangladesh is designed to foster personal, professional and corporate growth. We work together in a spirit of cooperative teamwork and trust, emphasizing the following shared values: We know what we are doing. We like what we do. We keep our promises; globally we recognize that customers pay for actions, not words. We commit ourselves to understand and improve customer profitability. We take social, ethical and environmental responsibilities seriously. We use our capacity to imagine, innovate and improve. We take considered risks. We compete as a team. We are proud of Coats and our collective achievement. We view the future with confidence. We expect our work environment to reflect a sense of community while nurturing a commitment to innovation. You will find a culture that encourages open dialogue and the sharing of ideas, that prefers conversations over presentations. We are comfortable, yet professional. We are casual, yet respectful. Coats is the world's leading producer and supplier of sewing thread used by clothing companies, footwear manufacturers, furniture makers, car seat upholsterers and people who sew at home. We are the only company in the world with the capability to produce thousands of thread products to high quality standards and in colours specified to meet the unique requirements of customers. Today, we have manufacturing facilities in 68 countries in the world and our products are marketed in 150 countries. Our global reach means we have the capability to ensure swift product delivery anywhere in the world whether the demand is for high quality, performance thread for making fashion clothing and sportswear or thread for more unusual applications including car air bags, hot air balloons or even tea bags. For those who express their creativity through embroidery, crochet and knitting, we provide the finest threads under a range of leading brand names including Sylko, Red Heart and Anchor which are sold through well-known shops. Coats is also the world's second largest manufacturer of zips for clothing, footwear and luggage.

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

Supply Chain Operation

Before 2000 Coats BD had only two departments to manage all the operation and the departments were Planning department and Manufacturing department. After the year 2000 the parent took a global supply chain strategy under which the procurement, production, warehousing, information flow, logistics and all the operation coordinated by one department that is Supply Chain Department. Under the supply chain department there is a Supply Chain Director to monitor operation and Head of supply chain who execute all the operation strategy. A detail diagram is given in the Appendix for better understanding how the operation is done. Below mention are the breakdown of the operations of the Costs Bangladesh.

Products:
Coats BD is a leading thread producer in the world. It has a diverse array of thread produced and supplied worldwide. Major Products are: Product Name Coats Dual Duty Product Type Application Polyester Cotton Classic jeans Corespun and outdoor ( Soft cotton rapped wear around polyester Fine cotton, denim shirts and suits Leather goods, towels and home furnishings Fine fabrics and premium lingerie corespun thread which is produced by spinning a staple polyester sheath around a core of high tenacity continuous filament polyester

Coats Epic

Page

Shirts & Blouses ress & Slacks Intimate apparel Sportswear

Supply Chain Operation & Logistics Collaboration of COATS BD.

COATS RUGGED

ASTRA polyester designed for garments. cotton thread

thread denim

designed denim garments

for

Dymax

designed for sewing cotton garments that are to be post dyed international sportswear companies small lettering on fabric or leather. T-shirt, Track Suits and hosiery garments.

COATS SYLKO

filament polyester

trilobal

Sylko Art

fine count bright trilobal polyester

TIGER (locally sold)

Spun Polyester Thread

Raw Materials:
There are different numbers of raw materials needed such as Alkalis, Organic solvents, , Acids Organic solvents, Packaging, Mineral Acids and the most important of all dye and Yarn. All of the raw materials are imported from the different countries in the world. Some chemicals are imported specially from some specific countries to maintain high quality and color consistency,

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

Procurement of Raw materials and equipment:

Coats has a very limited number of supplier to maintain its unique quality. The yarn is imported mainly from Chinese and Indian Coats subsidiaries and the dye stuff are bought from a German company named BASF and the chemicals such as lubricants, Acids, Alkali, and Micro soft powder are bought from a Swiss company named Clarient. They could have many suppliers but because of the relationship marketing and quality which is their major competitive advantage they limit their suppliers. Also if they collect the raw materials from other sources for example the dye stuff the output of the colored yarn would be different.

Production Process:
The production process uses highly customized machinery for producing a larger amount of volume. For the production process they use Cellular Technology by grouping items that has similar processing requirements. So they use a process technology to process. First the Yarn is died then it is lubricated as per the specific requirement of the customer then it is winded finally after packing the order is shipped. In the appendix the details flow chart has been provided. After the dying finished the polluted water is sent to the water treatment plant for purifying and realizing.

Yarn Dying

Shipping

Bleaching

Packaging

Lubricant

Page

Coats BD Ltd. Has two plant in Bangladesh the first one that established 1987 in Gazipur and the recent one is in Chittagong. Both of the plant performs similar operations that is dying yarn, packing and shipping. Both of the plant share same technology and use materials back and forth.

Supply Chain Operation & Logistics Collaboration of COATS BD.

On the other hand the equipment and machineries they use are also made by a German Engineering company Named Minmax Corporation.
Coats BD Plant Clarinet RM BASF
Repositioning

Gazipur Yarn Dying Chittagong

Packing Shipping

Coats Indian & Chinese Subsidiary

Yarn

Equipment & Machine Minmax Corporation

Information Technology:
In 2007 sap Implemented SAP provided ERP(Enterprise Resource Solution) to manage and integration of their production management specially the Material Management and Business Process Management (ordering, purchasing and so on). For example when a particular order is places into the ERP solution it takes the data into material management and makes the Bill of Material. Based on the BOM the raw material are released from the warehouse and starts production. Also worker schedule and machine scheduling and capacity planning, payroll, accounting is done through the information system.

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

Logistics Collaboration:
Raw materials are both delivered by Air and Ship. The ship comes through the destination from the supplier vai Singapore port to Chittagong port. Then material repositioning is done through Third Party Logistics company named Novo Transportation Ltd. Each truck has a capacity of 1.5ton. The supplies are come to Gazipur Plant via Chittagong Plant. Also they use another partner A.H. Khan who have 14-16 small pickups to transport material from Gazipur Plant to Chittangong plant back and forth.

Demand Planning:
The company has a demand planning department to smooth the demand and supply of their products. They use frequent forecasting techniques to predict the future demand and capacity planning. Traditional forecasting techniques like linear regression model and time series analysis are used. Their forecasting techniques have limitation like in time of uncertainty about raw materials the forecast do not provide good quality forecast accuracy. For example the order for different color is so random that they could hardly tell which color order will come next. Thats why they are always in perplex what color inventory should be managed. As a result higher level of safety stock is maintained to avoid stock out cost.

Inventory management:
Coats BD has a inventory policy of three month. Of that three month one month inventory is kept in the warehouse and next one month inventory is always in transit ( on the ship) and the final one is in the process of shipping. So they use continuous pipelining inventory to hedge against price risk. As a result they are hedged again three month price risk. Moreover, they only keep raw material inventory that means they do not have any finished goods inventory. This process they call Make to order process. Typically upon receiving the order only then the production starts. Because of the high and continuous demand the machines do not sit idle.
Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

1st month in warehouse 2nd monts in vessel 3rd months about to ship

Capacity Planning:
The production runs 24/6. The production runs in three shifts. A total of 64(Gazipuir factory 32 and Chittagong factory 32) dying machine operates daily with a set up time of 3 hours per day. With a Maximum Effective capacity of 11 LpMpd (lots per meter per day) and each lot contains 500 cones of thread.

Page

Supply Chain Operation & Logistics Collaboration of COATS BD.

Suggestions
Better forecasting technique:
Coats BD Ltd. faces a major problem regarding the forecasting of color demand and managing color inventory. The order for color is very random. For example it got an order to make a green and then got another order that requires to make green yard but a different shade than the previous one. It then sends the desired color to its lab and the lad determines which proportion of red, yellow and blue are required. So suggesting using a simulation model to forecast the demand of the basic demand of red, yellow and blue as a dependent variable and all other color that has been ordered previously are independent variable. Then calculating frequency and cumulative frequency to calculate the probability and cumulative probability distribution. The method is called Monte Carlo method which is a probabilistic simulation technique used when a process has a random component. If this method is used the error will be reduced by 1/ Observations. where N is the number of Random

The problem is to approximate the integral of a function f as the average of the function evaluated at a set of points x1, ..., xN. Thus the model can be described by.

By solving and finding the cumulative probability of the colors red, yellow and green we will be able to solve the problem.

Page

10

Supply Chain Operation & Logistics Collaboration of COATS BD.

Better Logistic Collaboration:

From the analysis we have found the

repositioning time of material is quiet high. By that we mean they could minimize the repositioning time. As they follow make to market means no finish good inventory which requires JIT(Just in Time) process. Receiving products early would help to better run the operation. Because the vessel comes to Chittagong via India, China and other eastern countries Coats can use both Mongla and Chittagong port to reduce repositioning of materials.The vessel comes through Mongla port to Chittagong port download the materials and then the Novo Transportation Ltd takes the material first to Chittagong Factory then all the way come to Gazipur factory. Intead if we use the two ports simultaneously the two factories will receive the order almost simultaneously. As a result the repositioning cost will be reduced. So shippers carrier and third party logistic collaboration is required. With the help of linear programming we can prove that timing of the repositioning will be optimum. In the following linear programming ZL= Minimum repositioning cost Cij= Unit of distance covered Xij= Time required per unit distance covered

Page

11

Supply Chain Operation & Logistics Collaboration of COATS BD.

Appendix
Page

12

Supply Chain Operation & Logistics Collaboration of COATS BD.

Company Profile

Name of the Company Address:

COATS Bangladesh Limited Novo Tower, 270 Tejgoan Industrial Area, Tejgoan, Dhaka. COATS PLC UK

Parent Company (if any) Subsidiaries, Associates, and/or Overseas Rep(s) (if any)

Type of organization

Public (assisted by the Government) NGO (nonprofit) Sole proprietorship Partnership Corporation- Public Corporation- Private Cooperative Other (please specify): Wholly Owned Subsidiary

Type of Business

Manufacturer : Of Sewing Thread Retailer

Page

Consulting Company

13

Authorized Agent

Supply Chain Operation & Logistics Collaboration of COATS BD.

Other (please specify): ..

When established? Recent changes in company or affecting company? (e.g. changing markets, technology, labour force)

1987

Enterprise Recourse Planning (ERP) was introduced in 2007 In the beginning their market share was 65%-70% but due to some local companies now their market share is 40%-45% More competition from American Company - A&E and German company Aman Government is charging pressure on Health and Safety Issues

Current priorities, main issues?

Now they are emphasizing more on Business Growth On of the main issues is Cost Minimization Unproductive workers headcount and reduced them.

Business Model: (e.g. COATS BD follows the Centralized business model Centralized, Decentralized, retail, home based, office bound) Organizational Structure Functional Major business Leading manufacturer Industrial Sewing Thread. activities ( basic products and services offered) Primary/priority markets? Mainly export oriented business. Export their products around the world. Only local brand is Tiger Changes to markets/product range in past few years? Major Customers (current) COAS BD export their products to their parent company COATS UK and then they sell it to different UK based garments factory. Only they sell the local Tiger brand to local garments factories.

Page

14

Supply Chain Operation & Logistics Collaboration of COATS BD.

Vision Statement: Mission Statement: Values: (e.g. General Contribution and teamwork are valued over job titles guiding policies that are to and status govern all activities Business Goals and Objectives) Business Strategy: Diversification) (e.g. Product Diversification

Economic Intent: (e.g. Profit Maximization Intent of the organization, profit making, non for profit making, investment, speculation) Value Chain: (break down value) Accreditations (e.g. Coats Bangladesh has recently achieved the ISO Standard Operating 9001:2000 Certificate Procedures, ISO)? Markets, products, services Global Brands: Dual Duty Epic Astra Rugged Dymax Sylko Sylko Art Gral Gramax Local Barnds:

Page

TIGER Spun Polyester

15

Calypso Embrodery

Supply Chain Operation & Logistics Collaboration of COATS BD.

Workforce

No. Of full-time employees No. Of part-time employees Contractors (% of workforce) Casual staff (% of workforce)

Average length of service

Full time Part time Managers Line workers

Factory workers: 8 hours shift

Regular 8 hours (9a.m to 5p.m) of office

Full time Average Qualifications/educational background: Part time Managers

Factory Workers: Minimum Higher Secondary pass

Minimum Graduation from reputed Universities

Line workers

Recruitment processes Full time used? (e.g. word of mouth?

Part time Managers

Factory workers: only interview

Only Interview managers

taken

by

senior

Line workers

Key processes, work areas, Name: teams relevant to your project

Dyeing Blitching Lubricant Packing

Size(lot meter day) 11LpMpd 11LpMpd 11LpMpd 11LpMpd

per Hours of Structure of per work/shifts: supervision:

8hr/shift 8hr/shift 8hr/shift 8hr/shift

Administrative Administrative

Page

Administrative

16

Administrative

Supply Chain Operation & Logistics Collaboration of COATS BD.

Supply Chain Flow Chart

Effluent Treatment Plant

Page

17

Supply Chain Operation & Logistics Collaboration of COATS BD.

Company Organogram

List of Machineries

Page

18

Supply Chain Operation & Logistics Collaboration of COATS BD.

Better Forecasting Technique

Define the problem

Is an intuitive solution acceptable?

Yes

Use the intuitive solution

No
Is an analytical model available?

Yes

Use the model

No
Can an analytical model be developed?

Yes

Use the model

No
Is Simulation economically justified?

Yes

Use Simulation

No Rely on judgment and experience

Page

19

Supply Chain Operation & Logistics Collaboration of COATS BD.

Better Logistics Collaboration

Present Repositioning

Suggested Repositioning

Page

20

Supply Chain Operation & Logistics Collaboration of COATS BD.

References
Different aspects of COATS BD. Product list, company information, technology utilization. Available at; http://www.coatsbd.com Different supply chain report format for better implementation. Available at; http://www.scribd.com Assess to different theories from Operation Management; William J. Stevenson & Rochester Institute of Technology. Improvement suggestions. Better Logistics Collaboration; Quasi-Monte Carlo method.

Page

21