Dave Elias, vice president of supply chain management, and Josh Stauffer, senior director of IT, spoke at ARC Advisory Group’s Supply Chain Forum. Both men work for HarbisonWalker International (HWI). Mr. Elias and Mr. Stauffer spoke about the digital transformation the company is going through. They have implemented a broad suite of enterprise and supply chain applications and are still implementing more. They view their implementation of a tightly integrated suite of applications delivered in a public cloud infrastructure from Oracle as a platform on which they can build to help drive continuous innovation. The continuous innovation they are speaking about is not limited to product development, but more broadly entails the way HWI goes to market. HWI employed a crawl-walk-run methodology. The company is still somewhere in the “crawl/walk” phase. “Run” will include using the platform for inventory optimization and to support interesting internet-of-things (IoT) and artificial intelligence (AI) projects.
The following article highlights some of the key points made by Mr. Elias and Mr. Stauffer. It also includes information taken from HWI’s web site. For a more comprehensive explanation of this project you can view the video of the panel.
HarbisonWalker International Manufactures and Distributes Refractory Products
HarbisonWalker is the largest supplier of refractory products and services within the US and Canada. Refractories are products that have been chemically engineered to resist high temperatures. For example, the bricks in a pizza oven are refractory bricks. But refractories are used in a wide variety of industries, particularly manufacturing industries with high temperature or corrosive production processes.
Refractory products include preformed products, like bricks, and monolithics. Monolithics are unshaped refractory products. These special mixes or blends of dry granular or cohesive plastic materials can be thought of as being a concrete-like product. HWI uses an innovative way to produce and deliver monolithic products in 55-pound bags. This form, fill, and seal technology extends the shelf life of these materials.
HWI Has a Complex Supply Chain
The company has 18 plants and operating locations in the US, Canada, and Mexico as well as plants and labs in the UK, China, and Indonesia. Making refractory products is complicated and challenging. They also have 20 sourcing locations across North America from which they can ship make to stock products. The majority of make the stock items are tied to just-in-time or other supply chain value-added service program with their customers. HarbisonWalker has over 1300 employees.
HWI offers same day or next day delivery. A Value-Added Service (VAS) team can provide on-site management, installation, equipment, inventory management (just-in-time deliveries), heating solutions, and testing. The company also has a preferred network of independent contractor/installers who can provide refractory construction and maintenance services. Regional partners provide services out of more than 100 locations. In short, it is not a simple channel structure.
The company has products produced in both make to order and make to stock processes. The sourcing centers are key to just-in-time, same-day, next-day deliveries. The majority of make to stock items are tied to some sort of special just-in-time or supply chain program with their customers. The sourcing centers shipped over 130,000,000 pounds of product last year.
The company needs a very complete product line. They have tens of thousands of items they produce but there are a small number of products they purchase through a global sourcing program. Additionally, the company’s goal is a best-in-class focus on safety and quality, while optimizing inventory and cost.
The Supply Chain Was a Key Driver of the Digital Transformation
HWI has a broad product line, quick deliveries, and value-added services. HWI’s goal is to be the first and only call for their customers that need refractory products. Additionally, the company’s goal is a best-in-class focus on safety and quality, while optimizing inventory and cost. In short, strengthening service excellence and product breadth without being burdened with high inventory levels was a key pillar of the transformation.
But transforming their industry required more than siloed supply chain applications. HWI had a lot of disparate applications – a veritable spiderweb of version locked enterprise and custom applications. Their goal was to build an infrastructure around applications based on one data model. They concluded that Oracle’s public cloud offerings were the best fit for them. They looked at customer relationship management, finance, order quoting, warehouse management and planning applications before making their decision. The implementation journey began in mid-2017. They went live in early 2019. More recently they have implemented human capital management
No enterprise implementation goes flawlessly, so it is not surprising HWI had challenges surrounding such a broad set of application implementations. The company ran into the kinds of problems I hear about over and over – change management, data quality issues, integration issues, and some bugs that needed to be fixed. The successful implementation was made more difficult because during this same time span, they were building a highly automated monolithics plant. Then Covid hit!
Achieving fast deliveries and a high service level, while minimizing inventory involves the implementation of demand planning and inventory optimization. But service also depends on several types of modules being seamlessly integrated. Demand planning is improved when the sales opportunities in a customer relationship management system are a data source for the forecasting. Accurate order promising requires order management, but it also requires a granular understanding of a plant’s capacity. That in turn requires accurate item masters and bills of material. Order promising, based on an accurate bill of materials, allows procurement of the necessary raw materials to be kicked off automatically. This closed loop procurement in turn helps ensure products are made on schedule.
The implementation of point applications can lead to quick wins based on easy to calculate savings. But what HWI is trying to achieve is a competitive differentiation that will transform their industry. These kinds of end-to-end transformations often do not provide quick wins. But HWI feels they are continuing to make progress in this journey. As Mr. Stauffer stated, this journey is providing them a “platform to really springboard us into the future.” And as Mr. Elias added, “2021 is the year HWI seeks to actualize some of the ’big hairy goals‘ around optimizing the investment we’re making in inventory optimization.”