Baldwin Filters Ltd is the main UK distribution site for its multi-million dollar, US parent company, Clarcor. As such, Baldwin Filters is responsible for the supply to both distributors and end-users of heavy duty filters for construction equipment, mining equipment, commercial vehicles, public service vehicles, compressors and other large industrial plant.
While the company's current turnover of £5.5m may appear relatively minor in comparison to Clarcor's global turnover of $800m, Baldwin Filters has achieved substantial business growth and more than doubled its revenue in 5 years. Even more impressive is that this has been achieved in a challenging business climate and with marginal increase in overheads. At the heart of this success lies Baldwin Filters' long-standing reliance on its WinMan manufacturing and distribution system from SSL WinMan.
Director Gordon Shand has been with the company for over 15 years and explains how and why the relationship with SSL WinMan began. "Prior to our acquisition, we comprised a separate manufacturing and distribution operation, each running its own business system. The distribution system was UNIX based which increasingly became overly expensive and complex to adapt to our requirements while the manufacturing system was DOS based and fairly inflexible. We knew ideally we wanted to move both sites to a single platform basis, with this platform using the latest Windows technology. We also required a system that would be strong in both manufacturing and distribution functionality while providing high levels of customisation to allow it to grow with us as a company."
Having identified these ideals, the company soon hit a major problem, as Shand recalls. "Quite simply, we couldn't find such a system. There were plenty of manufacturing systems which had limited or no distribution capabilities and no distribution systems which could handle the manufacturing requirements we had. After much investigation, it became clear that SSL WinMan offered the only way forward. WinMan's manufacturing credentials had already put ticks in all the right boxes for our manufacturing team and it had strong core distribution functionality, but there were important areas that we knew we would need to develop in order to have the system deliver everything we required. This was the vital attraction of SSL WinMan because the experience and willingness of the company combined with the inherent flexibility of the system meant that we could have absolute confidence in developing with SSL the exact distribution solution that we required."
That is precisely what Baldwin Filters achieved courtesy of SSL WinMan, a unique system that handles the complexities of the evolved company's distribution challenges. These challenges are many and varied and begin with the very nature of the heavy duty filter market, which while possible to predict rough trends, is notoriously difficult to forecast. 95% of Baldwin Filter's business, is required ex-stock, same or next day delivery, by both distributors and end-users alike.
The problem is compounded by the size of orders involved, as Shand elaborates. "Our typical order size is very small, on average £150 or approximately less than 25kg of filters, yet we have 2000 live accounts at any one time, process over 80 orders a day and distribute over 1 million filters annually. The manual time involvement in such a pick-pack-ship operation is therefore considerable and represents one of our major challenges."
To achieve these levels of customer service, the company has to maintain an average stock of 200,000 filters, yet here again the company faces a major manual time challenge, this time in terms of receiving incoming goods. These are typically delivered in 40ft high containers from Baldwin's parent company in the USA as well as from other manufacturing sites, and must be broken down from bulk into individual product consignments before being stocked. Such is the time and resource usage for both receiving and despatching goods that Baldwin has to utilise a split shift system of working. As Shand comments, "Every minute unnecessarily spent moving people and products around the warehouse represents a cost and a threat to our very high levels of customer service, which consistently runs at 95% of all business delivered ex-stock. This is one of the key areas where WinMan helps us optimise our entire business."
To achieve this however, the system has been developed by SSL to take into account a range of further challenges faced by Baldwin Filters, the first of these concerning the problem of multiple part numbers. The company's acquisition of Woodgate Automotive in 2004 resulted in many of its products receiving a alternative part number in order to comply with group-wide standards. While the reality of part number supercession is a commonplace occurrence and widely accepted by distributors, it can have disastrous consequences when supplying direct to end users, as Shand explains. "End users will often rather change suppliers than part numbers, they have been used to working with one set of part numbers for a long period of time and all too often cannot adapt to a different numbering standard."
Given that Baldwin Filters supplies direct to end-users, it was therefore vital that end-users could continue to order via the old part numbers. To achieve this, WinMan provides a part number matrix that applies throughout the system and allows complete interchangeability of part numbers irrespective of process, from receiving sales orders, receiving goods through to generating pick lists and dispatch notes. Correspondingly, there is much greater accuracy in terms of current stock levels which in turn assists with stock replenishment mechanisms and the provision of customer-friendly reports and documentation.
This is also invaluable for Sales Order/Back Order tracking which generates a full breakdown per order, per part showing both required dates and promise dates. The multiple part number capabilities keep waiting time to a minimum when customers enquire regarding an order, and when generated by individual Salesperson, assists them in maintaining maximum proactive communication with the customer. Another area where this functionality is essential is in product/batch traceability, should a potential problem arise with a product/batch.
Baldwin Filters also had a definite need to prioritise and hard-lock stock allocation. Many distribution systems operate on a soft allocation basis whereby stock is allocated on a 'first come, first served' basis. WinMan achieves hard locking capability by means of allocation flagging, whereby the flag can be set to provide a level of priority so that stock can be allocated on a preferential basis. This extends to stock allocations in multiple stock locations, either at a geographical level or simply a consignment stock level, and facilitates maximum flexibility with regard to split orders. Baldwin Filters also uses this functionality as a means of managing the supply of product to its parent company in the US when stock may be better allocated to external customers. As such, this functionality becomes a powerful addition to CRM.
The ability to allocate and manage stock across multiple warehouse locations was also a key challenge for Baldwin Filters. While only having 2 geographical locations, the company has 50 consignment stock areas and over 2000 individual stock locations with stock moving on a First In First Out (FIFO) basis across all locations. To speed up the physical picking process, Baldwin Filters has created a dedicated "speed pick" section with 60% of products currently held here to reduce the physical distance and therefore time involved in each pick. Baldwin therefore needed a facility with WinMan to force pick as well as enable replenishment, often from one pallet to another, from within the speed pick area.
The system also needed to reflect improvements made by Baldwin Filters to speed up the actual pick-pack-ship process itself. Picking and subsequently processing lots of small orders is time intensive so Baldwin Filters developed a consolidated pick list whereby a number of orders can be picked at the same time, making optimum use of minimal warehouse routings, and then packed. Having identified 4-5 orders as the ideal balance between picking and subsequent unpacking before final dispatch, the company developed a 4 bay stillage system where the picklist can identify which bay, from A-D, that each part is to be placed prior to packing. Calculations within WinMan will also flag whether a particular order has a volume greater than the size available in a bay and revert to a standard stillage. Shand identifies this one area of functionality with WinMan as being one of the most significant areas of cost saving. "Moving to this system will completely remove sorting at the packing level which we calculate will allow a further 20% increase in business without any increase in resource."
The final area where SSL WinMan worked with Baldwin Filters to deliver its very specific requirements was in the area of stock replenishment and demand planning. Many ERP based systems provide a sense of visibility of current stock levels but fail to provide control over stock replenishment levels other than an arbitrary static refill level. This would be entirely inappropriate for companies like Baldwin Filters where significant variance in sales across the product range combined with no real sales forecasting data places a heavy reliance on continually changing data.
To this end, SSL devised a live replenishment matrix based on average daily sales per product over the preceding 6 months sales data. This is further refined by each product having an individual lead time variable and a re-order amount level, which in turn is further refined by each product being graded according to how fast moving a product line it is. Replenishment triggers also interrogate and take into consideration the number of outstanding and live products already on purchase orders.
Shand highlights an additional consideration that the system has been designed to handle. "In order to get the most accurate data, we needed the ability to mark some orders within the 6 month period as exceptional. For example, in the typical lifecycle of most end products we supply filters for, there is a large surge in demand in years 4 and 5 when the product comes out of warranty and can use aftermarket filters. A large purchase of a particular filter by a distributor to meet this need would skew the typical replenishment levels. Conversely, there is a marked dip towards the end of a product's lifecycle which again needs to be taken into account. WinMan provides us with the ability to positively exclude such instances and keeps our replenishment levels as accurate as possible." The effectiveness of this is shown by the fact that Baldwin Filters consistently supply 94-95% of all orders ex-stock, the so called "holy grail" for most distribution companies.
The strengths of the partnership with SSL WinMan are not just related to the benefits Baldwin Filters has achieved over the past 5 years, the company sees plenty of further potential for the system to grow and develop in sync with its own requirements. At the heart of this is a current Work in Progress which will ultimately lead to the company making comprehensive use of automated and manual bar-coding at every stage of the business process. This combined with moves to match space available per location area with physical space of incoming goods with the system generating alternative storage locations on putaway lists, combined with a general zoning of the warehouse will save an anticipated 2 hours processing in the office each day and a 1/3 reduction in picking per customer.
Shand concludes with some words of advice for companies in a similar position as Baldwin filters, where there is a requirement for both manufacturing and distribution capabilities. "No off-the-shelf software is perfect and you'll not get anything which will work the way you want or need it to. What you need to find is a company that has both the deep industry understanding of how you work, why this is important, and which will then work with you in a positive, friendly, and cost effective way to help you achieve the system which will deliver exactly what you require. That has been our experience with SSL WinMan."
