Royal Doulton

Company: Astech Consultants LimitedCustomer: Royal DoultonSubmitted by: Ford-Peacock Consultancy LimitedDate: July 2001Royal Doulton is one of the world’s leading companies in the ceramic tabletop and collectables market with brands including Minton, Royal Albert, Holland Studio Craft and Royal Doulton itself.

Retaining its place at the forefront of this traditional and highly competitive industry requires imagination, innovation and investment. In one of its latest initiatives, the retail arm of Royal Doulton has shaved a week off its order processing time by encouraging suppliers to go on-line.

Diverse Operations

The origins of Royal Doulton date right back to the late 18th century with the establishment of Minton in 1793. Today the company is a diverse manufacturer and retailer of tableware, crystal ware, figurines and giftware with annual sales of around £190m spread through eighty countries across the globe and with a total workforce of about 6,000 people worldwide.The company’s retail operation comprises over 350 outlets of which over 200 are in the UK with others in the USA, Canada, Australia and the Far East.

Comprising high street shops, factory shops and in-store concessions, Royal Doulton’s retail outlets stock non-competing products of other manufacturers, as well as its own, to provide the customer with the breadth of product and price that is required. Royal Doulton also enters into licensing agreements with other companies to produce and market non-ceramic products such as wall hangings and textiles inspired by Royal Doulton patterns, both past and present.

Changing Landscape

In line with the Potteries industry generally, local manufacturing in Stoke on Trent has declined significantly in recent decades and is now focused solely on the manufacture of Royal Doulton’s quality lines. However the company still has five ceramic factories – four in England, and one in Indonesia, which primarily manufactures lower margin products for sale in the Far East.

System Improvements

Royal Doulton’s IT systems have also been the focus of considerable change in recent years. With the close of the 20th century, Royal Doulton decided to change its retail system to ensure year 2000 compliance and invested in the market leading solution from JDA.

“At the time,” recalls Project Manager, Tom Kelt, “we recognised that there would be benefits from introducing a level of automation with suppliers. Chiefly we were looking for increased speed and accuracy and a reduction in the overhead required to manage the process. We perceived that there were definite tangible benefits in all these areas. Specifically, we wanted to improve our order turnaround with suppliers by one week.”Astech Consultants Limited, a company that specialised in the JDA consultancy arena, approached Royal Doulton and introduced their new supply chain management solution called b2b4retail. This resulted in Royal Doulton undertaking a cost:benefits study to evaluate the potential savings that might accrue from implementing the solution.

The key savings identified included:

• Automatic transfer of orders to vendors with no additional manual work releasing branch merchandising staff effort for more pro-active duties
• increased order throughput and therefore reduced replenishment time by an average of half a week for the major suppliers, in turn allowing a reduction in stock levels
• a one-off gain of 60% of a week’s agency intake value due to reducing the major suppliers’ lead timea reduction in stock-out of product and therefore an increased opportunity for sale
• the customer payment for 60% of agency sales will be received on average half a week earlier due to better availability of stock
• financial savings in stationery and postage which will outweigh the additional communication cost
• reduced mail handling and data entry, releasing financial staff effort for more proactive work

Problem seeking a solution

Royal Doulton’s weekly order throughput illustrates the scale of the problem facing the company.As the UK retail arm of Royal Doulton operates without a warehouse facility, the company receives thousands of individual purchase orders every week – each of which has to be printed, checked, and batched according to supplier before being posted to the relevant manufacturer.”Apart from the labour intensive and time-consuming nature of the process, the time taken for retail to third party purchase orders to arrive with the supplier can be anything from 2-14 days,” explains Tom Kelt. “As the supplier is not expecting them, delays in the post can easily go un-noticed and this can result in customers receiving a poorer level of service than they would expect. Fortunately these problems have been minimised to date as our suppliers are very conscientious and maintain good stock levels themselves.

“Apart from Royal Doulton itself, the retail operation has six primary suppliers: Swarovski of Austria, who manufacture glass giftware items, Lladro of Spain that focus on figurines, Enesco, Country Artists, Collectable World and Caithness Glass, which is part of the Group but treated as an external supplier. With supplier buy-in a notorious obstacle when automating the supply chain, Royal Doulton took the wise precaution of advising its suppliers well in advance that the company would go on-line.

b2b4retail

b2b4retail is designed to provide retailers with flexibility in the management of their supply chain with running costs considerably lower than EDI. For each supplier, the retailer specifies the preferred file format that the supplier wishes to use. This is usually EDI, email, fax or XML. The “data monitor” within b2b4retail captures each communication intended for the supplier, converts it into the appropriate format and sends it to the supplier via the Internet.

“The most exciting aspect of Astech’s system is the different options you can offer each supplier,” suggest Tom Kelt, “email, fax or full blown file-to-file transfer whether EDI or XML. Everyone so far has gone for email; perhaps the easiest to introduce initially, although everyone is looking to move to direct file-to-file transfer. This offers the maximum benefit to retailer and supplier as the two systems then become fully integrated enabling the supplier to send files to the retailer electronically too.”Royal Doulton Retail has focused initially on sending its purchase orders to suppliers via b2b4retail, but it is hoped that in time suppliers can be persuaded to return order acknowledgements, amendments and invoices to Royal Doulton Retail in the same manner.”Our experience to date is that not many companies in this industry have experience of EDI so there is a sharp learning curve involved and some technical investment usually required at the supplier end. At the moment the supplier gets no benefit from the system other than they receive their orders more quickly.

As they have to print their emails out and re-key the orders into their own system, our error reduction targets are not necessarily being achieved yet either.”

Future Possibilities

Astech’s new client for b2b4retail should help enormously. Called “Interact”, the client consists of an intuitive web interface through which companies can communicate electronically with their customers (retailers) to receive and confirm orders, issue ASNs, shipping confirmations and invoices and receive remittance details. The Interact client is based on email technology and is available free to all suppliers of retailers using Astech’s b2b4retail collaborative supply chain solution. Although a standalone product, Astech can integrate Interact with a supplier’s back end transaction application.”As yet we’re not experiencing the full benefits of b2b4retail”, admits Tom Kelt, “because we’re not receiving information back from suppliers.

Two of our original aims – capturing order acknowledgements to reduce the incidence of “lost in the post” and capturing advance shipment notification to allow picking shortages to be re-ordered immediately – have not yet been achieved. To help minimise the impact of this we issue a weekly report of orders sent by email to each supplier. Interact may help but it may be difficult to get suppliers to buy-in further without their systems being integrated with Interact too.”In total Royal Doulton Retail has in the region of fifty suppliers. Although six of these represent over 75% of all sales of purchased product, Tom Kelt sees no reason in principle why every supplier shouldn’t be using the email option within b2b4retail, and direct file transfer remains the optimum goal.

The pressure to achieve this will build once only a few orders are being processed manually and the associated costs begin to mount and become disproportionate. Another route for potential expansion lies with corporate customers and suppliers of the Royal Doulton Group and even the company’s financial partners.

Supplier Choice

Whether it’s a reflection of their relatively small size or their consulting experience, Tom Kelt is positive about the experience of working with Astech:”There are other suppliers offering different options in this market but we found Astech’s approach to problem resolution refreshing. Their small size is irrelevant against the cost:benefits offered by the product. Supplier buy-in is an issue in this area, and the cost involved in getting suppliers on board could – theoretically at least – undermine the value of having the system.

Astech approached this challenge with typical resolve, working closely with each supplier and visiting several of them as needed. It’s a myth to say that retailers can impose supply chain solutions on their suppliers. We have to work as partners and recognise that the system we wish to use may involve costs for the supplier. Encouragement and support is the only way forward, particularly if we want them to be persuaded of the value of direct file transfer.”With this in mind Royal Doulton Retail intends to upgrade to v2 of b2b4retail.

This new version includes several important enhancements to make it easier and quicker to configure the system for individual suppliers. For instance in v2 it is possible to specify the exact mode of file transfer such as an XML file as an email attachment. Configuration in v2 is also in Windows, as opposed to the AS/400. Even so, with v1, claims Tom Kelt, “to add a new supplier is only a few minutes’ work for the email option once all the information from the supplier is available”.BenefitsMeasured against the original objective of reducing order turnaround by a week, Tom Kelt is convinced of b2b4retail’s benefit:”Given our initial outlay we would have recouped our investment within the first quarter if all six suppliers had got on board straight away. As it is, five of the six are now on board and we have achieved our original objectives very comfortably.

The result is improved customer service and a considerable reduction in administrative overhead.”

IT Infrastructure

• IBM iSeries e-server 400 running MMS merchandising system from JDA and b2b4retail from Astech Consultants
• IBM iSeries e-server 400 running BOSS warehouse management system
• HP- UNIX box running MFG-Pro ERP system for sales order processing and financials
• Microsoft NT network for desktop office applications and email
• Overview of B2B4Retail

B2B4Retail comprises five modules covering the key supply chain relationships:

PurchasingCataloguesReturnsPlanning and ReplenishmentAuctions

• Java-based modular suite of applications
• Easy to integrate with legacy systems throughout the supply chain
• Platform independent
• Gives benefit across complete range of customers and suppliers
• Accommodates fax, email, XML and EDI communications

Key Benefits

• Improve lead times
• Leverage existing investment
• Improve visibility, integrity ; flexibility in supply chain relationships
• One supplier for total solution across entire customer/supplier base
• More cost effective than traditional EDI
• Hosted environment available if required
• Potential for immediate ROI

NB. Royal Doulton have only installed the purchasing module.