BUSINESS CONCEPTS.

The purpose of this Fastreact training course is to provide students with a be er understanding of the
management skills needed to run a successful fashion company. This course makes use of the Fastreact
planning system to illustrate how be er planning can greatly improve the financial performance of a
business.
Before we enter into a discussion on planning perhaps we should confirm the purpose of running a
business.

What is the fundamental reason for a business to exist-

TO MAKE A PROFIT.

Of course there are a number of other reasons that a company should exist and these can include:

Ø Social aspects such as the provision of sa sfying employment for your workforce.

Ø Na onal aspects such as the supply of goods which would otherwise be imported.

Ø Commercial aspects such as offering an investment return to shareholders.

Ø Industrial aspects such as provision of work for raw material and capital plant suppliers.

However, unless a company makes a profit, these other business requirements will not be sa sfied.
Indeed the business may not remain open at all.

What does a manufacturing business need to do to make a profit?

Put simply, goods need to be delivered to the customer, when the customer wants them, at a quality
agreed to with the customer and in a way that allows a profit from the supply of these goods.
To do all of these things the business must have in place an efficient produc on facility and a healthy
sales order book. Even with these two essen al requirements in place the road to profitability is s ll not
an easy one. Hundreds of things will go wrong along the way.
What is the func on of planning?

The purpose of planning is to predict problems before they impact produc on efficiency, quality or
delivery performance and then set in mo on ac ons which will minimise or eliminate the problem
altogether.
Many businesses have a planning func on. The size of this func on varies according to the size and
complexity of the business. It may range from notes wri en on the back of an envelope on the
produc on manager’s desk up to a full planning office employing several people in a dedicated planning
role.

Typical planning systems:

In many companies the planning func on concerns itself only with produc on planning. In other words
it concentrates on filling the factory capacity with orders, o en just iden fying overloaded periods---and
it seems to stop at this point.
Below is an example of a typical produc on plan that is o en based on a spreadsheet to handle the
calcula ons. Normally the plan shows the work content of the styles being made, customer names,
delivery dates and factory capaci es. For clarity, all of these have been le out.

Period Wk 3 Wk 4 Wk 5 Wk 6 Wk 7 Wk 8 Wk 9
Order 123 1000 1000 1000 1000 600
Order 999 0 200 500 800 800 800 800
Order 567 2000 1000 0 0 0 0 0
Total load % capacity 89 90 120 130 100 50 50

The advantage of the above spreadsheet approach is that the planner can set up a customized system
and therefore understand and modify it as necessary. However, the disadvantages are many.

For instance, using the spreadsheet approach:

Ø Prohibits quick and straigh orward me-cri cal changes; encourages the ‘islands’ of informa on
that are the cause of current coordina on and speed of response problems.

Ø How can orders be updated to show actual output against the plan?

Ø Can Order 999, which in our example extends over 20 weeks (not shown), be quickly re-planned
and can the knock-on effect be easily seen?
Ø As the plan is overloaded in weeks 5 and 6, the planned output will not be met. Delivery dates
will not be correct and raw materials will be brought in too early. Can this system predict these
problems?

Ø Are ancillary opera ons such as cu ng well loaded?

Much can be done with a spreadsheet but it falls a long way short of all-inclusive planning.

Typical business systems (ERP Systems) are used in most factory environments. These systems have
many benefits but do not provide a comprehensive planning solu on.
Some disadvantages to typical ERP Systems:

Ø Provide limited capacity planning (o en rough cut).

Ø O en non-graphical and complex to use.

Ø Rou nely improved by spreadsheets.

Planning requirements:

What other factors should a planning func on consider?

Ø Can the produc on be re-scheduled to minimise late deliveries?

Ø If different customers have different priori es, has the plan taken this into account?

Ø If we do not allow unacceptable overloads in the factory then what will be the effect on delivery
performance?

Ø Where the delivery date cannot be achieved can we reliably quote a new delivery date?

Ø How well has the factory performed against the produc on plan?

Ø Does the work load on specialist machines vary and have we sufficient capacity for the plan?
Ø Will all of the pre-produc on commercial decisions be completed to allow produc on to start on
me to achieve the delivery date required?

Ø Will we have the raw materials on me to start produc on when planned?

Ø Will we get the raw materials too early for produc on, clogging up the stock room and soaking
up cash to pay for the materials?

Ø Can we pull in a new order without disrup ng the current plan?

Ø Will the business make a profit?

As you can see planning, if done properly, is a complex task during the best of mes. In clothing
manufacture the best of mes are not seen very o en as manufacturing businesses must supply retailers
who offer smaller and smaller orders, demand shorter lead mes, offer ght profit margins but above all,
require flexibility.
Over the years the market has become more demanding of its clothing and now sees it more as a fashion
purchase rather than an essen al commodity. Thus we have moved from a year containing the
tradi onal Spring and Autumn seasons to one with four seasons and, in some businesses, the seasons
have disappeared altogether to be replaced with an on-going design and manufacturing cycle.

With the overall volume of clothing growing slowly this results in a much larger number of smaller
orders. In these circumstances good planning, especially the planning of ac vi es required before
produc on is essen al for the business to be profitable. Retailers must supply a fashion conscious public
but their sales will also be influenced by other factors such as the unpredictable weather.
Thus the planning task becomes even more complex as all of the above requirements must be
considered while at the same me having the ability to quickly re-plan at any point to cope with the
changing requirements of customers. It is this flexibility which o en persuades a retailer to buy from a
local manufacturer rather than impor ng the goods.

Who should be responsible for planning?

In many companies the planning func on is the responsibility of a rela vely junior member of staff when
in actuality it should be a senior member of staff who does the planning.
Consider some of the day to day decisions that have to be made when re-planning.

Ø Can I afford to deliver late to this customer?

Only the sales manager or sales director can answer this ques on.

Ø Why have certain pre-produc on ac ons not been carried out by their due date?
Only a senior member of staff can answer this ques on—someone who possesses sufficient authority to
get ac ons carried out in an urgent manner and is able to judge priori es between conflic ng orders.

Ø Can I cope with the overload on this special machine?

The produc on manager or produc on director needs to authorise purchases of new machinery or
approve the addi onal cost of commission working.

As you see a junior clerk is not able to make these decisions. Because senior staff are expensive and the
business plan requires con nual adjustment to reflect changing customer demands, the actual planning
mechanism must be very rapid. It is to provide such a mechanism that Fastreact was developed.
A great deal of this understanding is gained whilst actually working in a clothing supplier. It is the
purpose of this training package to introduce the necessary concepts in a 'business game' so that
students can not only see the relevance of the different topics, but can also experiment with different
solu ons to problems.

Fastreact in business:

Fastreact is in use in a number of real businesses ranging from carpet, cloth and lace weavers to shoe
manufacturers, clothing companies and so on. These companies range from small contract businesses
employing less than 30 people to large mul na onal enterprises employing thousands. Many of these
supply important high street retailers. Fastreact is installed in 200 companies across 36 countries and is
in use in the UK and Europe, United States, China, India, Sri Lanka and in many other countries.

This training course is based on exactly the same system as in industrial use. It is undergoing constant
improvement to add new func onality or to make it even more flexible for new industries. For this
reason the training course will not cover all aspects of the Fastreact system.
OUTLINE OF THE COURSE.

Introduc on:

The Fastreact training course consists of a number of sequen al modules, each one designed to
demonstrate par cular aspects of produc on and business management.
The modules are progressive and must be worked in the sequence in which they are presented. Doing
so provides maximum benefit for each student. Modules become more difficult throughout the training
course and each one builds on certain aspects of earlier modules. For this reason skipping modules is
not recommended; all modules should be completed in succession.
Fastreact keeps a score of achievements as the course proceeds. Principally this score is based on how
well the orders are planned to meet on- me delivery. In the la er modules over me and
pre-produc on issues are introduced so achieving 100% on- me delivery is not easy and may be
impossible, although it is no less relevant. A report within the training course, Value Late Orders, shows
how Fastreact scores each module. How effec vely the orders have been planned can be determined by
referring to this score. Each module provides a suggested target for which to aim and modules may be
repeated at any me.

To remain compe ve in today’s rapidly changing market businesses must:

Ø Deliver on me

Ø Improve produc vity

Ø Respond quicker

Ø Reduce lead mes

Ø Reduce WIP (Work in Progress)

Ø Provide be er informa on

Achieving these demands (by good planning, ge ng and sustaining op mum work efficiencies and WIP
levels) ul mately contribute to the profit of the business. This training package helps students recognize
the importance of these current industry themes as well as to appreciate a tool such as Fastreact to help
meet these difficul es.

The goals of the course:

There are two primary goals of this course.

Ø The first goal is to introduce a modern produc on and business planning system.
This, in turn, emphasises the need for business planning to encompass more than just capacity planning
and show how this can be achieved simply and effec vely.
By the end of the course there should be a clear understanding of how all of the different aspects of
business planning fit together and how this can be applied in any company.

Ø The second goal is to introduce a number of problems and tasks which are o en presented to
management. Fastreact provides a means to explore various solu ons to these problems and find the
op mum course of ac on.
By the end of the course there will be a be er understanding of the inter-rela onship of different
business aspects and a greater collec on of management techniques.

Note:

This course has been designed to test and improve management skills. There will o en be a number of
solu ons to the problems presented and the targets shown in each module should be more than
a ainable using only these skills.

The Modules:

The modules included in this training package cover the following topics:

Module 1 - An introduc on to the planning:

The introduc on includes crea ng products and orders and instruc ons about how to load the planning
board. An empty factory is provided along with a healthy order book. Orders are loaded onto the
planning board in such a way as to maximise on me delivery performance. Also included is an
addi onal task of adding an order a er the planning board is completely loaded. The resul ng knock-on
effects of this ac on are seen, requiring students to re-plan orders.

Module 2 - Matching product types to the correct produc on resource:

A demonstra on of the losses that occur if correct matching of product type to produc on resource is
not achieved. These losses have an effect on efficiency and ul mately, therefore, on- me delivery
performance.

Module 3 - The effect of start up allowances:

The effect of mul ple style changes on produc on efficiency and performance is demonstrated. The
module explains the reasoning behind start up losses and then how to minimize these losses through
intelligent order sequencing and hence improve on me delivery performance.

Module 4 - The need to balance workload on individual produc on opera ons:

The loading on individual opera ons both within and outside of the planned opera on (sewing) is
reviewed. This module shows how to iden fy the overload problems and eliminate them through
careful re-planning.
Module 5 - Control of pre-produc on cri cal path events and ac vi es:

Introduces the theory of pre-produc on planning. This module demonstrates the effect on produc on
when failures in this area occur. Module 5 also looks at different approaches to solving late deliveries.
Each Module includes the following sec ons:

1. The task(s):

Describes what to do within the module.

2. Tips:

How to improve the plan.

3. On- me Delivery Performance:

Shows the percentage of on me delivery value versus the value of the en re plan.

4. Review:

Lists the topics covered in the module.

Each module contains a number of tasks that are related to the module currently in use. These tasks
could be considered a mini-module within the main module. Because modules are divided into tasks,
work can stop on a module at any given me. Modules can be re-started.

A DESCRIPTION OF YOUR BUSINESS

This sec on describes the business that you will run throughout this course.

You are the Managing Director of the An Apparel Company Limited.

This company has been in business for a number of years and has a well established customer base. You
make fashion outerwear and consequently are obliged to provide a rapid response to fashion trends and
can normally expect to have compara vely short produc on runs of any one style.
The turnover (sales) of your business is $8.5 million per year and if all goes according to plan, you can
expect to make between 15% and 20% profit. In most modules it is possible to achieve a 100% on me
delivery performance., however, as you will see, things rarely go according to plan and, depending upon
your management skills and adaptability, you could even experience as low as 80% or even 70% on me
delivery value.

Your financial budget:

It is essen al that your business has a budget which shows the expected sales and costs for the coming
year. Only in this way will you be able to check your performance as the year progresses to see that your
actual performance is in line with the plan.

Budget value Value pa % Sales

Turnover 8.5 million 100
Materials cost 3.1 million 36
Direct labour piecework 1.6 million 19
Other overhead costs 2.2 million 26
Profit 1.6 million 19

In reality, a company budget is much more detailed than the one shown above; however, for the purpose
of this course our budget provides only the informa on that is needed.
The profile of this company is typical of a clothing manufacturer except for the profit margin which, at
19% of turnover, is probably a lot higher than is seen in a large number of companies. This profit does,
however, assume that all goes according to plan, which is virtually never the case.

Your factory:

You have 8 produc on lines.

The lines consist of a number of different machines so a garment can start at the top of the line in its cut
state and come off the line once completed. All the produc on lines can make any garment type that the
company sells. For example, the Quick Response line can manufacture skirts and blouses although,
because of some specialisa on, mismatching the garment to the line causes a loss in produc on
efficiency. This par cular point is discussed in Module 2.

The capaci es of the produc on lines are defined below:

Capacity name Operators *Efficiency% CapacityMinutes/week CapacityMinutes/hour

Blouse (1) 13 100 37,440 780
Blouse (2) 13 100 37,440 780
Skirts/Trousers (1) 14 100 40,320 840
Skirts/Trousers (2) 14 100 40,320 840
Jackets (1) 14 100 40,320 840
Jackets (2) 14 100 40,320 840
Quick Response (1) 12 100 34,560 720
Quick Response (2) 12 100 34,560 720
TOTAL 106 305,280 6360

Note that figures for standard minutes output is shown in minutes per week and minutes per hour. It is
common for produc on managers to refer to the Weekly capacity, shown as 305,280 above. For
planning purposes more detail is needed as some weeks have 48 hours but others may include planned
over me or there may be a short week because of a holiday. Planning in hourly capacity provides total
flexibility over the day to day capacity.
*Module 1 has efficiencies of 100% for every produc on line. In reality, produc on lines never run at
100% efficiency. Therefore, produc on line efficiencies change throughout the progression of this
course.

READ THIS BEFORE YOU START.

Accessing Fastreact:
Entering the training package for the first me:

Ø Double-click on the Fastreact icon.

Ø Enter your name and password.

Ø It is a good idea to change your password to something that only you know. Click on the Account
management tab; enter a new password and click on the Password bu on.

To go into a module:

Ø Double-click on the Fastreact icon and log in using your username and password.

Ø On the Modules tab, highlight the module you want and Click on the ‘Open module’ bu on.

NOTE:
This will open your last saved version of the module. If you are opening the module for the first me,
this opens to the default star ng posi on.

To re-start a module from the beginning:

Ø Highlight the module to be re-started.

Click on the ‘Start module again’ bu on. If you have already started and saved this module any changes
previously saved version will be lost.

Fastreact Menu:

When Fastreact opens the main menu presents. The main menu provides access to the func onality
within Fastreact. Going from the le of the screen to the right, menu op ons and brief descrip ons are:

Menu: Descrip on:

Exit Exit Fastreact

Products Add/Amend Products
Orders Add/Amend Orders
Customers Add/Amend Customers
Update Update Progress
Reports Generate reports
Planning Planning board
Help On-line help

The majority of menu op ons are feature-rich, providing users with all of the necessary tools to plan and
manage a business successfully. But for the purposes of this training course menu items that are needed
will only be addressed and some of the menu items will not be available at all.

A er opening Fastreact, display this help screen and the planning board together on the computer
screen. Click on the Help Menu | contents and expand the help sec on ‘
Fastreact Training Course’. Click on the ‘Restore Down’ bu on in the middle at the right of the Fastreact
Title Bar and re-size the help so that it is on the right side of the screen.
When clicking within the Fastreact applica on the help screen automa cally minimises but can be
restored at any me by toggling (Alt + Tab) to go between Fastreact and the Fastreact Help screen.

Note:
Help topics can be printed by clicking on the print bu on at the top of the page.