To forecast the demand of its customers and to optimise Master Production Schedule (MPS) in a better way, Baccarat equipped itself with the sales forecasting and production planning solutions, SKEP® Forecasting and SKEP® Planning from DynaSys. The problems, which differ greatly from one product to another, require a certain amount of flexibility in anticipating sales variations as accurately as possible and in planning production for the different workshops.

Keystone planning

Several product typologies co-exist in the company:

• The catalogue references (over 2000, some of which are limited editions) for which Baccarat works on Master Production Schedules i.e. demand forecasting. The Master Production Schedules are established from sales forecasts, provided by the company’s different markets, in order to anticipate demand and finally production, even though differences between forecasts and effective demand remain inevitable. More accurate forecasting moves the use of order programming to the head of the flow in order to meet production deadlines. The increased flow of the production process comes from good sales forecasting. The sales forecasts are made by the marketing management teams of the company's three areas: global market (excluding the United States and Japan ), the United States ( New York ) and Japan ( Tokyo ) subsidiaries.
• The second product category, special orders, dedicated to one customer is, by its very nature, difficult to forecast. Fore example these are the “big players of this world” who adorn their homes with glass sets, chandeliers and Baccarat lighting. On-request services represent 7 to 8% of all orders. Production is made to order and production deadlines are defined order by order. Depending on the volume, the difficulty and the nature of the order, delivery may vary from a few days to several months.
• Finally, the third production type is linked to the two previous types. It relates to referenced products that are customer specific: producing small cognac and perfume bottles. In this respect, an annual contract is drawn up. It involves monthly time-phasing, products that are clearly defined and exclusively sold to the customer in question. This sector represents 10% of all orders.

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Cross distribution diagrams

Baccarat sells its products through its own shops; 13 in France , 7 in Europe , 10 in the United States , 5 in Japan and approximately 12 throughout Asia . In terms of distribution, the company has adopted several policies:

• Distribution subsidiaries in the United States and Japan each have their own warehouse. Compared with the head office, sales are done from warehouse to warehouse, each subsidiary has a distribution network of shops that are supplied by its own warehouse. Their clients include third parties, department stores, decoration, table art or home shops, shops or even its own boutiques which belong to each of the subsidiaries respectively.
• European along with a third party level (table art traders, jewellers, etc.), products can be delivered directly from production to the company's own shops. Today jewellery represents between 20 and 25% of the company’s turnover.

A traditional context

For its organisation, Baccarat felt the absolute need to anticipate variations in capacity for each main production sector; variations in social and regulatory issues must also be considerated. Robert Chopat, Director of the Logistics Department, admits: ‘before launching our project related to a Master Schedule tool, our forecasting capacities were reduced. We experienced many difficulties in accurately forecasting the correct positioning of capacities’. The MacPac production management solution, acquired by the company 10 years ago, does not have the Master Schedule or planning functions. Furthermore: ‘Our project is triggered by the market. The industry’s necessity, as with a good number of other companies currently, demands a very restricting service/lead time ratio. This factor is made even more important, customers no longer tolerate long waiting periods and massive inventories. They want the shortest lead times possible. This is not only a market requirement but also a real competitive advantage. Service is an essential factor in winning market shares. Our problem was more traditional’.

Baccarat started looking for a planning tool at the end of the 1990s, having previously considered a possible improved planning outline model. Robert Chopat continues: ‘Around MacPac, we have built in complementary tools within the three domains: sales forecasting (required for any forecasting), the Master Production Schedule (which transforms the sales forecasts into capacity forecasts) and finally, the workshop or scheduling planning (which transforms the Master Production Schedule into execution).’

Baccarat started looking for a planning tool at the end of the 1990s, having previously considered a possible improved planning outline model. Robert Chopat continues: ‘Around MacPac, we have built in complementary tools within the three domains: sales forecasting (required for any forecasting), the Master Production Schedule (which transforms the sales forecasts into capacity forecasts) and finally, the workshop or scheduling planning (which transforms the Master Production Schedule into execution).’

Robert Chopat, Director of the logistics

Killing two birds with one stone

Baccarat also found that the editor's offering had the forecasting solution it was looking for in SKEP® Forecasting. The two solutions are implemented in parallel, even if two different project teams are formed. As for DynaSys, ‘the number of support days was built into the installation cost and we received all the support we could have possibly wished for’, confides Robert Chopat. For each of the projects, a DynaSys technician was on site. It should be noted that during the design phases, this workforce doubled.

Baccarat has one user in the planning department for SKEP® Planning as well as one user in marketing for SKEP® Forecasting.

‘From an operational point of view, SKEP® Planning interfaces with MacPac and vice versa, which is updated once a week, explains Thierry Mangin, IT systems Director. MacPac sends the information relating to the technical, sales history, inventory status and orders to the SKEP® Planning and SKEP® Forecasting solutions. SKEP® Planning is then able to set up, after several finite and infinite capacity simulations, a feasible Master Production Schedule that is reintegrated into MacPac to calculate the net requirement. Sales forecasts are then established over a six month timeframe, month by month. As for the Master Production planning, it is carried out weekly over a six month period.’

Dramatic reduction in lead times

• In just a few years, the company has seen a significant improvement of its customer service: between 75 and 80% of its catalogue products are delivered within three weeks, a lead time which is reputed to be very good in an industry where only slightly more than 50% of items were delivered within this same period.
• Better anticipation of demand, reduction and compliance of production lead times were therefore able to be established, using SKEP®.
• SKEP® Planning has had a favourable effect on inventory. Enabling Baccarat to increase its consolidated turnover without increasing inventory, and the inventory turnover to turnover ratio is today taking on even more favourable proportions.
• SKEP® Planning and SKEP® Forecasting have been an organisation factor in the sense that they have pushed the company to go further in its considerations of flow and information sources, employee roles and the special nature of its market.

In l ine of sight

Evolutions, modelled from the beginning of the project, are now planned: the installation of a SKEP® Forecasting tool in each subsidiary. At MPS level, the company now places itself in permanent improvement, adjusting capacities to an increasingly finer level, better corresponding to the demand. On this point, Baccarat still estimates it has two developmental steps to clear. The first aims to improve the performances of production lead times, i.e. 80 to 85% of catalogue products delivered within three weeks. The second aims to improve the delivery percentage of jewellery, so that the order is delivered within one week to the customer. This is even more difficult given that jewellery sales per item are respectively very low and therefore difficult to forecast. But in the end, it’s simply a question of forecasting and planning.

‘The planning market only offered a few possiblities. In business we were confronted with editors which sold this function at prohibitive prices, and whose installation was deemed too arduous. The path led us to SKEP® Planning from DynaSys, the only company to offer an excellent price with a high quality solution. We then checked with DynaSys pre-sales department and the demonstrations that the editor provided us, to see if the solution corresponded well to our needs.’

Robert Chopat, Director of Baccarat’s Logistics Department

‘SKEP® Planning was installed in six months, and SKEP® Forecasting more quickly, within three months. The first includes interfaces to be made with the production management solution as well as the technical data to be taken into consideration, whilst the second “only” depends on sales history to operate.’

Thierry Mangin, Director of Baccarat’s IT systems