SMB Market: Switching Gears
As one of the bike industry's leading innovators, Cannondale is power-driven by a corporate philosophy that focuses on bolstering service levels for its retail partners. Former farm boy and Wall Street analyst, Joe Montgomery, set the business' wheels in motion as a bike trailer manufacturer in 1971. The company introduced one of the first affordable aluminum-frame bicycles in 1983 and added mountain bikes to its inventory the next year.
Today, Cannondale manufactures lightweight, high-performance road and mountain bikes, offering more than 75 bike models along with cycling apparel and accessories to more than 60 countries worldwide.
Delivering the Goods
Despite the failure of a motor sports project that led to a brief passage through Chapter 11 bankruptcy, Cannondale maintains its strong presence in the bike industry -- correlating success with producing innovative, quality products and using flexible manufacturing processes to deliver those products to the market quickly and back them with quality service.
Historically, however, Cannondale's outdated business operations could not keep up with its corporate philosophy -- a condition that pushed the bike manufacturer to recently invest in Logility's Voyager Demand Planning solution to improve its forecasting processes, reduce costs and boost service levels for its retailers.
"We make state-of-the-art, high performance bicycles, but a superior product is not enough in today's competitive environment," says John Doerr, chief operating officer and president of operations for Cannondale. "It's imperative that that the quality of our service to our dealers matches the quality of our bicycles," he says. "We want our dealers to sell Cannondale bicycles with confidence, knowing we'll be able to provide the bike they need, when they want it."
A Slow Start
In the past, Cannondale used Microsoft Excel to operate many aspects of its business. Until now, forecasting was not considered a high priority within the company. Responsibilities of the job were spread thin among a number of employees rather than having one person own the entire process. Additionally, Excel did not have the functionality to bring a level of analytics into play.
Cannondale is currently transitioning from a largely reactive model of operations, where it was constantly responding to various changes in the marketplace, to a forward-looking model based on accurate forecasting and execution. With this go-ahead strategy kept top-of-mind, Cannondale began a search to obtain a one-number forecast that could drive supply chain improvements across the enterprise.
Pushing Forward
According to Doerr, Cannondale wanted to initiate a consensus-planning process to generate both short- and long-term operational improvements. Cannondale evaluated three technology companies in addition to Logility in an effort to steer away from Excel and drive toward a system possessing analytics and optimization capabilities. What differentiated Logility's solution from the pack? Doerr says Logility provides superior algorithms and has a comprehensive system. Another advantage is that it is compatible with the AS400 platform that Cannondale uses.
Currently, Cannondale is in the middle of implementation and is using selected Logility consultants to assist with the just under three-month process. The company says the implementation has so far gone smoothly and anticipates that the system will be fully functional by March 2004.
Stepping Up the Pace
Voyager Demand Planning is a member of the Logility Voyager Solutions family -- a set of solutions that enable networks of trading partners including suppliers, manufacturers, distributors and retailers to collaborate, integrate and synchronize their planning, production, warehouse and transportation operations.
More specifically, Voyager Demand Planning users can automate the entire planning process by generating forecasts at user-defined business levels. The solution also allows users, like Cannondale, to compare forecasts generated at the same time from multiple demand points.
Although Voyager Demand Planning is not yet installed, Cannondale expects Logility to reconcile demand history, orders, trends and other information, enabling the company to produce a comprehensive overview of demand by stock keeping unit (SKU), customer and region.
Cannondale works within a seasonal business structure, selling its products to retailers heavy into March, and Logility will help improve planning accuracy by generating a one-number forecast. A spokesperson for Logility says that this one-number forecast can then be used for all forward-looking business decisions, including sales and operations planning.
Not only does Cannondale have a seasonal business structure, but it also has long lead times from component vendors throughout Europe and Asia.
"Increased forecast accuracy will allow us to plan a steady flow of components from around the world, smooth out production and enhance efficiencies at our factory, and raise the level of service we provide to our dealers and our end-consumers," says Doerr.
Approaching the Finish Line
With Logility's Voyager Demand Planning in place, Cannondale will be able to uphold its corporate philosophy that focuses on booming business relationships by using a solution that delivers finished products to retailers and consumers in a timely manner.