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e-RP.TEX Internet Oriented Distributed ERP for Managing Textile Company

Paolo FRANCESCHINI1, Giovanni FANTONE2 and Davide COLOMBO3 1Sineura Spa, V.le Giardini 9, 20038 Seregno Milan (Italy) Tel: +39 0362 328318 Fax: +39 0362 245341; E-mail: paolo.franceschini@sineura.com 2Datatex srl, V.le Lunigiana 42, 20125 Milan (Italy) Tel: +39 02 66738223; Fax: +39 02 66738234; e-mail: giovanni_fantone@datasys.it 3 EDA spa, Via G. Fara 26, 20030 Birago di Lentate – Milan (Italy) Tel: +39 0362 53101, Fax +39 0362 557777; e-mail: dcolombo@edaspa.it

Abstract: The current textile competitive scenario is characterised by complex factors, such as the ever more reduction of time to market, the need to dramatically improve the efficiency of business processes and to offer to the clients timely effective, complete and satisfactory services. This lead companies to the reorganisation of internal and external business processes which, in most cases, cannot be apart from the adoption of the suitable technological infrastructure. e-RP.TEX project aims at empower the sharing of information among the textile SMEs involved in the project and their clients, opening their ERP to the web. The ability to circulate information in an effective and quick way by the mean of integrated and homogeneous infrastructures, the possibility to extract and provide useful information when it is needed and the necessity to improve the business processes, will find in e-RP.TEX solution an effective support.

1. Introduction The European Textile sector employs about 2,3 millions of persons and it is the second world exporter of T/A products. The main feature of this industry, in which more than 114.000 companies are operating, is the high level of small and middle sized enterprises: the high fragmentation of this sector represents a critical point of weakness.

Actually, Europe’s T/C industry is dominated by a large number of small and medium-sized enterprises, the average company having 19 employees (in 1999): textile companies with less than 20 employees accounts about 47.616 units. However, this large number of micro-companies employees 19,3% of textile personnel, making only 11.6% of sector’s turnover. Actually, micro-enterprises always take a bigger share of the total of jobs in their sector than in the total of turnover. In practice they often subcontract within the sector, which would explain why their turnover per person employed is lower than amongst the main contractors.

On the other side, a considerable percentage of turnover (10%) is generated by a limited number of big companies (10). However, in terms of company size (expressed in turnover), Europe has rather few global players. While there are 5 European companies/groups among the worlds 30 biggest textiles companies (defined as companies whose annual turnover exceeds € 1 bn), the biggest European group ranks only 18th (Coats Viyella Textiles, UK): main textile groups from USA and Japan are far ahead Europe’s ones. Otherwise, the dimensional factor is not the sole against European textile companies are competing. Actually, the Far East’s and CEECs’s textile suppliers increased their market share in Europe during last years: the low costs of products is their main competitive factor, while their “standardisation” and low quality level are the main point of weaknesses [1].

European textile companies are thus facing a double challenges on nowadays markets:

- Dimensional, competing against the biggest textile groups: large companies world-wide competitive and globally based;

- Cost/quality, competing against textile suppliers from “lower labour costs” countries.

Europe’s main competitive strength lies precisely in the higher quality of its products, which implies, of course, an higher cost structure than many of its most important competitors on world-wide markets. In order to remain internationally competitive, those higher costs have to be offset by factors such as more flexible productivity levels, and/or superior product quality.

On the dimensional point of view, it has to be considered that the number of European textile companies vertically

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integrated (partially or totally), with one single enterprise carrying out all the phases of production processes, has gone down markedly over the past decade. The integration of textile companies composing the stages along the supply chain both at vertical and horizontal level, rises as a strategic competitive factor.

The interdependence of the individual parts of the textile supply chain is thus emphasised and increased. The essentiality of interaction among all parts of the chain can be considered to be essential to speed up the European sector's reactions to market fluctuations, to cut distribution and stock management costs and to virtually integrate existing SMEs. The application of ICT is bound to lead to a more integrated and improved supply chain, and to a further reduction in the time taken for products to reach the final consumer.

2 Objectives e-RP.TEX project aims at empowering the sharing of information among four textile SMEs and their clients, opening their ERP system to the web. The ability to circulate information in an efficient and quick way by the mean of integrated and homogeneous infrastructures, the possibility to extract and provide useful information when it is needed and the necessity to improve the business processes, will find in e-RP.TEX solution an effective support.

This purpose implies an extended vision of the company, which becomes a wide organisation in which different actors

(i.e. suppliers, producers, clients

technologies is not focused within the companies organisation, but it is extended outside, towards the network of sales agents and clients.

)

interact as if they were a single company. In this context the management of

Actually, the textile production process is very complex and involves a number of processes and activities often leading to different actors, their number and interaction depending on vertical integration level of textile supply chain. Moreover, an effective integration of downstream sectors of supply chain depends strongly on the type of relationships enabled among the companies and their clients and, of course, on the type of services offered.

The increasing needs of connection among textile companies and their clients, suppliers and employees becomes the assumption of the “extended enterprises” concept. Following this model, the information flows coming from the internal functions should be transmitted also towards external counterparts, using fixed and mobile communication tools. The requirement to extend companies’ applications from the back office to the front office is arising [2].

From this point of view, it is necessary to set up a system of relationship in a “one to one” perspective. The arising “extended enterprise” model requires ever improved communication standards among the textile companies, their distribution network and final outlet. This is why ever more attention is paid towards solutions enabling new and effective information/data flows along the whole textile supply chain, till the downstream sectors.

In a collaborative world, enterprises must compete not only on the availability, cost and quality of their products and services, but also on the quality of the information they can publish for consumption by collaborating partners. A primary aspect of this positioning is engaging not just in B2B and B2C electronic commerce, but in collaborative- commerce (which involves the collaborative, electronically enabled business interactions among an enterprise’s internal personnel, business partners and customers throughout a trading community) processes as well.

The technology support enabling the above mentioned information flows can be identified in the CRM (Customer Relationship Management) software, which can be implemented as a single module or as a part of an Extended ERP. The extended ERP is characterised by the merging of traditional ERP functionality (integration of data flows along company’ business processes) and function linked to innovative integrative solutions (i.e. Supply Chain Management).

The ERP system is a software solution finalised to the integration of different company’ functions. It is generated by the customisation of standards application on particular needs and it accomplishes the evolution of the company from an organisation functions based to processes based. These systems can support the management of internal cycles (active cycles -production, sale, distribution; passive cycles –purchase; support cycles - administration, finance, human resources, quality control) and enable new activity flows (i.e. clients relationships management), becoming Extended ERP.

Extended ERP can be defined as a business strategy and a set of industry-domain-specific applications that build

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customer and shareholder value by enabling and optimising enterprise and interenterprise, collaborative operational and financial processes. The core financial areas of Extended ERP are accounting, purchasing, order entry and costing. The role of extended ERP expands from the resource optimisation and transaction processing of traditional ERP to leveraging the information involving those resources in the enterprise’s efforts to collaborate with other enterprises, not just to conduct e-commerce buying and selling [3].

3 The Technology The four SMEs involved in the project (textile companies from Italy, Portugal and Germany) have well understood the growing importance of the Internet in conducting their business, both in supporting new strategies and in changing current process execution.

Therefore they decided to test the Internet capabilities in opening their Information System to the Web, with the goal of making a significant step in improving the customer services. Actually, the four textile SMEs are using the same ERP (Datatex’ TIM, see section 3.1) since years

To reach the e-RP.TEX project goals, the four textile SMEs could:

- Adopt an ERP Web enabled;

- Modify the ERP currently in use.

The solution of doing the test changing their current installed ERP or adding a non-integrated application is not viable. Actually, current ERP (TIM - Textile Integrated manufacturing) contain enormous amounts of mission-critical information relating to customers, products and sales. The participants have used TIM reliably for some years with heavy transaction loads sustained over long periods of time. TIM has been tuned to fit the participants organisation’s rules and practices. The solution chosen with the e-RP.TEX project will therefore keep unchanged all functions of the installed ERP while enhancing it with new WEB capabilities. The participants have chosen those functions that will bring higher return in terms of operation cycle reduction and image as leaders in customers service. In particular the project will consider:

- Order entry from agents;

- Order entry from selected customers;

- Query from agents on order portfolio;

- Query from agents on order status;

- Query from agents on inventory;

- Query from selected customers on order status

- Query from selected customers on inventory (Stock items).

e-RP.TEX software will run into a separate machine (see figure 1): a dedicated application server, the only “open” to the Internet. e-RP.TEX will periodically update data to be published on the Internet, while operations processed by the external users (i.e. order entry) will be registered by the server open to Internet and then uploaded in the internal server. This has been necessary for two reasons:

1. to avoid slowdown of data processed by the server running the ERP;

2. to protect data processed on the server running ERP.

Being the system architecture the backbone of the e-RP.TEX solution, the core item will be the interface, the tool allowing the interaction among the ERP and the external users (remote workstation).

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Figure 1 : the network structure The e-RP.TEX solution is composed by three modules: -

Figure 1: the network structure

The e-RP.TEX solution is composed by three modules:

- the ERP on which the interface is developed (TIM-Textile Infrastructure Management);

- the Internet interface, enabled by a dedicated Extranet, and provided with a digital signature module;

- the EMS (Environment Management System). Following sub-sections will describe main feature of every single module.

3.1 TIM – Textile Infrastructure Management

The textile sector is an industry with special needs. Among its companies are different levels of vertical integration and a variety of manufacturing processes and management requirements. The textile SMEs participants to the e- RP.TEX project are using the same ERP system (Datatex’ TIM: Textile Integrated Manufacturing) successfully since some years. This sub-section will give some basics information on this ERP.

The Datatex’ TIM addresses the Manufacturing & Logistic requirements of textile manufacturers of all sizes, whether vertically integrated or specialising in just one stage of the manufacturing chain. It assures the information availability across the whole production cycle: from order receipt and sales details to planning, launch and control of manufacturing processes and management of delivery schedules, as well as cost analysis and management of warehousing, purchasing and work for other manufacturers. Modular in structure, Datatex’s TIM not only provides a user-friendly environment that can be tailored on needs of companies both large and small. It can be also progressively expanded, both in the "horizontal" sense to embrace additional organisational functions, as well as “vertically”, to integrate other stages of the production process.

The applied ERP covers all processes of the textile production chain: Fibres manufacture - Spinning - Warping - Weaving - Knitting - Tufting - No woven production - Dyeing – Printing - Finishing - Cut & sew.

The TIM is based on separate but completely integrated modules, and joins the specialised knowledge of the textile industry and the most advanced technology available in the AS/400 environment.

Some of the modules serve several functional areas which are conceptually related, performing distinct but complementary functions.

3.2 e-RP.TEX interface

The e-RP.TEX interface has been designed with the objective to be as simple as possible, providing a series of data (statistics, technical schedules on products…) and allowing the interaction between the company and the client/sale agent, till the direct insertion of orders.

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The information flows can be identified as follows:

- From the company to the user: statistical data, utilities, information on current orders status and previous orders, offer of purchase;

- From the users to the company: reorder of articles/products previously purchased.

Access area and users home page. The client/sale agent log-in using the Password and the Username provided by the textile company running e-RP.TEX, entering its Personal Homepage. The system automatically identifies the user’s country (previously verified by the Commercial Function), setting up the proper language .

When the client/sale agent enters its own Home Page, a series of statistical data are provided: general indicators about sales proceeds; general indicators about the previous orders; financial information about client, company information….

Commercial and technical documentation can be downloaded from this section.

Active orders page. From the “HOME PAGE” it is possible to access the “ACTIVE ORDERS AREA”, where a list of articles ordered but not yet delivered is given. For any active order, a list of information is showed (i.e.: order status

Order detail. The number of the order referring to the article allows the client/sale agent to enter the “ORDER DETAIL AREA”, showing details on all the articles belonging to the selected order.

Reorder. From the “DETAIL ORDER AREA” it is possible to enter the “RE-ORDERING PROCESS AREA”. The client/sales agent can select one or more articles, modify some field (i.e. size, colours, quantity) and generate a new order.

Purchase proposal. The SMEs running e-RP-TEX will have the possibility to directly contact their client/sale agent potentially interested in the purchase of an article previously ordered. This happens when the company decides to produce “rare” or “critical” article or to sell a product with particular conditions (i.e special price).

Digital Signature. When asking information, ordering products, requesting product’ technical schedules, the e- RP.TEX user has to be clearly identified by the system. Actually, as in the real world, so in the Internet enabled environments some actions can be performed only by person in charge (i.e. Purchase manager). This is the reason why the e-RP.TEX system is designed to be enabled for the digital signature.

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Figure 2 : the e-RP.TEX information/data flows scheme. 3.3 The Environment Management System The Environmental

Figure 2: the e-RP.TEX information/data flows scheme.

3.3 The Environment Management System

The Environmental Management System or "EMS" is a system of processes. It is not a set of goals or performance standards to be achieved, although it includes processes for setting performance goals. The EMS is a systematic process for implementing main environmental policies. The Environmental Management System (EMS) process calls for an initial assessment or gap analysis, once an environmental policy statement is established.

Gap analysis reveals the difference between the environmental policy and actual performance. The data for the gap analysis comes from the initial environmental review and are constantly monitored using indexes identified among data provided by the ERP. Further assessments are then conducted throughout the EMS process to ensure constant evaluation and feedback for continuous improvement.

3.4 The NOW approach (Technology description)

The transfer of ERP functionality to the web had to consider following requirements:

- to provide an effective and appealing user interface; - to extend core applications (such as agent's order entry) to accept inputs from the Web.

Two of the possible tools allowing the transfer have been analysed and discussed in detail, with cost/ benefit comparison and real use to develop a possible solution. After the evaluation, the “NOW” framework has been adopted. NOW (Network Oriented World) is a framework allowing to create enterprise WEB applications, with an Object Oriented programming approach, which will allow to “translate” the ERP functionality on Internet.

NOW allows to reduce the cost and time required to develop and deploy applications on multiple platforms. Even though all the four project participants are working on the same platform, the platform portability is a big plus of the solution.

The fact that Java code can run unchanged on multiple platforms gives the network an homogeneous execution environment that enables new kinds of distributed systems built around network-mobile objects.

Enterprise Java 2 Enterprise Edition and JavaBeansTM technology allows the NOW solution to be deployed virtually on any platform (AS/400, NT, Unix…) that supports the Java Virtual Machine at J2EE level.

NOW follows Enterprise JavaBeans standard so it runs under any Application Server that support that standard

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(WebSphere , WebLogic,…).

NOW uses the protocols to access the data base defined by the SQL standard so it can manage any data base that support that standard (DB2, DB2/400, Oracle, ).

So NOW can be installed on virtually any platform without added cost for the customer.

NOW allows the eRP-TEX project to fully respect and meet the expectations and the needs of the project participants and, subsequently, to make more easy the results dissemination to the widest variety of customers and users. NOW’s entire philosophy revolves around the native-on-web concept, it has the emerging technology of Internet, Intranet and Extranet in its DNA. This means that all the applications of NOW are made immediately available on these networks with no added effort.

The eRP-TEX project has to create new ways to do business over the Internet while drawing on the resources already in place, such as databases, transaction systems, inventory etc.

Moreover it is required the interaction with a wide array of legacy technologies that can not be replaced.

The Java Platform has in-build the portability, consistency and industry standardisation, enabling quick linkage of the systems already in place.

This means that NOW can connect users effectively through the integration of Mail and Workflow, Fax, Wap/UTMS and all the other systems that the customer requires.

6. Conclusions At present (June 2002), the project is still in its early phase: the design of software functionality will end at the end of July 2002 and the phase of installation and final validation will start from September 2002, lasting till the end of the project (February 2003). At the time being, it is thus possible to evaluate the expected benefits only on qualitative basis, by identifying main impact area of e-RP.TEX solution on existing business organisation. The e-RP-TEX solution will enable a better and enhanced communication among the companies and their external counterparts (clients/sales agents) in the downstream stages of textile supply chain. The enabled information flows (see figure 2) will allow to improve the efficiency of the whole network, allowing clients and sales agents to have on the web a sort of information system, providing accounting data and commercial statistics. The possibility to enable clients and sales agent to execute the reordering, will allow SMEs running e-RP-TEX to re-allocate personnel assigned to this task to other functions within the business organisation, reducing the costs and improving the efficiency of the whole system.

The definition of this new IT tool together with the resolution of the problems identified into the original flow of the process, should bring the textile companies toward a better business process condition.

In particular, the benefits consist in:

- reduction of the documents printing and distribution costs;

- reduction of communication cost (telephone, fax, mailing, paper cost);

- reduction of the space needs to archive order documentation

- higher productivity of personnel (due to the elimination of redundant, not-value-added activities): the time saved can

be used for other, value added activities, or can lead also to personnel cost savings (through a redistribution of tasks);

- reduction of transaction costs

- reduction in production scheduling, with effects on WIP level, cost of capital employed, etc.;

- reduction in production errors, due to the higher standardisation and completeness of the production order, which, in turn, leads to reduced spoilage, reduction of re-working activities, duplication of sample production, etc.

- increased quality level;

- reduction of time needed to perform the process;

- Customisation and reduction of batch sizes

It is important underlining the massive impact of this business process re-engineering on the supply chain of the textile sector. In fact the IT tool developed can be customised in order to achieve the best results in several business

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environments.

For a company oriented on order production, e-RP.TEX can support the customer who can better manage the order and re-order process; in the same context, the Company running e-RP.TEX can relieves itself by activities extending the times needed to perform the business processes.

On the other hand, the company oriented on massive production may use e-RP.TEX to support the sales agents. In this case it’s important to build a solid link between the enterprise and the agent, in order to obtain a better service and a bigger knowledge of his requirements.

All these benefits imply an improvement of the overall “quality” of the output of the network of firms (in terms of both inherent quality characteristics of the product, and compliance to customer’s specifications), a reduction in response time (both for new product codes and for simple re-ordering), and a reduction in overall costs along the value chain, both in production activities, and in support units.

References [1] Werner Stengg, The textile and clothing industry in the EU – A survey, European Commission - Enterprise Directorate-General, June 2001. [2] Assintel, Prodotti ERP e applicazioni web deployed, 2000 [3] B. Bond, Y. Genovese, D. Miklovic, N. Wood, B. Zrimsek, N. Rayner - ERP Is Dead — Long Live ERP II – Gartner Group, October 2000

July 2003

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