Harnessing Data to Modernize Legacy Supply Chain Systems
New Balance, the well-known athletic footwear and apparel brand, has undergone a significant transformation of its supply chain, enabling impressive growth and resilience. By modernizing legacy systems and emphasizing data-driven decision-making, New Balance is navigating a competitive market with newfound agility. The transformation has driven efficiency across all aspects of its supply chain—from demand planning to production optimization—resulting in a notable 23% revenue growth in the past year.
Addressing the Challenges of Legacy Systems
New Balance faced a common challenge shared by many long-established businesses: reliance on legacy systems that were decades old and lacked compatibility with modern, integrated technologies. These systems often operated in isolation, creating silos that hampered visibility and efficiency. In response, New Balance adopted a dual-path approach: first, it began a gradual replacement of its outdated ERP with a new, more capable system; second, it implemented advanced analytics to enhance existing systems and provide immediate value.
While replacing an ERP system is a long-term project that can take years to fully implement, New Balance took proactive steps to improve operational effectiveness in the short term. This involved creating a centralized data infrastructure that gathered and organized information from disconnected systems. By creating a “Snowflake” data warehouse, New Balance was able to consolidate information from multiple legacy systems, providing a foundation for data consistency and accuracy.
The integration of advanced data visualization tools, such as Spotfire and Power BI, played a crucial role in making this data actionable. These tools provided detailed insights into key operational metrics, from forecasting accuracy to production capacity utilization, and enabled effective, data-driven decision-making throughout the supply chain.
Leveraging Analytics for Optimized Planning and Production
One of the biggest benefits of New Balance’s supply chain transformation has been the enhanced ability to plan demand and manage production effectively. The creation of a centralized database enabled the company to achieve a “single version of the truth,” which is essential for making well-informed decisions across all supply chain functions. The new data structure helped eliminate discrepancies in reports and ensured that stakeholders across departments were working from the same reliable information.
A notable success story in this transformation has been the optimization of production planning. New Balance developed an in-house “solver” program designed to load factories in a way that balanced capacity and reduced costs. By using advanced algorithms, this system made it possible to smooth out peaks and valleys in production demand, which was particularly critical during the unpredictable supply and demand conditions seen during the COVID-19 pandemic. By refining the production schedule and creating a clear view of available capacity, New Balance was able to minimize production disruptions and improve efficiency across its manufacturing footprint.
Moreover, improvements in supply and demand planning have been substantial. By incorporating new data analytics capabilities, New Balance has enhanced its forecasting accuracy and capacity planning. By measuring forecast bias and evaluating real-time capacity, the company became more adept at managing the supply chain end to end. It also facilitated better negotiation and communication with third-party suppliers and internal manufacturing teams to ensure product availability and cost efficiency.
Investing in Data Quality and Unified Processes
A major aspect of New Balance’s supply chain overhaul involved addressing data quality issues. The company established a master data management function that included data governance and stewardship. This move ensured that every aspect of the supply chain was informed by a consistent set of data standards, which was vital for maintaining high accuracy across supply chain planning and production functions.
To support this effort, New Balance also focused on creating a data analytics team responsible for advanced data analysis using Python, JavaScript, and other technologies. This small but effective advanced analytics team worked to create custom reports, dashboards, and insights, driving strategic decisions across the business. The use of advanced analytics enabled the company to answer critical questions about bias in demand planning, production efficiency, and capacity utilization, which helped in identifying opportunities for continuous improvement.
Benefits of an Integrated, End-to-End Supply Chain Approach
One key aspect of New Balance’s transformation was the consolidation of product development, supply chain, and production functions under one unified leadership structure. By integrating these functions, New Balance effectively broke down the silos that often create inefficiencies in traditional supply chains. This change allowed for a more seamless flow of information and decision-making from product design through production and distribution.
The integration of product development into the operational structure had an immediate positive effect. By creating a direct connection between the creative teams and those responsible for manufacturing and sourcing, New Balance ensured that new products were designed with manufacturability in mind from the outset. This led to fewer disruptions during product launches, better alignment between development and production timelines, and an overall reduction in the time required to bring products to market.
Furthermore, New Balance’s revamped supply chain structure allowed it to respond more quickly to changes in consumer demand. With the supply chain, sourcing, and production functions unified, decisions could be made faster, and adjustments to product volumes or production schedules could be implemented without delay.
Key Takeaways for Supply Chain Modernization
The transformation of New Balance’s supply chain highlights several important lessons for supply chain professionals seeking to improve their own operations:
- Prioritize Data Centralization and Quality: Consolidating data into a single, centralized location, and ensuring data quality is vital for accurate and efficient decision-making. Eliminating data silos and creating a “single version of the truth” empowers the entire supply chain to operate more cohesively.
- Leverage Advanced Analytics for Demand Planning: The use of advanced data visualization and analytics tools can dramatically improve forecasting accuracy, optimize production planning, and create efficiencies across the supply chain. These tools provide insights that support proactive decision-making, allowing for smoother operations and a more resilient supply chain.
- Adopt an End-to-End Supply Chain Perspective: Integrating product development, sourcing, manufacturing, and distribution under one leadership structure helps eliminate inefficiencies and enables faster decision-making. Breaking down silos and ensuring that all functions are aligned around common goals helps to create a more responsive and adaptable supply chain.
- Invest in Production Planning Systems: Tools that enable advanced production planning, such as solver algorithms for factory loading, can create significant cost efficiencies and reduce bottlenecks. This approach allows companies to level out production demands, enhance capacity utilization, and minimize costs.
- Data-Driven Improvement Culture: Establishing an advanced analytics team can be a game-changer in uncovering inefficiencies and identifying areas for continuous improvement. Using insights to drive improvements in supply chain planning can help companies maintain competitiveness and resilience, especially during periods of market volatility.
By modernizing legacy systems, focusing on data quality, and unifying key supply chain functions, New Balance has successfully transformed its operations. These initiatives have enabled the company to not only navigate a challenging market environment but also achieve significant growth and set a strong foundation for future resilience. The lessons from this transformation provide a valuable blueprint for other companies looking to modernize and optimize their supply chain operations for a competitive edge.
