The Challenge: Setting up end to end, integrated single budget and planning sytem, at a fully integrated textile group of companies
Sanko Tekstil, is an integrated textile group that operates cotton ginning, yarn production, dying, printing and ready-to wear garments in 4 legal entities, 6 divisions and 8 production units.
Each unit prepared its own budget on Excel and the HQ aggregated these independent budgets into a single budget. Since Excel does not have the simultaneous solution capability required for such a consolidation, the group could not make a single consolidated budget.
Until Reflex project Sanko lacked the the experience of ERP oriented budget and planning software.
The Solution: The HQ integrated all production units end to end on Reflex’s single MRP program.
Reflex forced each production unit’s independent MRP to tie up with the single HQ MRP to be used collectively by the units.
This chain-like connection enabled each unit to trace the effects of its own decision on other group units. Each unit internalized to evaluate the results of the decisions on the consolidate outcomes only, and not on the outcome of the decision making unit.
Reflex automatically and simultaneously balanced the quantity flows of finished goods, semi-finished goods and raw materials triggered by the transactions among the group units.
Reflex recalculated the division costs based on the new general quantity balances reflected on the inventories of the individual units that comprise the divisions.
For example, to produce the towels to be exported by Gaziantep Division, Reflex made the calculations to decide
- Whether to supply the required yarn from the Adıyaman or Başpınar Division
- Whether to use “low priced, high wastage” Adana cotton, or “high-priced, low wastage” American cotton
Solution Benefits: Sanko Tekstil realized that
- Profit maximization at company level does not maximize the total profits of the group.
- Group profits can only be maximized by overall cost minimization.
- Cost minimization decisions can only be based on real consolidation results.
- The best cost minimization scenario can only be targeted by simulating consolidated results.
- Taxes at the Division level cannot be minimized due to legally compliant transfer pricing.