Bacou-Dalloz USA is getting smaller even as it becomes larger. Larger, thanks to a series of mergers and acquisitions that has made the manufacturer of personal protection equipment at least twice the size of its nearest competitor. The subsidiary of Paris-based Bacou-Dalloz, in fact, comprises nine different businesses in the United States alone—and it's not done growing. But as it expands, most recently through the 2001 merger of parent companies the Bacou Group and Dalloz, it has started to feel the tug and ache of a fragmented supply chain that's spread a bit too wide.

Which is why the company is in the midst of an initiative to make its supply chain smaller. Through a program known as "Project One," Bacou-Dalloz USA is working to pare down its logistics operations while eliminating unnecessary assets and practices.

Project One will integrate the company's several divisions into a one-stop solution that will meet all of its customers' needs. As things stand now, customers (mostly safety equipment distributors) must deal separately with each Bacou-Dalloz USA subsidiary. "Our customers find themselves having to make several calls to outfit a person," explains Peter Moore, vice president—supply chain. "If you need a hardhat and glasses, you call one number. If you need boots, you call another. We're trying to create a situation where you only have to call one."

Achieving that objective will require a lot of behind-the-scenes work to optimize how products get from the plant to the distributor. This entails consolidating plants and warehouses, trimming transportation costs, and streamlining enterprise resource planning (ERP) systems.

Seven Project One teams, each with its own initiative but working in concert, will carry out that mandate. The customer-service team looks at ways to reduce errors and non-essential steps in order processing; the DC team works on plans for a new distribution center and improving shipment and tracking capabilities; the sales and operations planning team is creating a global forecasting and planning system, along with new services for customers; the metrics team focuses on the company's goal of the "perfect order"; the ERP team is working on consolidating and harmonizing information management systems; the telephony team works on the "one number" problem; and the Web portals team is developing Web-based reporting and inquiry capabilities. The teams update each other weekly on their activities, and hold Web seminars to inform company associates worldwide of the project's status, Moore says.

The first step in launching Project One was to go directly to the customers to find out what, ideally, they wanted from the company. "We visited our customers and interviewed them," Moore says. "The highest priority was for our customers to be able to issue one purchase order to one vendor, Bacou-Dalloz USA, and then leave it to us to get that order out to the various divisions."

To fulfill that request, company managers realized, they would not only have to change their order management system, but they also would have to change their distribution practices. "The buyer may say you can ship to them across five shipments, but then you meet with the receiving people and they want to receive against one purchase order in one place at one time," Moore explains. "That necessitated us to [create] a distribution center where all the products could be shipped at the same time to fulfill orders."

Bacou-Dalloz now operates 14 distribution facilities. Of those, five are stand-alone warehouses, while the others are plant/warehouse combinations. Working with six months' worth of ERP data from all of the business units, Moore and the DC team created a model that suggested the company switch to a centralized DC. They also considered what potential impact one DC would have on sales and operations planning.

Based on the results of that research, Bacou-Dalloz will eliminate the pure warehouse operations and will instead open a single distribution center, centrally located in the Ohio Valley. Moore says just one DC will easily be able to meet customers' needs. "Our customers, the distributors, need a lot of facilities across the U.S., Mexico, and Canada to fill next-day orders. But we only need to restock them every five to seven days or so, which lets us go to one DC and still have time to transport to our customers' regional centers," he explains.

Moving to a single DC will offer another advantage. "We'll be able to mix loads," Moore says. "We've purchased a state-of-the-art transportation management system, which allows us to plan and consolidate loads from the various businesses into one LTL or truckload unit to be shipped to the customer. We'll be able to plan in advance and then take advantage of the potential synergies between all the businesses serving a particular distributor on any given day," he says. Moore expects to consolidate several thousand loads each week once the DC is fully operational, a move that should create what he calls "synergy savings" of 10 to 15 percent off the company's annual overall logistics costs.

A new warehouse management system will provide full visibility not just for the company, but for its customers as well. Because both the in-house and customer sides of the system are Web-enabled, they make it possible to track products in real time. Those new information systems, says Moore, will allow his group to monitor activities at the different business units from the plant through to the DC.

Using the ERP data that helped plan and place the new DC, Bacou-Dalloz found other ways to tighten up its logistics operations long before the DC opens. "The study led us to look at how we were moving intra-company freight," Moore explains. "We found literally hundreds of thousands of dollars in the practices of how we deliver not just to our customers, but also between plants."

Moore cites the example of product moving to two company facilities for semi-finish and finish work. "It became a daily routine of shipping in response to orders," he says. "There was no formal process. We had no transportation system that would look at the orders and try to group them." Now that the company is consolidating orders for those facilities into truckload and LTL quantities based on Project One standards, Moore says, he's seen "dramatic savings" in transportation costs.

That discovery in the United States led Bacou-Dalloz to take a closer look at its transportation practices in Europe as well. "It was a surprise to find that there was 'low-hanging fruit' of that size, and it's encouraged us to look at freight over there," Moore says. "Hopefully it will generate some more quick hits for us."

The "fruit" is falling from other trees as well. Those findings, for example, helped Moore reduce the number of contract carriers he uses. Prior to Project One, Bacou-Dalloz USA worked with nearly 60 different motor carriers. That's now down to a dozen, and Moore would like to cut that to 10 providers. Consolidating carriers has already yielded a 10-percent savings off the company's annual transportation bill. Moore says he plans to put out another request for bids to the remaining motor carriers once he knows the exact location of the DC.

The "quick hit" improvements haven't been limited to transportation. As part of the project rollout, the Project One team has started teaching other employees about the new processes. But there's a catch: The team doesn't actually implement them until managers can demonstrate that they understand how sales and operations planning, forecasting, and constraint-based planning work. And because the new information systems aren't in place yet, they have to show that understanding with just a spreadsheet for a tool. That sounds harsh, perhaps, but it's working.

"Once we did that, we started to get some great hits," Moore says. "As management began to understand [the process], they began to sharply reduce inventory in some key markets because they could see what they could live with and what they couldn't and started to run the business accordingly, right down to the shop floor.

"This is a supply chain transformation," he continues. "We're trying to go from a 'push' environment where the plants are optimized and run because there's plenty of space to store everything, to a 'pull' environment where the market takes from each unit what they need to satisfy the customer. We're very pleased that we've already started to see results just from the spreadsheet model."

As part of the effort to pare the supply chain down to its essential elements, Moore also has turned his eye toward the company's ERP system—or, more accurately, its five different ERP systems. Although they all are JD Edwards products, they support five different customer lists, item master lists, data sets, and customer contact points. Clearly, that situation didn't fit the Project One vision.

In order to get the necessary support for its centralized distribution system, Bacou-Dalloz needed to integrate the divisions' varying ERP systems into one common solution. That's not as easy as it might sound. "It's the equivalent of doing a new ERP implementation because when you go to one, you have to agree on the standards you're going to use, from financial to operating standards," Moore explains. "The first step is to get all those standards rewritten so that they fit into the new system, then migrate it."

That changeover is underway, and Moore expects everything to be settled in by the fourth quarter of 2004. When that occurs, the company will have a single EDI connection for all of its customers across all its business lines, complete with a uniform item master list and customer list.

Project One is not just about patching a few holes in the supply chain. Rather, it's a forward-looking initiative created with the understanding that the company has not finished growing—not by any means. "We want to be a $2 billion company by 2006, and we're not going to do that just by organic growth," Moore says. "We're going to do it through acquisition. The drive for Project One is that we need to have a platform that will allow us to [smoothly] bring in more brands and business groups."

Ultimately, Moore says, what Project One is about is serving Bacou-Dalloz's growing customer base as efficiently as possible, regardless of how large the company gets through future acquisitions. "Our picture is that this will enable us to raise the bar for customer service in the personal protection market," he says. "It sets up a platform for us to offer one-stop shopping, and the new DC gives us the ability to acquire new companies and bring them to market to fill out what we offer to our customers."