As you read through this issue of DS Magazine, I hope you will find it inspiring ....
fruit juice packaging operations in the world and a leader in premium, 100.
VOLUME 13 | 2013
DSX Gives
Ceres
More Juice Sophisticated Forecasting Tools Manage Ceres Beverages’ Growth
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WELCOME
PRESIDENT’S LETTER A
s you read through this issue of DS Magazine, I hope you will find it inspiring to see how quickly many of our customers are growing. The reasons are varied but include design, organic growth, acquisitions, product line extension and geographic expansion. This is really impressive, especially in our uncertain global economic climate. While Demand Solutions would like to be able to claim some credit for this growth, I think it comes from the companies’ strategies, great execution, fast-paced decision making, efficient manufacturing and sourcing, and excellent people pulling all of these elements together. These companies have turned to Demand Solutions to continue their success. Business growth is wonderful; fulfilling for people throughout the company and exciting for investors. It is also dangerous -- just ask your CFO who has to balance cash flows and hunt for financing from reluctant banks.
Bill Harrison President
Find Us On
Business, especially during innovation or expansion, requires meeting multiple demands without going broke. Customers want ample stock of popular items. Sales people want their orders fulfilled so they can get paid. Production, whether domestic or international, wants sensible and predictable order flows that will make the best use of factories. Logistics aims to fill containers or truckloads and ship by land or sea while minimizing the number of costly air freight deliveries. Meanwhile the finance department wants to keep inventory to a minimum and hold as much cash as possible. Even that has changed. While big companies often set payments to suppliers 30 to 60 days from delivery, some now recognize slow payments could drive key suppliers out of business. Good supply chain managers are monitoring businesses for signs of stress. Sometimes I marvel that this whole process works as well as it does. In my early career, I ran inventory control for a large wholesale distributor and I learned what the participants in a supply chain truly value. It has been our longstanding goal at Demand Solutions to deliver the best supply chain tools possible. That is not enough, of course, to solve the problem of all the competing demands. However, by applying the latest technology to supply chain planning, we can provide a solid path for continued innovation and growth for our customers. My congratulations to the companies which have provided such inspiring case histories and to the supply chain professionals who deliver the efficiencies through the software.
Sincerely,
Bill Harrison President | Demand Management, Inc.
WHAT’S INSIDE
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CONTENTS
NEWS
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CERES BEVERAGE CO. Headquartered in the Ceres Valley in South Africa, long-time Demand Solutions user Ceres Beverage Company tackles an expanding product portfolio and stays on the cutting edge of supply chain management by upgrading to DSX.
COVER STORY | CERES BEVERAGE CO.
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a.b.m. CANADA Plastic injection moulding company a.b.m. Canada constructs new business procedures and overhauls its forecasting process to better deal with a high volume and variety of products after implementing Demand Solutions. ARGOSY TRADING CO. Argosy Trading Company, the biggest retail grocery supplier in Cyprus, trades manual forecasting for Demand Solutions Forecast Management, resulting in better business processes and better control of promotions and seasonality. THULE Travel accessories manufacturer Thule drops spreadsheets in favor of Demand Solutions Forecast Management while expanding its business.
HDA HDA provides the books that keep kids and adults busy with home improvement, decorative crafts, cooking and reading stories across more than three million display pockets, with the help of Demand Solutions Retail Planning.
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NEXANS NORWAY As a producer of a wide variety of cabling solutions for a number of industries, the Norwegian-based Marketline division of Nexans pilots Demand Solutions Forecast Management for better customer service levels and inventory reductions. BUILT Design-focused accessory manufacturer Built NY implements Demand Solutions to get ahead of the curve in a speed-tomarket industry.
ORLANDO HEALTH Orlando Health’s eight-hospital system is a pioneer in integrated delivery networks (IDN) for the healthcare arena. Demand Solutions Forecast Management was instrumental in reducing inventory levels by three million dollars.
Editor: Ashley Riley
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NEWS
NEWS DEMAND SOLUTIONS FLAGSHIP OFFERING IS NOW CALLED DS1 Demand Solutions announced the rebranding of its flagship product suite to DS1. The new product name reflects Demand Solutions 27-year supply chain heritage and its continued commitment to supporting global supply chain systems for growing businesses. Demand Solutions announced the release of DS1 Version 12 at the 2012 Customer Conference.
DEMAND SOLUTIONS ANNOUNCES NEW PRODUCTS
Demand Solutions continues its history of innovation and practical supply chain functionality with new offerings for both of its product suites. Predictive Lead Time: Demand Solutions Predictive Lead Time was designed to address the challenges of long and inconsistent supplier lead times due to global outsourcing. The product applies the principles and statistical formulas of forecasting to provide an accurate view of those lead times. The company plans to add predictive lead time to both of its product suites beginning with DSX and then DS1. OTHER NEW ADDITIONS TO DSX: Demand Solutions Comes to the iPad with iCollaborate The new DSX iCollaborate app for the iPad enables customers, salespersons and suppliers to communicate with demand planners offsite, from home or while traveling. The new app will allow stakeholders to look at the forecast by customer, by item or at an aggregate level and contribute meaningful insight from forecast and history data to DSX right from their iPad. EXPANSION AND GLOBALIZATION Demand Solutions continued its expansion into Europe in the past year, adding offices in Turkey, Romania, Greece, Croatia and Germany. To continue expanding globally, the company also added to its language offerings of the Demand Solutions products to include Russian and Turkish in addition to Chinese, Japanese, Italian, Portuguese, German, Spanish and French. With the newest office addition in Greece and the closing of a recent deal in Zimbabwe, Demand Management has offices globally representing customers in 76 countries.
The app is free and available in the App Store, although DSX users will have to contact customer support to set it up as a secure web service. Workflow Integrates Supply Chain Functions Demand Solutions DSX Workflow gives all the stakeholders in the planning process the visibility to issues before they become problems. DSX Workflow lets you build automated workflow process – your business rules embedded into the Demand Solutions planning suite – so you can set thresholds and create notifications to ensure prompt action when the system identifies an issue. By alerting the appropriate mangers if a forecast falls outside of parameters or inventory dips for a key item, DSX Workflow enhances efficiency across the planning process. DSX: Sales & Operations Planning Designed to meet Gartner’s Stage 3 S&OP Architecture requirements, DSX Sales & Operations Planning offers a single technology platform that includes supply chain modeling, scenario planning, financial reconciliation, performance management, workflow, hierarchy management and collaboration while featuring the most up-to-date forecast available.
COVER STORY CERES BEVERAGE COMPANY DEMAND SOLUTIONS FORECAST MANAGEMENT
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dsx gives more juice
sophisticated forecasting tools manage ceres beverages’ growth
Ceres Beverages Migrates to Demand Solutions DSX Flexibility to forecast weekly, monthly and quarterly key to success
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ucked away in a crescent of mountains in the picturesque Boland region of South Africa is the beautiful valley of Ceres. From its production facility there, The Ceres Beverage Company ships its pure premium fruit juices to health-conscious consumers in 80 countries across Africa, the Middle East, Asia, Europe and North America. The company, which was established in 1986, is now one of the largest fruit juice packaging operations in the world and a leader in premium, 100 percent pure juices. Its long-life juices are distributed to both the domestic and international markets in Tetra Pak packaging, which are shelf stable without refrigeration or preservatives. In addition to packaging and distributing pure fruit juices and concentrates, Ceres also bottles and distributes the Pepsi range of products to regional markets. A Demand Solutions user since 2000, Ceres has become skilled at forecasting.
As its business grew, both in geographies and product categories (4,300 SKUs), supply chain planners at Ceres realized they needed more detailed demand forecasting across major customers, brand volume rebate groups, pack sizes and product groups based on weekly, monthly and quarterly demand views. Being able to look at core forecasting data in the context of time periods in addition to the traditional view was the catalyst for upgrading to a more sophisticated sales forecasting system. Fortunately, just as the company was looking for a modern, more sophisticated forecasting engine, Demand Solutions was coming to market with DSX, a robust, enterprise-level solution that makes use of the latest Microsoft technologies.
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COVER STORY CERES BEVERAGE COMPANY
“Deciding on Demand Solutions DSX technology was easy, as it fits with our systems strategy and the user interface is familiar to our many Microsoft Office users,” said National Administration Manager Kolie Lintvelt. In late 2011 Ceres implemented the latest version of Demand Solutions software. In more than a decade of using Demand Solutions, Ceres achieved great improvements in forecast accuracy. As a proactive client, the company worked closely with Demand Solutions consultants to constantly improve its demand management processes and improve customer service while controlling inventory. As the company grew its juice business and expanded into more international markets, it needed a more powerful forecasting tool with additional features such as weekly time buckets, especially for its fast moving, locally distributed soft drinks. DSX proved to have everything Ceres required and, because it came with familiar Demand Solutions design and Microsoft-style interfaces, it could be implemented with minimal training. The benefits have been impressive. The forecasting process now takes between four and five hours from updating the system with the latest historical information through providing updated demand information for collaborators across the different hierarchies to work with. This
COVER STORY CERES BEVERAGE COMPANY
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“Deciding on Demand Solutions DSX technology was easy, as it fits with our systems strategy and the user interface is familiar to our many Microsoft Office users,” said National Administration Manager Kolie Lintvelt.
speeds up the monthly process by about six days. Updated demand information can now be brought in weekly or daily to support replenishment planning and updates will filter through to replenishment planning much faster than before. And in fact, DSX forecasts better than the collaborators. Ceres found the statistical forecasts, even before the collaboration process, were highly accurate. “The difference between the previous and current methodologies is that we are now able to forecast different items in different time buckets depending on the available data and characteristics.” Ceres learned that weekly forecasting algorithms work better for certain items while monthly for others. “Depending on the data and the need, DSX
can consolidate it into monthly and even quarterly buckets and resultant forecasts can be tested.” From DSX, Ceres exports the results to a data warehouse and distributes them to forecast collaborators in Excel spreadsheets. This has eliminated delays, and when the sales teams have developed changes in the forecasts, they can make the adjustments in DSX directly. The company’s export market has introduced new types of complexity. Different markets require different types of packaging. Orders for export are usually by the container load and may come months apart as the distributor works through the supply, so the forecast has to be linked to the factory production schedules. “In the export business you can’t forecast the way you can in your local business because a lot depends on a distant distributor,” said Lintvelt. “The ideal situation would be total collaboration right into all the export countries, but right now only a few know how to review our statistical forecasts and collaborate on them. As we improve our relationships with distributors we expect our results to improve.” Ceres also prefers the flexibility in DSX which allows users to make changes in the configuration, such as adding data streams on the fly at the database level without coding. So far they have found the data streams that come with DSX meet every need, but they know they can add new data streams in the future without IT expense. The Demand Planning support system at Ceres has enough “juice” and should be good for another ten years.
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a.b.m. CANADA DEMAND SOLUTIONS ADVANCED PLANNING & SCHEDULING
a.b.m CANADA: Taking Action
When Growth Imperils Success
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n innovative leader in plastic injection moulding, a.b.m. Canada faced a challenge. The company was growing at 100 percent annually by 2010, just four years after it was founded. Its European designs, bold colors and unique in-mould labeling won significant market share across a broad product range in the housewares channel. Furthermore, the company launched product into the medical sharps containers market, where its product is used in the disposal of medical and dental hypodermic needles and consumer products such as storage containers, refuse bins and buckets. The company also does custom moulding to produce products for design firms that require plastics, but have no manufacturing facilities of their own. The volume and variety of its work soon became too much for Excel-based forecasting and planning to handle.
“It was evident that we needed a demand planning application that would enable us to operate and compete as the world class company we were quickly becoming,” says Chris Koehler, president of a.b.m. Canada. “We had a strong desire to improve our internal processes and, according to our research, felt that Demand Solutions was the right program to help us accomplish our goals.”
a.b.m. Canada’s plant was constantly switching work priorities to adapt to changing circumstances and unplanned customer orders. Inventory was high, customer fill rates were low and staff members were spending more time preventing problems on the verge of spiraling out of control than they were following through with their day-to-day planning responsibilities. Performance was inhibited by poor demand estimates and an inability to effectively prioritize the load on the production floor. Neither forecast nor production was measured on a real-time basis which made it extremely difficult to isolate specific challenges. Instead of planning ahead, a.b.m. was continuously fixing problems and trying to avoid large scale disasters from occurring.
a.b.m. Canada chose Demand Solutions for several reasons. First, a.b.m. was looking for a local provider who was able to offer on-site support whenever needed. Second, a.b.m. wanted a program which was able to easily integrate into its existing SAP Business One system and also evolve with its technological changes. And finally, a.b.m. was impressed with Demand Solutions functional expertise and extensive experience with the supply chain planning process.
The company realized that meeting customer expectations would become a significant barrier if it didn’t move towards a more professional planning system. In order to stay competitive in the marketplace, a.b.m. would need to formalize its supply chain process with commercial software.
Demand Solutions was able to help construct the business process a.b.m. needed by offering guidance and recommendations on implementation.
a.b.m. CANADA
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Demand Solutions Advanced Planning & Scheduling helps a.b.m. make manufacturing adjustments and timely decisions regarding new equipment purchases and human resource requirements on the shop floor.
DEMAND FORECASTS Now, with Demand Solutions in place, a.b.m. can use its past sales history to forecast seasonality, predict new trends in consumer demand and better plan its special offers and promotions. The program gives a.b.m. the ability to monitor the forecast at different levels and compare numbers against current business assumptions. PRODUCTION SCHEDULING The fact that a.b.m. can now accurately forecast customer demand far into the future enables it to manage its plant efficiently and effectively on a daily basis. In addition to the prioritization of orders, Demand Solutions Advanced Planning & Scheduling helps a.b.m make manufacturing adjustments and timely decisions regarding new equipment purchases and human resource requirements on the shop floor. Building finished goods ahead of customer demand has allowed a.b.m. to decouple supply from demand and significantly reduce the amount of firefighting that was previously needed to meet customer expectations on time. INVENTORY AND MATERIALS a.b.m. Canada also uses Demand Solutions Requirements Planning (DSRP) to assist with raw material purchasing. Raw materials for production can arrive by either truck or rail car and getting the delivery schedules correct is a critical component in the product process. “Without all the raw material needed for each product, production would stop so it’s vitally important that we never run out of the key ingredients required,” said Martin Zekorn, the company’s supply chain manager. “With an integrated planning system and accurate demand forecast numbers, our ability to plan and purchase raw materials to support production has improved dramatically. DSRP does the heavy lifting for us when the time comes to acquire and manage the correct mix of materials for production.” Demand Solutions helps to ensure that materials and components arrive exactly when needed, he added. “DSRP uses a Bill of
Material to determine the exact amount of polymers, colorant, packaging and other materials required to support the production of finished goods. The system backward schedules all material so that it is time phased appropriately to arrive just before it is needed in the manufacturing process.” KEY BENEFITS “Since our implementation of the Demand Solutions software we have a far better ability to plan and respond to customer demand. Demand Solutions enables us to be more proactive so that we have more time to focus on making decisions. The program supports a reliable and repeatable process that keeps us on track day in and day out,” said Zekorn. Implementation of the new system followed Demand Solutions guidelines which prevented downtime and enabled the company to quickly adopt the new system, adjust to its processes and start experiencing its benefits. a.b.m. Canada realized it could become a victim of its own success if its supply chain became a choking point. Now it has a highly accurate forecast linked to material ordering and it can run its plant more efficiently and with far fewer disruptions. That means more time to focus on innovative new products. The business and IT teams at the company worked together very effectively to make this a smooth transition.
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ARGOSY TRADING CO. DEMAND SOLUTIONS FORECAST MANAGEMENT AND REQUIREMENTS PLANNING
Argosy Trading Co. Tackles Promotions and Seasonality
with Demand Solutions Forecast Management
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n the promotion-driven world of grocery distribution there is little room for forecast error. Argosy Trading Company LTD, the biggest supplier to the grocery retail sector in Cyprus, accounts for six percent of the total grocery business in the country. Argosy’s distribution coverage includes 2,300 outlets consisting of hypermarkets, supermarkets, grocery and convenience stores that account for 95 percent of the total trade. This large, multi-tiered business was forecasted manually entirely by Microsoft Excel spreadsheets and derived from input from the sales and marketing departments without the involvement of anyone from the supply chain planning department. “We have a lot of national promotions and many tailor-made activities that we run each month,” explains Martha Clambaneva, planning manager at Argosy. “With so many promotions and special codes, it was hard to go back and get a true account of the sales history in Excel. We had an advanced tool set up, which allowed us to view sales history for the past three years, but it was not in-depth. It was not great for forecasting and more importantly, when we did get an inaccurate forecast, we were unable to identify why. ” “We were also missing discipline in the process,” says Forecasting Manager Charis Theodosiadou. “The Excel spreadsheets didn’t give us the opportunity for improvement of our forecast accuracy because it didn’t allow for more efficient collaboration between sales and marketing departments. They had limited access to the data, which led to misscheduled promotions and ultimately, inaccurate forecasts.”
Argosy identified a laundry list of needs to be met by a new forecasting tool – improved inventory levels, inventory turns, customer service, warehouse utilization and cash control; maintain optimum stock levels, while increasing planning and marketing productivity and efficiency. Demand Solutions Forecast Management and Requirements Planning were able to bring Argosy one set of data – a single view of the truth - and it forced the group of multi-department individuals involved in the forecasting process to put in place new, more efficient procedures. “With Demand Solutions, we are able to collaborate more with other departments. The Forecast Management tool has much higher accuracy than the manual Excel process and enables us to create a more disciplined forecasting process,” says
ARGOSY TRADING CO.
“With Demand Solutions, we are able to collaborate more with other departments. The Forecast Management tool has much higher accuracy than the manual Excel process and enables us to create a more disciplined forecasting process. With Demand Solutions Forecast Management, we increased our forecast accuracy by 17 percent over a four month period. We maintain an average accuracy of 75-80 percent each month,” said Theodosiadou.
Theodosiadou. “We are able to more accurately plan promotions and alert people that there are inaccurate forecasts so they can update the information. With Demand Solutions Forecast Management, we increased our forecast accuracy by 17 percent over a four month period. We maintain an average accuracy of 75-80 percent each month.” Argosy can now connect the national promotions with Demand Solutions so they have a more accurate forecast and there is little room for mistakes. All of the information is plugged in beforehand, making the meetings between teams consisting of sales, marketing and planning run faster and more smoothly. The Demand Solutions forecasting tool helps the team decide on the most appropriate forecast. With Demand Solutions in place, they were able to reduce the time it takes to create a forecast by two days. In addition to better communication and more disciplined forecasting processes, Argosy has seen a number of measureable improvements in several areas. The average inventory turns have increased from 7.35 to 8, inventory costs have decreased by 3.1 Million Euros and customer service levels are up six percent. “Given the economic situation in Europe at the moment, our overall sales are down, but I’m certain that the decreased stocking levels and improved cash flow that Demand Solutions has provided puts us in a much better position today than if we had not been using Demand Solutions,” says Clambaneva.
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THULE DEMAND SOLUTIONS FORECAST MANAGEMENT
THULE
Thule Never Misses a Vacation – Forecasting Keeps Its Travel Accessories In Stock
when vacationers go to play, they like to take all their equipment with them
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ntil 2010, the U.S. division of Thule used an ever-expanding number of spreadsheets to forecast its 2,000 SKUs. The cumbersome nature of the Excel forecasting process and the inaccurate forecasts that resulted led the company to search for a forecasting tool that could optimize its supply chain planning process across its wide assortment of travel accessories such as roof racks and boxes and bike and water-sport equipmentcarriers. In addition, Thule was about to complete the purchase of two additional companies and add SKUs to the mix. Vice President of Operations Patrick Monahan explained, “Our Excel-based process was very difficult to manage and not as accurate as we would have liked. Our biggest issues were mostly driven by data problems. As the business grew, the number of SKUs we were trying to manage got bigger and bigger and there was no statistical model behind it.” He also said the company wanted the ability to record more information on the high mix, low volume SKUs and the ability to manage by exception was especially important. Thule sought out Demand Solutions based on the recommendation of an employee who had used the product at a previous job. “It was the Demand Solutions Forecast Management model – the page where you could see the different views of data – that caught my attention first,” said Monahan. “I’m a visual person and I really liked the ability to see the numbers graphically. The statistical analysis capabilities with the 26 algorithms for best fit was impressive.” Monahan also liked the price point and the flexibility of adding users as the company grew. Thule’s sister company, Case Logic, was also searching for a new forecasting tool. The sister companies ran separate evaluations and both chose Demand Solutions. After implementing Demand Solutions Forecast Management in March of 2011, Thule finally had the tools at hand to get ahead of its demand.
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THULE
Three departments - planning, sales and product management - had previously worked on Thule’s monthly forecasting spreadsheets. While the same number of people are working with Demand Solutions today, those managers can now closely monitor more information more effectively, as Monahan has quantified. “Before Demand Solutions, we barely had time to manage our key SKUs, now we can look at all of our products and dive deeper into each SKU,” said Monahan. “We used to spend too much time sifting through data and not enough time analyzing it. Now we can, and we have been able to add an additional 500 SKUs through business expansion without anyone getting behind on the data. Statistical processes actively manage them and manage by exception. If we see demand, the system will help us adjust the forecast and we start at a high level to see if it makes sense.” Thule has reduced the time it takes to create their monthly forecast from two weeks to just a day and a half with Demand Solutions Forecast Management. The company also forecasts on a more timely basis. “Rather than having an annual forecasting cycle, Demand Solutions gave us the opportunity to truly create a rolling 12-month forecast,” explained Monahan. Though most of Thule’s North American product is manufactured in the United States, some components
Thule quickly enjoyed tangible improvements as a result of its usage of Demand Solutions, including a 20 percent service level increase and a 15 percent increase in forecast accuracy for in-season products. “I’m also noticing a steady trend of two to three percent improvement per month over the last four months,” said Monahan.
and finished goods are sourced offshore and have longer lead times. “Typically we wouldn’t get next year’s forecast fully loaded until late in the third quarter. Some of our lead times would be past the mark to hit the first of the year, causing us to get behind early in the year, especially February when the spring season starts to pick up. This year, thanks to Demand Solutions and new planning processes, we rolled into our season with the components and the plans to start our production in November instead of January because we had that forward look much further in advance,” he said. Thule quickly enjoyed tangible improvements as a result of its usage of Demand Solutions including a 20 percent service level increase and a 15 percent increase in forecast accuracy for in-season products. “I’m also noticing a steady trend of two to three percent improvement per month over the last four months,” he added. One small surprise - when Demand Solutions objectively suggested that Thule increase inventory on some key products, the company was able to markedly improve customer service while helping to maintain an optimal inventory balance. Thule used to suffer from stockouts particularly early on in the season. Then it was forced to ramp up production in February as customers stocked up across the country. Monahan said that the introduction of Demand Solutions actually resulted in inventory growth for the company by providing accurate forecasts earlier in the season and giving them the correct amount of safety stock. Previously, they were always chasing it. “If we’re out of stock, the end consumer will buy what they need when they need it, they’re not going to wait. They’ll go to a competitor. Demand Solutions has helped us stay competitive by having more accurate safety stock,” said Monahan. Demand Solutions new-product forecasting and lifecycle management features have been especially applicable in light of Thule’s dynamic product mix. The Demand Solutions Forecast Management Curves and Supersession features help Thule remain competitive by managing a large portfolio of new products each year in a speed-to-market environment.
HDA DEMAND SOLUTIONS RETAIL PLANNING
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HDA BOOKS MORE SALES AT 13,000 RETAIL STORES WITH 3 MILLION DISPLAY POCKETS USING DEMAND SOLUTIONS RETAIL PLANNING
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t. Louis-based HDA Inc. stocks the eye-catching books one might find upon entering a big-box home improvement or discount store across the United States.
For Adam Ketterer, HDA’s retail process manager, that means keeping track of three million-plus book-display pockets to limit stock-outs, maximize sales, reduce returns and best utilize retailer inventory budgets. Each pocket holds two to 20 copies of each title which makes store-level replenishment extremely complex. Demand Solutions Retail Planning gives businesses like HDA the visibility to manage inventory replenishment at the store/item level. The company fully rolled out the tool in early 2012 and, as a result, Ketterer now has a more detailed look at his business than ever before. One of the main benefits has been the ability to maximize the use of inventory budgets by keeping the right items in the store.
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HDA
The bottom line is that Demand Solutions Retail Planning users spend more time doing what they do best – adding value and analyzing the business. Ketterer and HDA credit Demand Solutions with helping their customers grow sales consistently.
“Our business is driven by point-of-sale data by store, by SKU, by day. I can look at sales for the last six weeks and forecast demand, but when I have to do that for three million SKU/ store combinations - that’s where I need Demand Solutions Retail Planning,” said Ketterer. “We might have high volume sales on one or two categories in an otherwise low volume store. Our previous model didn’t give us the individual SKU/store combination. Demand Solutions gives us visibility to each individual title in every store. It’s not cost-effective to keep five copies of each of the 2,000 titles we stock at many retailers. Now we just keep five copies of the faster moving titles.” Planners need the ability to work within the framework defined by their customers. This means that each unit of inventory has to be in the location where it has the best chance of selling. As a supplier to large chain stores, HDA works within a budget set for each store and selects and manages the titles. “We used to be very basic–we had five levels of stores based on total book sales. The highest selling stores with a platinum rating got the maximum mix of books, maybe five of each title. A store in the middle of nowhere might be a bronze level because of slow total volume of book sales and get only two. But if one title was selling really well, they would sell out and it might take three weeks to restock, so they would miss any sales that may have occurred between the time of the sell-out and the time the new shipment arrived.” As difficult as it may sound, each store is unique and needs to be treated as such. The Assortment Planning module within Retail Planning provides the tools that allow planners
to group stores together when it makes sense while also making sure that the product mix for each store matches the selling characteristics of its customers. Basement improvement books don’t sell well in Florida and Texas where basements are rare. Puzzle books are a big hit in discount stores near nursing homes. “You wouldn’t believe how many puzzle books are sold in Florida,” he added. “Before we implemented the Demand Solutions Retail Planning tool, the lowest selling stores - a bronze-level discount store - might get just two copies and sell out, and then it would take me weeks to get the title back in. Initial results were amazing - sales of Cars, based on the Disney movie, went up 100 to 200 percent, and the movie came out around five years ago. The title eventually settled in at an increase of 18 percent.”
HDA With quick access to sales information at different levels of detail, HDA can also provide valuable feedback on trends to publishers, he said. Gardening books are a big seller around Christmas, and then again when the snow is melting, he added. “The retailers buying them in April or May have already missed the boat.” Some categories grow, while others shrink - HDA used to stock a lot of faux painting titles a few years ago, but not so many now, he explained. Likewise, this year he is replacing a book about dry walling with an updated edition. Demand Solutions Retail Planning gives planners the tools that they need to find those items that need to be replaced. Despite their best efforts, planners are not magicians. Sometimes products don’t meet expected sales levels and need to be replaced with newer products.
percent. By working with the retailer, HDA was able to determine that a remodeling project at the stores in question had relocated the books to an alcove rather than the usual display space just inside the door. The retailer halted the redesign before it could spread further. All of the modules within the Demand Solutions tool are designed to make it easy to manage large volumes of stores and SKUs without needing a huge team of planners. “We use Retail Planning to manage three million-plus pockets from a couple of desks. We let the numbers do the heavy lifting and let other people decide which titles to bring in and which to cut. What the tool helped us do is maximize the sales by title, so we are making better title selections and not dropping titles because we had them in the wrong stores.”
Unlike most wholesalers, in the book business the distributor effectively owns the products until they sell. Ketterer uses the planning tool to wind down the inventory of books that are being phased out. HDA handles the stocking itself at most stores.
The bottom line is that Demand Solutions Retail Planning users spend more time doing what they do best – adding value and analyzing the business. Ketterer and HDA credit Demand Solutions with helping their customers grow sales consistently.
“We bring out the old and put in the new. These resets are costly. That’s why we try to sell down by store and title so we can minimize returns. We have used Demand Solutions Retail Planning to reduce buyback while not reducing total sales. I am working for my retailer to make a profit, and nobody makes money on returns except the freight companies,” Ketterer said.
“We are one of the few distributors with comparable sales increases with our retailers because we get titles to the right locations. As a result, our retailers have seen increases year over year.”
“Demand Solutions Retail Planning shows the items that we want to sell down so we don’t have to buy them back when they are on the chopping block,” he added. Monitoring week-to-week sales is just as important as rolling out new products. It’s easy for external factors to cause products to not meet sales expectations. Part of the valuable service that HDA provides to its customers is the constant testing of titles and monitoring of sales. As an example, the Analysis Module within the tool helped them quickly see that sales at 500 home improvement stores had dropped by 20
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NEXANS NORWAY DEMAND SOLUTIONS FORECAST MANAGEMENT
Cabling solutions Provider
Makes A Connection With Better Forecasts Using Demand Solutions
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he Marketline division of Nexans in Norway turned to Demand Solutions in 2010 because its Excel-based forecasting process didn’t fully support its business objectives - customers were pushing for better service while the business owners wanted to reduce inventory. Prior to Demand Solutions, the company was producing forecasts fairly quickly working with just 20 to 25 product families, but the accuracy was not good enough, said Kyrre Beenfeldt, supply chain manager for the division. At the time, the company was forecasting on spreadsheets and then uploading the forecast numbers to SAP. When the division implemented a pilot program for Demand Solutions Forecast Management, it cut forecast inaccuracy in half. However, the forecast preparation time actually rose. But that was a good thing. “The whole procedure was probably a three-day process before Demand Solutions and today it is longer,” said Beenfeldt. “That’s because it has become a wider process covering forecast meetings and preparation time. We start at the beginning of the month and shoot for implementing a forecast in our ERP system by the ninth or tenth. By that time we have four marketing areas updated and we are ready to import the new forecast. By using Demand Solutions we have a much better quality forecast at the item level and the SKU level.” Nexans offers a wide variety of cabling solutions for power transmission, railroads, airplanes, ships, oil and gas production and cables for office buildings including electric and optical fiber for connecting computers and providing high speed data transmission. It operates in more than 40 countries around the world.
NEXANS NORWAY
Demand inaccuracy has been cut in half with Demand Solutions, from 80 percent to an average of 37 percent. Both inventory and capital deployed for certain products are down 40 percent.
In northern countries the demand for many of its products is seasonal. “You cannot dig into the ground between January and March, so you usually have to wait until Easter, but there’s no knowing exactly when the ground will thaw, so we have to adjust our forecasts. The real challenge is the weather - will it be cold and when will the snow melt?” Demand Solutions can’t help with the weather forecast, but it does assist the company in spotting trends on a monthly basis that had often gone unnoticed until an annual sales review. “When we had a lifecycle that might be increasing or decreasing year over year, we often didn’t catch the trend before the year was over, so the process was, in effect, more annual than monthly. With Demand Solutions we can easily see when product demand increases or decreases month by month. With the system, we can predict slow-moving items sooner, which makes a real difference in products that have a long lead time,” explained Beenfeldt. He noted that some of the company’s products have an eight-to-12 week lead time, and without making a new, accurate forecast he had already lost business by the time he saw the trend.
“most importantly, we increased our service levels by five to six points. Higher service levels and availability have resulted in less cost in other areas of the supply chain, like transportation, the picking process, and last, but not least, the use of overtime in production,” beenfeldt added. “We had to look at the whole process to find where our weaknesses were and what strategies to use for the next year to cope with the change,” said Beenfeldt. “One clear solution was to work on our demand and forecasting. In my opinion, we had a well -developed process, but we needed a calculation of demand for each SKU.” Nexans set up a team comprised of Beenfeldt, an IT specialist from the corporate office in Paris and the supply chain director, also in Paris. The group invited presentations from five different vendors before selecting Demand Solutions and installing it as a pilot in Norway. The clarity of the presentation of figures makes it easy for all the participants in forecast meetings to agree on the numbers so they can get straight to work instead of trying to decide whose spreadsheet results are right.
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“The Demand Solutions layout was easy for the sales team to understand. When we have our forecast meeting, it is easy for everyone in the room to see the figures and percentages on the screen. We can look at 12-month rolling periods or the fiscal year in a combination of graphics and figures, which is very useful. The calculations, using 26 different algorithms, have been quite amazing and the way Demand Solutions runs the forecasts in batches makes the whole process very efficient.” Demand inaccuracy has been cut in half with Demand Solutions, from 80 percent to an average of 37 percent. Both inventory and capital deployed for certain products are down 40 percent, he added. “But most importantly, we increased our service levels by five to six points. Higher service levels and availability have resulted in less cost in other areas of the supply chain, like transportation, the picking process, and last, but not least, the use of overtime in production.” Surprises in demand that lead to weekend overtime shifts are very expensive, Beenfeldt explained. “With Demand Solutions, the company is managing that much better.” “Our Demand planning is steering the production and raw material replenishment, inventory, and service levels. As a production facility, our inventory is related to a minimum production lot size, which could be as little as one week or even up to two-three months of sales. What is important to us is to start at the right time and put the demand into SAP in order to initiate the production in time.” Nexans has set up alerts to notify them of significant changes, like a 30 percent sales increase or decrease in an item. With a wide product range, managers don’t always notice, so the software provides warning and then the sales team can see what is happening with customers and adjust future demand. Implementing the software took less than three months and presented no problems for the IT organization, said Beenfeldt. Because of the good experience with Demand Solutions in Norway, Nexans plans to implement in its France, Sweden and Belgium locations over the next year and is now considering Demand Solutions Sales & Operations Planning in a similar program.
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BUILT NY DEMAND SOLUTIONS FORECAST MANAGEMENT, REQUIREMENTS PLANNING
Accessory C Designer Built NY Gets Ahead of the Curve
with Demand Solutions in a Speed-to-Market World
ompanies that pride themselves on making products at the cutting edge of design face a challenge when it comes to staying on top of constantly evolving trends. BUILT is just such a company, designing fashionable and functional bags, totes and cases for electronics to sell to a customer base of small, independent specialty stores as well as big-box stores like Target, Staples and J.C. Penney. “Our customers have very distinct and varied identities,” explained BUILT’s Senior Planner, Craig Berger. “We were trying to find a way to have a more unified replenishment logic and we tried a couple of different things, but our broad spectrum of demand made it a challenge. Either they wouldn’t fit with the big-box guys or the smaller mom-and-pop shops.” Using spreadsheets for forecasting, Berger relied on a combination of Excel-based replenishment ladders and ERP-driven inventory and exception reports. He ran into issues involving inconsistency in volume and faced another challenge from a complex international business. Trends in design were completely different and it was difficult to get forecasts from customers abroad, which meant BUILT had to find a way to control it in-house. “Trying to reconcile different forecast models along with varying interpretations of consumer demand from our customers, the one-size-fits-all approach using Excelbased tools fell short with certain segments of our business and product assortment,” said Berger. “With spreadsheets you are vulnerable to formula errors and the simplified statistical and seasonality logic can be limiting. You can have various systems available, but if you don’t have a good solid forecast driving it, it doesn’t mean anything.” Rather than chasing changes in categories and seasonality in a speed-to-market world, BUILT wanted the ability to get ahead of the trend. The leadership of the company was pushing for a toolset that would allow BUILT to make sure it always had the right product available, shorten its lead times, and be six months ahead of the trend instead of a month or two behind.
BUILT NY “Demand Solutions was thought to be a good opportunity for us because we could use the robust suite of statistical formulas to dive deeply into specific SKUs, look at them from multiple levels, and aggregate to customer detail,” stated Berger. “We would be able to discuss it and see trends on a different scale, focus on one SKU, and find out the narrative behind that SKU.” BUILT began implementing Demand Solutions in December of 2010 and found value shortly thereafter, when it was able to see some of the changes in the international environment as the European markets dipped in early 2011. “With Demand Solutions, we were able to react to that and quickly rebalance the inventory,” said Berger. BUILT now relies on Demand Solutions ability to work with its seasonal electronic products such as computer sleeves, camera cases and tablet covers which are very popular around the holidays and during the back-to-school months. These items are heavily design-driven as they are based on tech industry innovations, and BUILT must be able to turn on a dime to accommodate updates and new releases. “Demand Solutions has provided some surprising insight on specific categories, which has helped inform directions in development and product life cycle,” said Berger. Through the implementation of Demand Solutions Forecast Management and Requirements Planning, BUILT reduced its inventory by 18 percent overall in one year, and improved forecast accuracy by 20 percent. “I don’t spend half as much time in terms of the forecast now,” says Berger. “Where it used to take a few hours every day, today we only need a few days at the beginning of the month to generate a reliable forecast, which allows other cogs in the supply chain to spin earlier and limit delays, optimizing customer service.” With a more accurate forecast, Built has increased inventory turns from 1.9 to 2.5 annually, and customer service levels have improved from 87 percent to 96 percent. With a more accurate forecast, BUILT has increased its turn by almost a full point and improved customer service stock levels by ten percent. “With Demand Solutions, we have more robust and dynamic statistical logic, improved seasonality, better forecast accuracy, and better visibility at various product levels,” said Berger. With a more “We’re able to stay ahead of seasonality trend changes and improve our forecasts for new SKUs with limited history.” has increased Demand Solutions has supported new business processes within BUILT including bill of materials, forecasting, new perspectives on inventory evaluation and item categorization. Because of this, the planners have implemented a different approach to creating new items. “Even before implementation was fully completed, we were able to use output from Demand Solutions to discern trend and behavioral differences between products and customer types, which has been fully integrated back into Demand Solutions and our ERP system, and are standard metrics discussed during business reviews,” said Berger. With the ability to react and plan for market shifts in realtime, BUILT has a competitive advantage to expand its presence globally.
accurate forecast, BUILT its turn by almost a full point and improved customer service stock levels by ten percent. “With Demand Solutions, we have more robust and dynamic statistical logic, improved seasonality, better forecast accuracy, and better visibility at various product levels,” said Berger. “We’re able to stay ahead of seasonality trend changes and improve our forecasts for new SKUs with limited history.
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ORLANDO HEALTH DEMAND SOLUTIONS FORECAST MANAGEMENT AND REQUIREMENTS PLANNING
Orlando Health Saves $3 Million,
Doubles Management Efficiency
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rlando Health, one of Florida’s most comprehensive not-for-profit healthcare networks, successfully uses Demand Solutions Forecast Management to distribute critical medical supplies to eight hospitals in the Orlando area. The hospital network keeps just under 5,000 items in stock. Like most businesses, optimal levels of inventory are critical to Orlando Health’s success. Inventory costs fall under the same scrutiny as other healthcare costs. Only in this case, timely availability to essential items can potentially have life and death consequences. Jackie Gregory, the manager of supply chain operations, explained the process before implementing Demand Solutions. “We had a local distributor and our main commodity items came from there. About four and a half years ago, we made the decision to dig into our processes to see what made the most sense,” said Gregory. The conclusion reached was that Orlando Health could become an integrated distribution network (IDN) by opening its own warehouse and be at least as efficient, if not more. In 2009, the company embarked on the venture and also formed a committee of 1520 directors, vice presidents and executives to search for a warehouse management information system that could help them keep track of their inventory. The committee chose a warehouse management system, which was packaged with Demand Solutions Forecast Management. “The dynamic forecasting tool was one of the reasons we chose our warehouse management provider,” said Gregory. “We also liked that it was a free-standing system where we were able to analyze the data from a different point of view.” In order to accumulate a reasonable amount of accurate demand history to feed the forecasting system, Orlando Health previously used a min-max method on Excel spreadsheets, which became inefficient. “It didn’t take into account seasonality or growth factors, there were no reporting tools to pull KPIs, and we were not truly able to analyze the data,” said Gregory. “We didn’t have visibility into customer demand and it led to a lot of instances of excess inventory because they wanted to buy to the maximum level rather than analyzing what they should be purchasing.” The Excel-based manual process was inconvenient at best, but Gregory knew it would only be a temporary situation. Once the year mark passed and Demand Solutions Forecast Management was fully implemented, Orlando Health saw immediate results. “We started utilizing Demand Solutions Forecast Management in 2010. At that time, we had a little over 4,000 items to forecast, and we were able to identify and eliminate $350,000 worth of nonmoving inventory within six months,” said Gregory. “In the first 90 days, we reduced inventory levels by $3 million dollars.”
Gregory noted a huge improvement on Orlando Health’s processes and inventory visibility. “Ninety percent of our current inventory is effectively managed by Demand Solutions – we don’t even have to touch it because it is forecasting an accurate number based on the demand and what we actually look at. Our buyers only have to go in and make adjustments to about ten percent and only half of the time were they actually accurate, based on system errors,” said Gregory. “If they’d left it alone, it would have leveled itself out.” Orlando Health’s new warehouse started out housing 2,300 items and thanks to a more efficient forecasting system provided by Demand Solutions, Gregory’s team was able to increase the number of SKUs that could fit in the warehouse to 4,800 items. “We’re still using the same number of inventory planners but have double the number of items, so we’re getting more productivity from the same number of people,” said Gregory.
ORLANDO HEALTH
She also added that inventory turns have gone from five the first year to 10.9 annually with a 99.96 percent average on daily fill rates. Forecasts have become faster and more accurate. “We’ve actually gotten it down to an art form now,” Gregory said. “Our forecast process is done in two days, whereas we used to spend anywhere from seven to ten days with the manual process.” Demand Solutions has increased the team’s efficiency and the ability for the members to collaborate. Buyers can make adjustments through the system and run reports to share different views of data. Gregory sees many more opportunities for Demand Solutions in Orlando Health’s future. “Some of our labs want to be able to forecast individually within their department. We’re looking into the potential for taking it to the next level and using Demand Solutions Forecast Management on a departmental level.”
“We started utilizing Demand Solutions Forecast Management in 2010. At that time, we had a little over 4,000 items to forecast, and we were able to identify and eliminate $350,000 worth of nonmoving inventory within six months,” said Gregory. “In the first 90 days, we reduced inventory levels by $3 million dollars.”
FORECAST BUYER VERSUS SYSTEM ACCURACY MARCH 2012
80%
20%
10% 10%
Total items DS forecasted
Total Items Buyers adjustment was accurate
Total Items Buyers adjusted forecast
Total items DS forecast was more accurate
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Your Supply Chain Visibility Just Got Clearer Your supply chain planning decisions are only as good as the information you have. With Demand Solutions DSX you can see the bigger picture more clearly and more completely. And better clarity means better decision making, reduced inventory, increased service levels and increased profitability. Cultivated from our 27-year supply chain planning expertise, we’ve built DSX as a platform for innovation to deliver the next generation of supply chain planning.
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