Demand Planning & S&OP Review

Client: National Dairy & Fruit Juice Manufacturer 
Background

Our client is a national producer of dairy drinks, food and fruit juice for industry and retail channels. They were facing significant challenges maintaining acceptable service levels to customers with customers threatening to de-range various products if service levels did not improve. Our client sought help to review their demand planning processes and tools with a view to identify improvement opportunities.

Challenge
  • Different categories within the business had different levels of planning and process maturity.
  • The business was using a combination of system based planning tools and manual spread sheets for its forecasting, planning and production requirements. Additionally, system based forecasting was not optimised for the speed and complexity of this business.
  • The management processes used to coordinate planning and operations were not fully integrated and aligned across all functions of the organisation.
Approach

A project was commissioned aimed at undertaking a detailed forecasting review and inventory analysis as well as designing an organisation-wide Sales and Operations Planning process:

  • A comprehensive gap analysis of existing planning activity was conducted comparing the organisations’ current activities against industry best practice.
  • This analysis was then overlaid with the clients’ unique requirements across the following dimensions:
  • At Channel level (e.g. Retail, Convenience & Food Service)
  • At Group Functional Level (e.g. 3rd Party Manufacturing)
  • A `deep-dive’ inventory analysis was undertaken across 5 product categories and two sales channels to understand demand, inventory and range issues.
  • Service level optimisation, inventory optimisation, minimisation of obsolescence, future overstock and understock position and profitability analysis were central to the investigation.
  • Meeting structures, reporting, inputs and outputs and KPI’s were determined.
Outcome
  • Up to $23M reduction in inventory holdings identified.
  • Service level improvements from 87% to 98%.
  • A reduction of damaged and dated (D&D) products from $32M to $15M.
  • Identification of specific SKU’s contributing to D&D, overstocks and understocks and their corresponding lost sales.
  • Revised KPI’s with a focus on organisational alignment as well as development of key leading indicators for business performance.
  • Recommendations on improving the operational effectiveness of the current planning tool plus a strong recommendation to replace the existing tool with a best-of-breed solution.
  • An updated S&OP process with greater management accountability and ownership.

 

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Testimonials

"GRA has been working with us off and on for over four years... I wouldn’t hesitate to recommend them."

– Scott Coulter, Chief Operating Officer, Comvita

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)