Rubenstein Justman Management Consultants

Planning in a shrinking world

For those of us old enough to remember, a paper route was our first brush with supply chains. Right from checking the bicycle tires, to consulting our route lists, to picking up the stack from the depot manager, being prepared was the watchword. But, who among us does not recall a paper landing on a wet lawn and wishing for that extra copy or two?

Over the last two decades suppliers, manufacturers, warehouses, distributors have been marching in lock step, thanks to the evolution of supply chain management systems. From components to finished goods no link has been left unexamined to ensure that a supply chain satisfies the most stringent requirements of manufacturing cost and product quality.

In the last few years, as more of the world’s population is entering the consumer age, planning – be it on the demand or supply side – has now taken on a major role in the supply chain.

Consider the following five examples of planning successes:

Two years ago, in order to save transport costs, PepsiCo UK identified opportunities to share vehicles with Asda, the supermarket chain. When Asda vehicles are making deliveries to stores, on the backhaul route, the vehicle diverts to the PepsiCo distribution centre, collects the load and delivers it into Asda’s distribution centre network. This has resulted in 70% of Asda’s volume from PepsiCo depots being transported on the backhaul route of an Asda store delivery and a decrease of nearly 50,000 miles in the distance covered by PepsiCo UK trucks annually.

Franzus Cpmpany, a fast growing Connecticut based distrbutor of travel accessories was losing large orders due to poor inventory planning. After incorporation of a demand planning module into the exisiting Microsoft Business Solutions system the company was able to achieve a forecasting accuracy of 95%. As more sales history was entered into the planning mdoule the easier it became to spot and accomodate seasonal sales patterns.

Titan, India’s largest watch manufacturer used SAP optimization and planning software to move from a countrywide to a regional supply chain and demand planning model. The higher resolution model enabled the company to maximize the utility of regional Carry & Forwarding Agents, a key player in the Indian retailing arena. Through this approach Titan was able to speed up the the journey of its products from manufacturing plants to stores across India, leading to a 20% increase in sales.

Advanced Fibre Communications, one of the largest providers of next-generation edge access networking equipment and multi-service broadband solutions for the telecommunications industry, utilized Steelwedge’s EDM planning software to generate data for Cognos applications. This effort resulted in very little change to the design of the existing ERP architecture but the availability of real time forecasts proved invaluable in synchronizing the efforts of company’s key business units.

Nestle Waters decided to calculate the correlation between key SKU sales and the prevailing weather conditions in its most volatile markets. The resulting impactors for each product were then loaded into a SAP forecasting system. Currently, the weekly weather forecast is loaded into the planning system which in turn creates a more precise weather-impacted demand plan.

What did the companies do right?
Two things. These companies listened closely to their customers’ questions and dug deep into their supply chain for answers.

As with most aspects of life in the twenty first century, there is no shortage of choices when it comes to planning tools. Oracle’s Demantra, SAP’s Demand & Supply, Infor’s SCM, and JDA’s Demand Management products all offer tools that serve the planning needs of large companies. Smaller enterprises can choose from products like Steelwedge’s EDM, Exceedra’s Cube, and Demandworks Smoothie.

Irrespective of the size of a company, obtaining satisfactory answers to the following questions should provide a head start when considering a solution:

How easily does the system allow the planners to arrive at a Single Number?

Does the system allow visibility to the entire supply chain?

During forecasting, at a given point in time, does the system allow everyone involved in the planning making the same assumptions?

Can the system ensure that everyone in the supply chain is aware and signed on to the Order Promises in effect?

And finally, does the system provide a quick and clear method of communicating planning changes up and down the supply chain?

Planning is the path to pro-activity. It is what will help you stay ahead of the curve. And the results – low cost, quick delivery, high quality – will soon get your customers’ attention.

Newspapers may be going the way of the dinosaur but if you ever do happen to pick one off your driveway on a lazy Sunday morning wouldn’t you’d rather it be dry?

At RJMC we have been helping our clients navigate the ERP waters for over twenty four years. As the business functions of our clients have grown in complexity we have been deeply involved in assessing their Supply Chain and Demand Planning requirements and helping them select the tools that will serve them best.

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