KEYNOTES

Planning without external factors is no longer an option

“We operate in a long-tail supply chain, which means we maintain a very broad product portfolio with relatively little demand per product." So, wat had happened? Branch forecasts are separately forecasted and  disconnected from network forecasts. This lead to a high bullwhip. With increased volatility due to inflation and Covid bullwhip skyrocketed. How to keep the supply chain in sync?

Miara discovered the cause of the bullwhip effect through her participation in Project Zebra. One of the first exercises was to draw the ‘river of demand’. Visualizing how the demand signal flows through the supply chain revealed how long it takes for the demand signal to turn into a replenishment decision and purchasing, and how much the signal gets distorted along the way. “This is not only about forecasts, but also about contracts with suppliers, that include minimum order quantity agreements and sales catalogue listing. You also need to consider revenue targets or budget constraints that can affect a company’s purchasing decision. Drawing the river of demand is a completely new way of thinking for the entire company. But the drawing shows how the organization itself is largely responsible for distorting any demand signal." The key to overcome it? Using outside demand signals as proxy for demand and using a financial balanced scorecard in procurement to drive purchasing decisions.

Read more about “Riding the wild river of demand”

The transformation of Supply Chain Planning from Volume to Value

Like most other companies in the world, multinational MarsWrigley is facing disruptions, caused by dynamics like geopolitics and inflation, leading to volatility and imbalance between supply and demand. Supply chain planning has been identified as a pivotal capability and is positioned at the heart of the company, bringing a balance between Sales and Supply Chain and ensuring service to their customers.

In 2023, MarsWrigley Europe has implemented Enterprise planning, establishing an End to End integrated organization, processes and Supply Chain planning systems (Kinaxis Rapid Response and E2O). They have implemented assumptions based National planning by market. The national volume number (which is sent to Manufacturing) is translated to value, ensuring a seamless connect between volume and value in the full S&OP+ cycle.

MarsWrigley is on a journey to further unlocking the potential of this massive transformation across 10 factories and the European markets, which they managed to do without disruption of the delivery to their customers.

Inventory health vs. the market volatility. Are we thinking far enough ahead?

ADAMA sources around 300 different active ingredients which it uses to produce 15.000 stock keeping units for Crop Protection worldwide.

To try to limit the consequences of these days’ tensions in the world; 1^st up to 3^rd tier suppliers shortages, wars, earth quakes or others ADAMA reallocates its stock using a self-designed S&OP dashboard connecting information from SAP/SAP B1 and BlueYonder in Microsoft PowerBI. “SupplEye enables us to keep track of supply delays but also our inventory health of current and projected stocks. In our ‘Outlet’ tab we create opportunities to reallocate stock by linking slow movers and no movers in one country with the purchase planning on formulation and pack size in other countries. Biological and chemical crop protection we forecast with 65% quarterly accuracy. Sales do not only depend on the price, but amongst others also depends on the weather; dry conditions can imply a surplus while unforeseen wet and warm climate can create a shortage in stocks. Our SupplEye displayed in gold/silver/bronze segmented products allows us to keep track and find solutions for shortages and surpluses. Currently we are working on displaying the segmentation in service levels, adding container tracking, adding supply chain sustainability reporting by means of CO2 calculations for our inbound and outbound transports and we can’t wait to experiment with the co-pilot language model in Power BI (expected to be released by Microsoft in December) to make correlations and come with even better recommendations from all available information in SupplEye. As default tools don’t offer us what we need, we build them inhouse. Creating simplicity in Agriculture. More to come!”

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Unlocking faster and better decision-making through Planning transformation

Henkel Laundry & Homecare conducted an S&OP assessment, to lay the foundation to an Integrated Business Planning (IBP), as well as to replace its highly customized SAP APO system in the fall of 2021. But with the creation of Henkel Consumer Brands announced in January 2022, a new BU formed out of the internal merger with the Beauty Care BU, it was not the right time to initiate this transformation. Much of the efforts were prioritized towards redesigning P&L and organization structure and a first level of process harmonization.

One year operating in the new Henkel Consumer Brands structure, we have launched our Next Generation Planning program. It is a key enabler to our overall BU-Supply Chain Transformation program, driving improvement in Forecast Quality, inventory optimization and reduction of obsolescence, and unlocking cross-functional collaboration to improve total P&L performance through better and faster decision-making. A new planning platform has been selected, and a Minimum Viable Product is being built for Supply Planning and Production Scheduling. Next Generation Planning goes beyond a technology implementation. It will transform the way we do Supply Chain Planning. The biggest challenge is the process redesign of supply chain planning and the determination of future roles for planners. The transformation to IBP requires a profound change from within, while also working on strengthening cross-functional collaboration to tune in to business context and to unlock holistic P&L decisions.