VOLUME 13 | 2013
DSX Gives
Ceres
More Juice
Sophisticated Forecasting
Tools Manage Ceres
Beverages’ Growth
2
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
4
3
CONTENTS
NEWS
5
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.
8
10
12
15
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.
18
20
22
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
4
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
5
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
T
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.
6
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
7
“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.
8
a.b.m. CANADA DEMAND SOLUTIONS ADVANCED PLANNING & SCHEDULING
a.b.m CANADA:
Taking Action
When Growth Imperils Success
A
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
9
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.
10
ARGOSY TRADING CO. DEMAND SOLUTIONS FORECAST MANAGEMENT AND REQUIREMENTS PLANNING
Argosy Trading Co.
Tackles Promotions
and Seasonality
with Demand Solutions
Forecast Management
I
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.
11
12
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
13
U
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.
14
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
15
HDA BOOKS MORE SALES AT
13,000 RETAIL STORES WITH
3 MILLION DISPLAY POCKETS
USING DEMAND SOLUTIONS RETAIL PLANNING
S
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.
16
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
17
18
NEXANS NORWAY DEMAND SOLUTIONS FORECAST MANAGEMENT
Cabling
solutions
Provider
Makes A Connection With
Better Forecasts Using
Demand Solutions
T
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.
19
“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.
20
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.
21
22
ORLANDO HEALTH DEMAND SOLUTIONS FORECAST MANAGEMENT AND REQUIREMENTS PLANNING
Orlando Health
Saves $3 Million,
Doubles Management
Efficiency
O
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
23
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.
To see what Demand Solutions can do for you, visit: demandsolutions.com | (1) 800 886 3737 | info@demandsolutions.com