Maria Simos
Maria Simos CEO e-forecasting.com
What do battery operated lawnmowers, $1B of crop protection annual R&D and making chemical drum orders on your iPhone have in common?
More than you would think.
All of these things have been used as examples of how the world’s leading companies are working to improve their supply chain planning and forecasting process at this year’s IBF Supply Chain Planning and Forecasting Best Practices Conference in Orlando Florida. All you have to do is see past the nouns and look to the processes, which are much more the same than you’d think.
During all of the sessions at the best practices conference, speakers and attendees have shared important takeaways from their company’s attempts to improve their bottom line by bringing more efficiency and collaboration into their sales and operations planning (S&OP) and forecasting functions.
During the S&OP Workshop led by Andy Coldrick of Ling-Coldrick.com, Rick Ling of Demand Technologies and Mike Wilson of Syngenta, the conversation started with this simple statement:
Everybody agrees on a number for one hour a month.
That shouldn’t be the case. There is a need to understand different views. Why are different functions coming up with different numbers? What are the assumptions they are using? It is important to understand the assumptions because they are the real story behind the number.
For S&OP to be successful, it needs to be collaborative. The Breakthrough Ling Coldrick Model provides steps when followed ‘ from right to left’ makes this possible The steps first start with (rather than end with) the senior business management review. If you start from the top, you get commitment from the senior management team and the rest of the pieces fall into place such as managing the portfolio and new activities, managing demand and supply and using integrated reconciliation. It is important to link dollars and value. Until these two are integrated, you will have two different meetings, the demand planning meeting and the business meeting.
Mike shared how Syngenta used these principals to move from a command and control environment to a growth mentality. The main steps they followed were shared in a helpful assessment guide that was provided for us as a takeaway from the session. The process is broken down into the main steps following the ‘right to left’ approach. As mentioned above, the first of these steps is the senior business management review. During this step, you look at what has changed about your views of the future since last month and what actions you need to make.
In another session, Dow Corning’s Michael Levey shared in his presentation titled “Business Model Innovation Spurs Supply Chain Improvement.” The session delved into how the company was able to split the business into two brands and in doing so was able to limit inventory, optimize operations, minimize overhead, consolidate transportation, work in emerging markets and quickly adapt to changing business strategies. They broke out their products based on innovation or efficiency. The innovation brand has remained Dow Corning which focuses on markets and specialty products and services. The efficiency brand called Xiameter is entirely online based. This is where customers input their own orders on the web which has an SAP backbone with no human intervention. Orders can be done in as little as 43 seconds from login to confirmation or as one customer shared with them, via iPhone while on a shopping trip with her daughter.
Yet another session titled “How Home Depot Synchronized their Supply Chain with Consumer Demand” Nadim Zoberi from Toro shared how they moved to a lean model with daily replenishment. This process has the benefits of less stock outs, is much simpler, has reduced inventory on Toro’s books by 250K units and even brought them the honor of winning an award from Home Dept as Partner of the Year. For Toro’s business, they also have achieved a 50% reduction in warranty claims and large capacity improvements of up to 50%. This was an important shift to work to build to retail demand rather than the sales forecast. They optimized the use of their seasonal distribution centers and now have ‘supermarkets’ with specific inventory levels set. Using electronic pull, replenishment is based on a daily cutoff sheet. And Toro has not stopped there. Nadim said that as they get leaner, their strategy continues to change and they continue to make bigger goals to increase efficiencies.
As you can see, the lessons from one industry and company can easily be translated into lessons that are universal in helping plan better in your own organization. We have a lot more in common than you would think. One person’s experience with lean manufacturing for lawnmowers can help with another’s shoe manufacturing processes. You just have to see past the nouns and look to the processes, which as I have witnessed during several IBF Conferences including this one, is happening, in sessions, in hallways, over dinner and I imagine in the Disney Parks too.