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Demand planning


FrieslandCampina started with S&OP some two years ago in its Cheese divi- sion, after the merger of the two dairy giants, Friesland Foods and Campina. “We each had our own meeting procedures, of course, which needed to be aligned. So we decided to do it right first time, and within six months we had implemented the S&OP process,” explains Derrien Jansen, Manager of Planning & Master Data at FrieslandCampina. “The major benefit of S&OP is that there are no nasty surprises – we don’t suddenly face stock shortages or surpluses.” Within FrieslandCampina, the two central sales planners, who are based in the sup- ply chain department, take the lead when it comes to demand planning. They have six meetings in the first week of the S&OP cycle, with the local representatives from sales and finance, the local sales planners and marketing managers, sometimes as conference calls. The meetings are used to discuss the weekly forecasts entered into SAP APO by the local sales planners – who, in contrast to the central sales plan- ners, are part of the sales department. How are the forecasts developing? What are the deviations from last month? What impact have new products or customers had? “We use this moment to examine how we can improve the accuracy of the forecasts by using statistical forecasting methods,” explains Jansen.


Accuracy of data


The central sales planners must have completed their demand planning by the Friday of the first week so that their colleagues can make a start on the sup- ply planning on the following Monday. That week also sees a pre-S&OP meeting for middle management, which is used to determine where the current gaps are between supply and demand, and which of them can already be closed by the sales, supply chain and finance colleagues in attendance. In the subsequent S&OP meeting, they are joined by senior man- agement who make decisions on the big- ger issues.


SOFTWARE FOR S&OP


The last few years several vendors have introduced software for Sales & Operations Planning. These vendors have mostly further developed existing software for supply chain planning. Only few companies have implemented specific software for S&OP.


Reviews in S&OP-process 1.Product 2.Demand 3.Supply 4.Finance


Vendor


Equazion (NL) IBM (USA) Infor (USA) JDA (USA)


OM Partners (B) Oracle (USA) Quintiq (NL) SAP (D)


Slimstock (NL) Solventure (B)


Software Equazion


Cognos BI & FM Infor10 S&OP JDA S&OP OM Plus Demantra


Quint S&OP SAP APO Slim4


Zemeter S&OP


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x x x


x


x x x x x x x x


x x x x x x x x


x


x x x x x x


x x x


x x x


x x


x x


x x


Many companies tend to get involved in discussions about the accuracy of data, in particular around the demand planning. “We’ve had those kind of discussions too,” admits Jansen. “Which is why we developed a standard format for forecasts. Everyone knows exactly what data they need to submit for a forecast and how it should be interpreted.” FrieslandCampina is currently working towards being able to run through and financially assess several different sce- narios in 2012. This will enable the com- pany to make better informed decisions. “Within Friesland Campina, we call it the ‘Integral Business Management Pro- cess’ (IBMP). Right now, we’re still mak- ing decisions that will have an impact on the entire business based on calculations within the individual disciplines, rather than looking at the whole chain.”


Pragmatic approach


At Perfetti van Melle, all the elements of S&OP are present. However, this confec- tionery manufacturer takes a somewhat more pragmatic approach than recom- mended by Oliver Wight, says Erik Brou- wer, Supply Chain Director North-West


Europe at Perfetti van Melle. “I get the feeling that S&OP is managed top-down in many companies. We, on the other hand, try to approach the process from the bottom up as much as possible. The only things dictated by senior management are the KPIs and the reporting formats. Wher- ever we can, we let the actual alignment between the disciplines be driven by the operational situation.” In spite of this, Perfetti van Melle still holds a monthly S&OP meeting which is attended by senior management. “The meeting serves partly to provide reassur- ance that we are on the right track and partly to help us set priorities when it comes to investments. Switching from two shifts to three is a decision that can only be made at senior level, for instance. In the meantime, we try to let responsibilities be held at as low a level as possible within the organisation, and we give our planners scope to make their own decisions within a certain framework.”


This approach makes good tools invalu- able. Perfetti van Melle uses an add-on to SAP which enables forecasts to be pre- pared clearly and simply. The supply plan- ners use a different add-on called ‘Every


29


SUPPLY CHAIN MOVEMENT, No. 1, Q1 2012


1a. Portfolio analysis


2a. Demand planning 2b. Forecasting


3a. Inventory Optimization 3b. Fintite capaciy planning


4a. Gap analysis 4b. Financial what-if


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