A globally operating B2B lighting manufacturer, with its European headquarters in the Netherlands, was struggling with a combination of performance-suppressing factors: high inventory levels, a backlog of undelivered orders, and high logistics costs. The core of the problem consisted of several elements: lack of visibility in demand planning, low maturity of the S&OP process, limited use of the S&OP tool (Optimact), and the need to build up the planning organization.
The supplier, which sought help from 4SupplyChain Consulting, is based in China and primarily serves business customers. The company sells more than 1,200 different products to B2B clients across various markets, including offices, aircraft hangars, sports fields, industrial facilities, retail spaces, and public infrastructure projects.
4SupplyChain conducted an assessment of the company, revealing that implementing an S&OP process was essential to improving delivery reliability and reducing logistics costs. The focus was on three key areas: reconfiguring the S&OP software Optimact (1), building a robust supply chain organization (2), and setting up targeted KPIs (3).
Implementing the S&OP Tool with a Focus on Demand Planning
The supplier realized that supply chain improvements could be achieved through the implementation of S&OP. The importance of this has increased in recent years due to relatively long lead times caused by production locations in Asia. The company had already purchased a license for the S&OP tool Optimact years ago but had stopped using it. During the assessment by 4SupplyChain, it became clear that the tool was still suitable.
Throughout the project, Sam Baljet invested significant effort in “resetting” this tool within the organization. The result is an S&OP process supported by a software tool instead of Excel. As a result, forecast accuracy improved, positively impacting service levels and inventory levels.
4SupplyChain recommended setting up an S&OP process with an initial focus on demand planning. In developing this plan, the company needed to incorporate sales forecasts from all European countries.
Due to the large amount of obsolete stock in terms of both items and value, the recommendation was to develop a strong focus on inventory management. This was addressed by implementing an “obsolete process” for low/non-rotating products. This aspect is now much better under control, and inventory levels have been significantly reduced.
“The goal was to create better planning at every level, with additional focus and inventory for A- and B-products. To achieve this, it was necessary to revive the existing demand planning tool to generate better forecasts.”
Additionally, based on advice from 4SupplyChain Consulting, the organizational structure was slightly adjusted. In practice, this meant appointing a Head of Operations/Supply Chain and a Demand Planner. “I handed over my responsibilities to them after completing this project. The search for these individuals went quickly, and the collaboration was very pleasant.”
A central aspect of the improvement process, according to Sam, was bringing the demand planning tool Optimact back into use. “This also involved the human aspect. It was necessary to convince the management team to use an application that requires a monthly fee.” However, he believes there was little alternative. “It’s quite a complex company, with many different products and product launches. If you introduce a hundred or more new products at the beginning of a year, you also have to phase out many.”
The most important adjustment within the tool itself was updating the data and making the tool more user-friendly for future users. “I also pointed out that the application is now set up at the product level, but the company should look at the customer-product level, customer SKU, and plan accordingly for different markets.”
The results Sam achieved are quite impressive. A portion of the excess inventory was sold, while another portion was disposed of. Additionally, the more robust demand planning ensured that 2024 became one of the better years for the lighting season—the darker period of the year when the supplier sells most of its products.
“The main improvement was greater availability of core products, combined with effective purchasing and production in China. The latter was a result of increased communication between different sales markets and the production facilities in China—in other words, a true S&OP process.”
The fact that Sam was able to start without extensive preparation and consultation did not lead to a rough start or delays. The project was initiated and completed in the second half of 2024.
“Of course, a more detailed briefing is nice, but the lack of one also made it feel like a fresh start—though a challenging one. Beyond reviving the demand planning tool Optimact, strategic thinking was crucial. This included managing the connection between European logistics operations and the Chinese production site and headquarters. The Chinese culture is more hierarchical. Ultimately, the client makes the decisions, but as a consultant, you must dare to steer and provide advice. That worked out well. Now, it is up to the client to take the next steps, such as further focusing on demand planning at the customer-product level.”