S&OP Implementation

One of our clients, a major producer of dough and dairy products, faced the problem of not being able to fully adapt production to the annual sales peak every year towards the Christmas season. Too often ‘no’ had to be sold.

Our consultants Olivier Berghuis and Jens Michaelis were brought in to solve this typical ‘Sales & Operations Planning’ challenge. The data analysis confirmed that demand has been quite stable in recent years with a clear seasonal pattern with a strong peak in the winter months. However, the production planning was based on placed orders. Most orders were placed three days to a week before delivery with a maximum of about three weeks ahead. This resulted in a very reactive and short-term planning. In addition, orders increased in the winter, but it was difficult for the customer to ramp up production and find temporary workers to work more shifts. In addition, production to orders (Make to Order) caused many changes to the production lines. This took time but also came at the expense of the quality of the end product.

Our team improved the S&OP process, opting for four-week cycles. To properly predict demand, they implemented the Forecast Pro tool, in which algorithms determine the expected demand at the individual product level and visualize it in a dashboard. Olivier: “In this way you can make reliable long-term forecasts for your production process, on which the supply planner can base the production planning and in turn the material planner can make a purchasing strategy for raw materials and other resources.”

Three new positions
Also, the functions of the two original planners (one for the pasta, one for the dairy) were replaced by three new planning functions: a demand planner, a supply planner and a resource planner. For the period of this assignment, our consultants each took one of the new positions and arranged them in such a way that their successors could take over these positions seamlessly.

Looking back
Olivier: “The big advantage with this approach is that you can not only plan your raw materials better, but you can also make the deployment of (temporary) personnel and operations run more efficiently, because you don’t have increasingly smaller runs.” Jens: “As a demand planner you can supplement the already known orders with expected demand and thus increase your planning horizon. This gives the supply planner more information to plan more efficient production runs, provided goods can be kept in stock, which was the case here. This also allows you to know what to expect in terms of production sooner and you can plan the resources, including temporary and other personnel, more efficiently and sooner.”