Analysis
Our consultants Olivier Berghuis and Jens Michaelis were called in to solve this typical ‘Sales & Operations Planning’ problem. The data analysis confirmed that demand had been stable in recent years with a sharp peak in the winter months. However, production planning was based on orders placed. Most orders were placed three days to a week before delivery with a maximum of about three weeks ahead. This made for a very reactive and short-term planning. In addition, during the winter, orders increased but it was difficult for the client to ramp up production and still find temporary workers to run more shifts. Finally, producing to orders (Make-to-Order) resulted in a lot of changeovers on the production lines. This made production less efficient but also affected the quality of the final product.

Solution
Our team improved the S&OP process and we opted for four-weekly cycles. To forecast demand properly, we implemented a pragmatic forecasting application, in which algorithms determine the expected demand at individual product level and make it visible in a dashboard. Says Olivier, “This way you can start making reliable long-term forecasts for your production process, on which the supply planner can base production planning and in turn the material planner can make a procurement strategy for raw materials and other resources.”

Adjustment of the organization
The functions of the two original planners were also adapted to three new planning functions: a demand planner, a supply planner and a resource planner. For the period of this assignment, our consultants each supported the new positions and set it up so that their successors could seamlessly take over these positions.

Retrospective
Olivier: “The big advantage with this approach is that you can not only plan your resources better, but you can also deploy (temporary) staff and run operations more efficiently because you don’t have smaller runs all the time.” 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. With this, you also know earlier what to expect in terms of production and can plan resources, including (temporary) staff, accordingly more efficiently and earlier.”